Credit Agencies Ignore Policy: Canada’s long-term financial profile seen consistent with the S&P AAA rating – July 11, 2020,

Just so Canadians are aware Standard & Poor’s didn’t see the 2008 financial crisis coming, actually they probably did, but they probably knew if they made a statement that politicians would have been all over them. During 2008 George W. Bush was president, America had invaded Iraq and patriotism was still the name of the game.

Politically talking about the financial crisis during that period would have looked bad on George W. Bush which would obviously mean that Standard & Poor’s would have to prove their findings, which let’s be honest is hard to do if it hasn’t happened yet.

So, to avoid the bad press, Standard & Poor’s did what was in the best interests of business, which was to do nothing, ignore the obvious and make a statement after the fact. As the meltdown occurred, it was easy for Standard & Poor’s to say that nobody saw this coming, when a lot of people did see it coming.

But you see when the people who saw it coming were Austrian economic theorists, it’s easy for Standard & Poor’s to get away with this. With that said, Canadians would be wise not to take Standard & Poor’s AAA rating seriously.

2008 crisis still hangs over credit-rating firms |

Canada is definitely heading towards a cash flow problem, in case people forget, higher taxes and lower public sector costs, fewer regulations on the Private Sector are usually the ways to shrink the budget, well under Justin Trudeau none of this is even on the table, with Justin Trudeau the opposite is true, Trudeau is spending more money and expanding regulations on the Canadian economy.

This is clearly going to lead to a cash flow crisis in Canada, but I should also add that because of all the global money printing, there is a lot of money slushing around and Canada will be the beneficiary of some of that GLOBAL money, the cash flow problem in Canada will stem from productivity and servicing of historically low-interest-rate debt payments not being able to be serviced by consumers.

Ballooning asset prices are good for the owners of these assets, however, new money will find it harder to get into the game and this is extremely problematic when it comes to cash flow. Inflating asset prices makes it harder as an example to qualify for a mortgage, higher prices are bad for debtors with unsecured often depreciating assets and the hardest hit will be renters and mortgage investors who will have to take on more risk with rental properties.

Investing for capital games, when the game is rigged to push up asset prices further, reaches a critical point in which an economy simply becomes a zombie economy and Canada is definitely no Japan when it comes to manufacturing, furthermore, we spend more than Japan does taking care of our elderly, we have a lot of people getting ready to retire and they have nothing in savings.

In Japan, even their poorest people save money, it’s their government which is in debt, in Canada, we have people who are financially responsible and a whole lot more people who are not. Canadian savings rates can be seen by Standard & Poor’s, but they’re not going to care about domestic inflation because that’s a Government created problem and if Canadians can’t pay their bills, the expectation is that the government is going to bail them all out.

CMHC as an example is there to make sure the housing market in Canada doesn’t crash, what this obviously equates too is a devaluation of the Canadian dollar, there is no getting around it, the real problem is that unlike past prime ministers, Justin Trudeau is not making any cuts to anything.

In America, Donald Trump has been spending like a drunken sailor, HOWEVER, Donald Trump cut a lot of regulations and also created tariffs that didn’t exist in America prior, because of America’s competitive economy, American consumers so far haven’t felt the wrath of inflation.

A reminder to Canada, that we have a lot more tariffs than America has, the reason the cost of living in Canada is so high now, is from what past Prime ministers have done, if you’re a Canadian, consider purchasing something on and you’ll notice that already has tariff charges built into their prices, if as a Canadian you’ve ever purchased something from a Shopify created an online store which is integrated into the government tariff systems in Canada, don’t be surprised if you get hit with a tariff tax, buying American.

Canada has already maxed out its socialism, sure we can add more socialism to the Canadian economy, but it’s expensive and it will lead to cash flow crisis because small businesses are the backbone of the nation and if they’re forced to raise prices, which consumers may opt not to pay for, income the government thought would be there won’t be there.

You see the government grows when businesses fail and are not replaced with anything. When manufacturing jobs left Canada, they were replaced with service sector jobs, well, Coronavirus is an attack on the service sector and if you’re not paying attention logistically Canada is struggling to keep up with online demand, primarily because Canada Post held a monopoly and they’re not exactly ECONOMICALLY friendly to start-up businesses or their customers.

So unlike in America in which shipping is relatively cheap, shipping in Canada comes with a premium and that premium is a barrier to entry for lower-income Canadian entrepreneurs. All of these government-created problems are going to be a huge problem for Canada, it was a huge problem prior to COVID-19, Coronavirus only expedited the cash flow problem.

All that I pointed out in this article, is not something Standard & Poor’s is going to want to analyze, because it’s an attack on Canadian culture, it would put Standard & Poor’s in political crosshairs, it’s easier for them to make a statement after the fact, nobody will remember, nor will anyone really care. Most people don’t even remember the role Standard & Poor’s played in the 2008 financial crisis!

Canada’s long-term financial profile seen consistent with AAA rating: S&P |

Interesting times ahead!