Debt Servicing major cause for concern for the Canadian Economy, while BoC interest rates are close to 0%! – February 13, 2020, – February 13, 2020,
The Canadian economy is approaching some interesting times as jobs aren’t being filled and entitlements continue to skyrocket. Under Justin Trudeau Canada’s public sector spending as exploded and in a lot of Provinces a lot of Public Sector workers are demanding an increase in their wages.
The reality of a potential economic depression in Canada doesn’t seem realistic, because times have been so good for so long and Canadians have become accustomed to being able to purchase things with borrowed money. The problem with this way of thinking, however, is that there comes a time when people have to retire and that’s when the expenses start to add up.
All work and no play tend to create a demand for more economic relief and this typically manifests itself into more entitlements. I’m not entirely sure if the plan is to phase out Canada’s once prosperus energy sectors, but even if Canada becomes a leader in AI or other tech-heavy industries, this won’t include lower-skilled workers which are very important to the growth and maintenance of our country.
Minimum wages and union culture and overall Liberalism in Canada has led to a lot of manufacturers leaving and others skeptical about making Canada their home. This equates to a different type of job for the average Canadian that either won’t be as sector or won’t pay as much, with a higher barrier to entry into the job market it also leads to more people and families being more reliant on the Government.
Why I say this is, is if debt isn’t allowed to grow in Canada, there will come a time where, the economy will stagnate and because Free-market Capitalism has to be taught, the assumption by the people when the economy becomes stagnant is that the government should be able to fix the problem easily with cutting rid of price and wage controls and without lowering the standard of living.
Until you go to a country in which getting a loan is extremely difficult, you won’t understand how great a time it is to be living in Canada. Now, the worry is that bankruptcies will rise while interest rates are near zero, if Canada’s credit rating goes down, well, let’s just say things could get interesting.
Bank of Canada has it all wrong — this is the real ‘red flag’ to watch for in the economy | FinancialPost.com
“Focusing on debt servicing provides a potential clue as to why we have not seen the type of market correction that has been repeatedly predicted for the Canadian housing market.”
Interesting times ahead!