The Budget

[Army Guy]

On ‎11‎/‎10‎/‎2016 at 8:38 PM, Smallc said:

Yeah, and the economy will grow to make the debt insignificant.  We have to return to balance at some point, but now it's easy to argue balance isn't that important.

So why do we have a huge Infra structure debt, Military debt, Health Care debt, concerns about CPP....Why do we have any concerns about anything...just keep piling on the debt....it will become insignificant......or is only insignificant when it comes to liberal projects......the rest well we've been told by previous governments liberal and cons.....we could not afford it.....SO what is it.....because the rest of us are confused.....

[Smallc]

If your debt grows slower than your economy, you shrink it out of relevance.  That doesn't mean open up the taps.

[Wilber]

16 hours ago, Smallc said:

If your debt grows slower than your economy, you shrink it out of relevance.  That doesn't mean open up the taps.

Not happening. The 30B forecast deficit represents a 4.7% increase in Federal debt. No one is forecasting more than about 2.% GDP annual growth between now and 2020. The IMF is forecasting 1.9%.

[Wilber]

On 11/9/2016 at 4:40 PM, Michael Hardner said:

Context:

 

Not 32%.

 

 https://www.fraserinstitute.org/sites/default/files/cost-of-government-debt-in-canada-2016.pdf

True the 32% is debt to GDP. Federal debt servicing is just over 11% of revenues.

Another way of looking at it is debt servicing cost the Feds 29.3 Billion in 2013/14.  On the other hand, the GST raised only 29.9 B so it barely paid interest on the debt if you are wondering where all that money is going. OAS cost the govt 32.3B.

You can't say that debt servicing has no consequences, particularly when govt regards that debt as perpetual.

Edited November 15, 2016 by Wilber

[Smallc]

1 hour ago, Wilber said:

Not happening. The 30B forecast deficit represents a 4.7% increase in Federal debt. No one is forecasting more than about 2.% GDP annual growth between now and 2020. The IMF is forecasting 1.9%.

That level of deficit is not predicted to continue. 

[Wilber]

30 minutes ago, Smallc said:

That level of deficit is not predicted to continue. 

They never are.  It was only supposed to be 10 billion.

[eyeball]

20 hours ago, Wilber said:

On the other hand, the GST raised only 29.9 B so it barely paid interest on the debt if you are wondering where all that money is going.

I'm wondering who received all that money and what they're doing with it.

[Wilber]

22 minutes ago, eyeball said:

I'm wondering who received all that money and what they're doing with it.

Paying interest on what we already owe.

[Army Guy]

On ‎11‎/‎16‎/‎2016 at 1:48 PM, eyeball said:

I'm wondering who received all that money and what they're doing with it.

That sir is an excellent question.....

[Army Guy]

On ‎11‎/‎16‎/‎2016 at 2:11 PM, Wilber said:

Paying interest on what we already owe.

To whom, the Bank of Canada....and what do they do with it all....

[Wilber]

They pay it to the bond holders, whoever they may be. 

[Bonam]

On 11/16/2016 at 9:48 AM, eyeball said:

I'm wondering who received all that money and what they're doing with it.

 

15 minutes ago, Army Guy said:

That sir is an excellent question.....

No... it's really not. Canadian government debt is held by individual Canadian investors, corporations and retirement funds (~73%), and foreign investors (~27%). The interest that the government of Canada owes on this debt is paid to these debt holders. What they do with the money is the same thing anyone does with whatever money they have. 

[Army Guy]

7 hours ago, Bonam said:

 

No... it's really not. Canadian government debt is held by individual Canadian investors, corporations and retirement funds (~73%), and foreign investors (~27%). The interest that the government of Canada owes on this debt is paid to these debt holders. What they do with the money is the same thing anyone does with whatever money they have. 

I thought a percentage of that debt was held by the bank of Canada, if not what debt do they have....

[Bonam]

41 minutes ago, Army Guy said:

I thought a percentage of that debt was held by the bank of Canada, if not what debt do they have....

Yeah the Bank of Canada was included in my answer under "corporations". 

[Army Guy]

8 minutes ago, Bonam said:

Yeah the Bank of Canada was included in my answer under "corporations". 

OK so let me get this straight, the Bank of Canada owns a large share of our nations debt....and the Nation or Government owns the bank of Canada are we not paying ourselves interest on money we lend ourselves.....does that sound right....sort me out please

Edited November 18, 2016 by Army Guy

[Wilber]

15 hours ago, Army Guy said:

OK so let me get this straight, the Bank of Canada owns a large share of our nations debt....and the Nation or Government owns the bank of Canada are we not paying ourselves interest on money we lend ourselves.....does that sound right....sort me out please

And where does the BoC get the money to lend?

[eyeball]

Out of thin air apparently.

Aliens maybe.

Edited November 18, 2016 by eyeball

[overthere]

On 11/15/2016 at 1:16 PM, Wilber said:

Not happening. The 30B forecast deficit represents a 4.7% increase in Federal debt. No one is forecasting more than about 2.% GDP annual growth between now and 2020. The IMF is forecasting 1.9%.

Likely scenarios: the deficit of $30B may be understated.  It illustrates the perils of not having a f***ing clue about how to run an economy.

 

I think both the Morneau and IMF forecasts for growth are very sunny.  I see very little on the horizon that provides optimism for our economy in the next few years.  But, Diversity.

[msj]

18 minutes ago, overthere said:

Likely scenarios: the deficit of $30B may be understated.  It illustrates the perils of not having a f***ing clue about how to run an economy.

 

I have read the fiscal update at Nov 1, 2016 which is out not all that long ago. 

Even the worst case scenarios in there appear to be looking at a deficit for 16/17 of $26B. 

Looking to the fiscal monitor, which only goes to August, we see year to date a deficit of $5.4 B. 

The month of August is terrible for the defict, adding $2.7B to it however that compares to $2.3B in 2015.

So, given these facts, what part of the process is understating the fiscal year deficit? 

Should they be expecting a black swan event in CDN housing? 

Maybe, since the typical Canadian has taken on debt with a nod to there being no tomorrow. 

Maybe they should have expected the Trump increase in interest rates? 

Exactly how should the government budget for such events though? 

They already build in contingencies and presumably will adjust the budget each year as we move forward whoch is the same as any government would do. 

In fact, 2017 budget consultations are already started. 

So, specifically, how, where, and in what ways are they demonstrating "no clue" about running the economy? 

Keep in mind that we already have at least one pipeline in the works and likely will get another one approved next week so don't expect to be taken serioulsy on that.  

We also have Keystone to look forward to. 

[overthere]

Quote

So, specifically, how, where, and in what ways are they demonstrating "no clue" about running the economy? 

lets start with the reality that they started from a decent, small surplus position and an economy not in recession.  Soon their promise of $10 billion magically became $30 billion, with no pans clues or notions on how to ever return to balance, much less surplus.

 

Compound that with much of supposed 'infrastrcuture' now being classified as 'social infrastructure', which is Liberal gobbledegook for good old fashioned Liberal program spending.  That is the kind of spending that never ends, every year we need to borrow megabillions to keep the lights on.

 

Our economy and particularly manufacturing should be booming, with the weak CDN dollar.  It is not.  Why would anybody invest in Canada, where electricity costs are high, where governments change the fiscal landscape overnight(AB and Ottawa, for example), where approvals take somewhere between forever and never, where productivity and labour costs are at opposite ends of the spectrum...

 

Our energy resource export sector is floundering, by design.    Now, right now, is the time that corps want to spend their (low interest, private sector) megabillions to invest in infrastructure that brings billions in export earnings and pays for our lovely, ever fatter social contract.  Progress? None,  We await consensus, consultation, appointments to boards that take decades to make simply technical decisions,.....and yes, every minute of that is on Trudeau.

 

Your optimism on pipelines is sweet, but naive.  It is very unlikely that the LNG plant approved will be built, missed the boat on that one via delays.  Kinder Morgan might get done, but only if the governments at all levels are quite literally prepared for blood on the streets.  They are not so prepared, so adding a few hundred conditions to that application will do the trick of snuffing it.  Gateway is buried in conditions and litigation and federal closure of the area to tankers, Energy East is on the path of decades in consultation plus a few hundred conditions, Keystone XL the Trudeauistas are already waffling and saying it is not needed so that means more consensus study and a few hundred new conditions.  Meanwhile, both major pipleine builders have invested gobs of capital outside Canada, in more business friendly jurisdictions, and may not now be interested in wasting more time and money on this cluster***k of a place to actually do business- not just talk about it.

 

And so on.....

[msj]

1) No government has control over oil/natural gas prices so no government deserves much of the blame for the fall out there. 

2) Gateway is off the table because lots of voters don't want it - we may tolerate Kinder Morgan and Keystone (which is mostly a US concern anyway so f' them and their environment for all I care anyway).  

3) 75% of Canadians seem to agree that a carbon tax on the one hand can then help justify O&G extraction and pipelines on the other.  It is a good idea to have it both ways: fight climate change/pollution while O&G still have some value to the world.  

20 years from now O&G likely are not going to have much value at all other than as jet fuel and backup generators for the renewables. So, fine, monetize them while we can. 

4) So far Trudeau seems to have the political capital to do this - Harper didn't and never had the ingenuity (or was shackled thanks to ideology) to mix a carbon tax with pipelines.

If he can make the carbon tax into something like what BC has (revenue neutral) then it will not be a big deal. This is challenging for the Feds given jurisdictional issues which adds some complexity but I think many are willing to give the benefit of the doubt to try something. 

5) The $30 billion deficit has a pretty big cushion built in so unless the economy weakens further or a housing crisis occurs I'll bet on the under. 

6) Even the PBO says that we could run deficits of $20 billion per year right now and see no fiscal pressure to our debt/GDP ratio. 

7) Current government practices of reviewing the budget status in November and planning for the 2017 budget by doing consultations starting now indicate that our government continues to practice a professionalism that is the envy of the world. To think that we actually have a finance minister with a Masters in economics and MBA - well, I guess that is probably just too elitist in a Donald Trump world. 

 

But it is a sign that they know what they are doing; you just don't like their politics so you will resort to your insults of "no clue" while you pine for those years of deficits and stupid boutique tax cuts brought to us by our previous elites. 

[Army Guy]

3)  75% of Canadians think carbon taxes are a good thing, I'd like to see a source or cite on that, And just a question why would you want to make fossil fuels even more expensive than they already are / when our economy is so dependent on the whole fossil fuel issue....You also are making a huge assumption that fossil fuels will no longer be a huge part in our lives....Do you really think that these fuel companies are going to die that easy, the same companies that have kept green alternatives away for so long.......

4)  Lets talk about BC carbon tax.....So just so I understand....the citizens of BC pay additional taxes to their fuel bill, in most cases up to 7 cents a liter......all year they pay this tax and then they are given a check back from the BC government in a form of a rebate or tax cut....So what happen is the citizens have paid out of their own pocket gave this money to the BC government to do with what it pleases, then at the end of the year they give you a tax break or rebate....which may or may not pay out what you have put into the program....and as a side benefit because fuel prices are so high it has convince some of the BC population to drive less....So question number one is What does BC do with all this extra revenue it receives, does it invest into green technologies, does it invest into alternative fuel tech, does it give rebates back on using green tech in the building process of new homes or business.....NO....it just gives the funds back in a form of rebates....to everyone....again it may or may not equal what you have put into it.....but some how your convinced it's good for the environment....because fuel is to expensive and it makes the users rethink using fossil fuels.......very little of that Carbon tax is used to spur on the development of going greener.....all it is doing is driving fossil fuel costs up so not everyone can afford to use it....mean while what are we going to do when the cost get out of reach for most people what are we going to use for heat, to move our transportation.... 

5+6) I see you and Smallc use the same material , that there is truly no really limit in the near future to how much our country spends....As long as it is spent on liberals ideas....it is OK, we are good with leaving that debt for future generations to pay off....Our national debt has always managed to have grown more than it has shrunk....even a liberal can see that, so at what point do we draw a line in the sand and say....we do not borrow any more until we have paid off some of the debt.....is it a trillion.....2 trillion, what is the magic number....how much of our tax dollars must we spend just servicing debt......I know it is to far in the future for you to think about.....so screw it jack it up.....spend like mad men....because some how it is good for the economy....bad for the tax payer....

7) yes our current finance minister has a masters, are you saying he is the first to have one, that he is the only man in Canada that has a clue in what is best for our nation ?.....or because he has a masters that he can do no wrong ?.....Was not the harper government also looked at the same way by other world nations ?....I wonder did their finance minister have a masters degree ?.....so what makes the liberals right and the cons wrong.....to completely different styles and directions.....who is right and who is wrong....

    

[eyeball]

1 minute ago, Army Guy said:

And just a question why would you want to make fossil fuels even more expensive than they already are / when our economy is so dependent on the whole fossil fuel issue...    

Because fossil are so hard on the environment the thing everything is dependent on.

Why does this have to be reiterated over and over and over again?  Talk about banging your head against a wall. 

[Argus]

2 hours ago, Army Guy said:

3)  75% of Canadians think carbon taxes are a good thing,

I wouldn't doubt it. They've been told for years how horrible carbon is, and how its destroying the planet, and the Liberals and media have managed to instill the belief in them that it won't really cost THEM anything much to combat it. Besides, it's "necessary" or so they think. That's it's a complete waste of time and effort is not something you'll hear or read about much in the media.

[msj]

3 hours ago, Army Guy said:

3)  75% of Canadians think carbon taxes are a good thing, I'd like to see a source or cite on that, And just a question why would you want to make fossil fuels even more expensive than they already are / when our economy is so dependent on the whole fossil fuel issue....You also are making a huge assumption that fossil fuels will no longer be a huge part in our lives....Do you really think that these fuel companies are going to die that easy, the same companies that have kept green alternatives away for so long.......

 

The data is right here:  http://abacusdata.ca/climate-carbon-and-pipelines-a-path-to-consensus/

 

Here is the relevant quote: 

BROADER ENERGY TRANSITION PLAN PLUS A PIPELINE

We then asked, “let’s imagine that while putting in place these measures to encourage a shift to renewable energy, the federal government also approved a new pipeline to get Canada’s oil and gas to new markets, would you strongly support, support, accept, oppose, or strongly oppose such a decision?”:

• Three out of four (76%) would support (41%) or accept (35%) this decision.

 

 

The theory is simple:  Tax carbon to make it less economical to use and to encourage people to use less or to switch to other forms of energy use (renewables).  

Sort of like how hardly anyone smokes anymore thanks to taxes on cigarettes. And the world is a better place for this change. 

Another part of the theory is one that conservatives seem to have ideological blinkers on: compromise. 

This is a compromise solution that allows for O&G to continue operations until renewables are able to take over. 

Now, renewables likely won't take over very well in Canada, but in sunny parts of the world solar is already cheaper than natural gas without subsidy.  

So, whether the energy Luddites like it or not, the times are a changin' as they say. 

 

Edited November 22, 2016 by msj