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Net Zero: a failure for climate change mitigation

June 12, 2021

Net Zero: a failure for climate change mitigation

Canada’s Debt Spiral

May 21, 2018

Canada’s Debt Spiral

canada_debt.PNG

Living beyond our means requires us to borrow money to cover the difference between our income and our spending. Many Canadians now understand the financial consequences of this practice and regret the choices they’ve made. Unfortunately, Prime Minister Trudeau is not one of them, as evidenced by his government’s budget deficits which are further eroding the financial wellbeing of Canadians. He has broken a campaign promise, ignored basic economic principles, and seems hell-bent on setting an ignominious record.  According to the Fraser Institute: “Justin Trudeau is the only prime minister in the last 120 years who has increased the federal per-person debt burden without a world war or recession to justify it.”

The Broken Promise

The Liberals had won the 2015 federal election with a pledge to run annual shortfalls of no more than $10 billion over the first three years of their mandate, and to eliminate the deficit by 2019-20.

The deficit for 2016-17, Trudeau’s first full fiscal year, was $17.8 Billion. The forecast for 2017-18 is $19.9 Billion, and for 2018-19, the forecast is $18.1 Billion.

And now, from the government’s 2018 budget, we read this:

While austerity can come from fiscal necessity, it should not turn into a rigid ideology about deficits that sees any investment as bad spending.

The government says deficits are economically beneficial, and compares deficits to loans taken out by entrepreneurs and business owners. But here’s the rub: in order to spend, the government must first raise money by taxing or borrowing (deficits). This deprives the private sector of money which would otherwise be available for businesses to borrow and invest in new production, thereby creating jobs and raising our standard of living.

…click on the above link to read the rest of the article…

Rising Debt + Rising Rates

February 12, 2018

Rising Debt + Rising Rates

Have they all lost their collective minds? Look I get that some people are leaning Democrat versus Republican and vice versa and that’s fine, but what exactly are voters getting? If, on the one hand, you think Democrats tax and spend too much you get Republicans on the other hand who cut taxes with disproportional benefit to the top 1% and then spend even more. Fiscal conservatives? Please.

In early February the US government was already scheduled to borrow nearly $1 trillion this year. 

A week later and that figure is already out the door as this week both parties agreed to expand spending caps seemingly preparing for World War III. An incremental hundreds of billions of dollars to the military budget alone in just 2 years. What for? To what end? It’s a bonanza for defense contractors surely and the president apparently wants a parade, but have we entered the math no longer applies zone?

The numbers are staggering:

Sven Henrich
✔@NorthmanTrader

Ok, if nobody will say it I will: This is insane.
Just the increase alone is larger than Russia’s entire annual military budget.
“The budget deal would raise military spending by $80B through the rest of fiscal year and by $85B in fiscal year 2019”https://www.marketwatch.com/story/congressional-leaders-say-theyve-struck-two-year-budget-deal-2018-02-07?link=sfmw_tw …

The end result? Much, much more borrowing and deficits into the trillion+ range forever and ever amen:

2019? Looks lot be $1.4 Trillion.

I didn’t see these figures mentioned in any campaign brochures have you? And this is all pre-recession folks. We get a recession and you are looking at 2-3 trillion dollar deficits.

Think I’m going hyperbole on you?

…click on the above link to read the rest of the article…

“The Cost Is Very High”: Portugal Taxpayers Face €3 Billion Loss After Second Bank Bailout In 2 Years

December 21, 2015

“The Cost Is Very High”: Portugal Taxpayers Face €3 Billion Loss After Second Bank Bailout In 2 Years

Back in August of 2014, Portugal had an idea.

Lisbon would use some €5 billion from the country’s Resolution Fund to shore up (read: bailout) Portugal’s second largest bank by assets, Banco Espirito Santo. The idea, basically, was to sell off Novo Banco SA (the “good bank” that was spun out of BES) in relatively short order and use the proceeds to pay back the Resolution Fun. That way, the cost to taxpayers would be zero.

You didn’t have to be a financial wizard or a fortune teller to predict what was likely to happen next.

Unsurprisingly, the auction process didn’t go so well. As we recounted in September, there were any number of reasons why Portugal had trouble selling Novo, not the least of which was that two potential bidders – Anbang Insurance Group and Fosun International which, you’re reminded, is run by the recently “disappeared” Chinese Warren Buffett – suddenly became far more risk-averse in the wake of the financial market turmoil in China. Talks with US PE (Apollo specifically) also went south, presumably because no one knows if this “good” bank will actually turn out to need more capital going forward given that NPLs sit at something like 20% while the H1 loss totaled €250 million thanks to higher provisioning for said NPLs. Now, the auction process has been mothballed and will restart in January.

This matters because if the bank can’t be sold, the cost of the bailout ends up being tacked onto Lisbon’s budget. The impact is substantial. In September, when the effort to sell Novo collapsed, the government restated its 2014 deficit which, after accounting for the bailout, ballooned to 7.2% of GDP from 4.5%.

…click on the above link to read the rest of the article…

“No Recovery For You!” Brazil Officially Enters Recession, Goldman Calls Numbers “Disquieting”

August 28, 2015

“No Recovery For You!” Brazil Officially Enters Recession, Goldman Calls Numbers “Disquieting”

Well, you know what they say: when it rains it pours, especially when you’re the poster child for an epic emerging market unwind and you’re suffering through the worst stagflation in over a decade while trying to clean up the feces ahead of the summer Olympics.. or something.

Make no mistake, Brazil is in a tough spot.

Here’s a list of problems: 1) collapsing commodity prices, 2) the worst inflation-growth outcome in over a decade, 3) deficits on both the fiscal and current accounts, 4) street protests calling for the President to be sacked, 5) a plunging currency, 6) allegations of rampant government corruption. And we could go on.

On Friday, the latest quarterly GDP print shows the country sliding into recession (of course these determinations are always backward looking and just about every indicator one cares to observe seems to show that the economy is closer to depression than it is to the early stages of recession) as output contracted 1.9% in Q2. Here’s the summary from Barclays:

 

Q2 15 real GDP in Brazil surprised on the downside, contracting -1.9% q/q sa and compatible with a y/y print of -2.6%. This follows a downwardly revised -0.7% q/q sa Q1 real GDP print (previous: -0.2%), and also a flat real GDP print in Q4 14 (previous: 0.3% q/q sa). As a matter of fact, the past three quarters were revised to the downside, which now implies a strong negative carry-over for this year: if real GDP is flat in H2 15, the annual growth would be -2.3%.

Relative to our forecast, household consumption, fixed-assets investments and imports all surprised on the downside. These components reflect the adverse conditions for domestic demand, as a reflection of higher inflation, interest rates, fall in income and weaker currency. 

…click on the above link to read the rest of the article…

 

 

The President Of France Wants Eurozone Members To Transfer Their Sovereignty To A United States Of Europe

July 20, 2015

The President Of France Wants Eurozone Members To Transfer Their Sovereignty To A United States Of Europe

EU Poster Tower Of BabelThe President of France has come up with a very creative way of solving the European debt crisis.  On Sunday, a piece authored by French President Francois Hollande suggested that the ultimate solution to the problems currently plaguing Europe would be for every member of the eurozone to transfer all of their sovereignty to a newly created federal government.  In other words, it would essentially be a “United States of Europe”.  This federal government would have a prime minister, a parliament, a federal budget and a federal treasury.  Presumably, the current national governments in Europe would continue to function much like state governments in the U.S. do.  In the end, there may be some benefits to such a union – particularly for the weaker members of the eurozone.  But at what cost would those benefits come?

When I first learned that French President Francois Hollande had proposed that the members of the eurozone should create their own version of a federal government, I was quite stunned.  But I shouldn’t have been surprised.  For the global elite, the answer to just about any problem is more centralization.  The following comes from a Bloomberg article that was posted on Sunday…

French President Francois Hollande said that the 19 countries using the euro need their own government complete with a budget and parliament to cooperate better and overcome the Greek crisis.

“Circumstances are leading us to accelerate,” Hollande said in an opinion piece published by the Journal du Dimanche on Sunday. “What threatens us is not too much Europe, but a lack of it.”

So precisely what would “more Europe” look like?

Hollande envisions a central government that has both a parliament and a federal budget…

 

…click on the above link to read the rest of the article…

Prospect of deficit threatens Conservative government’s best laid plans | Toronto Star

January 1, 2015

Prospect of deficit threatens Conservative government’s best laid plans | Toronto Star.

TTAWA—Prime Minister Stephen Harper’s government faces a roller-coaster ride in the coming months as it tries to balance Ottawa’s books and implement a lavish program of family-oriented tax cuts and spending in advance of an election.

The Conservatives have been saying 2015 will be the year they end seven years of consecutive budget deficits and bring in billions of dollars worth of goodies for voters in keeping with promises made in the last election in 2011.

But the linchpin of this strategy — running a budget surplus — has been thrown into doubt by the sudden, unexpected plunge in world oil prices.

Depending on what happens to the always volatile price of a barrel of crude, the Harper government could find itself on the verge of an embarrassing slide back into a budget deficit in 2015.

…click on the above link to read the rest of the article…

Fitch Downgrades Ontario Long-Term Debt, Notes Risks On Path To Balanced Budget

December 20, 2014

Fitch Downgrades Ontario Long-Term Debt, Notes Risks On Path To Balanced Budget.

TORONTO – Fitch Ratings downgraded Ontario’s long-term debt rating Friday, highlighting “risks” on the path to the Liberal government’s target of balancing the budget by 2017-18.

The rating agency cut its long-term issuer default rating to AA- from AA, saying “difficult actions” will be necessary for the province to achieve its target of eliminating the $12.5-billion deficit.

“Budget options are likely to prove more limited given the extent of actions taken to date and use of one-time actions to achieve targets, in Fitch’s opinion,” the agency said.

“The downgrade to AA- reflects Fitch’s concern that risks remain to achieving its goals and both debt burden and the accumulated deficit will remain significantly elevated.”

Ontario Finance Minister Charles Sousa said the government remains committed to eliminating the deficit by 2017-18, but the Fitch announcement underscores the challenges the province’s economy faces.

…click on the above link to read the rest of the article…

MYEFO: Budget deficit forecast for 2014-15 increases $10 billion to $40.4 billion – ABC News (Australian Broadcasting Corporation)

December 15, 2014

MYEFO: Budget deficit forecast for 2014-15 increases $10 billion to $40.4 billion – ABC News (Australian Broadcasting Corporation).

The Federal Government says it is “on the right track” to put the budget back in the black in 2019-20.

It means the budget would return to surplus in a third term of a Coalition government.

The budget deficit for this financial year will be $40.4 billion, more than $10 billion larger than forecast in May, in a blowout that is set to continue for at least four years.

The Mid-Year Economic and Fiscal Outlook (MYEFO) has been released after a slight delay caused by the siege in central Sydney.

The May budget had forecast a deficit for 2014-15 of $29.8 billion.

Next year’s deficit will be $31.2 billion, or 1.9 per cent of GDP, up from the May forecast of $17.2 billion.

…click on the above link to read the rest of the article…

Olduvai IV: Courage
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Olduvai II: Exodus
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