Canadians need to ask what we have to show for the Liberal’s monumental fiscal and monetary failure except higher taxes, growing lines at foodbanks, inflation, a decaying Medicare, military and education system, increased drug use and homelessness, and a wealth-destroying devalued dollar. 

This coming budget year Ottawa will almost spend as much money on interest charges from the debt it has accumulated than it will on health care. The federal government spent $11.3 billion in interest payments during 2023’s third quarter, 36% higher than the same quarter in 2022. This will increase every year until the current government is gone and means higher taxes and less disposable income for consumers to save.  So, prices for most goods will have to decline inline with shrinking disposable incomes. This is a perfect example of interest charges destroying an economy and people’s pocketbooks for zero benefit.  

It is not just finances that are hurting the economy but the current government’s social policies such as immigration and a decaying education system. The issues in our education system surprises only our politicians. As schools opened last year, they discovered we have a shortage of teachers. Obviously, we desperately need more that specialize in math since no one in Ottawa understands the subject. 

A prime example is using company forecasts, it will take until 2043 for the federal and provincial governments’ $28.2b 'investment’ in two new electric vehicle battery plants in Ontario to breakeven. This is much longer than the five years the Liberal calculations showed. 

The Liberals’ poor math skills can be seen in housing as well. They are the only ones to blame for our home prices.  We built 250,000 units last year, an increase of 25,000 from the year earlier. During this period, we allowed one-million immigrants into Canada, plus we have maybe a few-hundred thousand young people trying to leave home and roughly 70,000 foreign students to house.  Ottawa says it will allow in only a half-million more immigrants in 2024. Guess why the housing situation is out of control? It is not the lack of money, but nobody in Ottawa realizes we cannot fulfill demand because our schools do not turn out enough skilled labour.

Housing debt is destroying many household finances. This is not surprising because it is hard to understand how most can afford the average price of $678,000(2023) in Canada without a CHMC mortgage which requires a $270,000 downpayment. Based on the average family income of around $125,000, it takes decades for most to save that.   More importantly, if you can save that amount within a reasonable time, one will be far better off renting and continue saving. Specifically, there will come a time when the income from the savings will cover rent or mortgage payments for the rest of your life. This will occur long before the mortgage is paid off. It is hard to justify purchasing the average home at today’s prices without a 20% downpayment because the interest cost would consume all the benefits of ownership. Specifically, the difference between cash-outlays for property taxes, repairs and maintenance, mortgage interest and the opportunity cost from not investing the downpayment is far greater than renting in todays market.   

Because Canadians cannot lock-in a 25-year mortgage like the US, we are at the whim of the market which can change drastically between renewal dates, like what we are witnessing today.  This is why it is critical to never have a mortgage larger than three or four times your household income. If you’re not a big spender and can direct more money to the mortgage than the four-times household income is fine, but it is better to stick to three-times if you prefer more discretionary spending. Anything above this you either must lower your expectations or rent and wait for prices to correct further. 

Prices will correct further eventually.  Since this is a man-made shortage, price declines are slow but this will not prevent prices from declining to meet what the average family can afford. This means a potential 50% price decline (worse case scenario) from peak.  

Trudeau does not understand that if we allow this level of immigration, and using Statistics Canada’s average housholde size of 2.51 people, there is a need for almost four hundred thousand new housing units today. The above demand does not include the natural turnover of homes or for renovations which lowers the amount of available labour for new-build construction. Home prices are clearly a result of demand outstripping supply. Until things changes, there will be an ongoing shortage of shelter and prices will remain out of reach. 

Immigration should be based on available social infrastructure, housing, and attracting skills the economy demands.  Not vote buying like it appears the current policy is attempting.  More importantly, it should be guided by population preservation with no more than 1.5% growth (which will double the population every 48 years, not like the 150% increase the Liberals want by 2100).  Any growth above this and the economy does not have time to adapt. As soon as Trudeau’s immigration targets are reversed, all real-estate prices will fall to a level based on income and the rate of interest. It will be a good thing having the average Canadian afford to have a family, buy a home, support the economy, and grow the population properly.

Just when you thought the Liberals could not be any more delusional, our Environmental Extremist Minister announced that all vehicles after 2035 must be electric. Shortly after, the main US auto manufacturers announced cutbacks to EV production on light demand. Even their dealer networks are turning their backs on them with 4000 dealers sending Biden a letter in December telling him to ease-up on his EV dream.  Last week, Hertz announced they will be getting rid of 20,000 EV’s, which is roughly 30% of their EV fleet, because they are too expensive to repair and the customer does not want to rent them. Thankfully criticism of the net-zero transition is growing across the globe because it is proving to be a drain on both our financial and natural resources, as well as our standard of living.

How climate friendly is the EV? Certainly not any friendlier that the ICE once you include the increased mining and the source of electricity. The International Energy Agency found that to meet 2030 pledges of 50% of all cars being EV, “the world will need fifty new lithium mines, 60 new nickel mines, 17 new cobalt mines, 50 new mines for cathode production, 40 new mines for anode materials, 90 new mines for battery cells and 81 new mines for EV bodies and motors”. That’s a total of 388 new mines worldwide, which is not very climate friendly. If Canada wishes to use domestic supply chains for battery metals, we have a lot of mines to establish in a very short time. Unfortunately, this is impossible based on Trudeau’s environmental laws, meaning we will be forced to import the materials on the back of a weak currency.

In the National Post, Adam Waterous, CEO of the Waterous Energy Fund and former Global Head of Investment Banking at Scotia Waterous, stated “it takes five times the amount of oil to build an EV than it does to build a conventional gas-powered vehicle.” To offset this difference, he explained the EV battery must last 120,000 kms using the electrical grid, assuming the battery lasts that long. So far, an EV battery does not last the lifetime of the vehicle itself, dying out in as little as eight years compared to the ICE which should last over 250,000 km’s. Replacing the battery expands the EV’s carbon footprint even further because one EV grade battery emits over seven tonnes of CO2 emissions.

All governments are slowly being forced to cut back on subsidies because they cannot afford them.  More importantly, it is morally wrong to give handouts for a luxury good when lines at foodbanks, shelters, and hospitals are growing exponentially. Sales are falling with every cut to subsidies. As evidence, Germans became one of the largest consumers of EV’s thanks to generous incentives. However, they began lowering their subsidies early last year and sales of EV’s have fallen inline. According to insideevs.com, electric car (BEV) registrations decreased by 22% year-over-year in November to 44,942, and Plug-in hybrid cars (PHEV) registrations decreased by 59% year-over-year to 18,124. 2024 will be interesting for the German EV market because the government announced an end to all EV subsidies on December 17^th. The EV will not disappear but rather remain a niche market.

Down south, the Texas Public Policy Foundation estimates that the nearly $22 billion in federal and state subsidies and regulatory credits lowered the retail price of EVs in 2021 by an average of $36,000 across the supply chain. Their paper showed that the average 2021 EV would cost $48,698 more to own over a 10-year period without government subsidies. They estimate that home and public charging stations put a significant strain on the electric grid, resulting in an average of $11,833 in consumer costs per EV over a decade. This cost is paid for by all utility ratepayers whether they are an EV owner or not. In a political climate that runs on equality, this is far from that as possible.  EV owners do not pay gas-tax used for infratructure but those with an ICE are responsible for upgrading the electrical system for the EV via higher electricity rates. There should be a sizeable levy on every EV registration for infrastructure upgrades to cover this.    

Back home, the Parliamentary Budget Office (PBO) estimates the total cost of handouts for battery manufacturing to be $43.6 billion between 2022 and 2033—$5.8 billion higher than the Liberals announced. The federal government used a break-even timeline of nine years based on full production in every year for their business model. But, based on the manufacturer Northvolt’s projected annual production schedule, PBO estimates a break-even timeline of 11 years for a $4.6 billion production subsidy. They also predict a break-even timeline of 15 and 23 years for the Volkswagen and Stellantis subsidy, respectively. Breaking even after such a timeline is unacceptable considering these companies can very easily afford to build the plants themselves.

Investment by blue-chip companies in renewable power is slowing and divesting is popular in the sector. The Danish wind developer Orsted announced in November it was cancelling two major projects off the coast of New Jersey after its demands for higher subsidies had been rejected. In its earnings release, Orsted said it was recognizing impairment losses of roughly $4b(USD), blaming supply chain delays, interest rates, and the lack of a profitable amount it can charge a utility company for renewable energy credits. BP and Equinor also announced impairments totalling $840 million combined on offshore wind investments. And last month, GE announced they spun-off their turbine division.  The only investment that appears to be taking place are ones where there are long-term contracts (usually 20 years) involved where the supplier sells the power to industrial projects like manufacturing plants and refineries.

Net-zero is not viable because governments cannot afford to finance it and private capital remains skeptical. It will also stifle the economy by increasing the cost of electricity.  The Business Council of BC believes the transition will make BC’s economy $28 billion smaller in 2030 than it would without net-zero policies. This is equivalent to what BC pays for healthcare in a year. Even the Alberta Electric System Operator estimates the cost of achieving a net-zero electricity grid by 2050 to be nearly $200 billion and “accelerating this timeline to 2035 could add an extra $45 to $52 billion”. These figures do not include the wages or tax revenue that would disappear with the fossil fuel sector.

We have been warning that the net-zero dream is not viable without government handouts. And so far, it holds true.  Any reasonable government will cut these unnecessary subsidies and economic strangling policies because the middle class is suffering. Governments need to stay out of the marketplace and let private capital make the investments. If the investment is not occurring, then there is no money to be made and business will move onto other technologies. Companies make the largest strides in environmental improvements on their own dime if there are reasonable laws and timelines in place.

Trudeau joined the APEC meeting in San Francisco last month and nobody gave him the time of day other than his climate buddy Governor Newsom. It should be no surprise though. President Biden does not talk to him unless necessary and world leaders try and avoid him in meetings. The few countries that listen to Trudeau have no impact on Canada and are usually just interested in his handouts. Most of the elite see him as the empty-headed golden spoon boy that he is.  They see what Canada has to offer the world and cannot understand why Trudeau does not take advantage of this and why he is happy to watch Canada crumble economically and socially.

Justin loves President Xi Jinping even though he is an enemy. NATO has warned him of China’s plans on taking over parts of our Arctic region next decade for the potential natural gas, oil and metal reserves. Justin just ignores the warnings and refuses to invest in our military, for China’s convenience.  Canada will need the U.S. to protect this land since Trudeau is shrinking our military for the sole benefit of our enemies. 

Trudeau is the biggest climate hypocrite in the world. This year he could very easily have set a world record for an individual producing green house gases jetting himself and his entourage around the world preaching climate change.  In his case, when a PM leaves the country a second jet follows in case the first breaks down. This is all on your dime of course.  

What right did Justin have telling Japan and Germany he will not sell them our natural gas because it does not make good business sense?  Weeks later Qatar sold Germany $15b U.S. worth of it. He is responsible for our companies missing out on those contracts plus hundreds of permanent high-paying jobs and billions in tax revenue that contract would have created. With close to 450 years of natural gas reserves around the globe, Canada needs every contract it can get to sell our supply. 

Whether you liked PM Chretien or Harper or not, at least they attracted fresh business.  They got our businesspeople to go with them to meet potential customers. Trudeau brings his friends and a photographer.  He just tells businesspeople to go elsewhere and that is what they have done.  Between 2015 and 2021, Canada experienced a net foreign investment deficit of $2.4t.  This means more than the 2021 GDP left the country for greener pastures. In 2022 direct investment in Canadian securities totalled $69.1b while $103.8b left Canada for foreign investments, A leader is supposed to attract capital, not scare it away.  

I have been in 39 countries and each time I return home I see so many opportunities. The future is 100% Canada.   Unfortunately, we lack the will to achieve it.  Foreign countries and businesses love our energy, food crops, mining reserves, forests, technology, and abundance of the most precious commodity, water. There is no reason why Canada is not a top economy other than Trudeau and his climate extremism.

Let us start 2024 with a fresh start. Canada needs to change.  No successful country limits its potential.  We need a government that gives us sensible policies and committed to strengthening our standard living.  More importantly, we need a real Prime Minister who cares about all of Canada and its future.  

One easy way to build more savings is avoid interest.  It is the biggest waste of money.  Everyone has a limit to what they will earn in their life so why do you want to share it with a lender?  Using cash builds savings and wealth because it provides a natural limit whereas credit cards and lines of credits create an artificial one that places deeds on future income. These instruments are the biggest waste of our savings and creates wealth and jobs for very few. 

Most debit and credit cards automatically offer limit protection, at a cost. Some cards increase their interest rates to 30% as soon as it goes over its limit and there are outrageous fees every time you go into overdraft or overlimit. This is why it is so important to turn down credit limit and overdraft protection.  It is smarter to let the card be declined rather than pay higher interest and fees. 

People like using credit cards to earn points. These are great if you pay your balance off every month. I always recommend people set your credit limit at two-thirds of your monthly spending. This way, you are always paying it off throughout the month and avoid interest.  I use a Cash Visa because there are zero fees and earns cash that can be used towards your balance. Depending on one’s spending, these rewards can build quickly and can cover an unexpected expense or travel. 

There are times when incurring interest does make sense.  Clearly, it is unavoidable for most when it comes to buying a home.  This is the only smart debt to have if you do not go overboard. Using a 5.5% mortgage rate on a $400k loan, the borrower will pay $336,905 in interest over 25 years, with nearly two-thirds of it paid within the first ten years. This is called the rent equivalent and averages $1,123 per month over the life of the mortgage in the above scenario. Borrowing $100k more will add an additional $84k to the interest.  An easy interest savings is always pay your mortgage weekly. Doing so will reduce a 25-year amortization by almost 3 years, most of this will be interest.

This is why it is so important to always stick to a mortgage that does not exceed between three-and-four times one’s household income. If you prefer more discretionary income, stick to the three, but if you are not a big spender than the four is safe. If you cannot stay within these limits, then chances are prices are too high and there is a net benefit from renting. Even though it may feel like one is wasting money on rent, the average home price always reverts to its average of three-to-four times household income. Some people today are already sitting on losses of a few hundred thousand dollars. This will haunt them for the bulk of their working years.

It is rare for the average investor to accumulate anymore wealth from using debt than without.  Under certain circumstances it does occur however it tends to be risky. During Covid one could earn a cashflow positive return by using margin to invest in dividend paying shares. The Covid market also created some very cheap shares, so the following price appreciation also worked well. It is on rare occasions like this that the risk of using debt for investing is low. However, one must learn how to sell. Today the interest rates on investment accounts are now more than dividend yields and the price appreciation of shares and real-estate purchased during Covid has been eliminated.

Recently I was shopping, and the cashier asked if I would be paying the bill with credit or debit.  She was surprised when I told her cash.  This is part of the reason so many people are having money problems. If one is unable to budget, credit cards and debit are an easy way to overspend.  A few businesses today will not accept cash and I refuse to deal with them. I pay cash because it is all I have.  It is amazing how easy one manages their spending habits when that is all you use.  

Just when you thought the Trudeau clan could not be anymore out of touch they continue to surprise.

They are not clueing into what is causing the housing shortage.  There is not a shortage of money, but the opposite.  The problem is there is a severe lack of tradespeople to build the one-million units needed to fill demand.  Plus, there is too much red tape to get the necessary permits.  For housing it can cost tens of thousands of dollars and take up to a year just to break ground. 

There are labor issues across the whole economy. We are also short of all medical professionals. As things now stand we can expect a tradesperson shortage for the next two years, but for the medical field at least until the end of this decade.  That is if governments create more school seats to train people starting in January. Making it it easier for foreign professionals and tradespeople to practice in Canada would also go a long way. But do not count on it under the current government. 

The Liberal solution is to raise taxes which has the opposite effect of their intention. Our banks are a prime example. They are responsible for writing the mortgages, but Trudeau has placed a special tax on excess profits.  This means there is less money to lend out and less dividend increases which hurt investors and pension funds. From an investment perspective, this tax alone is the reason for the bulk of losses by the big banks since they are writing down their mortgage portfolio as much as possible to avoid paying the tax. Their cashflow statements are strong and there will be large profit increases once they write up the value of their mortgage portfolio when the tax is eliminated with Trudeau.

Now they want to raise taxes on grocery stores because they are making money, albeit a small 3% profit margin.  Yet the grocery stores must pass on the rising costs of production, transportation, rising electricity costs, and now potentially higher taxes onto the consumer. Our politicians do not understand that not one business pays a cent of taxes because the expense is included in the price of the product. This results in an indirect tax on the consumer.

Over one trillion investment dollars has left our energy sector alone under Trudeau. Today it requires up to ten years just to get the permits to break ground for a major project. This is the longest wait time in the world.  As a result, nothing gets done and investment leaves to where it is wanted. A prime example is the Ring of Fire in Northern Ontario. It is full of metals needed for EV batteries but there is not even an all-season highway built to develop mines.  Given the Liberal climate agenda, one would think this would be a priority.

Canada’s ‘do nothing attitude’ is now destroying the country.  As we have mentioned numerous times in the past, Canada needs politicians who solve problems, not make them.  Talk is cheap, but very costly. This is what causes recessions and why Canada has a declining standard of living.