# Jim Flaherty



## I'm Howard (Oct 13, 2010)

The Income Trust was a major source of income revenue for many Canadians, Flaherty, with no real figures to back him up eliminated this source of income.

Cash strapped Canadians now must deal with extremely low interest rates by borrowing more, Jimbo's next step will be to raise rates.

This Governmnet has squandered a huge surplus and turned it into a huge debt, and they tell us we can't manage our own money??

Flaherty and his wife are eligible for three gold plated pensions, thanks to the cash strapped Tax Payer, and will ride off into the sunset oblivious to the personal harm He has caused many Tax Payers.


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## zylon (Oct 27, 2010)

May he reap his just reward

the sooner the better


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## HaroldCrump (Jun 10, 2009)

I don't see how Jim Flaherty is more guilty than Dwinght Duncan and Dalton McGuilty.
He has abused the finances a lot less than the clowns in Ontario have.

As for the taxation of income trusts, I don't see what else he could have done.
His hand was forced by BCE's decision to convert to an income trust.
The 5 big banks were also hinting that they will convert to income trusts.
The whole thing was become a joke.
He didn't have a choice.
If you want to lament the income trusts, blame the greed of companies too eager to convert to trusts like BCE and the banks.


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## the-royal-mail (Dec 11, 2009)

I agree with you Harold, unfortunately too many people in this country subscribe to the "left is correct" ideology stance, and any politician who doesn't pander to left-wing minority lobbyists is lambasted no matter what they do. I realize it and just shrug it off and form my own views and not be influenced by various "activists".


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## GeniusBoy27 (Jun 11, 2010)

It's no worse than a government that plainly lies to your face, and expects you to be stupid enough to accept it.

But to be honest, I still subscribe that both the left and right are entirely uninspiring presently. The most fascinating government presently in the world is the minority UK government with a mixture of the Tories and the Liberal Democrats. Some fascinating social policy changes and a strong attack on righting the economic problems in the UK with painful, but courageous moves, similar to Paul Martin when he took the fiscal helm of the Liberal Party.

I see no such courage in any politician today, except for unbelievably Elizabeth May. who is a fiscal conservative, but an obviously liberal social policy maker. Too bad she's not in a party with any hope of actually having power.

If someone could clearly delineate what the Liberals or the Conservatives really stand for, I'd be fascinated to hear. Because I'm sure a rat in a maze hitting random buttons could probably do better.


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## sags (May 15, 2010)

Flaherty got into trouble with the income trusts fiasco, in the same way that McGuinty did in Ontario.

Without comprehending what they were saying, or downright lying to the public, they made election promises that they couldn't and didn't keep.

A demonstration of either a lack of understanding or a lack of morals.

In recent local elections, the politicians who made promises that they are unlikely to be able to keep, were elected, while anyone telling the electorate the truth (what they didn't want to hear) was soundly beaten.

These results show that Canadians don't expect their politicians to keep election promises and don't hold them accountable when they don't.

We elect people who tell us what we want to hear.


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## the-royal-mail (Dec 11, 2009)

And it bears a point of clarifcation that the Conservatives have been maintaining balanced budgets, lowered taxes (GST and TFSA) and even paid down a few billion on the debt. They were doing well, but then the opposition parties in 2008 ganged up on the conservatives in a power-grabbing attempt. Flaherty was ready to introduced a balanced budget but the coalition crooks forced the gov't to spend money on bailouts and thus put us into debt. The economy sucked and they have been unable to dig themselves out of the financial hole since.

Of course, the left wingers will disagree with me based purely on ideology.


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## GeniusBoy27 (Jun 11, 2010)

TRM:

Paul Martin had a POSITIVE balance budget. (Please look at the evidence). If you remember the last election, Stephen Harper said we would not go into deficit.

Largest deficit in history? This conservative government. Please look at facts from gasp ... the budget presented by one, Jim Flaherty. (www.budget.ca/2010/pdf/budget-planbudgetaire-eng.pdf). On page 166 of the budget (152 of the pdf), Chart 4.1.5 shows budgetary SURPLUSES under the Liberal government consistent from 2001-2006. Largest budgetary surplus in history? $13.2 billion under Paul Martin. Harper takes over in 2006. Within 2 fiscal years, there's gasp, a budgetary deficit. "There is no way the government is going into deficit," was the election campaign mantra, if I remember correctly.

Largest deficit in Canadian history, -3.5% of GDP (or $53.8 billion) in fiscal year 2009. In fact, Flaherty was told by various economists to reign in the spending because a global downturn was a possibility. It wasn't until after the economy had collapsed that he had to put in a stimulus package with no manoueverability.

What would have given me the most money? Paul Martin's proposal to lower INCOME taxes, not the GST. Any economist worth his salt (i.e. all 5 big banks and the majority of economists across the country) said lowering the GST was stupid compared to lowering income taxes. But the optics of decreasing the GST is good politics. But if you actually work out the numbers, far less tax efficient.

And the evidence since the Harper government has been in power is an increase in the debt. In fact, taking the 2010 budget projections (from Flaherty's budget), we've added about $90 billion in debt since Harper has taken over. Yes, there was a global meltdown, but it could have been lessened, if Flaherty was actually listening to the business community.

My facts aren't from some heresay. It's from the Flaherty's own budget. I don't care about left wing/right-wing ideology. In fact, I'm centre-right when it comes on fiscal matters. I DO care about facts, and the facts you state are plainly wrong. (Unless, you're telling me that Flaherty is lying about his own budget). Put the truth on the table and let's have an honest debate. 

Paul Martin was right of the current conservative government. And I trust someone who's run a $300 million shipping business, more than Flaherty who has no significant business experience. But nothing drives me more bonkers than when the "FACTS" just aren't true. I honestly can't stand any government right now (I'd probably join an anarchist party if I had a choice). I hate the concept of this "left-wing"/"right-wing" noise. It precludes an honest debate on what's best for the country. 

I refuse to be a lemming. (How's that for a quote?) I can think for myself. And I don't like the fact that the current federal government lies to my face.


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## the-royal-mail (Dec 11, 2009)

Forget about Paul Martin. That was years ago and has nothing to do with what we're talking about. But since you brought him up, Paul Martin has lots of his own failures, like his irresponsible vote buying in the dying days of his gov't, sending his ministers across the country with boatloads of money, sponsorship scandal (as IF he wasn't involved, what-ever) not to mention discriminatory Liberal social policies. Enough about this. Back on topic.

Don't you remember the coalition of 2008? Read up on it. And read up on the conservative budgets from 2006-08. They were all balanced. It was the bloody coalition that forced Flaherty to give billions in bailout money and other "stimulus" that lead to us showing red ink. That's what happened and that's what lead to our current deficits. Plus the shi-ty economy with people losing their jobs and such.


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## GeniusBoy27 (Jun 11, 2010)

the-royal-mail said:


> Forget about Paul Martin. That was years ago and has nothing to do with what we're talking about. But since you brought him up, Paul Martin has lots of his own failures, like his irresponsible vote buying in the dying days of his gov't, sending his ministers across the country with boatloads of money, sponsorship scandal (as IF he wasn't involved, what-ever) not to mention discriminatory Liberal social policies. Enough about this. Back on topic.
> 
> Don't you remember the coalition of 2008? Read up on it. And read up on the conservative budgets from 2006-08. They were all balanced. It was the bloody coalition that forced Flaherty to give billions in bailout money and other "stimulus" that lead to us showing red ink. That's what happened and that's what lead to our current deficits. Plus the shi-ty economy with people losing their jobs and such.


Actually, that was Jean Chretien. He was a sleazy politician. Read Paul Martin's memoires. He got screwed by Chretien, and the sponsorship scandal had nothing to do with Paul Martin ... 

2006-2008. That was because the Conservatives didn't have a government that could make a semblance of a budget. So since the 2006 budget was a Liberal budget ... we're talking the 2007 and 2008 budgets. It was because the Liberals left the Conservatives a positive budget, and projected to have been higher in both 2007 and 2008 (read the 2006 budget), until Harper decided to spend.

How far was Flaherty off in his 2008 budget with his 2009 projection? Let's say $60 billion. It isn't bailouts that cause the deficit. It's the lost of personal and corporate income tax. That's what happened across the world. I accept that.

What was the cost of bailouts? Maybe $10-15 billion. It's not $54 billion. Stimulus spending was necessary, and I accept that it's not the federal government's fault, but to say it's the coalition's doing is not true. The Conservatives realized they would lose at the polls if they didn't seem like they were doing something in an obvious financial crisis.


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## kcowan (Jul 1, 2010)

A budget surplus means that we are paying too much tax on average. I like balanced budgets with no debt, no matter who gives it to me. OTOH Martin was riding the nationalized daycare program when he lost. I was against that for a number of reasons.

I thought income trusts had run their course and I was just disappointed that Flaherty did not realize that before the election in question. I would have felt better voting for him if he had been honest about it.


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## GeniusBoy27 (Jun 11, 2010)

Well, we do have a debt ... so I'm actually for paying back some of our loan. So a small budget surplus is what I would aim for, as a government.


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## Square Root (Jan 30, 2010)

HaroldCrump said:


> I don't see how Jim Flaherty is more guilty than Dwinght Duncan and Dalton McGuilty.
> He has abused the finances a lot less than the clowns in Ontario have.
> 
> As for the taxation of income trusts, I don't see what else he could have done.
> ...


Agree. The whole income trust concept was originally designed to be used by a restricted class of company to pass on certain tax advantages to shareholders, a bit like limited partnerships. Over time loopholes were exploited by smart people to extend the concept to ordinary companies that would otherwise pay regular taxes and dividends to shareholders. Dividends were discriminated against under this environment and income trusts had a reduced cost of equity as a result. Eventually, BCE and the Banks had no choice but to join the game. Bottom line is a lot of these trusts converted to corps and are now paying good dividends which attract a low rate of tax. Incidently, the maximum tax rate on dividends in Ontario is about 26.5% while in good old Alberta it is only about 16% in 2010. Over the next few years these rates are rising to reflect the lower corp income tax rates coming in. The concept of tax integration (corp and personal on dividends) is a good one that has been with us since 1971.


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## the-royal-mail (Dec 11, 2009)

Actually the cost of the bailouts was quite high. Most people have forgotten or never noticed that the banks got considerable bailout funds around 2008.


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## Square Root (Jan 30, 2010)

the-royal-mail said:


> Actually the cost of the bailouts was quite high. Most people have forgotten or never noticed that the banks got considerable bailout funds around 2008.


Canada? Not true here. There was some liquidity support that made money for the Cdn gov't. IE they purchased mortgages that they had already guaranteed from the banks which allowed the banks to lend more. As well the US made money on its bank bailout so far. The bailouts of AIG and the car companies are another story. Jury still out on those.


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## Rysto (Nov 22, 2010)

If the current deficits are only due to the stimulus, then why -- according to the Conservative's own very rosy projections -- is the deficit supposed to continue until 2015? The stimulus spending ends this year!

The simple truth is that the Conservatives cut taxes too far and raised spending too much. All of the complaints about the stimulus is just a political smokescreen for their brutal fiscal mismanagement.


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## the-royal-mail (Dec 11, 2009)

Square Root said:


> Canada? Not true here. There was some liquidity support that made money for the Cdn gov't. IE they purchased mortgages that they had already guaranteed from the banks which allowed the banks to lend more. As well the US made money on its bank bailout so far. The bailouts of AIG and the car companies are another story. Jury still out on those.


No, this happened here. The amount was between $20-40B. How much $ was involved those mortgages you mention?


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## Square Root (Jan 30, 2010)

the-royal-mail said:


> No, this happened here. The amount was between $20-40B. How much $ was involved those mortgages you mention?


I know what I'm talking about on this one (perhaps as opposed to other topics). There was no Canadian Bank Bailout. The Gov't bought tens of billions of already guaranteed mortgages at market prices to free up room on the Bank's balance sheets so they could give more loans and mortgages. The Gov't made money on this and it was NOT A BAILOUT. Many people continue to hold this erroneous belief.


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## sags (May 15, 2010)

If you break down the "jobs created" category in the unemployment numbers, you discover that a large % of the new jobs are public service jobs.

A truly conservative government would not be increasing the size of the public service, while caretakers of a rising deficit.

Reading some news articles, some of the new hiring is to handle higher case loads for welfare and unemployment programs.

That's just swell...........we have lost manufacturing jobs and increased the welfare rolls............so we have to increase public service jobs to handle the new work............talk about "mixed up" job creation.

The stimulus money was largely wasted on minor infrastructure problems that had little impact on the econony. There was a lot of road patching and repaving going on. Our city was virtually tied up on every street, as the few companies involved raced from one uncompleted project to another and another. People weren't unemployed because we had pot holes in the roads.

The big benefactors of the stimulus ?...mega companies like Ellis Don, who are faithful Conservative contributors.

The "little guys"........small businesses got very little of the stimulus money.
They were advised, and continue to be advised, to visit their "friendly banker" and apply for a loan.......yea, like that is going to happen.

The government bailed out GM by loaning them money. A better option would have been to buy the whole company outright to create a Canadian based auto industry overnight. Korea, Japan, India, China, USA, UK, Germany, Russia, and Norway....all have an auto industry..........but no..........not Canada. GM has revamped their product lines, and are declaring profits once again. A dozen more assembly plants and all the spin off jobs, in Canada would sure look good right about now.

It is time to think beyond "waiting and hoping" the US recovers so we can ride on their coattails once again.

If Canada has become a petro power in the world, we should start thinking like one and using the capital raised from our good fortune to own commodities, to create the next generation of business and jobs.

For goodness sakes, there are jobs available out west, but the government offers no financial help for young people to go there and get established. How does a person on unemployment or welfare move to a new job, with no money in their pocket? For a few thousand dollars each, we could move thousands of young people to places that need workers, but oh no.......let's just bring in Mexicans.

No leadership.........no new ideas........just more silly laws and more prisons.

In all honesty, you can blame all the political parties. They are playing from the same sheet music.


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## the-royal-mail (Dec 11, 2009)

Square Root said:


> I know what I'm talking about on this one (perhaps as opposed to other topics). There was no Canadian Bank Bailout. The Gov't bought tens of billions of already guaranteed mortgages at market prices to free up room on the Bank's balance sheets so they could give more loans and mortgages. The Gov't made money on this and it was NOT A BAILOUT. Many people continue to hold this erroneous belief.


Hi Square, I don't doubt your credibility for a second. Now this is coming back to me. I did a quick search and was able to find these historical links that would provide interesting reading on this topic.

http://www.globalresearch.ca/index.php?context=va&aid=12007

http://www.cbc.ca/money/story/2008/10/10/flaherty-banks.html

https://greenparty.ca/blogs/16756/2010-08-17/canada-had-had-bank-bail-out (interesting debate at the bottom of the page but be wary of where this is hosted)


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## olivaw (Nov 21, 2010)

sags said:


> For goodness sakes, there are jobs available out west, but the government offers no financial help for young people to go there and get established. How does a person on unemployment or welfare move to a new job, with no money in their pocket? For a few thousand dollars each, we could move thousands of young people to places that need workers, but oh no.......let's just bring in Mexicans.


You raise some interesting points SAG but some of your statements sound like they have more to do with the American immigration debate than with Canada. The Canadian government and Canadian companies do not give preference to foreign workers over domestic workers. In fact, the opposite is true. The employment boom that encouraged Alberta companies to bring in temporary workers from other countries has largely gone away and many of those souls have been sent back home. If anything, I'd say that our treatment of foreign workers was a bit harsh. 

Here is a different take on it: an interesting article that references the 2006 complaint that the west was stealing the "Sons and Daughters" from Atlantic Canada. http://network.nationalpost.com/np/...-rats-head-back-home-until-the-next-time.aspx

[As an aside, when I first arrived in Alberta in the late 70s, I was treated as if I was a foreign worker because I came from Eastern Canada.  It is better now.]


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## Square Root (Jan 30, 2010)

the-royal-mail said:


> Hi Square, I don't doubt your credibility for a second. Now this is coming back to me. I did a quick search and was able to find these historical links that would provide interesting reading on this topic.
> 
> http://www.globalresearch.ca/index.php?context=va&aid=12007
> 
> ...


Thanks for the links. I read them and they confirm the facts as I described. Certain commentators chose to call this a "bank Bailout" for political or shock value reasons, but all knowledgeable people familiar with business/banking practice believed the finance and prime minister when they said "no bank bailout". I guess the term bailout can be used in many ways depending on your objective. Bottom line: no money was lent, no money was invested, no cost to the Gov't. This was not the case for the car companies or US or European banks where there was indeed a "bailout" as evidenced by investments or loans and likely costs. Several UK banks have Gov't as their majority shareholder, still.


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## GeniusBoy27 (Jun 11, 2010)

the-royal-mail said:


> Hi Square, I don't doubt your credibility for a second. Now this is coming back to me. I did a quick search and was able to find these historical links that would provide interesting reading on this topic.
> 
> http://www.globalresearch.ca/index.php?context=va&aid=12007
> 
> ...


Gasp. Are you supporting the position of the left-wing ideologues out there? Wow, a quotation from no less than the Green Party? (da horror, da horror!)
Wow, and an acknowledgement from the CBC that the election promises weren't fulfilled?

But Square Root is right. It was an insurance swap, and the government MADE money out of it. The Big 5 never got a real bank bailout like in the US. Why else is the world clamouring to have Canada's banking system?


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## Rysto (Nov 22, 2010)

GeniusBoy27 said:


> The Big 5 never got a real bank bailout like in the US.


In fairness, what the Canadian government did is exactly the same as what TARP was supposed to do for the banks in the US at the time. It wasn't until later that Paulson decided to throw out the original purpose of TARP and just give the money to the banks.


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## Square Root (Jan 30, 2010)

Rysto said:


> In fairness, what the Canadian government did is exactly the same as what TARP was supposed to do for the banks in the US at the time. It wasn't until later that Paulson decided to throw out the original purpose of TARP and just give the money to the banks.


With one very major difference. TARP was supposed to take bad assets off the US banks' balance sheets with very big "hair cuts" (discounts). The assets in Canada were not impared-in fact they were already guaranteed by CMHC(our gov't). It was simply designed to provide liquidity to the banks so they could in turn lend more. As hard as you try I don't see how you can call what happened in Canada a "bank bailout".


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## kcowan (Jul 1, 2010)

ISTR that the Canadian Banks got a $25 billion line of credit from our government. Granted they had to pay interest on anything they borrowed. And they were expected to repay it. If I got a line of credit without the assets to back it up, I would thank the government for their largesse.

But I guess I would not consider it a bailout if I did not really need it!


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## Square Root (Jan 30, 2010)

Again. It was a line of credit that was backed up by assets that the banks pledged as collateral. It was put in place to provide liquidity. This was priced at market rates. Do you tnink this was a "bailout". If so we had better agree on what that term means.


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## andrewf (Mar 1, 2010)

the-royal-mail said:


> And it bears a point of clarifcation that the Conservatives have been maintaining balanced budgets, lowered taxes (GST and TFSA) and even paid down a few billion on the debt. They were doing well, but then the opposition parties in 2008 ganged up on the conservatives in a power-grabbing attempt. Flaherty was ready to introduced a balanced budget but the coalition crooks forced the gov't to spend money on bailouts and thus put us into debt. The economy sucked and they have been unable to dig themselves out of the financial hole since.
> 
> Of course, the left wingers will disagree with me based purely on ideology.


You're not paying attention, then. The non-partisan Parliament Budget Officer, Kevin Page, submitted a report in Fall 2008 showing that the government was in a structural deficit (and we still are). The CPC put us into a deficit position before the 2008 election, and before the coalition crisis. They did make it worse, but let's not suggest that they were paragons of fiscal probity before the dastardly coalition forced them to lavish funds on hockey rinks in conservative ridings. The government has been far from afraid to own the orgy of spending. Do you forget the Economic Action Plan 'branding exercise'?


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## andrewf (Mar 1, 2010)

kcowan said:


> A budget surplus means that we are paying too much tax on average. I like balanced budgets with no debt, no matter who gives it to me. OTOH Martin was riding the nationalized daycare program when he lost. I was against that for a number of reasons.
> 
> I thought income trusts had run their course and I was just disappointed that Flaherty did not realize that before the election in question. I would have felt better voting for him if he had been honest about it.


A surplus over what time frame? A month? A year? A decade? Business cycle? Generation?

Canada is heading into a period of time with a large portion of the population drawing PAYGO pensions (OAS/GIS), higher health care costs, etc. This is a time where we should be reducing debt and reforming these institutions so they are efficient, effective, scalable and sustainable. Instead, we're going to leverage up the federal balance sheet to the gills and tax the hell out of Gen X and Gen Yers to pay for their parents. It's going to be a massive inter-generational transfer of wealth.


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## MoneyGal (Apr 24, 2009)

andrewf said:


> it's going to be *another* massive inter-generational transfer of wealth.


ftfy.


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## andrewf (Mar 1, 2010)

Fair enough. Is it fair to kick the can that the boomers' parents left down the road for their smaller cohort of children to pay for? I'm not sure how much the boomers actually shouldered, given the substantial increase in national debt over the adult lives of that generation. 


Square Root, you remind me of something that occurred to me at the time. If the government can make money by purchasing MBSs from the banks that are guaranteed through CMHC, does this not imply that that spread is a subsidy to the banks through normal times? Why does the government not own all these MBS, since they are already guaranteed.


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## MoneyGal (Apr 24, 2009)

andrewf said:


> I'm not sure how much the boomers actually shouldered, given the substantial increase in national debt over the adult lives of that generation.


That was my point. To the extent that there was an intergenerational transfer of wealth _onto_ the boomers, it was passed on (to post-Boomers) via national debt. I think I am bit older than you are, so my perspective on this may be slightly different. My point was not that boomers were the recipients of intergenerational wealth transfers; it was that the transfer you pointed out is *in addition to* the enormous national debts we post-Boomers are already contending with. 

TL, DR: I'm double-agreeing with you. 

Side note: I don't actually love this style of arguing (declaring an entire generation responsible for "something") but this particular issue drives me 'round the bend.


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## HaroldCrump (Jun 10, 2009)

MoneyGal said:


> That was my point. To the extent that there was an intergenerational transfer of wealth _onto_ the boomers, it was passed on (to post-Boomers) via national debt. I think I am bit older than you are, so my perspective on this may be slightly different. My point was not that boomers were the recipients of intergenerational wealth transfers; it was that the transfer you pointed out is *in addition to* the enormous national debts we post-Boomers are already contending with.
> 
> TL, DR: I'm double-agreeing with you.
> 
> Side note: I don't actually love this style of arguing (declaring an entire generation responsible for "something") but this particular issue drives me 'round the bend.


A lot of it had to do with the governments back in the baby booming days in the Western world doing this to "prove" that Western capitalism is better than Soviet style communism.
By providing good jobs, secure pensions, strong military, etc. was supposed to prove that capitalism can do the same, and better, than what communism could.

Now it's time to pay the piper....


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## I'm Howard (Oct 13, 2010)

The fact is that we Boomers will be the largest recipients of wealth transfer in History, and who do you think will eventually end up with this wealth??

All these 50 somethings paying off mortgages, doing RRSP's and TFSA's , the real owners of this money will be your kids, the deprived little darlings with their X Box, Big Screen, Cell Phone, paid lessons, braces etc.

Every generation , blames the one before.


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## the-royal-mail (Dec 11, 2009)

I'm Howard said:


> Every generation , blames the one before.


Say it loud, say it clear...


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## andrewf (Mar 1, 2010)

I'm Howard said:


> The fact is that we Boomers will be the largest recipients of wealth transfer in History, and who do you think will eventually end up with this wealth??
> 
> All these 50 somethings paying off mortgages, doing RRSP's and TFSA's , the real owners of this money will be your kids, the deprived little darlings with their X Box, Big Screen, Cell Phone, paid lessons, braces etc.
> 
> Every generation , blames the one before.


We'll have to see how much is left. I hear a lot of stories about people retiring with mortgages. I also don't expect to hear a lot of stories like those about Depression-era grannies who clipped coupons and took the bus dying and leaving 7-figure inheritances. And that's fine--people should spend their savings in retirement and not leaving large inheritances for their ingrate children. I just wish our government hadn't been raided. We were doing okay until the most recent government was elected and they decided to boost spending by ~7.5% a year as well as cut taxes. Now we're going to erase all the surpluses from the late nineties and early 2000s in a 5 year orgy of borrowing. 

The provincial governments deserve a fair share of the blame as well. I'm unhappy about some of the sillier ideas adopted here in Ontario, particularly the Feed-In Tariff and other industrial policy, class-size mandates (sop to teachers), etc. I'm happy about the tax reforms here in Ontario, including the reduction in corporate taxes and introduction of HST, but we need to do some cutting of fat in certain government programs and likely some personal income tax hikes or increases in the provincial portion of the HST to help balance the budget here. The deficit in Ontario is out of control. I'm not hearing a lot of sensible talk from Hudak on this topic, unfortunately. He's hoping to cruise to victory without laying out a vision for how he'll address these problems.

Really, boomers have an interest in not leaving our government in dire financial straits. The worse things get, the likelier it will be that the health benefits and government pension they are counting on will be pulled from beneath them. The working generation will only tolerate a certain level of taxation before there is a significant political backlash.


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## Square Root (Jan 30, 2010)

andrewf said:


> Fair enough. Is it fair to kick the can that the boomers' parents left down the road for their smaller cohort of children to pay for? I'm not sure how much the boomers actually shouldered, given the substantial increase in national debt over the adult lives of that generation.
> 
> 
> Square Root, you remind me of something that occurred to me at the time. If the government can make money by purchasing MBSs from the banks that are guaranteed through CMHC, does this not imply that that spread is a subsidy to the banks through normal times? Why does the government not own all these MBS, since they are already guaranteed.


Excellent question. The reason why CMHC made money was because they borrowed short (TBills) and invested long (MBS). THey do this in the normal couse by issuing CMHC debt backed by mortgages. During the crisis they expanded the program greatly. If you push this whole thing to the limit you would simply nationalize the banks and all profits would go to the state. I wonder if they would open their "branches" on Sunday?


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## kcowan (Jul 1, 2010)

andrewf said:


> A surplus over what time frame? A month? A year? A decade? Business cycle? Generation?
> 
> Canada is heading into a period of time with a large portion of the population drawing PAYGO pensions (OAS/GIS), higher health care costs, etc. This is a time where we should be reducing debt and reforming these institutions so they are efficient, effective, scalable and sustainable. Instead, we're going to leverage up the federal balance sheet to the gills and tax the hell out of Gen X and Gen Yers to pay for their parents. It's going to be a massive inter-generational transfer of wealth.


I don't see anything new about that. Where do you think our national debt came from? We have been overleveraged for most of our lives!


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## kcowan (Jul 1, 2010)

Square Root said:


> Again. It was a line of credit that was backed up by assets that the banks pledged as collateral. It was put in place to provide liquidity. This was priced at market rates. Do you tnink this was a "bailout". If so we had better agree on what that term means.


The only reason it was not a bailout is that they did not need it. Will they ever need it? I hope not!


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## Square Root (Jan 30, 2010)

kcowan said:


> The only reason it was not a bailout is that they did not need it. Will they ever need it? I hope not!


OK I can agree with that.


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## Eclectic12 (Oct 20, 2010)

HaroldCrump said:


> I don't see how Jim Flaherty is more guilty than Dwinght Duncan and Dalton McGuilty.
> He has abused the finances a lot less than the clowns in Ontario have.
> 
> As for the taxation of income trusts, I don't see what else he could have done.
> ...


But he did have a choice. 

He could have defined that only REIT and existing trusts could keep the tax advantage. Or some combinations of REITs plus say energy trusts or whatever criteria makes up the business content that "should" have the tax advantage. Instead he chose an "REIT or nothing", with little to no advance warning to allow the market to adjust.

And while BCE and/or the Banks hinting about a conversion to the trust structure may have been the last straw, can you blame them? 

It's market forces and critical mass. If enough other companies convert or plan to convert due to significant gains through higher valuations/price-to-earnings ratios - at some point, to be competitive a conversion has to happen.

IMHO, if you want to lament the income trusts, blame the bureaucrat/gov't officials who left the definition so wide open that any business could covert.


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