Sooner or later someone will have to pay the piper.
http://business.financialpost.com/ne...vels-pbo-warns
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Sooner or later someone will have to pay the piper.
http://business.financialpost.com/ne...vels-pbo-warns
But probably one of the least indebted country of them all.... I guess money has to come from someone pocket.
Stay lean my friends, stay lean.
No real surprise. Anyone seen the price of a house in Vancouver, Calgary, GTA? Even rentals are getting insane.
And yet, despite knowing this. Some (like Ms Wynne) think government spending, and taxing is a good idea.
Won't take much for freight train to come off the tracks and start a spiral that's devastating, as many lose homes, or sell and start a real estate crash.
Something as simple as a 2% rise in the Prime Lending Rate will start the ball rolling and it's coming.Quote:
Originally Posted by JBen
I (you), Werner back when he participated in the politics threads, Terry others many years ago when people defended first McGuintys spending, the Wynne. Spoke about rates, storm clouds, stormy waters globally.
Wee factoid. When the US hit the wall their consumer debt was 170% to income. Back then we were around 165%.
We find out today if the BoC is going to cut again. Many economist are divided. Many think we need to it to spur economic growth, many think it will do more harm than good.
Federally.
I actually don't mind them going further into hock. Federally "we" can take it. We desperately need to spur growth. The problem I have, is not knowing where they will spend it. Special Interest, feel good warm and fuzzies, more green crap ( how well has that worked in Ontario?)....Subsequent to that, how many and where tax hikes....
Provincially
We are in deep. Backed into a corner. Wing nut Wynne atleast is showing some small signs she understands she can't keep borrowing. Finally showing some signs of worrying about Johnny Q and not PS. However she's hammering people with all her "revenue tools" and Hydro...and ORPP as well?
She and JT can blather all they want about Ontario backstopping Canada again and leading the charge.
2% growth is not boom years, it just sounds good because since around 2008 growth has been sub 2%.
When will the BoC raise the prime rate? Who knows
But I'll say this much. Between soaring food cost, Hydro, taxes and a sluggish economy, the peons (private) have lost serious ground and theres not much in the way of "hope". And its no wonder people can't save, reduce debt.
Good job Ontario.
And I hope to the gods I believe in no-one ever tries to defend Unions as caring about the commoners.
It's a great ideal, but as I'm sure you know, it will never happen voluntarily? We live in a consumer driven society. Everyone is intent on acquiring the latest, greatest and the biggest! If a person doesn't have those things, they are looked upon by many of their neighbours and society in general as "not doing well", or "poor" or any other terms you care to associate with "not keeping up with the Jones"?Quote:
Originally Posted by Hunter John
A popular trend we see popping up on our facebook page now is a charming picture of a log cabin in the woods with the inscription asking viewers if they could forgo modern conveniences for a year, would they choose to live there? Invariably everyone posts "yes"! But it's a romanticists dream as we all know. They then shut off the computer and hop in the car to head over to Wally World or Can. Tire to buy something from the sale flyer that they just have to have?
When or if things crash, our society is in for world of hurt.
Just wondering about something. If the government spend more on their people (construction, better retirement, child support, health care, EI and so on) don't citizen debt would go down and the country debt up? I have a pretty simple mind but isn't what really matter for people (send their kids to sport after school (1500$/years/per, spend a week of vacation every two years, don't have to work at Timmies at 70 years old and so on)?Quote:
Originally Posted by JBen
This is just a question, I'm not saying that's the way to go but I just didn't understand your statement about spending doesn't help personal debt.... I mean that's what the article is about.
You can't spend your way to prosperity. Start with that premise and there's your answer.Quote:
Originally Posted by seabast
Any thought that gov't spending will decrease personal debt is founded in the belief that a) the gov't debt is interest free; and b) it never has to be paid off. While we can debate the latter, the former is definitely false. One of the problems Ontario is running into now is the interest payment on its debts (11.5B). This means taxpayers have to pay for that. Paying more taxes leaves less cash in the taxpayer's pocket. Less cash in the taxpayer's pocket means more personal debt.
...and to put that 11.5B into perspective
Health is 50B
Education is 25B
Social services is 15B
Well said Werner Seems pretty simple to me but alas most can't or don't want to acknowledge reality.Quote:
Originally Posted by werner.reiche
The whole key to less consumer debt (and the diving dollar) is to start bumping interest rates up, but since our entire economy is a house of cards propped up by bizarrely low interest rates, no one is going to risk that.
Has anyone noticed that markets are in a virtual free-fall at the opening,this morning? Let's hope it quickly recovers or we could find ourselves in a "Bear" market for quite some time.
What Werner said Seabast, at it's simplest. There are a number of ways to look at it, angles if you will. Some might even say "spin" it if it doesn't suit their view.
One way to look at is the 11.5 billion being "spent", or lost to the debt servicing cost. I'm thinking just half of that ( 6b) would hire a boatload of Nurses, or provide the money to give teachers raises, or hire more COs, or go a long way to helping refugees, the homeless.......
Alternatively consider this.
Since the 60s or there about. Gov't spending has ballooned, as has the size and cost of government. They more they spend, the bigger they need to be. Likewise our debt levels have increased.
Are the poor still the poor? yep, little has changed for them.
Are the rich still the rich? Yep, no change there either
The middle class?
Like any see-saw when something goes up, something has to go down.
All that debt accumulated? All to those services and beuacracies? Well it takes tax dollars and lots of it. See also immigration, population trends and pyramid schemes.
At the end of the day the peons are getting hammered by rising taxes, hydro, food, etc. ORPP alone will strip yet another 2% on top of all else.
How many people are getting 3% raises these days?
So all that money Ms Wynne has taken from our pockets in just the last 2 years is money the peons can't
1) Spend and grow the economy
2) Save for the future
3) Pay down their own debts
And perhaps the biggest lie bald faced spin of all, is that all know and have known for years.
Consumers are going further and further into debt, and can't save.
JTs answer. Tax the rich and give the peons 1.5% tax cut .....wink wink we'll get it back taxing Carbon.
Ms Wynnes: Oh the poor peons they need better CPP....nope we will do our own for them.
So if all of them know and have known that consumers are carrying too much debt and can't save.
Tax them more?
A Bear market isn't all bad - depends if you have stocks - I play the market and use certain leading indicators as a guide when buying and selling stocks - I got out of the market at the end of last year because the indicators I use told me things were going south - so now I'm waiting for the prices to go down - when the indicators tell me to buy into the market again - then I'll buy at much lower prices -Quote:
Originally Posted by trimmer21
From what I gather with the high cost of housing in Ontario a correction will occur - all of a sudden prices will drop as they did down here a couple years ago - people will find that they owe more on the mortgage then what the house is worth - then stop paying their mortgage - the market will be flooded with foreclosures and a lot of empty houses
Very few things keep going up in price without some correction happening - look at oil - if you draw a straight line showing some increase in price going on forever - you eventually be surprised -
I say raise interest rates to keep those who can't afford it out of major purchases. I bought my house when the interest rate was at 13% and 15 years later I owned it. Now my investments get less than 4% return, maybe in a couple of years I could buy some of those foreclosed homes as an investment, people have to live somewhere.
Trouble with raising interest rates is that would affect the provinces (and countries finances badly). Ontario's budget says every percentage point increase in interest rates costs the province 400 million per year.
...but what I find strange about that is given interest payments of 11.5B, are we paying 28% interest?
My guess is that tthe province is actually paying about 3% and it's interest payments were 11.5 (as published). A 1% increases would cost about 3.5B per year.
You won't see a drop in housing in Ontario like you saw in the US. Too many public sector employees and pensions.Quote:
Originally Posted by JoePa
Well played W.R......Touche'
Lol WR :). A wee little truth in that, but not sure that will hold up.
The province finances in many ways. The simplest is by issuing province of Ontario bonds. Over simplified this, and nowhere near complete. The bonds are on a cycle. This where the "bond yields" you read about in the press in relation to federal bonds come into play. There are short, mid, long term bonds. In the press you'll read about 10 and 30 year yield curves a lot. Once the province or fed issues the bonds they trade on open markets like any stock. The "interest" a bond pays is set when its issued and is based on many things.
Interest rates at the time, credit ratings, etc. If you wanted to buy a 10year bond, all are being issued today, all mature on the same day 10yrs from now, and all pay the same interest, and you had 4 choices which would you buy?
Gov't of Canada: 3.5%
Prov of Ontario: 3.5%
City of Toronto: 3.5%
Country of Greece: 3.5%
What if you could buy the same 4 bonds all details the same but they were issued last year and paying 3% interest.
Is it better to earn today 3% for the next 9 years, or 3.5% for 10 years.
If interest rates move up substantially. Would you buy a bond paying 3% if for the same $5,000 you could something paying 5% interest?
So the bonds are either discounted and trade less than par (100) or they trade at a premium (above par).
How much money it cost you to a $1,000 bond (its value at maturity) depends on the price. If its trading at .90 it will cost you $900. if its trading at 1.10 it cost $1,100.. Why would you spend $1,100 to get $1,000 at maturity? Well its "yield" which reflects the interest you earn over that year. So that bond would likely be paying a interest rate thats far higher than todays rates...maybe 15%...Why would anyone sell that bond if they were going to lose 15% interest and buy something only paying 0.750%. You as the buyer after paying 1,100 for something worth $1,000 (face value) would earn the 15% for the year, but your net yield will be today 1 year rate.
So for years the province has been issuing bonds. if they have $500,000,000 maturing today, that paid 8% (based on yesteryears rates when issued), they will raise $500,000,000 today by issuing them again but at a rate thats competitive today. In order to make their bonds more attractive than the Feds...Well they need to pay more interest...Greece likewise might need to offer 20%.
So trying to reverse their debt servicing cost which comprises many things, (theres more ways than just bonds to raise/borrow money), you would need to see all their bonds currently outstanding that have been issued over the past 25 or 30 years. Thirty years ago they may have issued 5 billion, June 2016 (maturity date) paying 15%... and 25 years ago issued another 5billion maturity Sept 2016 paying 13% and many more including those issued over the past year.
As rates go up, when they issue bonds they will issue them at rates that are designed to draw investors. A better rate than the BoC pays, but not as high as the City of Toronto (who needs to offer more due their credit rating/ability to repay etc)