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Analysts on Canada's budget: ‘Deficit paranoia is mind-bogglingly stupid’

[WHAT]

1. ] by MICHAEL BABAD @theglobeandmail.com - Analysts weigh in on Canada's budget: ‘Deficit paranoia is mind-bogglingly stupid’

[WHY]

1. ] 

[WHERE]

1. ] READ THE FULL ARTICLE
1. ] http://www.theglobeandmail.com/report-on-business/top-business-stories/analysts-on-tomorrows-budget-deficit-paranoia-is-mind-bogglingly-stupid/article29308661/

[WHEN]

1. ] 2016-03-21

[EXAMPLE]

1. ] Canada’s new government is expected this week to unveil a stimulus budget with a deficit in the area of $30-billion. 
2. ] Finance Minister Bill Morneau has already adjusted the outlook amid the oil shock, projecting a deficit of $18.4-billion in the 2016-17 fiscal year, not including the Liberal government’s promised spending initiative. When you add it all together, it’s looking like about $30-billion.
3. ] Besides infrastructure spending, Canadians can expect to see a new child benefit, changes to the jobless benefits program and a tweak to tax rules governing stock options.
4. ] “Deficit paranoia is mind-bogglingly stupid. … Even a $50-billion deficit wouldn’t endanger the long-term outlook for the public finances, however. The bigger risk is that if fiscal policy doesn’t take up the slack, the economy could slip into a prolonged downturn. It would be a tragedy if, after watching Europe nearly destroy itself, Canada made the same mistake.” - Paul Ashworth, Capital Economics
5. ] “Expect the outcome of the next budget on March 22 to show cumulative deficits over the next two years well above $50-billion (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 provide fiscal stimulus to a Canadian economy that badly needs it.” - Marc Pinsonneault, National Bank Financial 
6. ] “Timely, targeted and temporary fiscal initiatives will provide a much-needed filip for the economy over the near term while potentially also improving long-term growth prospects. … However, prudent fiscal management requires that initiatives provide clear benefit to growth in the short and long term. 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
7. ] “Canada still warrants a triple-A credit rating, and Ottawa can afford a moderate fiscal boost – especially for hard-hit regions. However, the deterioration in medium-term finances from weak commodity prices, less-favourable demographics, and softening provincial credit ratings suggests that Ottawa should proceed with prudence. To reiterate: 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.” - Douglas Porter and Robert Kavcic, BMO Nesbitt Burns
8. ] Canada’s federal deficit will still be well below the U.S. federal government as a share of GDP, 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
9. ]“In evaluating the increase in the deficit, size is not all that matters. The composition will matter for growth. 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

[HOW-TO]

1. ]

[REFERENCE]

1. ] SRC = r/canada, comments

 

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ID: 5010

NAME: defecit-paranoia-is-mind-bogglingly-stupid

DESCRIPTION: ] by Michael Babad @theglobeandmail.com - Analysts on Canada's budget: ‘Deficit paranoia is mind-bogglingly stupid’

AUTHOR: article.author/s

EDITOR: article.editor/s

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STATUS: Write

PRIORITY: -5

OWNER ID: 75

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