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[dave]

Canadians and their Governments: Digging the hole deeper and deeper

There's a lot of discussion in the mainstream news media in Canada about the massive total debt the United States has, but so far I have not seen any discussion of the massive total debt we in Canada have, a massive total debt which is skyrocketing higher at a very alarming rate as we speak. The politicians and the mainstream news media absolutely refuse to want to talk about this issue.

The total Government (Federal, State, and Local), business, and household debt in the USA is 52.6 trillion$

http://www.federalre...cessible/l1.htm

http://research.stlo...&s[1][id]=TCMDO

The total household credit in Canada as of March 2011 was 1515 billion$ (1.515 trillion$). Over the last 12 month period it went up by 92.2 billion$.

http://credit.bank-b...householdcredit

The total business credit in Canada as of March 2011 was 1259 billion$ (1.259 trillion$). Over the last 12 month period it went up by 57 billion$.

http://credit.bank-b.../businesscredit

At the end of the 4th quarter of 2010 the total government (federal, provincial, and municipal) gross debt in Canada was 1742 billion$ (1.742 trillion$). In the the year 2010) total government (federal, provincial, and municipal) gross debt went up by 99 billion$.

(3rd line down in the following link from Statistics Canada)

http://www.statcan.g...10314a4-eng.htm

Adding it all up, at the present time the total (government, business, and household) debt in Canada is 4516 billion$ (4.516 trillion$), and over the last 12 months it has gone up by 248.2 billion$, (roughly speaking because the household and business credit numbers are from March 2010 to March 2011 while the total government debt number is for the calendar year 2010).

Since the United States`s population and gdp is approximately 10 times higher than Canada`s, there is not a lot of difference in the total debt numbers in the USA (52.6 trillion$) and the total debt numbers in Canada (4.51 trillion$), relatively speaking.

To put the increase in the total debt in Canada of 248.2 billion$ over the last year into perspective, according to the Canada 2010 Budget (document) - (Page 160 of the Adobe Reader document, page 175 of the actual budget document), program expenses by the Federal Government for the year 2010 were expected to be 249.2 billion$. The increase in the total debt in Canada over the last year matches almost exactly what the Federal Government expects to spend on programs in the year 2010.

On page 31 of the Adobe Reader document (page 33 of the actual budget document) of the Canada 2010 Budget it says as of the March 2010 budget the nominal gdp in Canada for the year 2010 was expected to be 1601 billion$ (1.601 trillion$)

On page 31 of the Adobe Reader document (page 33 of the actual budget document) of this same budget document it says as of the March 2010 budget the nominal gdp in Canada for the year 2010 was expected to grow by 4.9%.

Using the above figures that were given in the March 2010 Budget document if you multiply the 1601 billion$ gdp by 4.9% you get 78.4 billion$. For the year 2010 the nominal gdp grew by 78.4 billion$ in Canada, while the total debt grew by 248.2 billion$. In other words over the last year the total debt in Canada grew 3.16 times faster than its gdp (economy) did.

The total debt right now is 4.516 trillion$ and the nominal gdp is 1.601 trillion. The total debt to gdp is 282%

To get to the Canada 2010 Budget (document) which I have referred to in the last 11 lines of this email, click on the following link. When the web page appears click on the "pdf version" link which is on the middle part of the home page. Then go to page 31 of the Adobe Reader document (page 33 of the actual budget document) and Page 160 of the Adobe Reader document (page 175 of the actual budget document) to get to the statistics I have quoted above.

http://www.budget.gc...ccueil-eng.html

*** UPDATE. Please note the March 2011 Budget document (which was tabled in the House of Commons on March 22, 2011, but was NOT ADOPTED prior to the dissolution of Parliament on March 26, 2011) made adjustments to the nominal gdp, the rate of growth of the nominal gdp, and the program expenses for the year 2010. It states the nominal gdp for the year 2010 was 1622 billion$ (versus the expected 1601 billion$ stated in the 2010 Budget), the rate of growth of the nominal gdp in 2010 was 6.2% (versus the expected 4.9% stated in the 2010 Budget), and the program expenditures for the year 2010 were 245.2 billion$ (versus the expected 249.2 billion$ stated in the 2010 Budget).

The following is the link to the (March) 2011 Canada Budget document. (Click on the "pdf version" link) (Go to Adobe Reader document pages 33 and 185 to get the statistics I have quoted in the previous paragraph)

http://www.budget.gc...ccueil-eng.html

Using the updated figures in the 2011 Budget then:

- Over the last year the total (government, business, and household) debt in Canada went up by (approximately) 248.2 billion$. To put this increase in the total debt in perspective, the Federal Government in 2010 spent 245.2 billion$ on program expenditures.

- Canada's total (government, business, and household) debt is 4516 billion$. The nominal gdp is 1622 billion%. The total debt to nominal gdp is 278%.

- If you multiply the 1622 nominal gdp by 6.2% you get 100.5 billion$. In the year 2010 the nominal gdp grew by 100.5 billion$, and the total (government, business, and household) debt grew by (approximately) 248.2 billion$. In the year 2010 the total (government, business, and household) debt in Canada grew 2.46 times faster than its nominal gdp (economy) did.

To add insult to injury another huge challenge facing us is the demographic time bomb which is coming at us. (The graying of Canada). The leading edge of our massive baby boom generation turned 65 years old last January. This means there are going to be more and more people riding in the cart and fewer and fewer people pulling the cart (in this country) over the next several decades.

The following is the link to a graph on the Statistics Canada web site (last modified in 2008) of the number of persons aged 15 to 64 years for each person aged 65 years and over in Canada, 1956 to 2056. This one graph is an eye opener and it really says it all.

http://www.statcan.g...4129872-eng.htm

The following is the link to a recent news story on the topic of the demographic time bomb which is coming at us:

http://www.cbc.ca/fp...02/4544389.html

The following is taken from a recent article by The Canadian Institute for Health Information (CIHI) on the topic of health care funding and aging.

"In 2007, the latest available year for data broken down by age group, health care spending by provincial and territorial governments was highest for seniors age 65 and older ($10,318 average per person) and infants younger than 1 ($8,239). In contrast, health care spending on Canadians between age 1 and 64 averaged $1,966 per person, up from $1,832 in the previous year.
There were great variations among seniors: for those age 65 to 69, the average per capita spending was $5,589. For those age eighty and older, per person spending reached more than three times that amount ($17,469)."

http://www.cihi.ca/C...release_19nov09

It looks to me like the folks who look after the Canada Pension Plan are about to change the way they calculate its unfunded liability. The following is taken from the 25th Actuarial Report on the Canada Pension Plan (which was tabled before Parliament on Nov. 15, 2010.)

"If the Plan’s sustainability is to be measured based on its unfunded liability, it should be done on an open group basis. The Plan is intended to be long-term and enduring in nature, a fact that is reinforced by the federal, provincial and territorial governments’ stewardship through the established strong governance and accountability framework of the Plan. Thus, an open group valuation that emphasizes the long-term nature of the Plan could be deemed to be the most appropriate."

Under the old method of calculating the unfunded liability (the closed group method) it was 748 Billion$ on Dec. 31, 2009.
Under the above mentioned (new and improved?) open group method of calculating the unfunded liability of the CPP, it was only 6.9 Billion$ on Dec. 31, 2009.

I am highly skeptical of any possible plan to change the way the unfunded liabilitiy of the CPP is calculated. If this indeed does happen I would consider this to be yet another example of our "ponzi scheme economy" punting one of its problems off into the future (for them to deal with), so we do not have to deal with it now.

The following is the link to the 25th Actuarial Report on the CPP. The topic of the unfunded liability and the closed and open group methods of calculating it is discussed on pages 69 - 72 if anyone is interested in reading about this.

http://www.osfi-bsif...px?DetailID=499

While not directly under the jurisdiction of the Federal Government (however there is only one taxpayer), we in Canada also have a very serious problem of an aging infrastrucutre, (yet another issue which has been put on the "back burner")

The following is the link to a recent news article titled "Canada’s crumbling infrastructure: the silence is deafening".

http://www.theglobea...article1979065/

The following is the link to a recent news article titled "Federal funds for cities set to expire, municipalities ask: What’s the plan?"

http://www.thestar.c...s-the-plan?bn=1

The future history books are not going to be kind to the elected politicians, the Bank of Canada, and the financial regulators who have been at the helm of the good ship Canada for the last 40 years or so for allowing the build up in this country of so much debt and unfunded liabilities (in Medicare, Old Age Security, Guaranteed Income Supplement, the Allowance, public sector pension plans, etc). The numbers I have quoted above and the links I have provided to back them up speak for themselves. We are in debt up to our eyeballs and we are increasing these already staggering debt levels at a very alarming rate. These debt levels in Canada are clearly not sustainable. We are heading for a historical economic crash.

The Canadian people (generally speaking) have to accept a fair portion of the responsibility for the present "state of the nation" because they have been distracted by, and feasting upon, all of the "cheap money" which has been made available to them by our fiat monetary system over the last 40 years, and buying the big homes, the toys, and the gadgets on credit, and not stopping to ask themselves if our "high on the hog" standard of living and the "good times" we were all having were sustainable over the long term. The term "chicken today and feathers tomorrow" comes to mind.

Our whole system is one big ponzi scheme. And we actually have the nerve to put people like Bernie Madoff in jail for running ponzi schemes in our societies.

Are we all living in an episode of the Twilight Zone?

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[jayme2011]

Dave
Yes were in debt vs most around the world were in better shape however if we the ndp or liberals get in powet that very quickley could change.