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mises
Joined: 05 Nov 2007 Location: retired
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Posted: Fri Jan 23, 2009 7:02 pm Post subject: Canada Will Post Two-Year Deficit of C$64 Billion |
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..and the crises hits home
http://www.bloomberg.com/apps/news?pid=20601087&sid=auZdf4lSgzNk&refer=home
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Jan. 22 (Bloomberg) -- Canadian Finance Minister Jim Flaherty�s budget will include a combined deficit of C$64 billion ($51 billion) over the next two years in a bid to revive the economy, an official said five days before the fiscal plan is scheduled to be released.
The deficit for the fiscal year starting in April will be C$34 billion, followed by C$30 billion in fiscal 2010. The official, who spoke to reporters today at a briefing in Ottawa on condition that he not be identified by name, said Canada�s finances would return to surplus within five years and the deficits are mostly attributable to a planned stimulus package.
�We need it,� Avery Shenfeld, senior economist at CIBC World Markets in Toronto, said this week after Flaherty reiterated plans to run deficits. �We could sit back and wait for the rest of the world economy to improve, but that would mean suffering through a severe recession.�
The world�s eighth-largest economy will shrink 1.2 percent this year, the Bank of Canada said today. Canada sends about 75 percent of its exports to the U.S. and the central bank said the economic downturn there will fuel a drop in foreign sales, cutting 2.6 percentage points off of growth this year.
Flaherty�s budget is scheduled for Jan. 27, and the government needs opposition support to pass it and stay in power. Prime Minister Stephen Harper had to suspend Parliament last month to prevent the opposition from toppling him, after a budget update that predicted balanced budgets and little economic stimulus.
�Grossly Irresponsible�
John McCallum, the main opposition Liberal Party�s finance critic, said by telephone today that it was �grossly irresponsible� of the government to release the deficit projection ahead of the fiscal plan.
�That could move the markets before the budget,� McCallum said. �I�ve never heard of that before.�
Economists surveyed by Bloomberg News, including Toronto- Dominion Bank Chief Economist Don Drummond and Royal Bank Chief Economist Craig Wright, predicted accumulated deficits of between C$60 billion and C$115 billion over the life of the stimulus package, which Harper said could last for five years.
The median forecast of five economists surveyed by Bloomberg was C$80 billion. Forecasts for the 2009 deficit ranged from C$25 billion to C$30 billion.
Watchdog Report
Canada may add as much as C$105 billion in debt over six years even without new spending or tax measures because of a limp economy, the Parliamentary Budget Office said yesterday.
In addition to new infrastructure spending, the government has indicated its fiscal plan will make it easier for workers to qualify for unemployment insurance and provide tax relief in a bid to spur consumer demand. Flaherty has also said he will use the budget to boost the availability of business credit.
The two-year deficit announced today will wipe out the bulk of a decade�s worth of debt reductions for the energy-rich country. Canada used a resource windfall and spending reductions to run 11 consecutive budget surpluses and pay down C$105 billion of debt over that period.
As a result of the deficits, Canada�s debt-to-GDP ratio will rise to 28 percent in 2010 from 23.4 percent in 2007, the government official also said today. |
And the oil sands are dramatically slowing down:
http://www.theglobeandmail.com/servlet/story/RTGAM.20090122.wroilsands23/BNStory/energy/home
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Oil sands layoffs coming down pipeline
CALGARY � The big retreat from plans to expand oil sands projects has begun to show up in job losses and declines in expected corporate revenue.
Flint Energy Services Ltd. slashed between $100-million and $150-million from its 2009 revenue outlook yesterday and announced a spate of immediate layoffs, adding its name to a rapidly growing list of oil field service companies that are cutting staff and gearing down.
On Wednesday, international steel maker Evraz Group SA announced 400 layoffs across Western Canada, following industry giants Schlumberger Ltd. and Halliburton Co., which are letting go more than 2,000 people as the air rushes out of energy spending plans.
Fully $200-billion in planned developments have been deferred, delayed or cancelled in the past six months, according to a recent tally compiled by the Canadian Energy Research Institute (CERI).
While the prospect of reduced activity in the oil sands is now hitting home in the energy sector, the effects are expected to soon wash across the wider provincial and national economies.
The latest deferral came from western giant Suncor Energy Inc., which on Tuesday iced work on its two major projects � an upgrader and oil sands expansion � and cut its 2009 capital budget in half to $3-billion.
In the oil sands alone, capital spending plans for this year have now declined to about $13-billion from an expected $20-billion, the Canadian Association of Petroleum Producers said yesterday. Across the industry, capital projections in 2009 have dropped by $10-billion to $40-billion as companies race to hoard cash in the face of basement oil prices.
The impact on the economy is, however, likely to be far greater than those numbers would suggest. In 2005, CERI calculated that every dollar spent on big oil projects stokes nearly $2.50 in further spending in Alberta, plus another roughly $2.50 in the rest of Canada. In other words, a $10-billion decrease in energy spending translates into about $60-billion in lost economic activity across the country.
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The Canadian economy is suffering from a double whammy of asset deflation. On the one hand, we have the rapidly deflating housing bubble in the major cities and on the other the value of commodities (Canada's bread and butter) has plummeted - especially oil-. Canada (and Alberta especially) spent like the boom would never end. And now we deal with the contraction. |
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fiveeagles

Joined: 19 May 2005 Location: Vancouver
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Posted: Sat Jan 24, 2009 9:13 pm Post subject: |
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We still have agricultural and that will lift us out of the recession. |
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Bigfeet

Joined: 29 May 2008 Location: Grrrrr.....
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Posted: Sun Jan 25, 2009 12:25 am Post subject: |
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Don't forget global warming, that will be a big boon for Canada and Russia! |
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brento1138
Joined: 17 Nov 2004
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Posted: Sun Jan 25, 2009 10:10 pm Post subject: |
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It's a world depression and every country will be affected. Over the next 20-50 years, you want to be living in a country that grows lots of food, has oil & other resources, and few people. Canada is one of those.  |
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