Ontario's Provincial Debt: When Will it Stop

Even in my younger finance career, I never would have thought we would see the numbers we do now - $327B in debt....just for Ontario!  For the entire country of Canada I never expected such a magnitude, nevermind one province of 13 provinces and territories!

Here's how it happened.  Note, around the time I graduated, the debt nearly doubled from....$35B to $62B.  Since the Dalton McGuinty days, Ontario's debt has increased nearly 2.5x from $139B to the current $327B as released April 27th.

Canadian and Oilers Class: Let's Hope It Goes Further to an All Canadian Stanley Cup Final

Sometimes when there is a technical glitch, your audience is the one to bail you out...

http://www.tsn.ca/must-see/video/the-keg-must-see-oilers-fans-help-sing-star-spangled-banner~1112550

How Much Does it Cost to Run a Provincial Government With the Lowest Approval Rating Premier?

I have had a very eye opening read reviewing the "Treasury Board Secretariat PUBLIC ACCOUNTS OF ONTARIO Annual Report and Consolidated Financial Statements 2015-2016", yes that stuff that every citizen, MPP and member of the media either buries their head in the sand about, ignores it entirely or just plain spins it in a very different view.

Here is the beginning of the answer to the question (highlights below).  All the juicy details at https://files.ontario.ca/volume1-eng.pdf

And Yet Another Liberal Apology: Minister Harjit Sajjan Does not Know What "Architect" Implies or Means In Relation to Operation Medusa

...which begs the questions, "what qualifications does this MP have to actually LEAD our respected forces", and " how was he appointed to this role"?

"Embellishment" seems to be a common theme among the Liberals. Including how the economy is expected to perform to justify the multi-decades deficits we are going to have.

www.cbc.ca/beta/news/politics/sajjan-medusa-architect-claim-1.4091609

Those Puffin Penguins: Your "Science and Fact-Based" Liberal Party At Work...

MP McKenna, thank you for protecting us from climate change and taking care of an environment you have probably never been to nor seen (neither Newfoundland nor the Antarctic)

More Foot In Mouth Disease, But This Time It Is For the Camera: Trudeau Posing With Member of a Terrorist Group

Say no more. Did our inept Prime Minister nor his entourage know who this individual or his outlawed group is? Did he miss the briefing?

His judgement and his party's judgement must be questioned even by his voters that backed him.

Read it all here.

http://news.nationalpost.com/news/canada/prime-minister-trudeau-photographed-with-former-vp-of-group-on-canadas-terror-list

4/20: Happy Ricky (and Trailer Park Boys) Day

Ontario Real Estate Industry Takes the (Information) Highway: Are There Any Facts or Integrity at All in the Home Buying Game?

At last this data is finally being compiled and assembled and in Canada real estate purchased may have something objective to work with and make informed decisions.  However...

With any product or service in the world  (including houses, condos) there are reams of data on trends, competition/competitors, market studies, demographic breakdowns of purchasers (yes, including....what country they are from and/or race! Sigh! Gasp!).  This data is necessary in order to understand the consumer,  or from a purely investment perspective, whether a business (or a consumer) wants to be in that line before that product or service becomes the next dinosaur or it goes south.  As such, consumer/business is able to exit ahead of time or use funds for another purpose all from making an INFORMED decision.

Conversely (and perversely) here in Canada, if I wanted to make an investment hypothesis that if China's GDP decreases in the next year, then what impact would that have on the amount of potential bidders and as such the impact on housing prices here in Canada so I can act accordingly based on my findings? For example, sell now or later?

Good luck! The info cupboard is bare. I'm sure if you entered "Ontario Housing Purchaser Demographics" in Google, the amount of "real" hard data would be the same as entering "Saskatchewan Navy"

Which begs the question, what were compilers of such data doing or avoiding to do before this? If these basic items are being asked for now, what information was available before?  If any? 

There have been a lot of real estate so called experts on radio and télévision over the years extending the virtues of owning Canadian real estate and claiming the Foreign Purchaser only comprises about 5.0% of transactions.  And every word said with a straight face! Well we now know this is an over extended truth (in other words, something that rhymes with "pool kit").

Real Estate Wars: A New Hope (Will This Band of "Rebels" Be Enough to beat the Dark Side?)

The fact that these three levels of government are actually acknowledging the real estate issue (pricing and liquidity) nevermind meeting face to face about it is incredible...and it only took about 20 years.  With exception of Morneau's and Tory's past business track records, this is more political baffoonery.  As mentioned in a past post, there are ways and means outside of foreign buyer taxes, more supply, first time home buyer incentives to address this issue.

As usual, a lot of promises, but the more important ones are the federally controlled issues.  Morneau has pledge access to information (in Justin's "fact-based" way of governing) and that the CRA would "dedicate resources to ensure compliance in the real estate sector", also indicating Capital Gains Tax is not on the table (when it should be, the Capital Gains Tax exemption is open to ANYONE who purchases and sells real estate in Canada.  If the different levels of government want to start cooling down the market, leave this cherished exemption only to Canadians!).  It appears that Morneau has  learned from Premier Christie Clark's split personality government, and "have agreed to refrain from introducing new measures for buyers which would impact housing price in the GTA by boosting demand".

No action or official comment until the upcoming Ontario Budget.  We wait and see on April 27th.

http://business.financialpost.com/personal-finance/mortgages-real-estate/little-doubt-foreign-buyers-are-pumping-up-victorias-housing-market-says-bmo-chief-economist

And in Victoria, BC...
http://business.financialpost.com/personal-finance/mortgages-real-estate/little-doubt-foreign-buyers-are-pumping-up-victorias-housing-market-says-bmo-chief-economist

I do not hear in the background, "Cue the music to Star Wars IV: A New Hope" (Luke, Han Solo and....Chewbacca?)

Real Estate Supply is not the Problem, Demand Is: The "Foreigners - Buy Here" Sign has Been Up For Years

I would not normally quote the following source as "news"; however, it did outline clearly the significance of what is still coming to Toronto in an over zealous Canadian real estate market.  While two new skyscrapers are planned to be taller than that ivory tower of commerce, finance and a Bay Street mecca – First Canadian Place.  Think about that!

http://dailyhive.com/toronto/toronto-skyscrapers-future-skyline-2017

Although the benefits are seeing areas like Gerrard/Yonge with a facelift (yes, where you used to buy your "Big Slice"), it shows that despite Canadian buyers trying to purchase in Canadian dollars is a mug's game as we are in direct competition with billions of other real estate purchasers world wide who think and manage their wealth in US$ (which will continue to strengthen versus our Canadian dollar thanks to, oh say, i) Liberal deficits that are multiples of what they were forecast to be, ii) no plan to pay these deficits down within decades, iii) unemployment at 7% and iv) GDP hovering at or below 2.0%).  They are trying to move large sums of funds (millions), they are motivated purchasers, and are willing to outbid for that.  In summary, such purchasers salivate when they see the development continuing in cities such as Vancouver and Toronto due to the “discount” as the Canadian dollar is approximately 75% of a US$, the rule of law in Canada and the fact that Federal, Provincial or Municipal governments will NEVER react in a direct, firm and fair way for Canadians otherwise facing that term WITH NO CONSEQUENCES ATTACHED (whether right or wrong) by its constituents AND the media… the “R” word (“racist”).

In other words, CANADA AND CANADIANS HAVE IMPORTED THEIR OWN REAL ESTATE INFLATION, and now there is no stopping it until: i) interest rates increase (LOL, sometimes I crack myself up – see reasons above), or ii) there is a better place for foreigners/potential permanent residents to purchase.   Neither of which are happening.

In Australia, there are restrictions to combat such circumstances.  This requires foreign purchasers to buy “new” construction, not a resale, thus fostering jobs in the construction industry, and yes more supply which according to Economics 101 takes care of real estate pricing shocks as theoretically there should be no shortage .

Although Canada is part of the FinTRAC system (from the government web site, "The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) is Canada’s financial intelligence unit (FIU). The Centre assists in the detection, prevention and deterrence of money laundering and the financing of terrorist activities. FINTRAC's financial intelligence and compliance functions are a unique contribution to the safety of Canadians and the protection of the integrity of Canada's financial system.), this system has very little restrictions in stopping the movement of capital into Canada nevermind enforcement.  In the meantime, as Canadians we just have to accept that every dollar (Canadian$ or US$) is legitimate and well-earned, and only used for purposes of real estate as a place to live or to earn a capital gain in already over-heated market (that is, fuel to a fire).  And that every real estate agent dealing with a foreign buyer is screening them appropriately, and the banks are doing their due diligence…as per the law as well as the codes and integrity of their industries. 

No wonder the real estate agents and the real estate industry wants to keep this foreign data to themselves, and the significance of it.  What if a different truth was known and (naïve) Canadians actually woke up one day to what is happening behind the scenes (Exhibit A, around this time last year, the Globe and Mail blew the doors open on a story involving the Vancouver real estate market where real estate agents were assigning purchase and sale contracts, picking up tens of thousands in fees along the way, resulting in an unknown buyer showing up at the closing of the unsuspecting seller). 

On another note, CIBC has announced it will move into two brand new office towers, the first move for one of the big banks that have been residing in their respective office towers on Bay Street for decades.  Despite this refreshing move, when commercial towers are constructed and the doors open, usually that happens just in time for a….you guessed it, a market crash. 

"Sunny (and Stoned) Ways": Marijuana Legalized so let the Canadian Flag Be Ridiculed

Well it is official.  Although earlier than the uber tongue-in-cheek date of April 20th (4/20...Ricky's number on the back of his Sunnyvale hockey shirt) and three days after the adjusted April 10th date (maybe someone in the Liberal party read this blog and realized, "oh ya, one day after the 100th anniversary of 3,598 Canadian soldiers killed in one of the most defining moments of Canada's nation building history, maybe we should not release this marijuana legalization right after it"), the news is out.

It is enough to make Liberal marijuana smoking voters happy heading into this Christian-based holiday of Easter, which happens to render the weekend a long weekend (maybe it should have been introduced Thanksgiving long weekend for more of an impact....turkey and THC).

In any event, the flag-toting yahoos will be at the ready with their desecrated Canadian flags, altered for a cannabis leaf.  Merely days after a solemn and significant event for Canada, the Liberals are now changing Canada Day from a day of thanks, history, celebration, patriotism, honour and loyalty but to a day remembered for legalization of a selfish habit. Sad, very sad.

Makes you wander who in the Liberal party was smoking what.

Canadian Teams in the Stanley Cup Playoffs: Who will Go the Farthest?

So far, 0 for 5 in a rare year where 71% of the Canadian teams have made it to the playoffs AND are not playing each other in the first round.  With exception of the tri-coleur, the losses were one by goal, with all teams showing a valiant effort.

While the Leafs could have stole one out of the hands of the NHL's top team on their home Hi Heather. Received your flyer on 30 Philpot. What did it sell for and what was the asking price?   (according to your flyer, above asking ) .

Out of the West, we would all like to see McDavid continue on in successive rounds, while I am also gunning for a pesky, upset series win from Calgary. Writing from Toronto, I will have to reserve comments of the Eastern counterparts, only to say that my annual hope for an "All Canadian Stanley Cup Final" does arrive.

As such, will throw on my two cents on dividend paying stocks - yes, The Keg (KEG.un) and Boston Pizza (BPF.un). As these are national chains, and with most Canadian teams in the playoffs these have had some seasonality to them as I've been watching every playoffs since I've been a shareholder in each. Paying 5.4% to 6%, these should be part of any portfolio. 

And if the Canadian teams advance further, keep an eye out for "Second Quarter 2017 Results" for these companies as most bars in the country will be expecting increased business (especially here in Toronto with patio season approaching).

Sorry Vancouver, but you have your Stanley cup already...Justin's marijuana legalization.

DROP THE PUCK!

Well, At Least He (The Justin) Has Nice Hair: No Commentary Needed on This Latest Display of High School Drama Teacher Prime Minister

http://www.cbc.ca/beta/news/trudeau-searches-for-word-to-describe-north-korea-1.4063644

Canada's 150th: A New $10 Bill...Will Terry Fox Be Remembered Among Everything Sesquicentennial?

As usual, one important yet humble Canadian was overlooked, no matter whether man or woman, Anglophone or Francophone, from the east or the west. The efforts of this individual were heroic, super human and were beyond any sense of drive and spirit.

One of the greatest Canadians, if not THEE greatest Canadian - Terry Fox. If we already have the "Loon", I think the "Fox" would make a great piece of currency too.

(At least they kept Sir John A. on there)

http://www.cbc.ca/news/politics/bank-of-canada-unveils-new-10-banknote-for-canada-150-celebrations-1.4060501

Bank of Canada unveils new $10 banknote for Canada 150 celebrations

The Bank of Canada has unveiled a new $10 banknote to commemorate the 150th anniversary of Confederation.

CBC.CA

Internal Trade Agreement Rolled Out to Remove Domestic Trade Barriers Across Canada

What's that I hear? The sound of no one cares.

In spirit of the Federal government's efforts, finally a governing party has tackled these arcane laws between provinces and territories. If you remember the early days of Alexander Keith's beer first arriving in Ontario, their advertising slogan was "Imported from Nova Scotia". How fitting.

Before Canadians uncork the maple sparking wine (oh wait, that's only made in...), there are so many exemptions that most likely you will not see a half decent Okanagan wine in a LCBO (Ontario Liquor Store).

Perhaps just another distraction to lead the media down another path and refrain from writing negatively about our governing party (it was easy pickings lately!).

On another note, MP Navdeep Bains, could you please tell me what a Minister of Innovation does anyway?

And in other news, Maryam Monsef is still a fraudulent Canadian and MP.

Cracks in Liberal Foreign Policy (or Lack Thereof) Beginning to Show: Our Fearless Boy Scout Leader Claims it is Still Unknown Whom or What is the Perpetrator

After a swift move demonstrating the US military might by President Trump in the early days of his term, our Liberal party after claiming it was unknown the forces behind the latest vicious attack on the people of Syria sheepishly sides with the actions of their "closest ally".  Rather than debate further Hornets versus CF-18s, or contemplate the benefits of "diplomatic efforts", the Liberals had to speak from a text that probably made them throw up in their mouths a bit - the Liberals were forced to side with the unilateral actions of a contentious US President, albeit in fine Liberal style (calling the actions "limited and focused").

Straight faced and without any consequences whatsoever of his empty words, The Justin vowed that Canada, along with the United Nations process, would investigate and punish the perpetrators.

And that's your "sunny ways" foreign policy.

To Cool or Not To Cool the Housing Market? Canada Has Imported its Own Real Estate Inflation Problem

It is no secret, there is an influx of non-Canadian (and non-permanent residents) purchasers of real estate (not only residential homes, but commercial, hotel etc.).  And as noticed for example in certain neighbourhoods in Vancouver, some places purchased for +$1.0M have no one living in them, or on the other end of the spectrum, a "starving (international) student" has taken up residence.  As federal and provincial politicians continue their heel dragging methods to avoid "knee jerk reactions", the housing market increases further and becomes more and more unattainable...for Joe Canadian.

Although every "Average Joe" has a suggested solution, while Justin and his Liberal band of tax-seeking merry men and women want more tax dollars, here are some others....

1) Supply is not the issue, demand is the issue: Many in the real estate and construction industry are calling for more supply. Of course, since this is their livelihood and their biased interests they are trying to pass off as the gospel for all Canadians.  The focus should be on demand and this is where the federal government comes in.

2) Investors and speculators from outside of Canada to pay double the land transfer tax: , reduce for Canadians

3) Interest rates increase.  With a staged approach this would certainly more than cool the real estate market as according to the media, Canadians on average have too much debt and a small increase in mortgage payments would be enough to push them into dire circumstances.  However, with unemployment at 7.0% and a GDP running at 2.0%, it is impossible for Poloz and the Bank of Canada to justify such forecasted moves (as the US Fed has done).

In fact, this may only negatively impact Canadians who hold mortgages from Canadian banks and are subject to Canadian rates.  Investors and speculators from outside of Canada in some cases are i) buying houses, condos for cash, ii) may not need a mortgage, iii) are obtaining more attractive interest rates elsewhere.  Increasing Canadian rates...in Canada....will only render real estate prices perhaps slightly lower, which in the eyes of an out of country investor or speculator means "on sale!", and bid up again.

4) Investors and speculators from outside of Canada pay an increased level of property tax:  Why should Canadians

5) Implement a capital gains tax upon a sale. Why should a foreigner be part of the same tax code as Canadians?  Canadians receive proceeds from the sale of their home on a TAX FREE basis (or no Capital Gains tax) as this is the ONLY TAX FREE INVESTMENT VEHICLE left in Canada (other than our paltry TFSAs that Justin and the Liberals continue to render as paltry after nixing Harper's planned increases over the years to come).  With this one financial windfall given where the real estate markets are currently, and Canada's doors wide open to the world to do the same - guess what is going to happen to real estate prices? INCREASE! Canada and the Canada Revenue Agency are throwing gas on its own house on fire!

6) And finally, "what goes up, must come down".  Real estate markets today are different than the last lucrative days back in the 80s...and we all saw what happened after that cycle. CRASH! Interest rates were through the roof (no pun inteded), the decade was mired with the themes of excess and congolomerates, and a lot of investors and honest-to-goodness Canadians looking for a home saw their values drastically decrease and took decades to recover.

The message being, nothing wrong with renting, providing you are doing something with that difference in i) down payment, ii) repairs, iii) lack of renovations, etc you would normally have as a home owner.  As one strategy (not recommended for everyone), invest this difference in dividend paying REITs (some are yielding a juicy 8%) and ride those dividend cheques (and capital appreciation). REITs too will have their day come up, when interest rates do take an increase, but when that time comes, housing prices will become cheaper.

The following charts are from today's Financial Post

More of Justin Spouting Off: With Unemployment at 7.0%, Canadians and Those Influenced by His Comments of "Come to Canada" do not Need This!

From the left leaning CBC whom receives its billion dollar subsidy from the federal government (no conflict there, eh?).

And as unemployment in Canada sits at 7.0%, GDP hovering around a paltry 2.0%, and housing prices through the roof (no pun intended, but thats a whooe other discussion) this is still not enough to have an open, fair and professional discussion on the "sacred" institution of immigration in Canada. Annually, 300,000 entering Canada just because...it's a nice round number?

http://www.cbc.ca/beta/news/opinion/trudeau-message-to-refugees-1.4051008

Power Struggle in Ontario: No not for Monetary, Political or Authoritative Reasons - We're Talking Energy

I do not read much of Rex Murphy, but this one was too good to pass up.  Credit due to for his plain anecdotes and comparisons.  

For those not living in Ontario, we are outrageously "taxed" (well, our fearless Premier "The Kathleen" would not call it a tax, but "necessary extra charges" to fund her dictatorship green energy policies and make up for all the contract gaffes of past Liberal energy policy mistakes).  

As an example, after having recently moved back from Vancouver, my BC Hydro usage for a ~1,000 sq ft, two bedroom condo was between $26 to $28 per month.  And the total cost of that usage?.....$26 to $28.  Here in Ontario, the same "usage" becomes approximately three times higher.  Even if I burned candles all month, unhooked all of my appliances, turned the thermostat down and ate out for every meal I would still be on the hook for a fixed amount of say at least $50 to $60/month. (As such, thanks to Premier Wynne, in Ontario we never say "win-win"). 

Rex has a couple of gems, and I would like to quote and give credit to him here...

http://news.nationalpost.com/full-comment/rex-murphy-actually-witchcraft-is-a-pretty-good-explanation-for-all-thats-happening-in-ontario

First up from Rex, "A businesswoman I met recently — on her way, incidentally, to meet with a spiritual adviser — showed me the energy bill for her company. She was distraught and clearly frightened. And with good reason. For very clearly on her bill was a charge for the power she used — the electricity cost. And it was a mere (she employs nearly 40 people) $5,000. There it was on the bill: electricity charges $5,000. But when she forced her wary eyes to the Total Due, the amount had swollen to a terrifying and inexplicable $42,000.  How can this be? she cried… How could the add-ons cost SEVEN times more than the power actually consumed? It was like buying a low-end car for $20,000 and being charged $80,000 for the clock in the dash..."

Secondly, "It occurs to me that witchcraft in Ontario could explain a great many things. The curious gyrations of the Ontario government in its long embrace of its green plans, for one thing….What reason would bring in contracts lasting for decades with built-in guarantees for ludicrously overpriced power? What government would produce power, at great expense, to then sell it at a loss in a virtual voluntary subsidy to the ratepayers of neighbouring jurisdictions? What government would, on the premise of saving the planet, find itself in 2016 cutting off all power to 60,000 homes? What province would so engorge itself with taxes on its power that it now reaches into those same taxes it has extorted under this wild scheme to “rebate” them to the very people its plan has impoverished? It was bad enough when Ontario robbed Peter to pay Paul, now it’s then robbing Paul to pay back what it just stole from Peter..."

My favourite, "Finally, what province would but days ago ladle a couple of hundred million dollars to Ford Motor Company, in part for the building of V8 engines — the very villains of carbon production so decried in all the government’s other proclamations — some of which we may assume will go towards, directly or indirectly, Ford’s inflated power bill. Surely some superior dark force has a hold on Ontario...."

Red is for (Liberal) Deficit: Why are There Not Outcries and Protests in the Street?

With Federal deficits now forecasted (well a Liberal forecast, based in Liberal math) out to 2050 and with such bloated payouts within the province of Ontario (a proxy for other provinces), why are Canadians not in a panic over future benefits,  oh say, CPP!

(The following "Sunshine list", those making over $100,000 working for the Provincial government was released. Some select positions as outlined. I do not know how the IPO of Ontario Hydro affects some of these positions being reported now, but I will have to investigate)

Sunshine List: http://news.nationalpost.com/news/canada/ontarios-sunshine-list-2017-all-the-ways-you-never-thought-you-could-make-100000-a-year

Although interest rates are low today, the Liberals at both Provincial and Federal levels are spending like proverbial drunken sailors (and on the flip side were receiving payments at a fire hose rate for that little issue called "cash for access", remember that one? As Liberals are also good at using media techniques of distraction which is their proverbial " broom" to sleep things under the rug).

Enough of the clichés, what does this all mean?  Sadly, as the Liberals have a high chance of regaining power in the next Provincial (Ontario cannot help themselves, despite record low rates of approval for "the Kathleen", Ontario voters only see Liberal red and will likely vote this gaffe induced party in again) and Federal elections (no clear leader for ANY of the opposition parties), Canadians had better beef up on their personal finance skills and mind their savings, RRSPs, TFSAs, company pensions, real estate holdings and how they can minimize their tax situation over the coming decades.

I'm 46 now, deficits are " forecasted" to be eliminated when I'm 80, I'm not depending on a CPP and review my RRSP every day.