At The Mercy of Foreigners!!!

This is one of the battle cries I have heard talking about Canada’s National Debt and how we soon won’t be able to have control over our own destiny, as the Federal Government’s Creditors will start dictating to us about fiscal policy, Bunk! I say to that.

As usual the media gets it a little wrong. While the above rant may have some grain of truth with our soon to be turkey stuffed friends down south, in Canada that is not true at all. In fact Canada is really quite good figuring out who(m) is holding the Federal Government’s Debt.

International Comparison of Non-Resident Holdings of Central Government Debt

A very interesting graphic, which explains where some folks seem to get it wrong. Yes, our friends in the U.S. have a high degree of non-residents holding the Federal Debt (more than 2 times as much as Canada). It’s more interesting to see that Australia has such a high level of foreign investment.

Have a read of the document that is linked to the graphic (i.e. click on the graphic), if you are curious about exactly who, what, where and how the Federal debt works. Interesting stuff.

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If I Were the Government

So I saw an interesting graphic on Tumblr comparing the U.S. government spending to a median family income and how it might look, so I have tried my best to dredge up this comparison for Canadians.

This model is already flawed as I am only looking at the model where I (the Big Cajun Man) will take on the guise of the Federal Government and not all governments in general (which would change the debt number much as you will see). The average family income is borrowed from 2011’s median family income from Stats Canada as well.

The numbers I am using are gleaned from a report from Stats Canada, and are at best an estimation.

Income for the BCM Family $76,000.00
Spending Costs
   Life expenditures $74,512.00
   Debt charges $9,608.00
Total Spending $84,120.00
Net Income -$8,120.00
Debt charges as a percentage of income 12.64%
Current Family Debt $180,453.00
Debt after this year $188,573.00
Income Compared to Debt 42.12%

What does this mean? Well if I were the Government I’d be spending over 13% of my income on paying off my debt, however, if you look at my debt, it isn’t really that far out of whack, is it? A family with $180K worth of debt is a little high, and they should think about paying it off soon, but then again it is do-able, over a long period.

Oh and here is a nice graph I made too.

If I Spent the Way the Feds Spent

If I Spent the Way the Feds Spent

If you look at the U.S. Model it is a much higher Debt in comparison and a much more dire looking pay back scenario.

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Personal Auditor General

Another blast from the archives from the year 2008 (just before I was laid off), note how critical I was of the government. Do you have your own Financial Auditor General?

The Canadian Government is a mega-business in terms of size and jurisdiction, and to keep this monster organization in line there is the Office of the Auditor General. Yesterday the Office of the Auditor General put out its 2008 Annual Report, and as usual it is full of many interesting issues with the Government specifically in the area of spending. There are some very interesting comments on User Fees in general and how they have been arbitrarily added by many government agencies without a specific accounting of what the “fee” is for. Interesting reading.

The concept of the Auditor General got me thinking about whether I could stand an audit of kind by a 3rd party of my finances. My answer is I don’t really think so, however it might actually be a great idea to force me and my family to explain some of the purchases and financial decisions that have been made over the past little while. Think of having to explain to someone why I held on to my High Tech stocks for so long? Makes me cringe just thinking about this whole idea, but to me it sounds like a good idea.

I have previously written about the Quarterly Financial Review (which we are almost half way through the second financial quarter) and also about your Financial Resume, and these ideas are great concepts to help families communicate with each other about their current financial status (especially once you have a few reviews under your belt so you can actually compare and contrast quarter to quarter), but I am thinking that maybe these ideas aren’t quite enough. If you add more accountability (pardon the pun) to your Personal Financial Life you may be forced to make more informed decisions (i.e. you are less likely to rely on your “gut” or impulses, if you know you have to explain later to someone why you did what you did).

Any ideas where this kind of “Personal Audit” could be implemented are welcome.

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Taxing Government Benefits

This is an interesting topic for me. I am asking specifically, why does a Government tax Benefits that they pay?

An example is the Child Tax Benefit is not taxed (i.e. you don’t pay income tax on it), however the Universal Child Care Benefit is taxable  income. The benefits themselves are quite similar, yet one is calculated on the basis of your previous year income and may (or may not) be paid to you on that basis, tax-free because the other is a payment everyone gets that is then clawed back as it is counted as part of your taxable income (unless you make too much money, in which case you don’t receive it at all). It’s no wonder folks make mistakes on their taxes with these seemingly similar systems with wildly different tax rules.

Taxable all of them

Taxable all of them

How much does the government spend on collecting these taxes? The CRA is one of the larger government departments, and there must be a great amount of money spent on calculation of who owes what and collection of that money (in most cases), but what if all government benefits were effectively tax-free?

It is already being done with some benefits, why are some taxed then? I realize things like CPP payments, EI Payments and such being untaxed would take a big chunk out of the Government’s income stream, but if the Government simply paid less, would it not end up being the same thing? There must be a way to make this all a zero sum game (i.e. the Government gets to keep their money, but folks still get their benefits as well).

You give out money, and then you must figure out a way to take it back because you think the recipients didn’t deserve that much, seems a very odd way to do business (in my opinion), isn’t it? Yes I am being a little simplistic in my statements, but why must it be some complex an argument?

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Numbers are the Enemy

NB: It behooves me to point out that this is a Sarcastic Rant by me, I in no way condone or agree with the concept of hiding data to make folks happy (or the Census limiting law, or limiting Stats Canada either), I have a Math degree, I love numbers!

Under the class of: You just can’t Make This Crap Up; we find in the U.S. a  Republican Senator who believe that the U.S. Census is far too invasive and they want it changed. There is a segment of the U.S. population that seems to think that the Census is actually the Government attempting to start a dictatorship (evidently that is where Hitler started (and yes, that is my first Hitler reference this year)).

All Those Who Agree I have a Hat for You too!

All Those Who Agree I have a Hat for You too!

Rep. Jeff Duncan (R-S.C.) is introducing a bill that will basically allow the Census bureau to ONLY count our U.S. cousins every 10 years, and that is about it. The Census Reform Act (please go read it), will only allow:

22 (3) may only conduct the decennial census of
23        population, as authorized under section 141 of title
24       13, United States Code.

This means that there will be no more collection of economic data like the GDP, or Unemployment. What might be seen as an astounding piece of short-sighted cost cutting, could end up being a brilliant maneuver  If the public has no ability to tell whether there is unemployment or problems with the GDP it’s a great day EVERY day!

If Canada followed suit and shut down Stats Canada the same way, think how great the news would be. No more nasty news about Inflation or Unemployment, the Bank of Canada would keep interest rates at Zero (or lower), and everyone would seem to have a job (since we wouldn’t know otherwise).

The crazy thing is I’ll bet that a bunch of Politicians who might think this was a great idea. Either that or simply make Spreadsheets and Questionnaires illegal?  Outlaw accountants? Any other ill-advised measures I am missing?

Luckily the Republicans are thinking about Stop Being the Stupid Party.

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