Comments on: 2006 Fiscal Update

By: Canadian Capitalist

Canadian Capitalist — Mon, 27 Nov 2006 04:09:39 +0000

James: Regarding comment #7, it is true that any unexpected surplus was directed towards debt repayment. But, this year’s unexpected surplus became next year’s expected one and the Liberal government did spend a big chunk of it.

I do agree with your comment #14. The Financial Post once had a graphic on debt levels as % of GDP at OECD economies and the U.S. was middle of the pack.

By: anjo

anjo — Mon, 27 Nov 2006 02:52:28 +0000

James: Interesting, I wasn’t aware that the Canadian and US indebtedness is so similar on a revenue basis. Assuming an equivalent revenue growth percentage, I’m guessing there will be a larger gap as the US runs large deficits and we continue to have balanced budgets (at least I hope they continue to be balanced).

Steve: Good point, I guess we don’t think much about the government assets. However isn’t the current debt greater than assets based on Mr. Flaherty’s goal of having a reducing the net debt to zero, which I understand to be assets equal to liabilities?

By: Monty Loree

Monty Loree — Sun, 26 Nov 2006 23:02:58 +0000

OFF TOPIC:
Where as I don’t like to mix money with politics ever, I would like to talk about Stephen Harpers plan to separate Canada and Quebec.

The U.S. politicians take notice of blogs and blog talk. I believe that Canadians should talk about this as well.

(I’m sure they do on Canadian Political Blogs.)

Instability in a nation is the worst thing for its economy and money.!

By: Steve Heath

Steve Heath — Sun, 26 Nov 2006 22:23:02 +0000

One thing to remember is that while we inherit debt, we are also inheriting assets. Land, buildings, currency holdings, crown corporations… you don’t mind inheriting a $200,000 debt so much when it’s a mortgage on a $300,000 house you also get… it’s when you inherit credit card debt with nothing to show for it that it stinks. Just not sure which situation we’re in at the moment

By: James

James — Sun, 26 Nov 2006 15:07:02 +0000

Sadly, in comparison to annual revenue the US debt is not significantly worse than ours. Remember that their revenues are many multiple’s of ours and their debt is approximately 2.5X annual revenue where ours is about 2X annual revenue. That is a much better yardstick of indebtedness than total debt numbers which are not really comparable due to the differences in scale of our economies.

By: anjo

anjo — Sun, 26 Nov 2006 01:05:31 +0000

Phil: Arguably, if we maintain the current debt level and only make the interest payments, in a few generations the real value of this debt will be negligible due to inflation. However, my preferred solution would be to force the politicians and senior public servants of that time to have their pension payments redirected to debt repayment.

I post the above in jest because as a young person it is overwhelming at times to consider that our national debt may not be repaid in my lifetime. I’m thankful however that we don’t have a similar level of debt to our neigbours to the south.

By: Chris

Chris — Sun, 26 Nov 2006 00:50:48 +0000

I’m just glad the feds are putting our excess funds to work thru reduced taxes and lower interest payments on debt. Hope they follow through.

By: Phil S

Phil S — Sun, 26 Nov 2006 00:50:33 +0000

Oh by the way, Canada Savings Bonds are useless. It’s the government ripping off its “financially uneducated” citizens. I don’t think there could be a worse investment out there than Canada Savings Bonds, but my parents first put me into some when I was younger and didn’t understand financial markets. This year it’s 3% I see. Less than a GIC, less than a T-Bill and the interest is fully taxable every year that you hold it. Gosh, I can really retire on that! NOT!

By: Phil S

Phil S — Sun, 26 Nov 2006 00:45:31 +0000

On a personal level, I’m extremely aware of my debt and always assume as little of it as possible and pay it off as soon as possible. However, on a governmental level, all of this debt and crazy spending was done in the past by previous generations of Canadians. Why does the government feel that it is MY generation’s responsibility to pay it off? I say pass it on to the next generation!!! Screw future generations, I want to live my life today! Give me HUGE personal tax cuts!

By: Canadian Capitalist

Canadian Capitalist — Sat, 25 Nov 2006 00:21:18 +0000

Stephen: I always pick names at random using the random number generator from random.org. Thank you for your detailed comment but I pick randomly (and I mentioned this in the rules too) so that I am not biased. I hope you think it is a fair method as well.