Make This Nightmare End: The Canadian Economy Post Justin Trudeau – August 22, 2019,
Unfortunately, for Canadians, they made Justin Trudeau the Prime Minister at the wrong time. Being honest I was terrified for the Canadian economy when Justin Trudeau became Prime Minister. Lucky for Canada, the United States made Donald Trump their President and not Hilary Clinton, why? Because Merica would have had a recession had Hilary Clinton been President and a U.S recession would have a serious effect on the Canadian economy.
Canada, because of Donald Trump has actually been the beneficiary of cheap money, the U.S Federal Reserve raised interest rates in America, which for Canada helped our economy because the Bank of Canada wasn’t as aggressive raising its interest rates. This, of course, aided Trudeau in his reckless Government spending, but that bill is coming due, it’s important to remember Trudeau’s tax policies, his government spending his restructuring of social justice in Canada and his aloofness on trade.
Trudeau springs a nasty surprise on many Canadian employers – financialpost.com
Justin Trudeau has been a disaster with our allies and mending those relationships won’t be easy. Similar Stephen Harper and Paul Martin, Andrew Scheer is going to have mend fences his first 2 years as Prime Minister, Andrew Scheer is going to have to find a way to cut government spending and open Canada up to investment, Andrew Scheer is going to have to have to find a way to satisfy business to invest in Canada. Well, unfortunately, there’s only so much Andrew Scheer will be able to do, especially being that he has special interest groups that he and The Conservative Party of Canada will have to cater too.
The size of the Canadian government is going to have to shrink, the size of the Government should have shrunk under Stephen Harper, but it didn’t and eventually, the public and Private Sector Labor unions turned on Harper and brought their support to Justin Trudeau. The Leftist will always have the Corporate and Person Welfare vote. People on some sort of Government welfare will always seriously consider voting for a Leftist Political Party and being that more and more Canadians are nearing retirement the Conservatives Party of Canada has already pivoted their votes to cater to these people.
Unfortunately, for Scheer, there’s a Global economic problem that could very well occur in 2020 and Canada is on the wrong side of history on this. Now, personally, I don’t think we should count Justin Trudeau out of the 2019 election. Talking to Canadians, from my standpoint what I’m hearing is a lot of excuses for Justin Trudeau, why? Because more and more Canadians are dependent on the Government for their survival and they’re not so sure about Andrew Scheer. Working Canadians, I’m getting mixed results with them, but the immigrant classes who vote as a block, they’ve already forgiven Trudeau, The NDP types, they appear to be supporting Trudeau, certain Union people appear to be supporting Trudeau and welfare recipients, appear to be on Trudeau’s side.
What’s unfortunate for these classes, is they don’t appear to understand how bad the Canadian economy is. On the surface, of course, it appears to be business as usual, but a contraction in the credit supply globally s well as inflation in the Canadian economy is going to make for some challenging times. Post Trudeau whether it’s 2019 or 2023 is looking like some very challenging times.
Canada’s Rising Personal Tax Rates and Falling Tax Competitiveness (2019) – fraserinstitute.org
For the people who don’t put much emphasis on economics, to the people who think that economies simply fix themselves, well I’m sorry but this is not true. Economies are reflective of culture, the Canadian economy has a cultural problem, we’re both Protectionist and we have a huge Welfare State. Now, it would be easier to say Canada has a gigantic welfare state, but first, allow me to explain that Canada protects a lot of industries, Crown Corporations exist all over Canada, Provincially and Federally, Canada’s most profitable Crown Corporation is the Canada Mortgage and Housing Corporation(CMHC).
The CMHC has assisted the Canadian housing market by not allowing deflation, the Bank of Canada working in conjunction with the CMHC has made borrowing easier in Canada, this, of course, has led to an increase in the cost of living in Canada, not only are residential rents, leases and mortgage properties inflated so have commercial. This, of course, has assisted in store closures in Canada. All across Canada, there has also been a wave of minimum wage increases, this, of course, makes many non-family run business less competitive and squeezes out their profit margins as Canadians inevitably find higher prices unacceptable especially when they can make their purchases online.
Adding to this is an increase in self-employment in Canada, self-employed people pay fewer income taxes. To combat this, the Liberal governments have created a carbon tax, which again raises the cost of living and regressive taxation tends to make people spend less which creates an atmosphere whereby the government collects fewer taxes. Now, typically during prosperous times, Leftists government will tell the people that they will tax the rich more, but the rich who are actually usually the medium-sized businesses have either already left Canada or are thinking of leaving Canada, so this, of course, creates a very bad precedent moving forward, that won’t be easy to fix or even talk about.
Again even with a Scheer Government, post-Trudeau there doesn’t appear to be any cut-backs to the size of government. I personally haven’t heard a peep out of Maxime Bernier selling off the CMHC. Although I’m an open critic of Canada Post, I see I need for Canada Post, I just don’t think Canada Post should be as large as it is. CMHC on the other hand, they’re credit-based and they’re helping to fuel the Bank of Canada’s policies, if Canada faces a credit crisis, this will very quickly spiral into a currency crisis and being that we’ve lost so many of our manufacturing jobs and only Maxime Bernier has a platform that talks about cutting the size of Government, I highly doubt the Conservatives or the Liberals will have the heart for Austerity measures, which often means things in the Canadian economy will have to get a lot worse before they get better.
I’m of the belief that the 2023 Canadian election belongs to Maxime Bernier, but in the meantime, the front-runners are Scheer and Trudeau and personally, I don’t see much of a difference between the two. Scheer isn’t cutting back much of anything, I believe he’s getting rid of carbon taxes, but apart from that, his policies aren’t going to shrink the size of government, he plans to be a better manager of the Government. This is essentially what Stephen Harper did and eventually, this is what gave Canadians Trudeau.
Personally, my eyes are on the U.S economy, the global markets want Donald Trump to win a second term, but if a Democrat like Elizabeth Warren wins, the markets will crash and they’ll crash hard, if Trump wins a second term, the markets will still crash, however as I’ve stated for years, Donald Trump understands bankruptcy courts and chances are he’ll renegotiate the U.S debt, being that the world, for the most part, is heavily reliant on the U.S to protect trade routes, it’s likely the world will be open to restructuring their debts with the United States, this debt restructuring, however, will hurt the Canadian economy, because you have to remember that, for the most part, government debt is accumulated because of Government policies.
If there’s a global debt restructuring, this is in fact hitting the reset button and if the markets see little to no change in Canada while under President Trump there have been massive structural economic changes, Canada will have a hard time attracting investment. When there’s a bankruptcy, remember that creditors expect the individual not to spend beyond their means.
A credit tightening cycle also equates to investors wanting more money via higher or normalized interest rates to finance your economy, this of course typically means higher interest rates. Yes, I understand that this scenario might not play out like this, but either way, the Canadian economy is headed for some serious problems. Government can’t get home and condo developers to lower their selling prices, you can’t force current homeowners to lower their selling prices, you can’t force the private sector to lower their food and clothing prices and there’s little chance that wages for the poor will be able to keep up with the rising cost of living, don’t forget most government employees have wages that keep up with inflation, private sector employees don’t enjoy the same luxury as their public sector counterparts, sure the government can raise minimum wages, but government risks losing even more private-sector employers.
This modern-day Canadian economy screams “I NEED RESTRUCTURING” and the only politician that has policies that address this reconstruction concern is Maxime Bernier. Personally, I don’t see Maxime Bernier becoming Prime Minister until 2023 and even then because so many Canadians have become reliant on Welfare or Protectionism, there’s a chance that there will be major push back against him. Any perceived austerity measures will be met with fierce opposition, this happens everywhere all over the world. Anyway Post Trudeau, Canada will still have to face its economic demons, we’re in a serious debt bubble and in order to lower the cost of living to affordable levels, there has to be a rethink of protectionism, a rethink in the size of government and a contraction of the Welfare State.
Canada has two economies. Let’s hope the government is paying attention to both – financialpost.com
Interesting times ahead.