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Canada loses AAA rating
June 24, 2020
9:43 am
Bud
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Fitch downgrades Canada to AA+

June 24, 2020
12:20 pm
toto
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Our debt just got more expensive to service.

June 24, 2020
1:20 pm
Bud
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Can canada make it on its own on the current path.

June 24, 2020
1:29 pm
Vatox
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Bud said
Can canada make it on its own on the current path.  

Who are you suggesting, for Canada to team up with instead of going alone?

June 24, 2020
3:38 pm
Dean
In The Shadow Of The Valhalla Mountains, British Columbia
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.
Given Ottawa's present dept situation, this downgrading was pretty much expected. And as Fitch ratings go, 'AA+' is just a half step below 'AAA' (the best). Over the midterm, Fitch has a 'Stable Outlook' for Canada.

Fitch article link ▶ https://www.fitchratings.com/research/sovereigns/fitch-downgrades-canada-ratings-to-aa-outlook-stable-24-06-2020

Reader's Digest version ...

    Things could be better, but 'The Sky Is Not Falling', in Canada. sf-wink

.
G'day Mates,

      Dean

sf-cool " Live Long And Prosper " sf-cool

June 24, 2020
3:57 pm
cruzinalong
Ontario
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Not much has affected me in Ontario.

My government payments keep coming.

My few investments keep coming. Some increased. Some decreased.

The monthly bills are setup for equal billing.

I will pay CRA what I owe them within a month.

Looking forward to restaurants having dine-in services soon.

My credit score is not perfect. A friend at bowling says NOBODY has a perfect score.

June 24, 2020
4:02 pm
Loonie
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So, what I think we all want to know is, will this trigger an increase in interest rates for us, however small?
And will it cause a decrease in value of Cdn dollar?
If so, would that not contribute to inflation as cost of imports rises?

BoC seems to think inflation is not in the cards. I don't understand that. Covid-19 may have dealt a body blow to our economy, but economic stagnation can co-exit with inflation, and it's nasty.

Can anyone explain?

June 24, 2020
5:57 pm
Bud
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Vatox said

Who are you suggesting, for Canada to team up with instead of going alone?  

U.S. or UK gives us access to euro market. Our history rebuild the British Empire. I thought we shoulda dumped the Governer General Lieutenant Governors save n replace with Harry n Meghan for example

June 24, 2020
6:55 pm
Kidd
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I believe the lower our credit rating, the higher the interest rate charged on our debt. Which makes our debt harder to pay, which lowers our credit rating, which increases the interest rate charged on our debt.

I know it will all somehow balance itself out.... some drama teacher told me so.

June 24, 2020
7:28 pm
Rodster
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The lack of worldwide inflation is in part due to the movement of manufacturing to the third world. This has kept the prices of goods down in Canada. And the threat of more offshore manufacturing has moderated wage increases in Canada.

Non-union competition, with many service providers, has kept the price of services down (professional services being the exception).

This is not true for asset inflation. Real estate prices are out of control. And food prices have been moving up smartly.

In the future, I expect high levels of household debt and the propensity to save (rather than spend in times of uncertainty and fear) will curtail inflationary pressures.

The wild card is government spending. If they continue with massive deficits, bondholders may require higher interest rates to account for increased risk.

A significant drop in the value of the Canadian dollar may also force the central bank to increase interest rates. This is unlikely, but the government has been unfriendly to our largest export commodity. Who knows what the future might bring?

June 24, 2020
7:55 pm
Kidd
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Rodster. I believe in your theory BUT it contains a lot of double edged swords.

Canadian manufacturers moving production off shore, cost the Canadian economy the bigger wage earners. The savings of moving off shore, in most cases did NOT result in cheaper consumer pricing, the money went to company's bottom line, profit. Your NIKE shoes cost $150 when made in Tennessee, they still cost $150 when made in Indonesia.

If the personal debt load of the shopper prevents them from shopping... there will ultimately be no place left open to shop. Zero interest rates will not help, the shopper is maxed out. Maintaining artificially low rates caused this.

The governments of canada love creating government jobs, they see this as their savior when job stats are released. Greece has taught canada nothing.

June 24, 2020
8:41 pm
NorthernRaven
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Kidd said The governments of canada love creating government jobs, they see this as their savior when job stats are released. Greece has taught canada nothing.  

This is an example of what Paul Krugman calls "it's Greece, Greece I tell you!" thinking... 🙂

June 24, 2020
9:40 pm
Norman1
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Fitch's minor downgrade from AAA to AA+ has no real impact. The people who are buying and selling Government of Canada bonds must have missed the significance.

Government of Canada 5% 2037/06/01 bonds were trading with a yield to maturity around 0.89% per annum a few weeks ago.

Yesterday, the first day of the downgrade, the bonds were trading around a yield of 0.85% at Scotia iTRADE. Yield was actually down a bit the first day of the downgrade! sf-laugh

The sky is still blue and still above us.

June 25, 2020
7:05 am
Londonguy
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cruzinalong said
My credit score is not perfect. A friend at bowling says NOBODY has a perfect score.  

Mine is...

TU-Screenshot_2020-06-20-Home.png

June 25, 2020
9:02 am
cruzinalong
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Wonderful.
How do you do it?
How many months of doing your method does it take to reach 900?
Does it move up gradually?

June 25, 2020
9:05 am
cruzinalong
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A year ago it was 894.
What do you do that it keeps it high?

June 25, 2020
11:48 am
Bill
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Kidd, I agree that liberal governments love creating gov't jobs, civil service overwhelmingly votes not conservative so it's a great electoral strategy for them. And conservative gov'ts tamper with unionized gov't jobs at their peril. Hence the growth in public vs private sector, and it's a major flaw not to distinguish between private vs public sector numbers.

Disagree with the shoes example though, agree with Rodster that due to offshoring clothing (for example) is way cheaper than it used to be. I remember coveting Levis jeans as a teen and now I can get pants for cheaper than I paid for Levis all those years ago, especially now that "cool" is something I purposely shun to keep the kids and grandkids embarrassed to be seen in public with me. Walmart clothes are really cheap, for example.

June 25, 2020
12:14 pm
Loonie
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Of course, when clothes are made offshore (and so many other things), Canadian private sector jobs disappear; and the owners of those companies are very happy about it.
I don't worry much about public sector growth, as it's minimal considering population and I can always count on a periodic Conservative government to decimate it, but I do worry about the private sector abandonning the country and continually clamouring to pay even less in taxes to support the country.

June 25, 2020
12:17 pm
Doug
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I called this. Happened a little more quickly than I was thinking, but I maintain my prediction that Canada will lose its AAA rating from all three ratings agencies in the next 12 months. Probably will happen in less than 6.

Cheers,
Doug

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