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October 13, 2019 | Seven Days

A best-selling Canadian author of 14 books on economic trends, real estate, the financial crisis, personal finance strategies, taxation and politics. Nationally-known speaker and lecturer on macroeconomics, the housing market and investment techniques. He is a licensed Investment Advisor with a fee-based, no-commission Toronto-based practice serving clients across Canada.

Seven days before the federal election and more proof a week in politics is an eternity. For several reasons, a yawner vote in 2019 turned into a pivotal contest, rife with financial and economic consequences. Who knew?

Here’s the latest, according to the amalgam of polls the CBC tracks: the odds of the Tories wining a majority or minority is now 51%. Chances of a Lib win have dropped to 49%. Yes, this could change again, but there are some profound things happening.

The Liberals have crested. A resurgence by the separatists has the Bloc Quebecois chewing through T2 support in that province. In BC, the Greens are nibbling away at the Grits and the Jody factor is hurting. In the 905 and elsewhere the Dippers have moved ahead since Jagmeet surpassed low expectations in the sole English-language debate. And, as you know, Trudeau is dragging around all that Blackface-Lavalin-India-ethics baggage.

It would be shocking to have a majority Liberal or Conservative government defeated federally after a single term. But, this Turkey Time weekend, it appears that could happen. You can smell the PMO’s desperation as young Andrew Scheer is continuously and absurdly compared to bumbly Doug Ford, as the ghost of Harper is invoked and voters warned Tories would reopen debates on abortion or gay marriage. When you can’t inspire ‘em, then scare ‘em.

Economically, the country’s doing fine. The jobs numbers on Friday were huge. GDP’s okay. Canada’s avoided cutting interest rates thus far. So the macros should support sticking with the Libs.

The micros are something else. Household debt is epic. Borrowing is on the rise again. The savings rate has tanked. A string of surveys show most people are in precarious financial shape. House prices appear poised to swell once more. There may be a sense Mr. Socks has governed around the edges, spending more time on apologies, special interest groups and his rockstar image than the big stuff. The self-employed still remember the assault on small businesses last year. The carbon tax wiped away any benefit of the Libs’ middle-class tax reduction. And investors fear huge deficits will end up jacking taxes on capital gains, dividends or the 60% of us left paying all the income tax.

As my fancy portfolio manager buddy Ryan pointed out this weekend, governments that forever spend more than they collect are destructive. Today’s deficits are tomorrow’s taxes. Debt-servicing costs will erupt when rates click higher. Piddling away thirty billion a year on interest every year is criminal – more than we spend on child support or paying the wrinklies. Imagine when the Bank of Canada rate is just 3%, instead of 1.75%.

Of the four major federal parties likely to elect MPs or form government, three are embracing deficits with no realistic plan to balance the books. The Greens would tax every financial transaction, including trades for your TFSA, and still fall short. The NDP would raise billions from mythical rich people. The Libs would add another $90 billion in debt (best case scenario) over four years. The Cons admit red ink for a couple of years, then balance. (In fairness, Trudeau got elected in 2015 promising two years of ‘modest’ deficits, then delivered four years of fat ones.)

There’s more, too. The country needs pipelines built. Now. The lack of capacity has cost us tens of billions, depressed Canadian financial assets, hurt investors and cost jobs – not to mention a withering 30% commercial vacancy rate in Calgary. As for real estate, the Liberal shared-mortgage program is a mess and houses are less affordable now than they were in 2015. But the Cons’ plans to bring back long mortgages and gut the stress test are equally insane.

Truth be told, there may be no good option in this election. Fiscal conservatives voting for Max steal from Cons and help spendy Libs. Those opting for Greens are noble yet irrelevant. NDP supporters crave socialism. And the Bloc is a special interest anti-Canada party which, incredibly, might determine the next federal government.

How to vote?

Find the worthiest candidate in your riding and support him/her.

If voting for a leader and party, pick the one that’s best for Canada, not just you.

Got kids? Then don’t support the over-spenders or debt accumulators. They already blame you for the planet.

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October 13th, 2019

Posted In: The Greater Fool

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