U.S. Federal Reserve chair Jerome Powell is expected to raise interest rates this might hurt the Canadian economy – September 24, 2018
One of the only writers on the CBC that I value in is Don Pettis, he took the time to write about a topic that’s been lost with all this trade war nonsense with Donald Trump. This idea that the debt levels in Canada have magically disappeared since Justin Trudeau’s cabinet has taken over is a myth, things in Canada by my standards have actually gotten worse under Trudeau’s Liberals. However, Donald Trump’s big mouth has allowed Trudeau’s Liberals to viewed by the Canadian media as victims. if you click the article below what you’ll get is a real-world view of what Canada might be facing in the coming months.
Canadian borrowers will feel this week’s U.S. interest rate hike: Don Pittis – The world’s biggest central bank is expected to raise rates this week — and then keep raising them
My point of view on this issue has been rather consistent, my thoughts are Canada will experience a slow decline and eventually end up in our own Argentina scenario. The major problem Canada is facing now is that under Trudeau’s Liberals he’s intentionally or unintentionally created a situation where Canadian politics will have way more Lobbyist than it had prior. Trudeau’s cabinet has grown the public sector while the private sector has been shrinking.
However if a Canadian were to read about job numbers, job numbers would look very good under Trudeau. But because most of the jobs created by Trudeau’s Liberals are Public Sector jobs, that are dependent on the Private Sector to even exist, moving forward unless Canada undergoes some massive changes, we’re heading for a serious economic disaster. Adding to this is the fact that banking is the only game in town in Canada and if the United States is changing the game, by normalizing interest rates, what we’re going to have happen in the future are Canadians in the middle class that no longer qualify for prime loans and who will be dependent on sub-prime loans. The thing people forget about sub-prime loans is that they’re often created via financial derivatives of derivatives and investors invest in them knowing that there will be some defaults which are already calculated into their earnings.
You’ve often noted that I write about Canada being over-regulated, well this is another area where Canadian regulations are going to cause the Canadian financial sector more problems, as the U.S raises interest rates safer investment vehicles will start to appear, investment vehicles that will be competing with the unsecured loan industries. Higher interest rates favor people in business because that’s who investors will start to target, higher interest rates equate deflation, meaning consumers are going to have access to less money and business are going to be forced to be more efficient with the money they do get.
The Canadian economy is currently structured for easy money, people that couldn’t get unsecured loans 10 years ago have 8-year financing on a vehicle and line of credit with 15%+ interest rate add to that a few credits cards. Houses aren’t the only thins that make people feel rich, unsecured credit makes people feel rich and smart too when those options to get more unsecured loans to start to get tougher to obtain, there’s a good chance Canada will fall into recession.
This time around however and this has to be said, Canadians don’t have much savings, the middle class in Canada today is nothing like the middle class even in the 1990’s. Today’s middles class doesn’t have savings, how could they? forget mortgage prices, look at rental prices all over Canada, look at food prices, gas prices, entertainment expenses, and Trudeau’s Liberals have put a cap on how much money they think a Canadian family should earn before they get any government benefits? Government intervention doesn’t solve problems it creates problems, government intervention also changes the culture of a people.
What I like to do is not to listen to the right-leaning media, instead at times I allow myself to listen to the Left-leaning media and left-leaning thinkers and observe how the concept of solutions to economic problems isn’t even in their vocabulary, instead the solutions leftist will often talk about has to do with condemning the rich, or raising taxes, raising the minimum wage, creating rental controls, fighting for social justice, global warming, limiting what people can and can not say, opening the borders to allow immigrants into the country and hating the racist, fascist Donald Trump.
These solutions that most Left-leaning people think about have absolutely nothing to do with sound economics. I listen to leftist because the culture of a people says a lot. I also have to remind Canadians that over half of us are not working, people who don’t work tend to vote Leftist, I have to remind Canadians that more and more people are retiring broke, people who retire broke tend to vote Leftist, I have to remind my readers that the public sector all across Canada is growing.
People who work for the government and want to keep their jobs tend to vote Leftist. Also, I have to remind Canadians that even Stephen Harper had to make sure that during his final push to for another term as Prime Minister he had to make an appeal to debtors, to homeowners living pay-check to paycheck, he offered them some government relief. He did this because a lot more people are reliant on the government to survive than we’re led to believe.
Trudeau’s cabinet has exacerbated a lot of the economic problems that happened under Stephen Harpers Conservative party. At the very least Stephen Harpers Conservatives were trying to cut down on the deficit, in order to secure future votes Justin Trudeau’s cabinet ballooned the deficit in a time when debt might become more expensive, Trudeau’s Liberals are also engaging in a trade dispute with the United States. Donald trump barely mentions Canada in his speeches anymore, instead, his focus has been on China. America will be fine with or without Canada, however, China makes a lot of cheap stuff for America and those bills add up, so it’s obvious why Trump’s focus would be on them.
So, what Canada better be concerned with is what’s coming if the economic culture in our country doesn’t change quickly. We are in extremely bad shape, Don Pettis knows it and anyone with half a brain can see it. Just because people don’t want to see it doesn’t mean it doesn’t exist. Be prepared Canada, things are going to get very interesting in coming months
Interesting times ahead
