Another Ooops

I see in an article by Patrick Brethour in the Globe and Mail that “Since the early days of the pandemic, the federal Liberal government has pointed to rock-bottom interest rates as a key reason why their spend-in-all-directions fiscal approach will not drive Canada into a debt wall …[and] … In the fall economic statement, the Liberals asserted that its pandemic debts would be affordable, citing the precipitous decline in yields for the government’s 10-year bonds, a gauge not only of Ottawa’s borrowing costs, but also of the credit market’s belief that economic growth and inflation would be lukewarm for years to come … [and these] … assumptions of a soft economy, and low interest rates, were also the basis for the Liberal plan for $70-billion to $100-billion in stimulus spending over the next three years. The arithmetic was simple: Large deficits would not be a problem, so long as the economy was growing faster than the government’s debt. In a world of ultralow interest rates, borrowing tens of billions to boost growth would pay off … [but, and it’s a Big BUT] … Those assumptions have been turned on their head, less than four months after the November update, and weeks ahead of the first pandemic-era federal budget. Economic growth in the fourth quarter was much stronger than expected, a trend that stretched into January. In the United States, a US$1.9-trillion stimulus package will help out not only the American economy, but also Canadian exporters as well.

But things have changed say Canada’s top economists ~ none of whom are in the Liberal government ~ and Mr Brethour explains that “Chief among those changes is the rapid run-up in the yields for the federal government’s 10-year Canada bonds since the start of the year, driven by the belief that the economy will rebound from its pandemic tailspin much faster than expected – and that inflationary pressures will also re-emerge sooner than previously thought.” In other words what Justin Trudeau and Chrystia Freeland have been telling Canadians for the past year is, to be very charitable, rubbish. Did they know they were saying dumb things? I doubt it … I doubt that either has the mental capacity to really understand why and how interest rates fluctuate.

It’s not rocket science, everyone with a mortgage understands the process, I think. And I suspect we all ~ almost all ~ know that recessions, even ones caused by global pandemics, end, and that when the economy starts to grow, again, interest rates rise. Maybe, however, that’s news to Chrystia Freeland and Justin Trudeau. But it’s not to the senior officials in Finance Canada and that may explain why Ms Freeland and, previously, Bill Morneau seem to have been unable to craft a budget in the past two years ~ every other G7 country and every single Canadian province has brought down a budget during the COVID-19 pandemic. Ottawa seems to be uniquely incapable.

r/teslamotors - You don’t see this every day... 😂 Diesel fuel+generator+Tesla = 🤔

What the Trudeau-Freeland regime is doing is a lot like having a “green” vehicle charging station with a diesel generator chugging away, quietly, in the background. We all really want the government to help stimulate the economy and help to protect people from catastrophic financial problems but none of us really wants to have to pay the bills or, even, to understand how they are paid. We, and our children and grandchildren will, soon, become acquainted with debts and deficits again and we ~ taxpayers, because there is no one else ~ have to repay all the money that the Trudeau regime has borrowed, with interest, the rates of which both rise and compound.

It is time for Canadians to grow up. Growing up involves understanding that while Justin Trudeau is, undeniably, popular, he and most of his ministers are neither honest nor able. We need to elect a team of smart, honest, hard-working Canadians …

… who will NOT lead us into financial ruin.

Published by Ted Campbell

Old, retired Canadian soldier, Conservative ~ socially moderate, but a fiscal hawk. A husband, father and grandfather. Published material is posted under the "Fair Dealing" provisions (§29) of the Copyright Act for the purposes of research, private study and education.

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