Qs & As

Q: Why did Freeland quit?
A:To distance herself from the prime minister. By puting air between them, she keeps her political options open. She will run in the next election. And then likely as a leadership contender who resigned on principal, in the name of prudent fiscal management. That’s why her letter accused T2 of promoting ‘political gimmicks’ like the GST holiday and of not taking Trump seriously.

Q: Why did Trudeau demote her on Friday?
A: See above.

Q: How bad is the deficit? Should you worry?
A: It was supposed to be $39 billion for the year, but came in at almost $62b. The reason is largely because the feds booked expenditures for Indigenous payments and claims. They don’t stop, and a whopper is coming. Also bleeding us: pandemic loans that were never repaid.

Q: How bad is the federal debt?
A: Bad. It sucks at $1.25 trillion. But the real issue is what it costs taxpayers to carry this mortgage.

Q: Okay, what are the debt charges?
A: Interest on the amount already borrowed costs us $53.7 billion this year (a billion is a thousand million). Even with rates going down, that will grow to $58 billion in a couple of years and almost $70 billion in seven.

Q: How does that compare with the olden days?
A: Debt charges will soak up about 11% of government revenues this year. That’s a horrible two-fold jump from the 5.9% of taxes that they cost two years ago. But it is vastly less than the 33% of federal money required to float the debt in the 1990s – when the GST was brought in to help fix things.

Q: When will there be an election?
A: Sooner than we thought. It’s too late for Trudeau to resign and a new leader picked, and the oppo guys have said they’ll no longer support the Liberals. So it looks like the plug will be pulled soon after January 27 when MPs get back to work.

Q: Did Jagmeet Singh keep supporting Trudeau because his pension clicks in soon?
A: No. That’s Pierre Poilievre crap (who has a far, far bigger pension). Singh is a multi-millionaire, lawyer, doctor’s son, private-school educated, fancy car-driving, bespoke suited personal success. The Internet thinks his net worth is $78 million. Probably less. But enough to just not care about that pension pittance.

Q:The dollar has dipped below 70 cents. Is that because of the chaos with Trudeau?
A: The inflation rate has fallen to 1.9%. So the Bank of Canada will keep reducing its rate, with the spread growing between the cost of money here and in the US. That differential, plus Trump’s corporate tax cuts and protectionist stimulus, have the American currency flying. Justin or Chrystia did not do this.

Q: Did that fat new deficit number rattle investors or the markets?
A: A little. But bond yields spiked and bonds sold off more on news the finance minister had quit over a policy dispute. The concern is that Trudeau may actually increase spending considerably more in an attempt to rescue his political fortunes.

Q: What happened to the $250 cheques that were going to most people in the Spring?
A: Gone, baby.

Q: The economic statement this week had big bucks for the border. What now?
A: Nothing will pass Parliament. It’s broken. As for the $1.3 billion border package in order to placate Trump, it’s on hold and never actually mattered. Trump will do what he wants anyway. Keeping stuff out of the US is their job, not ours. The whole thing was a ruse.

Q: Should I change my investments to protect myself?
A: If you have a B&D portfolio, no. There’s too much change, volatility and uncertainty now to switch horses. Things will undoubtedly look far different in a year – and most people invest for decades. Don’t dump maple. Don’t overload on America. Keep the loonie hedging in place. Do not abandon fixed income. And don’t run to cash.

Q: Are we weaker now as we face Tarriff Man?
A: Bigtime. The premiers are squabbling (Smith loves Trump, Ford wants a fight). The prime minister is going down. The finance minister is a placeholder. Parliament won’t survive the next confidence vote. We may be in an election during Trump’s first weeks in office. Yesterday he called Trudeau ‘governor’ and says he was happy that ‘toxic’ Chrystia was kaput. This is not going well.

Q: Why do so many people here on this blog, in Canada, support Trump?
A: They place ideology over country. They will regret it.

About the picture: “Meet Sammy, our 10-year-old Golden Retriever,” writes Jamie. “Sammy just had his cast removed after his second surgery for a broken leg. Instead of sulking, he finds joy in simple things, like the season’s first snowfall. We could all learn a lot from him. Sammy was being extra silly in this picture—feel free to use it if it fits one of your themes. Blog dog since day one, thanks for everything you do.”

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’.

Source: https://www.greaterfool.ca/2024/12/17/qs-as/