debt

Thursday December 15, 2022

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Thursday December 15, 2022

Household debt levels could cripple economy, economist warns

November 3, 2022

Canadian household debt levels have increased enough to spark a recession when combined with interest rate hikes, says one economist, after Statistics Canada released its latest report Monday.

Jim Stanford, the director of the Centre for Future Work, said the debt levels are high enough that, as interest rates rise, disposable income ordinarily spent on consumer goods is being used to pay debt.

“Chances are you’re going to see an increased interest bite from household budgets equal to about two or three per cent of GDP,” he said. “That alone is enough to put the economy into a recession, let alone the other impacts on business investment, for example.”

The standard definition of a recession is when the country’s gross domestic product (GDP) contracts for at least two quarters.

Household consumption accounts for more than 50 per cent of Canada’s GDP, Stanford said, making it the biggest single contributor to economic growth.

Stanford said $16 billion in additional interest payments made over three months is worth more than half of a percentage point of Canada’s GDP.

Statistics Canada’s new figures show for every dollar of disposable income in the third quarter of 2022 there was $1.83 in credit market debt. The figure is a slight increase from the previous quarter and up from $1.77 last year.

Thursday September 8, 2022

The figures come as the Bank of Canada has continued to raise its key policy rate. Last week it hiked the key policy rate another 50 basis points to 4.25 per cent in an effort to fight inflation.

Mortgage payments also hit Canadians hard with interest payments expanding by more than 16 per cent, which is the largest increase on record, according to the StatsCan report.

“It’s certainly hard evidence that the rising interest rates are wreaking havoc with household finances,” Stanford said. “We’ve never seen an interest shock like that to Canadian households before.”

He said he expects the situation to worsen in the coming months.

On Monday, Bank of Canada governor Tiff Macklem defended the interest rate hikes in Vancouver in front of the Business Council of British Columbia. He said they are working and the country needs to stay the course.

“If we under-tighten, inflation is going to stay too high. Canadians are going to have to continue to endure the hardship of higher inflation,” Macklem said.

He said the bank was surprised at how international events, like the Russian invasion of Ukraine and supply chain issues powered inflation.

He said such trends will make it more difficult to bring inflation down than it has been in the past. (The Toronto Star) From sketch to finish, see the current way Graeme completes an editorial cartoon using an iPencil, the Procreate app, and a couple of cheats on an iPad Pro … These sped up clips are posted to encourage others to be creative, to take advantage of the technology many of us already have and to use it to produce satire. Comfort the afflicted. Afflict the comforted.

 

Friday March 26, 2021

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Friday March 26, 2021

Ontario has no clue how to get to fiscal sustainability

Somewhere in the bowels of Ottawa, officials are quietly preparing contingency plans for a fiscal bailout of Newfoundland, should that become necessary. They may wish to add Ontario to their plans.

April 16, 2020

Ontario’s fiscal situation was dire before the pandemic; it has grown much worse because of the pandemic; and it is going to get still worse after the pandemic is long past. That, mind, is the optimistic scenario – which is to say, the scenario on which the Ontario government has chosen to base its latest budget.

It shows the province’s net debt-to-GDP ratio rising, not falling, from the astronomic levels it has already reached, for as many years as the government can credibly project. From 47 per cent in the year just ended – more than three times what it was 30 years ago, and second-highest in the country after Newfoundland – it is forecast to continue to increase, to more than 50 per cent.

Only in the last years of this decade does it begin to recede, and then only on some heroically optimistic assumptions, a mix of the usual complacency about interest rates, fond hopes about economic growth and some truly herculean reductions in spending. We’ll come back to these in a minute. For now let us consider whether the government of Doug Ford even appreciates the gravity of the situation it is in.

May 16, 2020

The most the budget will allow is that the government “remains committed to developing a path back to sustainable public finances.” Not that public finances aresustainable; nor that they are on track to get there; nor even that the government has a plan to get us on that track; only that it is “committed to developing” such a plan.

Well, all right, there’s a pandemic on, and the government is focused on spending whatever it takes to get the province through it. First things first. But longer term? Does it even know what sustainable public finances look like, let alone how to get there?

The government’s choice of targets – not rules, or anchors, but targets – does not fill one with hope. It has three. First, it hopes to limit the debt-to-GDP ratio “to not exceed 50.5 per cent” over the medium term. Why 50.5? Because, one suspects, that is where the debt-to-GDP ratio was headed anyway – though if growth comes in below projections, the target will prove no obstacle.

As for the other two – debt interest to revenue, and net debt to revenue – the government declines even to pretend to have a target for these, other than “to slow their rate of increase.” (Slow it by how much? From what benchmark? It doesn’t say.)

Not only has the government assigned itself a sliding, indeterminate, non-binding target for fiscal sustainability, it seems in no hurry to get there. “Our return to fiscal sustainability,” the province’s Finance Minister, Peter Bethlenfalvy, said in his budget speech, “will take many, many years.” (Continued: Globe & Mail) 

 

Saturday May 16, 2020

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Saturday May 16, 2020

Ontario Premier Doug Ford reveals his ‘famous’ cherry cheesecake recipe

Ontario Premier Doug Ford got his hand mixer out, put on some bright blue gloves and revealed his “famous” cherry cheesecake recipe in a video released on Friday morning.

January 17, 2019

“If I wasn’t premier, I’d open up a cheesecake factory,” the premier says at one point in the two-and-a-half-minute-long video dubbed “Cooking with Doug.”

Ford said he learned the recipe “years ago” from his mother, who learned it from her sister.

“When I was 10 years old I just had it kind of memorized,” he said with all of the ingredients laid out in front of him on a kitchen counter.

June 7, 2016

While making the recipe on camera wearing a “We’re all in this together” T-shirt, the premier says this is one of many “fun things you can do while you keep yourself isolated” during the COVID-19 pandemic.

“Stay safe, stay healthy,” he added.

The release of the premier’s “famous cheesecake recipe” comes after he boasted about it on Twitter and even during an official COVID-19 news conference held at Queen’s Park earlier in the week.

May 5, 2018

“I make the best cherry cheesecake ever,” he told reporters on Monday. “I do it from scratch. No recipe, I got it down pat.”

“You can tell I’ve eaten one too many cheesecakes. That’s my problem.”

Ford released a trailer for the recipe on Thursday night before publishing the full video the next morning.

The full video ends by the premier saying, “I haven’t had one of these in years. I haven’t made one in years, but I got to tell you I haven’t lost the touch.” (CTV) 

 

Saturday January 18, 2020

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Saturday January 18, 2020

$60 payout ‘putting money back in parents’ pockets’, education minister says

May 4, 2019

The minister of education is offering parents money for childcare costs incurred during rotating teachers’ strikes.

Stephen Lecce says parents can apply for amounts from $25 to $60 per day for children under twelve.

Lecce says if all unions were to walk out, subsidies for childcare would amount to $48 million a day.    

“Just for clarity, every day that all unions withdraw services, that full withdraw saves the government $60 million dollars in salaries,” Lecce said. “So the concept here is we know that’s not our money, it’s our tax dollars, we’re using it. It’s the savings from their withdrawal of service.”

November 22, 2019

Parents of pre-schoolers at school-based child-care centres affected by the strikes will get the most money. Those with children in grades 1 through 7 will get less and parents of high school students will get nothing.

Lecce said the government’s motivation for the payout was to put money “back in the pockets of working people in Ontario.”

“At the end of the day the greatest constituency that bears the costs of this are parents and middle and low-income families who have to find childcare on short order,” he said.

As for criticisms that the payout was a bribe to parents, Lecce said he wasn’t surprised it was being spun by teachers’ unions as such.

August 29, 2019

“I think union leaders, respectfully, must accept the premise that there’s a cost when a child is staying home,” he said. “We have examples, real human examples, of individuals and low-income families and single parent families where they have to take vacation days.”

“Those will eventually add up,” Lecce said. “So it is absolutely in the interests of the taxpayer to return that money to them to make their life a little bit better and a little less difficult during this time of turmoil.”

“And it underscores our commitment to standing with families against this escalation.” (CBC) 

 

Thursday September 19, 2019

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Thursday September 19, 2019

Political smorgasbord doesn’t come free

Transactional politics are nothing new. That’s where a politician and/or a party offers goodies on the front end of the transaction, and the voter supports the politician/party on the back end.

September 12, 2019

It’s not unlike shopping and being drawn to sales or special deals that look especially appealing. That outfit looks good, but wait, the one next to it looks as good but it’s cheaper, or perhaps nicer in some small way. So the natural tendency is to take the one that seems better, even if the difference is marginal.

But what if the front of the special buy is fine, but you see flaws or differences once it’s unwrapped? What if you find out it needs special treatment when being cleaned, or it requires some sort of investment you weren’t expecting?

The analogy with the kind of transactional politics we’re experiencing during this election campaign isn’t perfect, but it serves the purpose. The political store has been bustling with promises, especially over the last several days, as the competing parties roll out their platforms — bit by bit — and try to be the outfit with that special something.

October 10, 2015

There’s nothing wrong with all this, to a point. It serves the purpose of offering measurable alternatives. If you don’t like the Conservative plan to expand RESPs, you can choose the Liberals because you like their plan about helping first-time home buyers. Or vice-versa. But it can be problematic when this sort of offer-of-the-day political play dominates the campaign to the exclusion of all else, and that is what’s happening right now.

It’s a veritable smorgasbord. Pick the party that has enough you like, and just vote for them? Of course, it’s not that easy. We know that not all promises are kept. Remember Justin Trudeau on electoral reform. We know that not all promises are fully explained. Andrew Scheer’s tax cuts are phased in so the maximum benefit comes only after three years. And the cost of that promise alone is $6 billion, which has to be paid for by someone — who might that be?

A big problem with many of the promises made to date is that the parties haven’t explained fully — in some cases not at all — how they will pay for their promises. That’s a critical part of understanding how parties will govern if elected. And it’s not always just about balanced budgets or deficits. It’s also about what things — like government services and support — get sacrificed in order for promises to be kept.

All smorgasbords end the same way. There’s a bill to pay. We can all stand to be reminded of that. (Hamilton Spectator)