Author Topic: Government Day-to-Day  (Read 13996 times)

0 Members and 0 Guests are viewing this topic.

Offline Gorgeous Graham

  • Full Member
  • ***
  • Posts: 6338
Re: Government Day-to-Day
« Reply #420 on: May 15, 2020, 07:08:25 pm »
For 30 years. Even if we take on significantly ore debt,  our old higher rate debt is about to be rolled over at a lower rate. I already should you the bond yield.

You've provided no links about these claims after I continually insist.
I can tell how good of a person you are by how you treat the people you disagree with.

Offline wilber

  • Moderator
  • Full Member
  • *****
  • Posts: 7476
Re: Government Day-to-Day
« Reply #421 on: May 15, 2020, 08:00:33 pm »
For 30 years. Even if we take on significantly ore debt,  our old higher rate debt is about to be rolled over at a lower rate. I already should you the bond yield.
You still haven’t explained who will buy this debt. You assume existing bond holders will just roll them over into new ones. What if they just cash out and no one wants to buy the new ones.
"Never trust a man without a single redeeming vice" WSC

Offline JMT

  • Administrator
  • Full Member
  • *****
  • Posts: 3457
  • Location: Waterhen, Manitoba
Re: Government Day-to-Day
« Reply #422 on: May 15, 2020, 08:07:14 pm »
You've provided no links about these claims after I continually insist.

I provided the 30 year bond yield. I provided you with quotes from the PBO saying that our borrowing costs are not likely to increase.  What more do you want to see?

Here's Kevin Page saying we probably won't lose AAA:

https://www.youtube.com/watch?v=K3diTXBU5W0

Offline Gorgeous Graham

  • Full Member
  • ***
  • Posts: 6338
Re: Government Day-to-Day
« Reply #423 on: May 15, 2020, 08:47:25 pm »
I provided the 30 year bond yield. I provided you with quotes from the PBO saying that our borrowing costs are not likely to increase.  What more do you want to see?

You said:

Quote
Canada's 30 year bond rate is 1.06%. Almost all of our old debt is about to roll over, and the new debt will be accrued at the 1.06% rate.

How do you know that "Almost all of our old debt is about to roll over"?  Where's your evidence for this claim?  Or is it a wild guess?

Canada issues bonds at 1 month, 3 months, 6 months, 1 year, 2 years, 3 years, 5 years, 10 years, 20 years, 30 years etc.

Where's your evidence that all or even most of this new debt we're spending will be locked in at 30 years at 1.06%?  What kind of moron would invest in a 30 year bond that only returned 1% interest...one of the lowest interest rates in history?  I would never, ever buy that bond, would you?  Would the Canadian government invest in a bond from a foreign country at that rate for 30 years?  Only if they were stupid, since it returns next to nothing and interest rates will start rising in a year or 2 or 3.

Quote
I provided you with quotes from the PBO saying that our borrowing costs are not likely to increase.

The PBO also said this in the article:  "Is the government in a worrisome position right now? The answer is no."  He said the debt load could become "unbearable" in the event of a sizeable spike in interest rates and added the prospect of such an increase is "concerning."

Interest rates go up and down all the time.  Right now they're low, so we're ok.  But how long are they borrowing at these low rates?  And what will happen in 5 years or 10 years or 20 years when they renew borrowing for the debt at higher rates when they inevitably haven't paid off all the money they're borrowing now along with the previous debt?
I can tell how good of a person you are by how you treat the people you disagree with.

Offline Gorgeous Graham

  • Full Member
  • ***
  • Posts: 6338
Re: Government Day-to-Day
« Reply #424 on: May 15, 2020, 08:59:14 pm »
We've been sold total BS, as I've been saying for years.  Liberals have been budgeting the last 5 years based on total BS projections that only a fool would think would happen, assuming recessions and big downturns never occur every 7-10 years or so:

https://www.theglobeandmail.com/politics/article-public-pensions-new-spending-put-pressure-on-federal-budgets-bottom/

"Monday’s fiscal update says the federal deficit is projected to be $28.1-billion in 2020-21, $22.1-billion in 2021-22, $18.4-billion in 2022-23 and $16.3-billion in 2023-24. Those figures include an annual $3-billion “adjustment for risk” to cover unforeseen events or economic changes.

Those annual deficit forecasts compare with the Liberal platform projections of $27.4-billion in 2020-21, $23.7-billion in 2021-22, $21.8-billion in 2022-23 and $21-billion in 2023-24.

Mr. Morneau pointed reporters to government plans to find $1.5-billion a year in internal savings, and said he will deliver on the party’s campaign promises while keeping the federal debt-to-GDP ratio under control."


 :D
I can tell how good of a person you are by how you treat the people you disagree with.

Offline JMT

  • Administrator
  • Full Member
  • *****
  • Posts: 3457
  • Location: Waterhen, Manitoba
Re: Government Day-to-Day
« Reply #425 on: May 15, 2020, 11:32:14 pm »
You said:

How do you know that "Almost all of our old debt is about to roll over"?  Where's your evidence for this claim?  Or is it a wild guess?

Canada issues bonds at 1 month, 3 months, 6 months, 1 year, 2 years, 3 years, 5 years, 10 years, 20 years, 30 years etc.

Where's your evidence that all or even most of this new debt we're spending will be locked in at 30 years at 1.06%?  What kind of moron would invest in a 30 year bond that only returned 1% interest...one of the lowest interest rates in history?  I would never, ever buy that bond, would you?  Would the Canadian government invest in a bond from a foreign country at that rate for 30 years?  Only if they were stupid, since it returns next to nothing and interest rates will start rising in a year or 2 or 3.

The PBO also said this in the article:  "Is the government in a worrisome position right now? The answer is no."  He said the debt load could become "unbearable" in the event of a sizeable spike in interest rates and added the prospect of such an increase is "concerning."

Interest rates go up and down all the time.  Right now they're low, so we're ok.  But how long are they borrowing at these low rates?  And what will happen in 5 years or 10 years or 20 years when they renew borrowing for the debt at higher rates when they inevitably haven't paid off all the money they're borrowing now along with the previous debt?

When was the last time we had high interest rates? Our debt servicing costs have been going nowhere but down for decades. Where is your evidence that things are about to get so difficult?
« Last Edit: May 16, 2020, 12:22:55 am by John Mark Taylor »
Agree Agree x 1 View List

Offline wilber

  • Moderator
  • Full Member
  • *****
  • Posts: 7476
Re: Government Day-to-Day
« Reply #426 on: May 16, 2020, 09:19:24 am »
Gee John, if we could borrow hundreds of billions and run our debt to GDP up over 200%
like Japan with little or no consequences, why weren’t we doing it before? We could have had a brand new military, lots of new infrastructure, social programs and be giving people money to do nothing at little or no cost. Why were we so dumb not to see that?
"Never trust a man without a single redeeming vice" WSC
Agree Agree x 1 View List

Offline JMT

  • Administrator
  • Full Member
  • *****
  • Posts: 3457
  • Location: Waterhen, Manitoba
Re: Government Day-to-Day
« Reply #427 on: May 16, 2020, 10:15:16 am »
Gee John, if we could borrow hundreds of billions and run our debt to GDP up over 200%
like Japan with little or no consequences, why weren’t we doing it before? We could have had a brand new military, lots of new infrastructure, social programs and be giving people money to do nothing at little or no cost. Why were we so dumb not to see that?

You keep creating straw men. It isn't prudent to constantly increase debt to GDP. The point is that the sky is far far far far far far far from falling. After this is over, we simply need to return to a slowly falling debt to GDP ratio and we'll be fine.

Offline wilber

  • Moderator
  • Full Member
  • *****
  • Posts: 7476
Re: Government Day-to-Day
« Reply #428 on: May 16, 2020, 11:11:40 am »
You keep creating straw men. It isn't prudent to constantly increase debt to GDP. The point is that the sky is far far far far far far far from falling. After this is over, we simply need to return to a slowly falling debt to GDP ratio and we'll be fine.

Sure we will. We can just print money and live happily ever after.
"Never trust a man without a single redeeming vice" WSC
Dumb Dumb x 1 View List

Offline wilber

  • Moderator
  • Full Member
  • *****
  • Posts: 7476
Re: Government Day-to-Day
« Reply #429 on: May 16, 2020, 12:10:46 pm »
You still haven't said who is going to lend us all this money at near zero interest rates. If you are hoping to grow an RRSP you had better hope the stock market performs really well because bonds and GIC's will end up costing you money. Same goes for the CPP and company pension plans which invest in the same kind of assets. Retirees will watch their savings disappear at an accelerating rate because they are no longer generating income as their pile grows smaller. In order to reduce debt to GDP you either have to reduce debt or increase GDP. Our GDP is shrinking and in recent years, real estate and energy have been the biggest contributors to growth. Both are in the tank and if the Alberta haters get their way energy will never come back, so they better come up with other ways to grow the economy that don't involve increasing debt.

And then there is the possibility of runaway inflation as governments pour trillions of new money into economies.

But don't worry be happy.
"Never trust a man without a single redeeming vice" WSC
Agree Agree x 1 View List

Offline Gorgeous Graham

  • Full Member
  • ***
  • Posts: 6338
Re: Government Day-to-Day
« Reply #430 on: May 16, 2020, 12:13:26 pm »
When was the last time we had high interest rates? Our debt servicing costs have been going nowhere but down for decades. Where is your evidence that things are about to get so difficult?

Right before the 2008 recession they were high.

I'm not saying things are about to get difficult, i'm not saying the sky is falling by any means, i'm saying we need to be careful and concerned, because taking on a lot more debt creates risks.

We have absolutely no idea what interest rates will do over the coming decades.  Interest rates vary but overall have been trending downwards over the last 40 years.  (https://tradingeconomics.com/united-states/interest-rate)  This has helped lead to more and more borrowing and debt for governments and individuals.  It's creating bubbles, and eventually it will pop.  It popped in 2008 with US mortgages.  The bubbles being created since then are much larger.

If you want to see what unexpected rising interest rates can do to the finances of countries, go look at African countries in the 1980's, it crippled them, after they borrowed a ton of money cheaply in the 1970's when rates were low and then rates spiked in the 80's.  I'm not saying that will happen on that scale, it's unlikely, but on a smaller scale it could, as the PBO warned: "Is the government in a worrisome position right now? The answer is no."  He said the debt load could become "unbearable" in the event of a sizeable spike in interest rates and added the prospect of such an increase is "concerning."

Any time any government goes deeply in the red it's concerning, and we've never seen anything like this, not since WWII:  https://www.mapleleafweb.com/forums/uploads/monthly_2020_05/image.png.baa5c2c7f4ebc47b303dfdc2375f5e76.png

You also continue to fail to answer where you're getting this info for many of your assumptions.
« Last Edit: May 16, 2020, 12:16:53 pm by Conspiracy Graham »
I can tell how good of a person you are by how you treat the people you disagree with.
Dumb Dumb x 1 View List

Offline wilber

  • Moderator
  • Full Member
  • *****
  • Posts: 7476
Re: Government Day-to-Day
« Reply #431 on: May 16, 2020, 12:24:05 pm »
A big reason interest rates are so low is because debt levels are so high, economies would collapse if rates increased to as little as 5%. How can anyone think that is healthy.
"Never trust a man without a single redeeming vice" WSC

Offline JMT

  • Administrator
  • Full Member
  • *****
  • Posts: 3457
  • Location: Waterhen, Manitoba
Re: Government Day-to-Day
« Reply #432 on: May 16, 2020, 12:54:03 pm »
Right before the 2008 recession they were high.


High? No, they were more normal.

In Canada, higher interest rates would raise borrowing costs in the medium term, but it would also make defined benefit pensions at the federal level far more affordable.  It would be mostly a wash.

Offline JMT

  • Administrator
  • Full Member
  • *****
  • Posts: 3457
  • Location: Waterhen, Manitoba
Re: Government Day-to-Day
« Reply #433 on: May 16, 2020, 12:57:20 pm »

Offline Mr. Perfect

  • Full Member
  • ***
  • Posts: 4279
Re: Government Day-to-Day
« Reply #434 on: May 16, 2020, 01:07:01 pm »
Right before the 2008 recession they were high.

What???  5% is high?   That’s not even close.  5% is within spitting distance of the lowest ever.