Comment 67615

By A Smith (anonymous) | Posted August 07, 2011 at 22:42:59

Wasting/spending money on LRT is truly a great idea, really.

From 1990-1995, Canada's national debt went from approximately 50% to 70% of GDP and Ontario's debt, from 14% of GDP to 28%. During this time period, the average Toronto home price fell from $255k to $180k, an average decrease of 9.1%, while nominal GDP increased by 2%/year. That means while homes were becoming cheaper to buy, incomes were still rising. This is the sign of a productive economy.

In contrast, between 2004-08, Toronto home prices have increased from $315k to $420K, an average increase of 7.46%. In this same time frame, nominal GDP/capita has increased by only 4.4%/year. In other words, prices (especially for the big ticket items) are rising faster than our incomes. This is the sign of a bubble economy, pretty on paper, but lacking in real productivity growth.

From 1990-1995, Canada's dollar fell from $0.85US to $0.71US and yet gas prices decreased from about $0.75/ltr CDN, to $0.70/ltr CDN.

In contrast, from 2004-08, Canada's public debt fell from 40% of GDP to 30%, while the dollar ranged between $0.82US to $1.07US. During this same time period, gas prices have increased from $0.90/ltr CDN, to $1.00 CDN/ltr.

As for the costs of paying back our debts. From 1990-95, when deficits averaged 7.29% of GDP, actual debt charges fell from 9.45% of GDP, to 9.03%.

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