Ron Butler: “Canada Has Done More Than Any Other Country…” [Covid Crisis]
The COVID-19 crisis is the challenge of our generation. And, it is a real test of the economic and political limits of (every) government deficit spending in a crisis.
According to Ron Butler of Butler Mortgage, the Canadian Government achieved something few other countries were able to pull off:
“Canada has done more than any other country on earth to support its population in this COVID crisis to the tune of about 40% more than the next most aggressive country.”
In a recent podcast interview with Tom and Nick Karadza of Rock Star Inner Circle, Ron offered specific points on the various stimulus packages that our Canadian Government rolled out to support his statement:
- On CERB (Canada Emergency Response Benefit): “Other countries like Britain had similar but it was for a much shorter period of time with no extensions”
- On Mortgage Deferral: “No other country at all came close and did as big a move on mortgage deferrals” to help its citizens navigate the impact of so much of the economy grinding to a halt
- On CEWS (Canada Emergency Wage Subsidy): “United States has a version of CEWS but it’s not as big or progressive as Canada’s”
- On CEBA (Canada Emergency Business Account): “Nobody in the world just gave $40,000 loan interest-free loan to every small business. It did not happen anywhere else in the world.”
“Since the beginning of this pandemic, we promised to do whatever it takes to help small businesses through this unprecedented crisis. The CEBA loan is one of the many ways we’re supporting them – and with almost 670,000 businesses across the country benefiting from this lending support, we know it’s making a real difference for people. By expanding the eligibility for this loan, even more business owners – including sole proprietors – will get the support they need to help them restart and begin to rebuild in the weeks and months to come.” – Mary Ng, Minister of Small Business, Export Promotion and International Trade
There are other stimulus packages like CESB (Canada Emergency Student Benefit) that provides financial support to post-secondary students and recent high school graduates who cannot work, cannot find work or are making less than $1000 a month due to covid.
Without a doubt, governments around the world have embarked on “one of the greatest peacetime borrowing binges in history” — according to The Globe and Mail article, “Pandemic debt: Countries are spending trillions to save the economy from the coronavirus crisis. Can the world afford it”, published on April 3, 2020.
But can the world afford this avalanche of debt and take on more debt?
“For now, the answer is yes. So long as interest rates remain low and economies return to something approaching normality within a few months, developed countries should find the additional burden to be tolerable.”
Back in our backyard, where once there was wealth, now there’s a mountain of debt.
“And the federal government being best placed to carry that debt, a lot of the measures that the feds have brought in [are] effectively them just taking the load off of individuals, businesses and sub-national governments,” said economist Trevor Tombe of the University of Calgary. “And that is a good move.”
Keeping that debt on the federal government’s books allows businesses to carry on without fear of bankruptcy and keeps consumer spending alive. And most economists agree that Canada’s federal government should be able to carry its pandemic debt without too much of an effect on the real economy — as long as the current measures don’t go on for too long.
Thankfully, today’s shockingly low rates set up some favourable math.
According to The Globe and Mail, “When Canada and other major industrialized economies can borrow money for 10 years at considerably less than 1 per cent a year, the real burden of carrying additional debt becomes exceedingly small – or even negative.
Once the world gets past the worst of the pandemic, and growth returns to more normal levels, the economies in most industrialized countries should expand substantially faster than the interest rate on their debt.”
One lesson learned so far is that the governments that stepped up quickly – like Canada – with big rescue packages have tended to be the ones keeping the damage done to a minimum.
Let’s take a moment to be thankful. Canada isn’t perfect, but we really are blessed to live in a great country.
For the FULL podcast interview, click: Your Life! Your Terms! Show: Ron Butler
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