A Tale of Two Economies...

[GRG55]

Re: A Tale of Two Economies...

I grew up in WV, eastern panhandle, moved to TX after college.

But also I will never understand why people assume you must like the team that is closest in geography to you

I was a big fan of Lemieux and Jagr growing up. The Pens won tonight and looked phenomenal.

In the late 1960s, when I was growing up in Vancouver, the NHL team I followed was the Bruins, on the opposite coast. Those were the days of Bobby Orr, John Bucyk, Wayne Cashman, the always colourful Derek Sanderson and of course Phil Esposito. When they traded Espo that was it for me as a Bruins fan. Even the Oiler's trading Gretsky can't compare with that "day that will live in infamy"...

[Fiat Currency]

Re: Tax Me - I'm Canadian

cringe if you're a Canuck ...

Beyond our means: Government debt tops $1.2-trillion and spending is still rising

Canadian politicians need to stop searching for additional revenues and spend more time finding ways to reduce their own profligate spending habits

Over the course of the past several months, outgoing Bank of Canada Governor Mark Carney and Federal Finance Minister Jim Flaherty have repeatedly warned that Canadians are spending beyond their means and taking on too much debt. Unfortunately, neither Minister Flaherty nor Governor Carney has publically expressed as much concern about the amount of debt taken on by Canadians governments.

An analysis of the 2013 budgets from governments across the country, it is clear our elected leaders continue to spend beyond their means, happily sticking it to the next generation.

For starters, the federal government and every province (save Saskatchewan) ran a budget deficit in 2012-13 which cumulatively added $42 billion to total government debt.

All told, total provincial government net debt (debt minus financial assets) reached more than $512-billion in 2012-13. Ontario, Canada’s own version of the fiscal train wreck that is California, accounted for nearly half (or $253 billion) of total provincial debt. Ontario’s debt alone is expected to reach $550 billion before the end of the decade without significant spending reform.

Add on the current federal net debt of $676-billion and Canadians are currently leaving a legacy of $1.2 trillion dollars in debt to the younger generations, an increase of more than $350-billion since 2007-08.

And despite this unfortunate legacy, Canadian governments continue to borrow. This year (2013-14) nearly all governments will again run deficits contributing another $52.7 billion in new debt (after accounting for assets).
Minister Flaherty and Governor Carney continue to talk about household debt levels, but every Canadian family is in hock to the tune of $124,890 due to federal and provincial government borrowing, up by more than $25,000 per family since 2007-08 after adjusting for inflation (see chart).

Most surprising is the common view (especially among politicians and bureaucrats) that continued deficits and mounting debt are the result of a soft economy and therefore a lack of revenues. In reality, nothing could be further from the truth.

Our governments continue to run deficits after three years of modest but nonetheless positive economic growth in Canada. This isn’t a revenue problem. The most damning evidence of this comes from looking at what has happened to revenues relative to spending for the majority of governments across Canada over the past five years.

Take the federal government which saw its revenues peak at $242 billion before the recession. From the 2007-08 peak, revenues decreased for the next two years due to the recession. However, in 2010-11 revenues rebounded and last year’s federal revenue of $254 billion was nearly $12 billion higher than the pre-recession peak.

Why then is the federal government still running a $26 billion deficit? The answer is simple. Despite a $12 billion increase in federal revenues from the pre-recession high, program spending (total spending minus interest costs) is up by $52 billion.

Even more concerning is that program spending is up by $6.3 billion since 2009/10, the year the Conservative government implemented their massive “stimulus” spending plan. Spending did not retreat to pre-stimulus levels; rather, the higher level of spending simply became the new base from which future spending grew.

Unfortunately, the federal government is not alone. As the other table shows, revenues of nearly every provincial government in Canada have rebounded from pre-recession highs while spending has greatly outpaced revenue growth.
For example, Ontario revenues were $114.2 billion in 2012-13, nearly $10 billion higher than the pre-recession high (2007-08) while program spending is up $19 billion.

Yet, despite the fact that excessive government spending is clearly the root problem in Canada, governments across the country continue to look for tax increases to close their deficits.

Out in B.C. the supposedly “conservative-minded” Liberals introduced a new top personal income tax rate for incomes over $150,000 which will be taxed at 16.8% up from 14.7%; increased the corporate income tax rate to 11% from 10%; and increased Medical Service Plan premiums by 4%.

In Alberta, the government chose not to increase taxes in the 2013 budget but is clearly trying to warm Albertans up to future tax increases. The government repeatedly points out how much extra money the province would have if it possessed tax levels and levers that exist in B.C. Meanwhile, Saskatchewan deferred previously scheduled corporate income tax rate reductions and Manitoba increased its tax on financial institutions to 5% from 4% and it’s PST to 8% from 7%.

Quebec introduced a fourth income tax bracket for incomes over $100,000 which will be taxed at nearly 21% provincially. And in the Maritimes, New Brunswick increased its corporate income tax rate to 12% from 10%, increased all four of its personal income tax rates while Prince Edward Island increased its small business tax rate.

For the sake of future generations, Canadian politicians need to stop searching for additional revenues and spend more time finding ways to reduce their own profligate spending habits.

[astonas]

Re: Tax Me - I'm Canadian

A piece with a strong opinion. Whose opinion is it?

[jiimbergin]

Re: A Tale of Two Economies...

I grew up in WV, eastern panhandle, moved to TX after college.

But also I will never understand why people assume you must like the team that is closest in geography to you

I was a big fan of Lemieux and Jagr growing up. The Pens won tonight and looked phenomenal.

You are of course right. I grew up in Pittsburgh, but when I was young (back in the 50s!!) Cleveland Browns with Otto Graham and Jim Brown were my team even though my dad and I had season tickets to the Steelers! Of course by the 70s the Steelers became my team!

[Fiat Currency]

Re: Tax Me - I'm Canadian

A piece with a strong opinion. Whose opinion is it?

Sorry ...

Niels Veldhuis, Jason Clemens and Milagros Palacios are economists with the Fraser Institute (www.fraserinstitute.org).

http://opinion.financialpost.com/2013/05/16/beyond-our-means-government-debt-tops-1-2-trillion-and-spending-is-still-rising/

The Fraser Institute is widely viewed as a right-wing conservative vocal vehicle. Stats are correct though ... and as I've posted many times, everybody uses NET DEBT these days - as if subtracting some gov't asset that should never be sold makes everything better. Use TOTAL DEBT and it's even worse.

FYI - I've stopped putting in web links these days. Every site limits article views (annoying but easy to defeat) and wants $10/month for rewired news. Good luck with that web-business geniuses.

[GRG55]

Re: Tax Me - I'm Canadian

Just a poll, but...



Velocity Achieved in U.S. as Growth for Two Years Seen in Poll

May 16, 2013 6:00 PM MT

The U.S. economy will continue to recover until at least 2015 without tumbling into a recession, achieving the sustained growth that has eluded it since the last slump ended four years ago, according to a Bloomberg poll.

With the economy creating an average of 208,000 jobs a month since November, 69 percent of those surveyed call the recovery “sustainable” while 27 percent anticipate a new recession within two years, according to the global poll of investors, analysts and traders who are Bloomberg subscribers.

“I expect growth to accelerate,” says respondent Brandon Fitzpatrick, 35, a portfolio manager for D.B. Fitzpatrick in Boise, Idaho. “Consumers’ balance sheets are improving, and consumption is set to pick up.”

The prospect of increasing energy independence, a rise in home values after years of decline and a pause in the partisan budgetary battles in Washington are driving investor sentiment.

Real estate, the epicenter of the 2008 financial crisis, is a big part of the optimism. Even after yesterday’s reported drop in April’s housing starts, homebuilders began work on 853,000 new homes, up 78 percent from the April 2009 low. After watching the housing crash erase more than $7 trillion worth of wealth, homeowners have recovered about $2 trillion in real estate holdings, according to Federal Reserve data...

...“Anyone who isn’t long real estate housing is a moron,” says Stan Jonas, 64, managing partner of Axiom Management Partners in New York, speaking before the April figures were released...

[don]

Re: Tax Me - I'm Canadian

The U.S. economy will continue to recover until at least 2015

[Fiat Currency]

Looking North ? ...

Any SV techies looking North? ...

Jason Kenney: Silicon Valley Tech Entrepreneurs Can Get Instant 'Green Card' In Canada

SAN JOSE, Calif. (AP) — The Canadian government has launched an aggressive campaign to lure Silicon Valley tech workers frustrated by U.S. visa policies northward, just as Congress wrestles with a long-sought overhaul of America's immigration system.

Canada's minister of citizenship, immigration and multiculturalism, Jason Kenney, arrived in the San Francisco Bay area Friday for a four-day visit aimed at snapping up talent for his country's high-tech economy by offering startup entrepreneurs a new visa.

"I think everyone knows the American system is pretty dysfunctional," Kenney said in an interview with The San Jose Mercury News. "I'm going to the Bay Area to spread the message that Canada is open for business; we're open for newcomers. If they qualify, we'll give them the Canadian equivalent of a green card as soon as they arrive.

"The new "startup visa" will grant permanent residency to entrepreneurs who can start a business in Canada and raise enough venture capital.

Earlier this week, a billboard sporting a giant red maple leaf went up in South San Francisco, part of a Canadian ad campaign encouraging tech workers to head north."H-1B problems?" asks the billboard on the road to Silicon Valley, referencing the temporary visa issued to skilled foreign workers in the U.S. "Pivot to Canada."

The current immigration bill before the U.S. Senate – the result of months of negotiations among eight influential senators – is on track to greatly increase the number of highly skilled foreign workers allowed to work in the U.S. under an H-1B visa, from 65,000 to 110,000.

"The Canadian perspective is they would love to re-create Silicon Valley in Canada," said Irene Bloemraad, a professor who chairs the Canadian studies program at UC Berkeley. "And they recognize that under the current immigration system in the United States ... there are people who are having a hard time getting permanent legal status.

"Bloemraad said Kenney's trip would underscore the differences between U.S. and Canada immigration systems. While two-thirds of immigrants to the U.S. gain their permanent residency thanks to family connections, she said, Canada's points-based ranking system means that two-thirds of immigrants are chosen for their work skills.

Under the current H-1B system, thousands of foreign tech workers in the Silicon Valley can stay in the United States for a maximum of six years, and must stick with the employer who sponsored them.

Kenney plans to promote the new visa and to meet with tech leaders, speak with Stanford students and run the Canadian booth at this weekend's TiEcon entrepreneurship conference in Santa Clara.

"There's an option," said Kenney, a member of his country's ruling Conservative Party. "It's north of the 49th parallel."

http://www.huffingtonpost.ca/2013/05...anada-business

[GRG55]

Re: Looking North ? ...

Any SV techies looking North? ...

We should give them a parka and a snow shovel as a signing bonus though...

[ST]

Re: Looking North ? ...

Any SV techies looking North? ...

Bravo for designer immigration. The nimble win, sometimes.

65k H1-B visas taken in 5 days this year via lottery.

Maybe the new bill will be better:

05-20-2013 Imm Reform.jpg

[Milton Kuo]

Re: Looking North ? ...

Any SV techies looking North? ...

No offense intended but Canada's "instant green card program" is rather laughable in that it targets only the creme de la creme of immigrants:

The new "startup visa" will grant permanent residency to entrepreneurs who can start a business in Canada and raise enough venture capital.

While the U.S. does not have such a program specifically for the super elite of skilled workers, I'd be surprised if such an individual could not find a way to work in the U.S. The big fuss over the H1-B visa program in the U.S. is that the vast majority of the workers are mediocre at best and are about as good for the U.S. economy as offshoring manufacturing was for the economy. Notably, Canada's instant green card program is not available to these mediocre immigrants.

One other problem Canada is going to face is that it lacks the existing startup infrastructure that already exists in the U.S. It's certainly something that can be built but it's not as simple as adding money and importing a bunch of skilled/educated workers.

[astonas]

Re: Looking North ? ...

Very tempting...

The US's sequester is hitting opportunities for new contract research. I could see certainly imagine some migration happening.

Any idea where this Silicon Snowdrift might form up? Vancouver, B.C. isn't the same thing as Montreal, or Toronto. The article is not specific, but even if all of Canada is included, one would still want to collocate with other talent.

[GRG55]

Re: Looking North ? ...

Very tempting...

The US's sequester is hitting opportunities for new contract research. I could see certainly imagine some migration happening.

Any idea where this Silicon Snowdrift might form up? Vancouver, B.C. isn't the same thing as Montreal, or Toronto. The article is not specific, but even if all of Canada is included, one would still want to collocate with other talent.

Depends on the industry. Tech to support oil and gas centers in Calgary. The two other tech concentrations are in Vancouver, B.C. and Ottawa, Ontario.

[GRG55]

Re: A Tale of Two Economies...

All it took was a train wreck...

TransCanada going ahead with Energy East pipeline

Will span from Alberta to as far east as St. John, N.B.

By THE CANADIAN PRESS, CP August 1, 2013 10:03 AM

CALGARY — TransCanada Corp (TSX:TRP) has decided to go ahead with its Energy East pipeline project to transport crude oil to Canadian refineries and export terminals as far east as New Brunswick.

The proposed pipeline system will take crude from western provinces as far east as Saint John, N.B., passing through other Canadian cities, including Montreal and Quebec City.

It will include some existing TransCanada pipelines between western Canada and Montreal plus new lines to be constructed to take the crude further east...

...TransCanada estimates the project will cost about $12 billion, excluding the value of its converted Canadian Mainline pipeline system...

[shiny!]

Re: A Tale of Two Economies...

Never let a crisis go to waste. But Geez Louise! What an awful mess.