News
Trudeau’s Canada a House of Cards Waiting to Collapse
Canada is under a state of toxicity. It’s unfashionable to say so in centrist circles, but it’s true. The country faces escalating radicalism, toxic polarisation, and low trust. Wealth disparity is increasing. Its federal system could be better, notably in the relationship between Alberta and the national government. Monopolies and oligopolies go amok, exploiting customers.
There are numerous other issues. However, the convergence of a few big obstacles screams House of Cards collapsing! The country’s housing crisis, consumer debt, and high – and potentially rising – interest rates are among them.
They present a picture of hardworking individuals living lives they can’t afford daily. This dreadful scenario occurs no matter how hard people work or how strictly they adhere to the game’s rules – laws they were assured were fair and just.
The Exorbitant Cost of Housing
In Canada, housing is completely expensive. The average home costs around CAD$700,000, while a one-bedroom rental costs close to $1,900 per month.
According to the Canadian Centre for Policy Alternatives, the hourly wage required to rent a one-bedroom flat exceeds the provincial minimum wage. The analysis discovered only three urban regions in Quebec where the minimum wage was more than the rent for a one-bedroom flat.
Housing starts — breaking ground on new buildings — are falling behind as the country booms. They were down 10% in July after a significant increase in June.
No Affordable Homes in Canada
According to the CMHC, the country needs 5.8 million homes by 2030 to achieve affordability, but construction is on track to reach only 2.8 million, less than half of what is required. Building costs, government policies, and labor shortages impede construction attempts.
Even when units are produced, there are far too few purpose-built rentals and non-market options to assist people needing affordable housing.
Those who are lucky enough to own a home face their own set of challenges. Mortgage payments are growing due to high-interest rates, which may climb again in the autumn. Now, 40% of mortgage holders borrow to cover day-to-day expenditures, and nearly 20% need to catch up on their payments.
According to Robert McLister of the Globe and Mail, that is based on data from December, and things have most likely worsened since then. Despite new measures from the Financial Consumer Agency of Canada aimed at keeping people in their houses and pricey financial gimmicks such as extra-long mortgage amortization periods, the prospect of default looms.
However, something has to give at this rate — especially since debtors will face renewal periods and high-interest rates in the coming months and years.
Canadians Floundering in Debt
Households are also heavily in debt. The CMHC cautioned in May that Canada’s household debt, which leads the G7 and will reach 107 percent of GDP in 2021, “makes the economy vulnerable to any global economic crisis.” It also puts it vulnerable to an internal crisis of its own making.
Mortgages account for most household debt, although auto loans and credit cards also contribute. Consumer debt in Canada reached a new high of $2.32 trillion in the spring. People need to catch up on their payments. Simultaneously, inflation and rising prices remain.
The Bank of Canada raised interest rates by 25 basis points to 5% in July, largely due to mortgage expenses, which were the key inflation drivers in June and July. As it struggles to achieve its 2% inflation objective, the bank may raise rates again in September.
In the near term, the bank and Canadians are locked in a vicious mortgage-inflation circle in which mortgage rates fuel inflation, and the bank boosts interest rates to combat inflation, which raises mortgage costs. Even if the long-term goal is to reduce inflation by limiting money supply and expenditure, the short-term spiral is hell.
It will take a long time to reach the 2% inflation target. Meanwhile, Canadians are in a precarious position with high mortgage rates, a lack of home supply, high prices, and a massive consumer debt burden.
As interest rates climb, so does the likelihood and possible number of mortgage, auto loan, and credit card defaults. The chance of job loss is similar.
The Austerity Dance of Justin Trudeau
The Bank of Canada is not mandated nor disposed to care about persons in financial difficulty in the short term. Its long-term goal is to keep inflation at a sustainable level. On the other hand, national, provincial, and local governments are supposed to care about those in need at all times. And yet, if there is a plan in place to protect Canada’s house of cards from collapsing or to make people whole, if it does, it is still being determined what that plan is.
Imperfect and insufficient social welfare programs, such as dental care and prescription drug coverage, are being implemented, but they are insufficient to address Canada’s serious financial crisis.
The Liberal government of Justin Trudeau may also be considering budget cuts. Ministers have been directed to cut $15 billion in spending by October. This could indicate a government less willing to spend significantly in the coming months and years, even as the Liberals sag in the polls and face an election in the autumn of 2025 or sooner.
Governments must be prepared to support individuals experiencing economic difficulty and will be crushed if the country’s house of cards collapses.
These folks work and strive for the things they’ve been instructed to strive for: a house, a car, an education, and a few respectable consumer goods. They are now abandoned due to a confluence of economic systems, pandemic repercussions, inefficient government policies, and unpredictable global geopolitical processes.
These employees, who ensure the buses run on time and the grocery shelves are filled, make up 40% of the country’s wages yet own only 2.7 percent of its net worth. In contrast, the wealthiest 20% of income controls about 70% of the total.
This wealth disparity is terrible at any time, but it’s especially disgusting in the aftermath of the last few years when the powers that be paid so much lip service to workers — as “frontline” and “essential.” They must not be abandoned in the wilderness while the country fights to resolve its economic problems.
This article by By David Moscrop was first published in Jacobin.com
News
Canadian Man Arrested for TikTok Video That Threatened Trudeau
A TikTok video that went live earlier this week has led to a Toronto man facing charges of threatening Prime Minister Justin Trudeau and Deputy Prime Minister Chrystia Freeland. Andrew Marshall, 61, is facing two counts of uttering threats.
On Friday afternoon, the Ontario Court of Justice granted him bail with a surety and restrictions after the RCMP charged him on Wednesday.
Following Monday’s upload to TikTok, CBC Toronto conducted its own independent investigation of the video. Marshall vehemently opposes what he perceives as restrictions on free expression in Canada in it.
“I get them taken down all the time— I make videos — or all my comments, that are just simple comments,” Marsh says in the TikTok. “It’s just getting ridiculous, Marshall said.”
According to the CBC more and more people are threatening politicians. The commissioner of the RCMP has hinted that further measures may be necessary to ensure their safety.
In the TikTok video, Marshall explains in great detail how he would brutally assassinate Trudeau and Freeland “if it was up to him.”
Marshall attacks multiple groups throughout the roughly 11-minute TikTok video, including the media, Muslims, migrants, and the police who defend the government.
Among Marshall’s bail terms are the following: he must not communicate with Trudeau or Freeland; he must not use the internet to make social media posts or comments; he must not own any weapons; and he must not apply for a firearms permit.
During the bail hearing, the prosecution provided all of the evidence that is often not published.
Nate Jackson, Marshall’s attorney, stressed his client’s liberties and privileges as a Canadian in an email message.
“He has the right to freedom of speech, the right to reasonable bail and the right to a fair trial,” he said. “Having secured his release from custody, we will continue to defend Mr. Marshall’s Charter rights as his case proceeds.”
Neither Freeland’s nor the prime minister’s office would comment on the allegations, according to the CBC.
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Canada’s Unemployment Rate Hits its Highest Point Since 2017
As the job market remains dismal, the national unemployment rate in Canada has risen to its highest point since 2017. This has led some analysts to question whether the Bank of Canada should be reducing interest rates more quickly.
In spite of a net gain of 22,000 jobs, Statistics Canada reported on Friday that the unemployment rate increased to 6.6% from 6.4% the previous month. The rise was due to an uptick in part-time employment and a fall in full-time employment.
Outside of the pandemic years, the national unemployment rate has reached its highest position since May 2017, according to StatCan.
Rapid population expansion in Canada has increased the overall labour pool, but the country’s unemployment rate has persisted in rising.
The summer job market was especially tough for students, according to StatCan. Not including the pandemic, the unemployment rate among students going back to school in the autumn was 16.7 percent, which is the highest level since 2012.
Two days after the Bank of Canada dropped interest rates for the third time in a row, reducing borrowing costs to alleviate economic pressure, the most recent reading of the Canadian job market follows suit.
According to TD Bank economist Leslie Preston, who wrote a note on Friday, the central bank is “giving the OK” to keep dropping rates due to the bad August jobs report. Preston predicts two more quarter-point decreases at the remaining decisions this year.
According to CIBC senior economist Andrew Grantham, there are indications that the labour market is quickly contracting more than initially thought, since the unemployment rate is nearly two percentage points greater than the record low of 4.9% in June 2022.
“Due to this, we believe the Bank should be contemplating a quicker rate of reductions in order to bring interest rates to less restrictive levels,” he informed clients in a letter on Friday morning.
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US Job Growth Falls Short of Expectations: Economy Struggles Under High Interest Rates
Last month, job growth in the United States was weaker than predicted, prompting concerns that the world’s largest economy is beginning to struggle under the weight of increased interest rates.
The Labour Department said that employers added 142,000 jobs in August, which was less than the nearly 160,000 economists predicted. It also stated that job gains over the preceding two months were weaker than expected.
However, the jobless rate went down to 4.2%, down from 4.3% in July.
The report is one of the most important indicators of the US economy and arrives at a vital time, as voters consider presidential candidates for the November election and the US central bank contemplates its first interest rate decrease in four years.
Analysts said the latest statistics kept the Federal Reserve on pace for a rate drop at its meeting this month, but did little to answer worries about the trajectory of the US economy or how much of a cut it should make.
“There has rarely been such a make-or-break number; unfortunately, today’s jobs report does not completely resolve the recession debate,” said Seema Shah, chief global strategist at Principal Asset Management.
Soaring prices in 2022 caused the Federal Reserve to hike its key lending rate to 5.3%, a nearly 20-year high.
Faced with increased borrowing costs for homes, vehicles, and other debt, the economy has slowed, helping to alleviate pressures that were boosting inflation but exacerbating market concerns.
As inflation has fallen to 2.9% in July, the Fed is under pressure to decrease interest rates to prevent additional economic deceleration.
Although job increases in August fell short of expectations, they were greater than in July, when a slowdown aroused anxieties and triggered several days of stock market volatility.
Last month, construction and health-care firms hired the most, while manufacturing and retailers laid off employees.
Ms Shah stated that the data in Friday’s report was mixed, but provided enough concerning indicators that the Fed should make a larger cut.
“On balance, with inflation pressures subdued, there is no reason for the Fed not to err on the side of caution and frontload rate cuts,” she told reporters.
Others, however, felt the advances were just steady enough to warrant a 0.25 percentage point decrease, as markets had long projected – though this could signal more cuts than expected in the coming months.
Paul Ashworth, Capital Economics’ senior North America economist, predicted that the Fed’s decision will be “close run.”
“The labour market is clearly experiencing a marked slowdown,” he said, adding that the new statistics were “overall still consistent with an economy experiencing a soft landing rather than plummeting into recession”.
Concerns about the economy are a major issue in the US election.
According to polls, a majority of Americans feel the US is in a recession, despite healthy 2.5% growth last year.
Donald Trump has declared that the economy is headed for a “crash,” and his team instantly latched on the latest data to criticise Vice President Kamala Harris, publishing a press release titled “warning lights flash as Kamala’s economy continues to weaken.”
Democrats have defended their performance, claiming that the United States survived the pandemic and inflation better than many other countries.
They believe the slowdown is a sign that the economy is returning to a more sustainable rate of growth following the post-pandemic boom.
“Although hiring has slowed, the US job market continues to generate solid job gains and wage growth that is consistently beating inflation,” the White House Council of Economic Advisors stated in a blog.
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