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] by Michael Babad @theglobeandmail.com - Analysts on Canada's budget: ‘Deficit paranoia is mind-bogglingly stupid’
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<h1 style="text-align: center;">Analysts on Canada's budget: ‘Deficit paranoia is mind-bogglingly stupid’</h1> <h2>[WHAT]</h2> <ol> <li>] by MICHAEL BABAD @theglobeandmail.com - Analysts weigh in on Canada's budget: ‘Deficit paranoia is mind-bogglingly stupid’</li> </ol> <h2>[WHY]</h2> <ol> <li>] </li> </ol> <h2>[WHERE]</h2> <ol> <li><strong>] READ THE FULL ARTICLE</strong></li> <ol> <li>] <a href="http://www.theglobeandmail.com/report-on-business/top-business-stories/analysts-on-tomorrows-budget-deficit-paranoia-is-mind-bogglingly-stupid/article29308661/" target="_blank">http://www.theglobeandmail.com/report-on-business/top-business-stories/analysts-on-tomorrows-budget-deficit-paranoia-is-mind-bogglingly-stupid/article29308661/</a></li> </ol></ol> <h2>[WHEN]</h2> <ol> <li>] 2016-03-21</li> </ol> <h2>[EXAMPLE]</h2> <ol> <li>] Canada’s new government is expected this week to unveil<strong> a stimulus budget with a deficit in the area of $30-billion. </strong></li> <li>] Finance Minister Bill Morneau has already adjusted the outlook amid the oil shock, <strong>projecting a deficit of $18.4-billion in the 2016-17 fiscal year, not including the Liberal government’s promised spending initiative</strong>. When you add it all together, it’s looking like about $30-billion.</li> <li>] Besides <strong><span style="text-decoration: underline;">infrastructure spending</span></strong>, Canadians can expect to see a <strong><span style="text-decoration: underline;">new child benefit</span></strong>, changes to the <strong><span style="text-decoration: underline;">jobless benefits program</span></strong> and a <strong><span style="text-decoration: underline;">tweak to tax rules governing stock options</span>.</strong></li> <li>] “Deficit paranoia is mind-bogglingly stupid. … <strong>Even a $50-billion deficit wouldn’t endanger the long-term outlook for the public finances, however.</strong> The <strong>bigger risk is that if fiscal policy doesn’t take up the slack, the economy could slip into a prolonged downturn.</strong> It would be a tragedy if, after watching Europe nearly destroy itself, Canada made the same mistake.” - Paul Ashworth, Capital Economics</li> <li>] “Expect the outcome of the next budget on March 22 to show <strong>cumulative deficits over the next two years well above $50-billion</strong> (roughly 1.3 per cent of GDP) if the stimulus promised during the election campaign is implemented.In our view the government has the flexibility to <strong>provide fiscal stimulus to a Canadian economy that badly needs it</strong>.” - Marc Pinsonneault, National Bank Financial </li> <li><strong>] “Timely, targeted and temporary fiscal initiatives will provide a much-needed filip for the economy over the near term</strong> while potentially also improving long-term growth prospects. …<strong> However, prudent fiscal management requires that initiatives provide clear benefit to growth in the short and long term.</strong> As well, the funds spent will need to eventually be repaid with the upcoming budget expected to provide a game plan as to how the federal government plans to return to fiscal balance.” - Craig Wright and Laura Cooper, Royal Bank of Canada</li> <li><strong>] “Canada still warrants a triple-A credit rating, and Ottawa can afford a moderate fiscal boost – especially for hard-hit regions.</strong> However, the deterioration in medium-term finances from weak commodity prices, less-favourable demographics, and softening provincial credit ratings s<strong>uggests that Ottawa should proceed with prudence.</strong> To reiterate: <strong>Canada is facing a structural shift from the commodity shock, and that’s not something that can be quickly countered or fully mitigated by a big fiscal boost.</strong>” - Douglas Porter and Robert Kavcic, BMO Nesbitt Burns</li> <li><strong>] Canada’s federal deficit will still be well below the U.S. federal government as a share of GDP</strong>, and a stimulative fiscal plan is a preferable option to having interest rates even lower for longer given existing household debt levels.” Avery Shenfeld, CIBC World Markets</li> <li><strong>]“In evaluating the increase in the deficit, size is not all that matters. The composition will matter for growth.</strong> As such, an increase tilted towards investment in infrastructure would be viewed as more pro-growth than an increase due to increased tax credit. The reason is that, while the propensity of middle-income households to consumer is considered to be high, the record level of household debt will likely mean that most of the tax credit will be saved rather than spent.” - Charles St-Arnaud, Nomura</li> </ol> <h2>[HOW-TO]</h2> <ol> <li>]</li> </ol> <h2>[REFERENCE]</h2> <ol> <li>] SRC = r/canada, <a href="https://www.reddit.com/r/canada/comments/4bc48t/analysts_on_canadas_budget_deficit_paranoia_is/" target="_blank">comments</a></li> </ol> <h1 style="text-align: center;"> </h1>