“The sky is not the limit” for debt, the banks have warned.
In the 2008 financial crisis, Canada was able to escape with less damage than many countries for two key reasons.
First, the Harper government implemented a well-thought out economic stimulus package, mostly focused on building tangible things quickly, and moved back towards a balanced budget (though the voters didn’t reward it in the next election).
The second reason was that Canada’s banks were relatively more responsible and not as over-leveraged as many banks in other parts of the world.
The perceived responsibility of Canadian banks is now giving rise to those same banks warning the Trudeau Liberals, who seem headed towards an extremely irresponsible debt binge.
According to a BNN Bloomberg report, finance minister Chrystia Freeland is being warned by bank CEOs about the rising levels of debt:
“Finance Minister Chrystia Freeland held a call with chief executives from the nation’s biggest banks on Thursday to discuss the economic outlook and potential policy steps. She was told that while low interest rates provide some scope to borrow more in coming years to support the recovery, it’s imperative the government recommit to specific new debt targets to impose discipline on the budgeting process, according to one person familiar with the discussion.”
Others are expressing concern as well, noting that the beginning of the economic recovery reduces the justification for a huge spending surge:
“Frankly, I am a little bit concerned about some of the messaging we’ve heard from Ottawa in recent weeks about using this ‘golden opportunity’ to launch all kinds of new spending,” Doug Porter, chief economist at Bank of Montreal, said by phone. “We have made a pretty big recovery in the last three or four months already. We should be well past the peak of spending.”
The sad irony here is that the Liberals don’t really want the economy to recover that quickly, because then they wouldn’t have an excuse to impose a radical ‘green agenda’ that nobody asked for.
Further, the Trudeau Liberals are clearly addicted to the power the crisis gave to them, and are unwilling to give it up.
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