Importing The Obama Solution

"To start, this means ending the disastrous trend toward less and less government spending and employment each year and taking advantage of the current period of slack to renew and build out our infrastructure."
U.S. economist Larry Summers

Finally, federal Liberal leader Justin Trudeau has made his economic concerns and the agenda arising from them known to the public. He is no shrinking violet in pursuing an avenue he has convinced himself would make him stand out as boldly innovative. And so, he has decided that what is good enough for the U.S. and for Ontario is certainly good enough for the whole of Canada, under his supervision.

Canada led the G7 in economic growth and business investment. Our job creation record was far superior, doubling the American rate, higher than any G7 country. And in Canada, poverty rates fell by over 40%. These are no mean achievements, and they were in fact the envy of Canada's economic partners who spoke in great admiration and respect for the economic security relative to theirs that Canada's represented.

It has been widely acknowledged by the political pundits that the Conservatives have it all over their political opponents in the House of Commons through their economic record, carefully steering Canada in the right direction, away from the collapse suffered throughout the globe when the U.S. went into its massive financial failure and massive government grants and loans were required to keep their heads above the flood of impending disaster.

Americans are just now fully assessing the value of the huge payouts that their government made them responsible for well into the future and their children's future to rescue failed financial institutions and auto manufacturers. They survived thanks to the American public's largess, but the middle class in America is struggling as never before. But the Obama stimulus that has been panned for its value after the fact is what Mr. Summers is advocating for Canada.

Ontario hasn't done too badly, there has been economic growth, but the provincial Liberal government has depleted resources in a misguided but extremely committed social agenda that has wasted intolerably huge sums of treasury to realize programs in environmental sustainably energy, in politicizing priority projects, in seeking expedient solutions to ensuring Liberal longevity, in failed infrastructure programs, and advancing a huge debt for Ontarians.

But what has been dubbed the details of the Nanny State is hugely appealing to Justin Trudeau whose main campaign expressed concern is the hit that the Canadian middle class has taken, so much so that his heart bleeds for that demographic that he has committed to having their lives improved under his careful administration of charging infrastructure that he now calls social programs to the future in an hugely enlarged debt.

"This shows the middle class isn't withering away", Philip Cross, research fellow for the Macdonald-Laurier Institute and former chief economic analyst at Statistics Canada stated with the release of a new StatsCan study on Canadian families. "It shows Canadians have money to set aside for savings, so it's not like they are living from paycheque to paycheque, which is the way a lot of the narrative surrounding the middle class has recently been framed."

This just-released study represents the first comprehensive focus on net worth since 2005 by Statistics Canada. It highlights the manner in which families have weathered the recession. And it found that rising values of houses and pension fund gains have given fuel to higher net worth for middle class Canadian families.

The study verifies the median net value of Canadian families jumped 44.5% to $243,800 in 2012 up from $168,700 in 2005. The median net worth figure leaped 80% over the past fifteen years. Adjusted for inflation, measuring money left if all debts are paid, all assets sold. This is the middle class that has been described by Justin Trudeau as struggling pitifully against the burden of trying to make ends meet.

They've done that very nicely, with the help of the current government giving them a break in lower taxes, in helping families with children, in allowing seniors to split incomes for taxation purposes, and through a myriad of other incentives and tax breaks. "I would say that that contradicts the idea that all the wealth in the last decade was hoarded by the 1% and the rest of us are fighting over table scraps", commented Mr. Cross.

Families in the low-income classification are those that are suffering. They've lost financial ground. Their net worth has slightly declined since 1999. The bottom  20% of families back then had a median net worth of $1,300, which dropped to $1,100 in 2005 and has remained there to 2012. Alternatively, the wealthiest 20% of families in Canada could claim 67.4% of the country's net worth in 2012, and that's down from 69.2% in 2005.

And while debt owed by Canadian families has increased substantially particularly through mortgages, that debt has been more than balanced by steady gains in the housing market during that same period. Family homes realized a huge increase in value over the past decade with the median value of a home $300,000 in 2012, up 83.2% from 1999 and 46.6% from 2005.

"It used to be that Canadians wanted to buy the biggest home so they could make the biggest buck. But in the past year or so, I've noticed more and more homebuyers are looking at what they're more comfortable carrying. People today are concerned where rates are going, they're concerned about their jobs, about the economy. So they're saying let's pay what we can afford. They want a buffer of cash on hand."
Vince Gaetano, principal broker, monstermortgage.ca

So not only are we prospering in the middle class, we're also getting a little smarter. The question is, will we be smart enough to bypass the siren song of Justin Trudeau's impression that we need a break from the big, bad Conservatives who have led us into this place of economic comfort?