SharperDingaan Posted July 19, 2020 Share Posted July 19, 2020 Covid-19 has been with us for a while now, and we have a better picture of the spend to date on the various stimulus programs. As well as a murky insight into a number of grey elephants that hadn't initially been considered. The economic 'story' is "Yes, it is serious - but it is a temporary blip; that we will recover from once the economy is back up". All canadian municipalities are required to balance their budget every year, with any shortfall charged to the taxbase the following year. Toronto, recently forecast a current year Covid-19 related shortfall of 1.65B, and a property tax-hike of 35% if it weren't addressed - late last week, the Federal Government agreed to fund part of it. Every single municipality in Canada has the same issue, and will seek similar relief. The same Grey Rhino is present in the US. Most project annual Covid-19 spend to exceed the annual spend levels of WWII. During WWII, both the Allies/Axis financed their war efforts via patriotic domestic war-bonds - long/no maturities, and very low rates. The US financed Vietnam by removal of gold backed notes, and the USD as the worlds reserve currency. For a Canada, it is hard to imagine an eventual total Covid-19 recovery bill, of much under 2-3T - net of multiple years of wage subsidies, industry bailouts, mega-project stimulus, and social spend on skills retooling. Canada will come out modernized, and a lot stronger for it - but it's a nation building multi-year project - NOT a 1-2 year project. At 10x Canada's size - the total US bill is roughly 20-30T+. The EU will have something similar. I would like to hear how US based COBF members, would expect a financing of this size to play out - as it has never been done before. My own view is that ultimately, this it is going to require new arrangements, similar to what occurred in the years immediately following the end of WWII. And NONE OF THIS is priced into the market yet. SD Link to comment Share on other sites More sharing options...
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