May 2015 Provincial Election Thread v2

[Flash Walken]

Originally Posted by Locke

Private sector debt levels? What does that mean? Leveraged companies are the problem? What problem is that?

“In the event of a deeper and more widespread shock to incomes, highly indebted households with limited liquid financial assets could have difficulty servicing their debt,” the bank said.

“The proportion of highly indebted households in Alberta — those with a ratio to gross income above 250 per cent — is among the highest in the country.”

With a higher portion of incomes at risk from cuts in oil patch activity, along with lower corporate spending and scaled-back provincial revenues, “households could become financially strained.”

In general, “an increase in interest rates could cause households with variable rate mortgages to have higher-than-anticipated costs to services their debt.”

Individually, Canadians may not believe they have a problem. But collectively, the country’s insatiable appetite for household debt has caused headaches for policy makers, made Canada look risky to global investors and raised concerns over the country’s financial stability.

On average, Canadians had credit-market debts worth a record 163.3 per cent of their after-tax incomes in the fourth quarter of last year, up from about 110 per cent in 2002. Meanwhile, income growth has failed to keep pace and the household savings rate has dwindled to just 3.6 per cent, a near-five-year low. In 1982, the savings rate was 19.9 per cent.

Now, several additional factors are fanning risk: Low oil prices are denting investment and hiring in energy-exposed provinces such as Alberta and Newfoundland. The country’s labour market is starting to reflect the impact of crude’s plunge, with natural resources job losses in three of the past four months, while the retail sector is also trimming headcount.

At the same time, lower borrowing costs have fuelled home sales, driving prices higher.

The mortgage market has ballooned. Residential mortgage debt in Canada has more than tripled – to a record $1.3-trillion from $423-billion in 2000. And the pace of borrowing only accelerated after a surprise interest rate cut in January, a Royal Bank of Canada report showed this month.

Meanwhile, the share of mortgage lending by the less-regulated “shadow banking” sector, while still small, has doubled since 2012, CIBC research shows.

On the ground, signs of a squeeze are mounting. Bankruptcy trustees say they’re fielding more calls in Western Canada. In Alberta, the province with the highest debt-to-income ratios in the country, consumer insolvencies are already rising (and so are employment insurance claims). Credit counselling firms are seeing more seniors in trouble – an age group that has traditionally been debt free.

There are also signs that Canada’s housing boom is reaching a tipping point. Outside of Toronto and Vancouver, the market has largely gone cold, with prices flat in many cities and falling in places such as Calgary, Regina, Quebec City, Moncton and St. John’s.

A chorus of voices – many of them from outside the country, such as the International Monetary Fund, Moody’s, the Organization for Economic Co-operation and Development and McKinsey – have cautioned Canada over high household debt loads. The Bank of Canada warns that debt-to-income levels will climb even higher, though it is betting on a recovery in the second half of the year.

The central bank estimates that home prices are about 20 per cent overvalued, roughly the point where the bank’s own research says housing market corrections tend to occur. While Governor Stephen Poloz has said he is not worried about a crash, even a slow and steady decline in home prices could have a devastating effect on the economy, which has relied heavily on consumer spending for growth since the global financial crisis.

A chart-by-chart breakdown of the factors contributing to Canada's rising household debt levels.

Not everyone struggles with debt. In fact, nearly a third of Canadians are debt free. But a small, highly important, share of households are drowning in debt and could pose a major risk to the economy.

Twice this year, the Bank of Canada has cut its key interest rate in order to stimulate Canada’s sluggish economy, which has kept downward pressure on lending rates and thus encouraged borrowing. But last week, the federal government announced tighter rules on mortgage lending, aimed at cooling the debt risk related to the housing sector.

“The effects of stimulative monetary policy working through the economic system, as well as resilient labour markets year-to-date, were evident,” said Royal Bank of Canada economist Laura Cooper in a research note. But she added that Ottawa’s new mortgage rules “have the potential to dampen the pace of accumulation in the mortgage component and resultantly, could alter the dynamics of the evolution of household imbalances going forward.”

Statscan noted that the ratio of household debt to total assets – considered by some experts to be a better measure of consumers’ capacity to afford their debts – rose to 17 per cent from 16.9 per cent. This measure had been trending steadily downward since the end of the 2009 recession but has now risen for a second straight quarter.

Maybe I wasn't very clear, but I'm pretty sure you didn't give my post a very careful 'once over' in favour of emotional gesturing about how wrong I am.

[Locke]

Originally Posted by Flash Walken

Maybe I wasn't very clear, but I'm pretty sure you didn't give my post a very careful 'once over' in favour of emotional gesturing about how wrong I am.

Okay, but you specifically stated 'private-sector debt levels' were the biggest problem facing our society today, that term means companies and businesses.

If you're talking about people, individuals, then there is no differentiating between public and private.

Teachers and Nurses have credit cards and mortgages too. They're allowed, this isnt some sort of pseudo-apartheid or anything.

And if they have high debt levels thats a choice that they've made, a presumably informed, choice, and its between them and their creditors.

Their debt isnt backed by the Government and is out of the Government's control so I have no idea why we're even talking about it other than perhaps to deflect attention away from what I stated to be the biggest issue facing us at the moment and that is public sector pensions.

[Flash Walken]

Originally Posted by Locke

Okay, but you specifically stated 'private-sector debt levels' were the biggest problem facing our society today, that term means companies and businesses.

If you're talking about people, individuals, then there is no differentiating between public and private.

You're right, I misspoke, I meant household debt and not private sector debt. Debt held by private citizens.

Public sector employees are in a resoundingly better financial position than those in the private sector, largely by virtue of their pensions. 50% of private sector employees are receiving Guaranteed Income Supplement benefits compared to just 15% of public sector employees. This ratio is only going to get worse as more boomers realize they haven't properly saved for retirement.

[rubecube]

Jesus, how do you manage to rack up debt that's 163% of your net income? On the one hand, reading stuff like that makes me feel less terrible about my own finances. On the other hand, holy ####.

[peter12]

The nice thing about the pensions is that it is a forced way to save substantial portions of your income - I think an AUPE employee making over 53k is required to make a 19.6% contribution of his gross income every year. The not so nice thing about the pensions is that after two years, the government will match every dollar.

Still... must be nice! After 25 years of making those contributions, you would be in a great state for retirement.

[Izzle]

Originally Posted by rubecube

Jesus, how do you manage to rack up debt that's 163% of your net income? On the one hand, reading stuff like that makes me feel less terrible about my own finances. On the other hand, holy ####.

How did you calculate your debt to income ratio. I've googled it and it looks like you take your total entire debt (mortgage and car) and divide it by your annual gross income. But it seems disingenuous to compare something that typically lasts 25-30 years (ie mortgage) to an annual amount (annual salary).

Is there a better way to calculate this amount? If not, I got me some serious problems.

[Jacks]

Originally Posted by Flash Walken

I mean, it's not like we haven't seen this play out before. It's taken 20 years for the province to recover from Klein's ill-advised healthcare cuts, and it's been far more costly to the province of Alberta than if they'd never happened at all.

You call what's happened in the last last decade or so a recovery?

[Locke]

Originally Posted by Jacks

You call what's happened in the last last decade or so a recovery?

I always wonder at the 'once upon a time there were cuts!!"

Yeah...and in the meantime Alberta has had the most well funded public service in the country.

But there were cuts! We're still struggling!!

Yes, there were cuts, and they are still struggling, but not for the reasons they think.

[CliffFletcher]

Originally Posted by CaptainCrunch

I don't disagree, however when the deficit is in day to day keeping the government in business spending that's ludicris.

If your going to spend a deficit, at least have the money going towards stimulating the economy.

This. If it's about stimulating the economy, then let's build roads and bridges and schools.

Originally Posted by Locke

Public Service Pensions.

They're insane. They cannot continue as they are.

And they won't. By the time the boomers shuffle off this mortal coil, public pensions will be a smouldering ruin. These systems were set up when Canadians had a life expectancy of less than 70, the median age of Canadians was under 25, and the return on investment for pension savings was 3 times what we're can expect going forward.

Fun fact: New York spends more on police pensions than on current police.

Fun fact: In the ageing, rural parts of Canada, most municipalities are essentially a mechanism for transferring money from the few taxpayers left into the bank accounts of their retired neighbours.

Fun fact: In 1970, there were 7 working teachers for each retired one. In 1995 there were 3 working teachers for every retired one. Today, there are 1.5. Within 10 years or so that number will hit 1:1.

Fun fact: Even the fund manager for the Ontario Teachers Pension Fund has publicly warned that the current system is unsustainable, that you can't make the math work for a model where people work for 25 years and then retire for 27 years with a comfortable middle-class income.

Originally Posted by Flash Walken

Public sector employees are in a resoundingly better financial position than those in the private sector, largely by virtue of their pensions. 50% of private sector employees are receiving Guaranteed Income Supplement benefits compared to just 15% of public sector employees. This ratio is only going to get worse as more boomers realize they haven't properly saved for retirement.

Yes, public sector employees are in a resoundingly better financial position than those in the private sector. But this is the twilight of those good times. Already, teachers and other new public employees are being told they will have to work longer and make higher contributions to get the same benefits as their older colleagues. The same is happening across the country. The boomers - and especially boomers in the civil services - rigged the system to get far more out of it than they will ever put in.

Anyone entering the workforce today - public or private sector - who thinks they will retire before they're 70 is comically deluded. And yet today we get to enjoy the spectacle of 55 year old police and firefighters retiring with an excellent pension, while double-dipping to boost their incomes into the top 15th percentile. It's a criminal intergenerational looting of public wealth.

[Mr.Coffee]

Originally Posted by Resolute 14

God I hate the "we're just lucky to have a valuable resource hurr durr durr" argument. Human history is defined by the populace moving to and living where resources are. We aren't "lucky" to have oil. We moved here because of it. If Alberta didn't have a valuable resource, then we would be "lucky" to live somewhere else that does. That's not luck, that's basic human instinct.

I didn't move here, I was born here. Were you? I went to school, went to university and got a solid job and have done well, but I'm not so short sighted to think that it was all due to my incredible work ethic, ingenuity and superior talents that other people, notwithstanding where they were born or similar opportunities given, wouldn't have performed the exact same way or better. And that's my primary problem with Albertans. Not so much that I don't think they work hard, I very much do. It's that they must inform everybody about how much harder they work, how much better they are, how they "save Canada" with transfer payments, and this dripping arrogance that many Albertans possess. I've worked in corporate oil and gas for almost 10 years, the amount of arrogant people in downtown Calgary is what I find most reprehensible and an unbecoming, detestable trait. Not all Albertans / Calgarians of course, but many. It's mainly luck, let's be honest. Any other group of people would have performed just as well over the course of history and with the same opportunities. A long time ago somebody with a hell of a lot more wisdom than I once told me that 'oil and gas makes money in spite of itself'. I think most people, if they saw the staggering inefficiencies with how most companies operate, would agree.

Originally Posted by Resolute 14

Also, your final paragraph is hilariously awful. Sorry, Coffee. But you can't just rant about how absolutely nothing is the NDP's fault because oil prices are in the toilet, then go on and blame the PCs for it. Either it is the price of oil that is at fault, or it is both the price of oil and the actions of government. And if it is the latter, then Notley and the NDP are equally worthy of criticism as the past PC governments are. Especially when one considers the future outlook of Saskatchewan vs. that of Alberta. The difference there lies on the back of the current governments. You dippers are such hypocrites. You whined and whined and whined about how the populace was too trusting of the PCs and never held them to task, and now you whine and whine and whine because the populace followed your advice and refuses to be too trusting of the NDP.

I'm not sure why you seem to be incapable of interacting with people on this website without being a dick. Can you not respond respectfully? Are you not capable of that? I never said the NDP are without fault. To suggest they are at fault to the same degree as the PC's, after being in power since...less than a year, when the PC's were in power uninterrupted for over 40 years, is absurd to me. And yes, my position would be that this situation is the culmination of various factors to certain degrees. Number one, far and away, is the price of oil. If the PC's were in power, would we be in any different position today? Not really, is my opinion. The NDP's have not yet changed the royalties, have not made material changes to regulations, the AER is still in tact, tenure is treated the same, nothing really has changed. The delay in the royalty review could be pinpointed to capital allocation issues, true to a certain extent, but also not the sole reason for capital program deferment, reductions or jurisdictional allocations that otherwise would not have happened.

The truth is that commodity prices are the primary reason for this downturn, and it's not really debatable. Capital programs are poured based on program economics, which are derived from a variety of factors including but not limited to royalties, price, product, probabilities, costs, reservoir parameters, marketing arrangements, land tenure strategies, expected results, etc. Capital programs are crafted based on how much money a company has available. When commodity prices drop significantly, like they have, capital programs shrink significantly, like they have. Royalty uncertainty has created some uncertainty on program economics, thereby relating to capital program uncertainty. However to what degree? You want to know what else is uncertain in oil and gas economics? Just about every ####ing thing. Costs? Sort of predictable, I guess, but these are changing too. Well results? These are uncertain, and anyone that tells you a certainty around well results is a liar. Reservoir parameters- that's a best guess too. Commodity prices? Do you know what they'll be? What about land tenure. Do you know how ridiculously unpredictable the Alberta government has always been on land tenure? These unpredictable rules- do you think they were crafted by the NDP government? I hope you see my point. Royalties are now uncertain. But the truth is, they're just one part of an already uncertain industry with uncertain investment decisions, and furthermore they were and have been always uncertain. Recall the Stelmach PC government changing royalties on a whim. It sucked, and I don't recommend it or like it. But to blame today's problems based on royalties before prices is an absolute joke. Is that problem not helping? No, royalty uncertainty is not helping. Is it why downtown Calgary is in armageddon? Not really, kinda I guess if we want to be disingenuous, but really, oil and gas prices are the big driver here.

Originally Posted by CaptainCrunch

No insult intended, but its not like the Oil just bubbled out of the ground for part time troglodytes to scoop up with a shovel. The sheer will and determination and cost and effort that's gone into exploiting this resource does indicate that this province works very hard for its money. Every province has a resource that it can exploit for profit, some do and some don't. You can point to Quebec as a province that doesn't and they're constantly sitting there getting hand outs.

And yes, you're partially right, the Oil prices do have a major effect on the economy. But the Provincial Governments antics have pretty much destroyed this provinces energy sectors confidence in terms of continual investment. Their bizarre interim budget combined with things like the minimum wage increase have pretty much put the breaks on small business, the upcoming carbon tax is going to hurt everyone in the province at the worst possible time.

Notley's arrogance and the governments continual delays of things like the legislative session, the budget when the NDP were running federally, and the royalty review all have a fairly significant hand in this provinces economic tumble.

You can't keep pointing to one factor our of many and say, its that guys fault. Every speech, every word and every decision by this government resonates, and even more so now that confidence is so low.

I don't necessarily disagree with any of this, it's more the arrogant attitude I indicate earlier in this post that bugs me.

[Resolute 14]

I've worked in corporate oil and gas for almost 10 years, the amount of arrogant people in downtown Calgary is what I find most reprehensible and an unbecoming, detestable trait.

Take a look in the mirror, dude. You are what you hate.

[Mr.Coffee]

Originally Posted by Resolute 14

Take a look in the mirror, dude. You are what you hate.

I guess so, do you disagree? Do you see what I am saying with respect to Albertans (seemingly) arrogant attitude? Just curious if you see it the same way. And I apologize, I should not have called you a dick, not very cool.

[CaptainCrunch]

Moody downgrades Alberta's economic outlook from stable to negative

http://www.cbc.ca/news/canada/edmont...vice-1.3409406

Moody's Investors Service has changed its outlook on the Alberta economy from "stable" to "negative" and says the situation will get worse unless the province's NDP government takes action.

Without corrective fiscal action, this will lead to higher than planned fiscal deficits and lower liquidity than forecasted in the 2015-16 provincial budget, resulting in more rapid and higher debt accumulation across the medium term." Moody's said Alberta can regain a "stable" outlook if it limits debt and debt-servicing costs by meeting the forecasts in that budget, tabled in October, predicting a $6.1-billion deficit for the end of the fiscal year in March 2016.

[Locke]

The last thing we should want is for the NDP to do something. At the moment they're the opposite of King Midas, everything they touch turns to crap.

[N-E-B]

I heard a rumour from one of my buddies today that the NDP wants schools to start using the word "caregivers" instead of "parents" because "parents" implies a male and a female and it excludes the LGBT community...

Has anyone else heard this? When he told me this I couldn't believe it, so I had to look it up and couldn't find anything about it. It seems pretty ridiculous so I wouldn't be surprised at all if he read a joke article or misinterpreted something (possibly about the washroom/changeroom issues), but I figured I'd ask to see if anyone else heard about this before I start making assumptions. Thanks and sorry for the slight derail!

[Bownesian]

The document can be viewed here.

I would say your rumour is incorrect. The closest is page 14, which is pretty benign, under Best Practices:

School forms, websites, letters, and other communications use non-gendered and inclusive language (e.g., parents/guardians, caregivers, families, partners, “student” or “their” instead of Mr., Ms., Mrs., mother, father, him, her, etc.).

There are other parts of that document that are harder to defend, but I can't say that using the words Parents or Guardians rather than Fathers and Mothers isn't a best practice in communications with students.

[CampbellsTransgressions]

Originally Posted by Locke

The last thing we should want is for the NDP to do something. At the moment they're the opposite of King Midas, everything they touch turns to crap.

Perhaps the Wildrose have some thoughts on how to get things moving?

Of course, they would have to be able to voice them without sounding like a bunch of petulant children. Not to mention that "cut taxes, cut spending!" isn't a particularly helpful suggestion.

Perhaps the PC party have some thoughts on how to get things moving?

Nope, haven't heard a peep from them. Of course, if they had ideas on how to get things moving, they probably wouldn't have been booted out of office in favour of a party that is normally unpalatable to most Albertans. I guess Albertans weren't enticed by health care levies and spending cuts.

Their former leader didn't have any ideas either. Hell, he was so out of ideas that he stepped down on election night. Their new leader... who is he? Oh right, the rambling moron that also shares the legacy of having lost an election to someone so progressive you wouldn't believe Albertans voted for him. What ideas has he offered up?

It seems our government and legislature as a whole is a giant failure. I think Greg Clark might be the only shining MLA out of a bunch of garbage, because it actually seems like he does his job. Unsurprisingly, he's also been tweeting his parties ideas for how to get things moving.

The NDP may be painful to witness considering that raising taxes during a recession is tantamount to insanity, but I'm optimistic that their policies will win out in the long term, particularly the carbon plan. I'm glad that we have a government that is concerned about the future of the provinces economy, and is actually willing to stick to their guns and implement tough changes. We didn't have this before, and I don't think I need to elaborate on how well that worked out for us.

There's nothing that can be done to oust them from power, so it would be nice if people stopped pouting and politicking and actually started coming up with ways to make a difference.

[Resolute 14]

Originally Posted by Mr.Coffee

I guess so, do you disagree? Do you see what I am saying with respect to Albertans (seemingly) arrogant attitude? Just curious if you see it the same way. And I apologize, I should not have called you a dick, not very cool.

Thanks, and likewise, my apology for unloading on you there too.

I do understand what you are saying, but I think you unnecessarily confine it to Albertans, or O&G. Pick any industry that is flying high, and you will see the people riding that wave showing similar levels of arrogance. Just human nature, I think. Ontario's manufacturing sector certainly stands as a parallel in my view. That industry loved the low value dollar and people out there displayed a pretty healthy arrogance - right up until the Loonie rose to parity and all the inefficiencies of that industry were exposed. Of course, Ontario's now gone the other way entirely and was pretty satisfied to be a welfare province taking transfer payments from the west. So now they are panicking again because they are about to lose billions in free money. That will certainly put a big wrench in Kathleen Wynne's idiotic pension plan, assuming Trudeau is smart enough to stay away from it.

[Resolute 14]

Speaking of everything the NDP touching turning to crap: Joe Ceci's unconstitutional beer tax took a big hit in the courts as Steam Whistle won an injunction against it.

http://calgaryherald.com/opinion/col...onist-beer-tax

Finance Minister Joe Ceci defended his plan to charge a higher mark-up on beer from outside of the New West Partnership in late November. “Our intent is to grow the brewery business in Alberta and to create jobs and to diversify the economy,” he told the CBC. Unfortunately for Ceci, intent doesn’t enter into it. But even if it did, it’s a bad argument.

In Steam Whistle’s pleadings on Monday, the court heard that four full-time and 15 part-time Alberta employees will lose their jobs on account of Ceci’s plan to create jobs and diversify the economy. Further, Muskoka Brewery ceased operations in Alberta at the end of 2015 on account of this tax, leaving even more Albertans without work. So far, Ceci’s plan has only cost jobs and hurt the economy.

[Kavvy]

Ceci is starting to annoy me however, we need to be careful in over pushing small risks as then we are not allowing for new ideas and innovation and we will surely fail as a province.

Politicians are expected to try new ideas which have manageable risks.

Putting on a tax to out of province breweries ended up hurting jobs in Alberta. This isn't good, and maybe it is time to end the policy. However, is this only short term? Will this create a market where Albertians will invest in new brewers in Alberta and create more jobs then those lost? Investment takes time to react to market conditions. The long game may not be there yet.

Then there is the court case, which may make everything a moot point.