debt – mackaycartoons

Thursday November 23, 2023

November 23, 2023 by Graeme MacKay

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Thursday November 23, 2023

Growing Debt, Shrinking Priorities: The Trudeau Government’s Balancing Act

November 3, 2022

The Finance Minister, Chrystia Freeland, has tabled a fall economic statement revealing a stark reality: servicing the considerable federal debt will consume a larger share of Ottawa’s revenue than in recent years. This ominous financial forecast comes as Canada grapples with the aftermath of the COVID-19 pandemic, with economic growth expected to stall, unemployment set to rise, and tens of thousands of jobs at risk.

Freeland proposes additional spending of $20.8 billion over the next six years, emphasizing it as a modest increase compared to previous years and a display of fiscal prudence. However, the lion’s share of this new spending is allocated to housing initiatives and climate-friendly projects, diverting attention and resources away from crucial areas such as defense, social programs, infrastructure, innovation, and healthcare.

News: Canada fiscal update sees higher deficits and debt, adds housing measures

October 1, 2019

The Trudeau government has consistently run deficits since its election, exacerbated by the pandemic’s economic fallout. The interest rates, now at a 20-year high, have inflated the cost of borrowing from $20.3 billion in 2020-21 to a staggering $46.5 billion in the current fiscal year. Debt servicing charges are projected to soar to $60.7 billion in 2028-29, making it one of the most burdensome items in the federal budget.

To contextualize the impact, debt service charges for this year alone surpass spending on the Canadian Armed Forces by $18 billion and exceed the allocated funds for the Canada Child Benefit by $20 billion. This rise in debt interest charges limits the government’s fiscal flexibility to address critical issues such as the housing supply crunch.

November 2, 2016

Kevin Page, former parliamentary budget officer, warns that the substantial increase in debt during the pandemic will now have repercussions. The federal debt has doubled since 2015-16, reaching $1.2 trillion last year and projected to climb to $1.4 trillion by 2028-29. As debt interest charges consume more fiscal space, the government’s ability to tackle pressing issues diminishes.

Despite lower new spending in the economic statement compared to previous budgets, the fiscal outlook remains grim. The deficit for this year stands at $40 billion, and with a forecasted economic growth of only 0.4%, the unemployment rate is expected to rise to 6.5%. Projected deficits for the coming years have been revised upwards, indicating a challenging fiscal path ahead.

Freeland’s focus on housing measures, while important, raises concerns about the government’s ability to address a broad spectrum of issues. The proposed new spending measures, though aimed at addressing the housing crisis, may not be sufficient to meet the urgency of Canadians’ needs, as emphasized by opposition leaders.

Opinion: ‘Trudeau’s political problem is bigger than his debt problem’

November 13, 2014

As the government deviates from its traditional fiscal anchor, allowing the net debt-to-GDP ratio to rise, questions arise about the sustainability of Canada’s finances. Freeland introduces a new fiscal anchor, aiming to keep deficits below 1% of GDP in future years, asserting that this strategy will ensure continued investments in Canadians.

In the face of rising debt and constrained fiscal options, the Trudeau government must carefully navigate its spending priorities to address the multifaceted challenges facing the nation. Balancing economic recovery with essential program funding is a delicate task, one that demands strategic decision-making to safeguard Canada’s financial stability and the well-being of its citizens. (AI)

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. If you’re creative, give illustration a try:

Thursday November 2, 2023

November 2, 2023 by Graeme MacKay

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Thursday November 2, 2023

Haunted by High-Interest: The Looming Spector of Canadian Mortgage Renewals

In the eerie aftermath of Halloween, a haunting spector looms over Canadian mortgage holders, threatening a grim future of financial distress. The dread doesn’t come from ghouls or ghosts but from the imminent renewal of mortgages, unleashing a chilling cascade of increased interest rates set to torment thousands.

August 29, 2023

Recent analyses by RBC reveal a daunting reality: more than $900 billion in mortgages within Canadian banks are slated for renewal over the next three years. This impending wave of renewals, as pointed out by RBC researchers led by analyst Darko Mihelic, spells potential financial peril for many homeowners. An alarming 60 per cent of mortgages in Canadian chartered banks are anticipated to undergo renewal by 2026. As fixed-rate mortgage terms established prior to the Bank of Canada’s interest rate hike in October undergo renewal, borrowers are slated to face staggering increases in their monthly payments, a significant burden detailed in the report titled “Canadian Banks: A Review of Mortgage Payment Shock.”

The report forewarns that unless interest rates experience substantial declines, credit losses are bound to surge, potentially peaking in 2025 and beyond. These credit losses are estimated as outstanding payments owed to companies, including mortgage defaults. Alarming as it is, this prediction aligns with the Office of the Superintendent of Financial Institutions’ directive to major banks to bolster reserves for potential debt defaults, nearly tripling the amount set aside for bad loans compared to the previous year.

News: About 60% of outstanding mortgages facing payment shock in next 3 years: RBC

July 18, 2023

While some industry experts like Carl De Souza, senior vice-president at DBRS Morningstar, express confidence in the resilience of major Canadian banks against mortgage defaults, the forthcoming surge in renewals poses a significant threat to banks’ profitability and homeowners’ financial stability. However, the report suggests that the impact of mortgage losses might be mitigated to some extent due to Canada’s relatively low unemployment rate, which remains below pre-pandemic levels.

Nevertheless, the impending renewals paint a stark picture for homeowners. Banks are exploring options to alleviate the impending financial shocks, including renegotiating mortgage terms from variable to fixed rates. Currently, more than half of Canadians opt for a three-year fixed-term mortgage, but the stark difference in interest rates from previous years is ominous. Rates for a three-year fixed-term mortgage have climbed substantially, with estimates indicating a potential surge from the comparatively lower rates of 2019 to an alarming 6 to 8 percent at renewal, spelling financial distress for borrowers.

The report predicts a staggering increase in payments at each milestone year. In 2024, more than $186 billion in mortgages will renew, signifying a 32 percent payment shock. By 2025 and 2026, the looming numbers continue to surge, with estimated renewals of $315 billion and $400 billion, respectively. Payments are expected to soar by 33 percent and a staggering 48 percent, respectively, on a weighted average basis.

News: As inflationary pressures grow, Canadians increasingly struggle to make monthly mortgage & credit card payments

May 13, 2010

Even if there’s a hopeful return of the Bank of Canada’s key interest rate to 0.25 percent by 2026, the projected increase in payments still stands at a significant 20 percent. RBC’s estimations suggest a potential return to a lower interest rate in the future, yet the haunting reality of surging payments remains a foreboding certainty.

The post-Halloween season brings no respite as the grim spector of mortgage renewals hangs ominously over Canadian homeowners. The alarming forecasts and stark statistics paint a chilling picture of financial turmoil, urging caution and preparedness to weather the impending storm of high-interest renewals. (AI)

Thursday December 15, 2022

December 15, 2022 by Graeme MacKay

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

April 2, 2021 by Graeme MacKay

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

May 23, 2020 by Graeme MacKay

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)