Author Topic: Government Day-to-Day  (Read 13444 times)

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Offline kimmy

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Re: Government Day-to-Day
« Reply #435 on: May 16, 2020, 01:55:49 pm »
After this is over, we simply need to return to a slowly falling debt to GDP ratio and we'll be fine.

And what does that look like, exactly?  All the economists are saying the economy is going to be the worst it has been since the Great Depression and growth is going to be slow for a long time to come. The "V shaped recovery" isn't going to happen. It'll take us years to get back to where we were just a year ago.

So how do we get to a decreasing debt-to-GDP ratio in the foreseeable future?  Tax hikes? Spending cuts? Both?

 -k
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Offline kimmy

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Re: Government Day-to-Day
« Reply #436 on: May 16, 2020, 01:58:40 pm »
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.  Debt servicing costs are going to fall, even with a trillion dollars of new debt.

Who would lock in bonds for 30 years at 1% interest?  Who would buy bonds at 1% interest at all?  That's not even keeping up with inflation.

 -k
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Offline wilber

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Re: Government Day-to-Day
« Reply #437 on: May 16, 2020, 02:14:32 pm »
What???  5% is high?   That’s not even close.  5% is within spitting distance of the lowest ever. 



5% interest rates right now would bankrupt millions.
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Offline JMT

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Re: Government Day-to-Day
« Reply #438 on: May 16, 2020, 02:46:07 pm »
Who would lock in bonds for 30 years at 1% interest?  Who would buy bonds at 1% interest at all?  That's not even keeping up with inflation.

 -k

You’d have to ask the people buying the bonds.

Offline wilber

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Re: Government Day-to-Day
« Reply #439 on: May 16, 2020, 02:49:21 pm »
You’d have to ask the people buying the bonds.

What people? You just assume there will be people.
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Offline Gorgeous Graham

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Re: Government Day-to-Day
« Reply #440 on: May 16, 2020, 03:40:05 pm »
High? No, they were more normal.

A 3 year GIC from a bank in 2007 was around 4.5% if I remember.  I guess "high" and "normal" is what you define it, I guess you could call 4.5% moderate, it certainly wasn't "very high".  We haven't seen anything close to that since then.
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Offline JMT

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Re: Government Day-to-Day
« Reply #441 on: May 16, 2020, 04:10:01 pm »
What people? You just assume there will be people.

There are people buying right now ffs.

Offline wilber

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Re: Government Day-to-Day
« Reply #442 on: May 16, 2020, 04:13:10 pm »
In 2007 a 5 year GIC rate was about 3.5% A ten year govt bond paid over 4%. In 1990 a 5 year GIC paid 11% and a 10 year bond 10.8%.
In 1981, 5 yr GIC's and 10 yr bonds paid over 15% and the average for the next ten years was over 10%.

It wasn't great unless you had a lot of money in the bank but we survived.
Can you imagine what would happen if we hit those rates now. It would be catastrophic.

And people wonder why Mulroney's deficits were so high.



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Offline Gorgeous Graham

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Re: Government Day-to-Day
« Reply #443 on: May 16, 2020, 04:15:34 pm »
5% interest rates right now would bankrupt millions.

Exactly.

Governments reduce interest rates to increase borrowing so people will spend more money in order to increase GDP growth during struggling economic times.  When rates went to 4-5% in the USA millions of homeowners started foreclosing and the housing market collapsed on itself.

In Canada, interest rates went to historic lows following the 2008 recession and stayed low for years.  So a lot of people bought houses using this cheap credit.  This helped Canada's housing market skyrocket (among other factors), and now people are in deep, deep debt unlike any time in Canadian history.  A lot of people used the cheap credit to buy investment properties in the hot house markets to take advantage of the rising home prices, which further increased housing prices.  Over-speculation causes bubbles. https://www.investopedia.com/terms/s/speculativebubble.asp

If the feds or banks have to put interest rates to 4 or 5% the whole bubble could collapse & we become the USA in 2008.  The feds are in good shape financially, but Canada as a whole, including individuals and provinces, are knee-deep in debt.
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Offline wilber

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Re: Government Day-to-Day
« Reply #444 on: May 16, 2020, 04:17:09 pm »
There are people buying right now ffs.

In 93 they were deciding they didn't want to, even though 10 year bonds were paying over 7%. That's why Chretien and Martin had to cut so much.
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Offline Gorgeous Graham

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Re: Government Day-to-Day
« Reply #445 on: May 16, 2020, 04:33:27 pm »
In 2007 a 5 year GIC rate was about 3.5% A ten year govt bond paid over 4%. In 1990 a 5 year GIC paid 11% and a 10 year bond 10.8%.
In 1981, 5 yr GIC's and 10 yr bonds paid over 15% and the average for the next ten years was over 10%.

It wasn't great unless you had a lot of money in the bank but we survived.
Can you imagine what would happen if we hit those rates now. It would be catastrophic.

And people wonder why Mulroney's deficits were so high.

Exactly.  In the 1980's global interest rates went sky-high, and we had a recession at the end of his tenure, which is a reason why our debt went insane.

Then Mulroney brought in the GST to help pay for these debts, which is what Chretien did with the GST, because the 1990's were also an excellent economic period globally and our growth was excellent like in the USA etc.
« Last Edit: May 16, 2020, 04:35:48 pm by Conspiracy Graham »
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Offline waldo

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Re: Government Day-to-Day
« Reply #446 on: May 18, 2020, 10:59:22 am »

Offline wilber

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Re: Government Day-to-Day
« Reply #447 on: May 18, 2020, 11:26:53 am »
The 37% in BC would be in the same place as the last election, metro Vancouver and the North Shore. The rest of the province would go Tory, NDP and Green.
Also, any poles taken before the Conservatives choose a new leader won't mean much.
« Last Edit: May 18, 2020, 11:32:23 am by wilber »
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Offline JMT

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Re: Government Day-to-Day
« Reply #448 on: May 18, 2020, 12:08:05 pm »
The 37% in BC would be in the same place as the last election, metro Vancouver and the North Shore.

And? Do those people not count? That's where most of the people live.

Offline wilber

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Re: Government Day-to-Day
« Reply #449 on: May 18, 2020, 12:17:30 pm »
And? Do those people not count? That's where most of the people live.

Of course they count but i can't count the number of comment I have seen  (not here) that say the rest of the province doesn't count because it didn't vote the right way.

They don't actually, that's why the Liberals only got 11 out of 42 seats in the last election.

The Fraser Health Region is 1.6 million people compared to 1.25 for Vancouver Coastal.
« Last Edit: May 18, 2020, 12:26:40 pm by wilber »
"Never trust a man without a single redeeming vice" WSC