The provincial election is proceeding apace. Each of the parties are busily dolling out promises of bounty upon their succession to power; seemingly “no cost” goodies. I guess they can legitimately think the electorate is blind to economic reality. We’ve supposedly put all that nastiness of 2008 “behind” us, right?
Well, not exactly. Markets in the last couple of days have been registering the sort of spasms that suggest another ’08’ is just around the corner (notice how gas prices have retreated lately?).
In a sense, I’m somewhat encouraged by the timing of this latest downturn and not because I revel in bad economic news. It might force an agenda on someone to start talking about the great elephant (remaining) in the room from the last go-around – the legacy costs of the so-called stimulus package.
No matter how Keynesian your economic bent, you have to understand you can’t spend yourself into prosperity indefinitely. Governments have slightly more latitude than households in terms of how long they can keep piling on the debt, but it’s not forever (ask Greece).
Politicians are understandably loath to talk about either raising taxes or cutting spending – Premier McGuinty’s whole campaign platform seems to be based on bragging how much money he’s spent (so far). He’s not mentioning the bill for that shiny new car sitting in the driveway.
For Ontario, that credit card balance is currently $236 BILLION. (It pays to write it out that way so the enormity of the number doesn’t slip into unconsciousness.)When the current government took office, the number was roughly $140 BILLION. In terms of net debt, that puts Ontario on par with the shambles that is Ireland and considerably worse-off than that economic powerhouse that is Mexico.
So, here’s a thought before you go blindly falling in love with one piper over another promising baubles: Ask them all when they’re going to be asking you to pony up for all that new spending?