As we all heard in the federal budget, we are to get out there and spend our well-earned dollars (or well-earned credit) on home renovations to help in doing our part to boost the economy. I am well aware of the stimulus package and the need to spend our way out of a recession but in these unprecedented times, where debt levels are at a record high and savings rates at a record low, this seems ludicrous to me.
According to a report on Family Finances by the Vanier Institute, debt levels in Canada are dangerously high with average household debts soaring over $90,000 in 2008. Add to that the total debt to disposable income climbing to a record 140% in 2008. Clearly, many people will have difficulty paying their bills, never mind purchasing unnecessary home renovations. As it stands Canadians have found themselves in a heap of trouble from overusing credit and now need to take the necessary steps to dig themselves out.
I, for my part, will not be spending money for the sake of spending it. Isn’t that what gets us into trouble in the first place?
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To: Consumer Credit Counselling Service.
I look for information from my own Canadian research and contacts.
To your point Alistair, it is unfortunate that government did not step in sooner and the key to dealing with this situation is education and there is a serious lack of financial literacy information in Canada. This is going to take a long time to correct.
Adam makes a good point, however wasn’t that what lead to the Depression in the 30′s…the government spending, not my theory but I have heard this. I do agree with you about bailouts, I am wondering if it is just delaying the inevitable….nevertheless some government intervention is necessary to put some controls in place in this current economic crisis.
Hi Laurie,
In addition to your comment I would like to know where the Authorities were on this… The debt to equity ratio in households has been on the rise for many years and the goverment choose to close it’s eyes. Also, if the CPI is to elevated inflation why did it fail us? Case and point .. the housing market..
From my stand point, and, as cold as it sounds lets adopt Adam Smith’s policy of democracy and that the free markets will correct themseleves without any goverment intervention. Perhaps this is exactly what the world needs right now… No Goverment bailouts just increased bankrupticies for there foolish and then the markets will once again correct themseleves…
Thanks,
Adam Smith
The entire concept of Keynesian “stimulus” is ludicrous. Over-spending on cheap credit is what got the economy to where it is. And governments the world over are encouraging more of the same? And setting the example with high deficits? It’s mind-boggling. Simply mind-boggling.
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