Canada’s future economic problems worsen: Mortgage Deferrals, The Canada Emergency Response Benefit (CERB), Regulations and a rising Housing Market – July 24, 2020,
So, Canadian banks have a problem with mortgage holders and their inability to pay for their mortgage. Mortgage rates in Canad have been slashed as Canadian banks try to incentivize mortgage holders who have Mortgage Deferrals to sell. Canada has a looming mortgage crisis, that’s for obvious reasons is being ignored, but a reminder that the people receiving CERB and the people in mortgage deferrals are sometimes the same people.
Mortgage rates ‘dirt cheap’ as debt, deferrals rise | biv.com
Now, if you don’t know the problems stemming from CERB well, I highly recommend that you read the article below because it’s important to remember that CERB is supposedly ‘income taxable’ and the recipients’ haven’t paid the taxes due on it and there is no guarantee that the recipients of CERB will have a job when or if this economy every returns to it’s prior debt time bomb levels. Please take a look at what the Canadian government has done up to July 23, 2020.
Additional measures aimed directly at consumers and businesses include:
- Canada Emergency Response Benefit Act (CERB)
- Up to $2,000 per month for up to four months. In June, the government announced an eight-week extension of the program to 24 weeks, up from 16.
- Canadian Emergency Wage Subsidy (CEWS)
- A wage subsidy of up to 75% for eligible employers for the first $58,700 normally earned by employees. The government is currently in the process of revamping this program to extend its timeframe and modify criteria to cover workers’ wages on a sliding scale proportional to their wage hit. To date, 262,200 employers have accessed this program at a total cost of $20.4 billion.
- Business Credit Availability Program (BCAP)
- A measure that will allow the Business Development Bank of Canada (BDC) and Export Development Canada (EDC) to provide more than $65 billion of additional support
- Canada Emergency Commercial Rent Assistance (CECRA)
- Financial aid to support small and medium-sized businesses that pay commercial rent
- Emergency Community Support Fund
- Funding of up to $350 million to support communities and non-profit organizations
- Canada Emergency Business Account
- Financial support for small businesses, providing access to capital to see them through the current challenges
How the Government Has Saved the Economy from COVID-19…So Far | canadianmortgagetrends.com
The rising price of Gold in U.S dollars
Gold has officially broken $1900 and I’m not talking about breaking $1900 in Canadian dollarettes which it did during the supposedly good times, I’m talking about U.S dollars, I’m not sure if it will hold up, but Gold has broken $1900 in U.S currency and this is usually a signal that the U.S economy is deflating or in a recession.
How this will affect Canada is that the Canadian economy is heavily reliant on the United States, Canada’s public sector in many ways is financed via tariff taxation that comes via America, furthermore, a lot of Canada’s private sector is reliant on the U.S consumer. If consumer demand slows in Canada and the U.S this is very bad for the Federal and provincial deficits.
I’ve been saying for months that Trudeau has created a serious cashflow problem for the Canadian economy because he didn’t just start spending during COVID-19, Trudeau was spending prior to COVID-19, he spent the rainy day fund a long time ago and what’s left is paying Candian bills by printing money, which obviously equates to inflation or austerity in the future.
Mortgage Deferrals ‘Buying Time’ For Canadians, Bank Of Canada Says | huffingtonpost.ca
Flipping a house for a capital gains profit has its pros, but it actually has more cons as it’s going to add to the cash flow problem in Canada. Unless you have more than one home, after you sell, you’ll still need somewhere to live and inflation means that after you sell the price for everything else will be more expensive and if you’re selling because you have no income and you’re reliant on CERB, any cash windfall you get from your sale will need to be saved, which again equates to a deflationary economic outlet in the main street economy.
Now, obviously the government can keep printing money, but that’s the cash flow problem I’m referring too. The government Printing money actually means the government borrowing money and servicing debt payments when interest rates are near zero presents a serious problem during a recession.
You have to remember that governments anticipate having enough money to service their debts, well when the private sector shrinks, the TAXABLE money supply shrinks, public sector workers get paid with the money generated via the private sector when a public sector workers pays income taxes, they’re giving the government back a portion of the money that they received via the private sector being taxed, this is something most people have a hard time understanding during the economic good times.
Furthermore, Crown Corporations equate to fewer income taxes being collected, because a Crown Corporation is an employment monopoly, fewer people are hired because the inefficiently run Crown Corporation is often unionized and has disincentivized job creators from getting involved in a particular portion of the economy. All of these basic economics lessons are learned in real-time during a recession.
The tax on Energy, do not forget the carbon tax
I personally think Donald Trump will win the 2020 election, but that’s not a guarantee and if Trump loses, it will signal an economic downturn for the United States which will dwarf the economic downturn America is experiencing right now, this could also push the Canadian dollar up, which would be horrible if Trudeau’s carbon tax remains in force.
If people wonder why the price of oil is low, it’s primarily because of Donald Trump, if Biden wins, the dollar falls and the price of oil shoots up, yes the world is awash in oil, the world has been awash in oil for decades now, but if it becomes more expensive to bring oil to the market, the price will go up, furthermore, OPEC is a cartel, let’s not forget that.
Solar and wind have proven they can’t solve the worlds energy needs and Canada doesn’t manufacture much of any solar or wind products, Canada has little to gain economically from a carbon tax, but you see all of these bad Trudaue policies will be realized when there’s an economic downturn.
During the good times dumb people look smart, it’s the bad times that show a person or a government’s true character. Free money here, free money there, free money for you, free money for that company, free money for the public sectors, and their unions. If I were the Conservative Party of Canada, I would let this economy crash while Trudeau was in power, Brian Mulroney got blamed for Pierre Trudeau’s disasters, this could happen again.
Regulations and debt – The problem with restarting the Canadian economy!
I think Maxime Bernier was smart to abandon the Conservative Party of Canada when he did because there’s no avoiding the economic calamity headed our way and if it’s a Conservative government, they have to engage in austerity measures, they’re going to be viewed as the bad guy, I’d much rather the Trudeau name be destroyed in Canada.
The Liberal Party was dead, the Trudeau brand revived the Liberal Party of Canada, I think it’s time Canadians feel why the Trudeau brand of politics is bad for our country! For myself, I don’t see CERB as the problem, the real problem are the regulations on the Canadian economy. Our economy isn’t built for an economic downturn, our private sector has little to no flexibility or incentive to rebuild this economy.
Because of the socialist culture in Canada, when this economic crash happens, most Canadians will assume it will be an easy fix without losing their standard of living. If rump wins the 2020 election, the Canadian dollar could fall and by falling I mean it could cost Canadians $1.40+ Canadian dollars to buy $1 US dollar. What’s worse is that even a devalued loonie won’t help to bring Canadian jobs back, because again the Canadian economy is straddled with regulations and debt!
Interesting times ahead!