Same old song

My two cents on the budget today. No surprises, unfortunately. Same old song.

But first…a bubble market?

Chart from Zero Hedge

Yeah, all those other times were bubbles. This time is different (is it?).

 

 

Canada’s Budget

“The most terrifying words in the English language are: I’m from the government and I’m here to help.” Ronald Regan

Unbelievable. The biggest travesty of our current government is that we have deprived some village of their local idiot. Don’t take it from me. Comments from some of the most respected economists in Canada keep flowing in:

“It’s another step in a long line of tax-and-spend policies. The steady flow of net stimulus has only made the Bank of Canada’s inflation battle tougherBMO

“Reaction from the business community has mostly focused on how much it will cost on the other side of the ledger, as a disincentive to invest in the economy.” BNN

“Prime Minister Trudeau’s mandate… raising the tax burden at a time when Canadian businesses are struggling for competitiveness and productivity.” Rosenberg

“Slower growth + persistent inflation = Stagflation!”- Keith Richards

  • Cap gains on individuals with a $250k + cap gain – taxed now at 66% vs 50%. Own a cottage or rental property that’s gone up in value? Saving for your retirement with equites like a responsible person, attempting to achieve a higher net worth? Too bad, you “evil rich person”.
  • Cap gains for business changes. This is the big one (see Rosenberg below). Why would any Canadian business invest their capital? Why would any international business even entertain the idea of locating in Canada?
  • A “Global Minimum Tax” on multinational corporations as part of a plan penned by the WEF reset plan.
  • A FACT tax, on fuel, alcohol, cannabis, tobacco.
  • Net new spending of $5.3 billion this year; $36 billion over five years. Gosh. That’s not inflationary.

McDonalds just introduced the new “Trudeau value meal”. You order as much as you want, and the people behind you have to pay for it.

  • Real estate spending to win back votes of the millennials who have taken the brunt of the impact of inflationary spending by the very government they voted for in 2015. Trust them this time? Not.

Worth the read:

EDITORIAL: Trudeau’s budget is a debt bomb (msn.com)

 

A FAILING GRADE FOR AN ANTICOMPETITIVENESS BUDGET – David Rosenberg

Canada’s governing Liberal Party yesterday announced a 2024 Budget Statement that will see
spending increase by +C$53 billion over the next five years compared to what was announced
in the Fall Economic Statement just six months ago.

Absolutely incredible. This new expenditure
will be partially offset by (misguided!) capital gains tax increases, and still leaves the country’s
deficit running near -C$40 billion right through the 2026 fiscal year and modestly above the levels
that were previously projected. At no time in the next four years is the federal debt forecast to
come in below 40% relative to GDP, which is a travesty (seeing as when we add provincial
obligations to the federal largess, the total general government debt-to-GDP ratio is bumping
against 90% compared with barely over 70% two decades ago).
The 2024 Budget does nothing to arrest the persistent post-COVID-19 fiscal slippage that has
been allowed during Prime Minister Trudeau’s third mandate, while also raising the tax burden
at a time when Canadian businesses are struggling for competitiveness and productivity.

The fresh spending growth will also only make the Bank of Canada’s job of bringing interest
rates down from their very high levels that much tougher — as if ignoring the central
bank’s intent to crush inflation once and for all. Not to mention that by lopping on more
spending at this time, thereby impeding the Bank from cutting rates more forcefully, what this
budget does is make the fiscal deficits that much more structural in nature in the sense that
public debt charges are destined to swell from C$47 billion this year to C$57 billion three years
out — by which time, interest on the debt will be exceeding the deficit itself by a significant
amount.

5 Comments

  • What happended between Justin Trudeau and Bill Morneau? That is my question…

    J.P.

    Reply
    • Trudeau is notorious for using and disposing people in his cabinet. He gets others to take the fall for his transgressions, almost like a business deal. They accept responsibility, they get fired and in some cases collect a handsome retirement pension. Not a bad deal. So–Morneau (taking the fall for WE charity scandal) was just another Jody Raybould/ Jane Philpott (SNC scandal). Marco Mendicino (Bernardo scandal) was another. Recently Trudeaus order for the Emergencies Act was deemed “not justified” by the courts. Of course it is being appealed (taxpayers pay for that appeal)–but if/when that appeal is lost, there will be yet another head to roll, and Trudeau will skate away once again.
      Teflon Trudeau always has a scapegoat ready to take the fall for him.

      Reply
  • Thanks Keith.

    Like Canada, I’m falling off my chair after hearing more details of this latest “fair and responsible” budget come out. Thank you for covering it and I’m looking forward to further coverage from you. “Global Minimum Tax”, that’s a new one for me.

    I’m also of 1/2 mind to call and sell some of my buy and hold MF’s (reg and non-reg), as I feel this socialist train isn’t slowing down for the next stop. Your one of the few who see things clearly and I’ll be watching what you are saying to take into consideration.

    From 564B in 2015, to 1.3T in debt coming… I almost fail to understand how 1, just 1, PM can fiscally ruin Canada in 9 years. The austerity is truly going to be painful.

    BTW – I’ve been hearing June 25th is when the 66.6% kicks in (notice the 666), I’m shocked it won’t come in on Canadian Heritage Day at PizzaPizza on 4:20 where one can buy not only a “Dubbie shaped pizza” but also a bong box (limited edition). Canadian Heritage you say?

    Reply
  • Why is anybody surprised that this tool and freebrain have created anything but this? Somebody let them in 2x as well. They certainly know how to play politics. So well you can put somebody who has ZERO financial background or any indication of a financial class as finance minister. But, alas, you can get to the top by working p/t for 3 months? and you say you can’t get to the top without experience?? Brilliant!!! (to all the trudy lovers, ER, AH, DOH.. is only an acceptable speech by Homer Simpson), Although even Homer, when questioned, doesn’t get a note from mom or call it a hate speech and walk away – ..seems, Chant “kill the enemy” at a recent rally leads to nothing (except somebody offers you coffee!!) but question anybody in Libs or DP’s.. well, ask the rebel reporter that keeps getting arrested for showing up. How many high level people can bash the decisons being made before Canadians wake up. -even if you don’t believe some of them, they cant all be wrong me thinks. Too late, too bad, so sad as they say. Love your blogs and your course, maybe its time to add stupidity charts! ..or, is that still dumb money? Until then don’t foget to “spot the idiot”, its easier than you think these days! Good thing charting keeps our emotions out of our decision making!!!!!!!! oh, ya, I remember the point now of the comments now… cheers Keith, we laugh while we cry. Great to be Canadian.

    Reply
    • Nice summary of current Canadian reality. Its all been rather surreal to me.

      Reply

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