Are Crown Corporations included? Canada’s total government debt position continues to compare very well to other G7 economies, while Canada’s private sector debt worst in the G7 – May 10, 2022,

Canada is currently a G7 country, although many think it shouldn’t be, it currently is and to be fair I think it’s only right that when certain entities do their own comparative studies they look at the macro picture instead of the micro picture. So the article I point to in this post states the following

In the context of total public debt, Canada has the lowest net debt-to-GDP ratio in the G7, the analysis notes. “And while higher than prior to the pandemic, Canada’s total government debt position continues to compare very well to other major advanced economies.”

Government finances better than expected, surgical backlogs: In The News for May 10 | nationalpost.com

So The Group of Seven(G7) countries currently include Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States. Now, for the record, Italy embraced China’s belt and road initiative, I bring this up because that’s how bad the Italian economy is doing, why is the Italian economy doing so bad, you ask? Simple, their government is HUGE, which has led to all sorts of labor disruptions and a lot of young Italians moving to EU countries Germany for better career opportunities.

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I don’t know the specifics of other G7 nations but as an example, in the US The United States Postal Service(USPS) is part of the government, so when you talk about government spending, USPS is included in that number. In Canada, our Postal Service is Crown Corporation, which makes it a State-owned enterprise
that need not worry about competition but is still responsible for concluding its own profit margins.

In Germany, DHL is privately owned, but would likely be nationalized in the event of a war, but their model is closer to Canada Post which also owns Purolator Inc. a Canadian courier that is 91% owned by Canada PostCanada. Canada also has a supply management model for dairy which keeps certain expenses off the Government’s public sector balance sheet, but forces Canadian consumers to pay artificially high prices and me instance taxes for services they’d likely pay less for had the private sector been allowed to compete for market share.

Canada won’t meet NATO target with more than $8B in new military funding | ctvnews.ca

The Only G7 country missing From NATO is Japan

I could also write about the fact that Canada refuses to pay its fair share to NATO? As the headline points out only Japan is absent from the NATO list, and if Canada is supposedly in this great economic position in comparison to other G7 nations, why isn’t Canada paying its fair share to NATO? If anything the article I pointed to above is exposing Justin Trudeau’s government to corruption?

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Because if let’s say Trudeau is not spending money on defense to help the poor, then we have to start talking about Canadians currently struggling financially under his leadership. We have to ask where is money that should be spent on NATO going, or not going? If you ask me, I would make the claim that Canada is in the WORST DEBT position in the G7, it’s just that how Canada calculates its data is different based on certain government agencies not being on the Public Sector balance sheet.

USPS is on the US balance sheet, but Canada Post isn’t on Canada’s public sector balance sheet, Canada also has the Canada Mortgage and Housing Corporation(CMHC) another Crown Corporation that has a for-profit model. CMHC is one of Canada’s most “successful” Crown Corporations and it’s for the most part protected by the Bank of Canada, which in many ways is financed by Canadians’ willingness to pay inflated costs for almost everything in exchange for allowing its government to spend WAY beyond its means as well as protecting CMHC’s asset values from crashing.

Canada’s Government is Expensive and Its citizens are paying for it with debt

These revenues that the Canadian government already receives along with the benefit of recent consumer price inflation, create a picture of the Canadian economy that gives it the appearance of a country that is doing well in comparison to its G7 peers. But when you dig deeper you start to see what’s really going on. Which is that Canada’s government suckered Canadian voters into financing their ventures.

Canadian Household Debt Dwarfs G7 Peers, Growing Faster Than Emerging Economies | betterdwelling.com

Why I used the Canada Post example and the Supply management example is that these inflated consumer prices Canadians pay via these governments’ monopolies could be the main reason why Canadians lead the G7 in consumer DEBT. By the way, even if you don’t want to blame CMHC entirely, one could argue that Canada’s housing market could be inflated because of CMHC’s involvement in ensuring mortgages?

If Canada’s housing market crashes, CMHC could quickly go from Canada’s most profitable Crown Corporation to its most indebted crown corporation, and the Canadian taxpayer is on the hook if the CMHC fails. The Bonds issued by CMHC are backed by the Canadian taxpayer.

 

1 (CHT) The Canada Housing Trust is a special purpose trust created by CMHC. It sells Canada Mortgage Bonds (Bloomberg “CANHOU”) to domestic and international investors. It currently issues 5- and 10-year fixed-rate bonds and 5-year floating-rate notes.

CMHC-guaranteed bonds are sold to investors to generate funds for residential mortgage financing. | cmhc

Canada Mortgage Bonds rate the same as Government of Canada Bonds and CMHC’s debt securities. They carry the full faith and credit of Canada.

 

I bring this up because when you understand certain peculiarities with the Canadian economy, you start to see why on paper the Canadian government appears to have the best PUBLIC SECTOR debt position in the G7 while simultaneously having the worst private-sector debt problem in the G7.

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Interesting times ahead!