This past Saturday we enjoyed the second night of the Fireworks competition from yet a new vantage point, my friend and fellow blogger MJ’s condo in Yaletown. With our view from the 30th floor, it had to be the highest elevation from which we’ve ever seen the show. (Pam and I have been lucky enough to have seen it from 4 different locations over the last 3 years). This year was marked by plenty of talk and munchies, as well as Tanya (NetChick) and I both trying to snap pictures of the plumes with our iPhones. Best of all, we managed to post them on FaceBook just about as fast as we snapped them. Nerd paradise.
The fireworks this evening of the competition the USA’s entry (last Wednesday had been Canada’s). Normally, the phrase ‘Americans shooting rockets over Vancouver’s English Bay’ is not what anyone here wants to hear, but in this case, I guess it was OK.
Were We Rats Fleeing a Sinking Ship?
While we’ve been observing the third anniversary of having moved here, at the party, appropriately enough, I got to speak to an American couple who had just made the move here. In fact, they had just arrived a week or so ago, roughly in the same state of confusion and excitement as we had in 2005 (MJ is helping them to find a permanent place to live). The main differences between them and us is that they are moving from San Francisco (vs. our Boston), and our timing was, we all agreed, a lot better. In the last 3 years, the US Real Estate market, the US Stock Market and the US Dollar have all fallen markedly in value, leaving Pam and me in much better shape than the couple who unfortunately didn’t have the nerve to move earlier. They even had a place picked out, and just didn’t move on it.
As we compared notes, the topic of why we left came up. While it was true that in 2005, we couldn’t stand the direction the country was going (and note that we felt that way before the Torture, Illegal Wiretapping and other scandals became public knowledge). Despite all that romantic stuff about voting with your feet, the most concrete disaster that loomed on the horizon for us was the US Public Debt. During the Clinton era (our 8‑year nightmare of peace and prosperity), the US Government actually ran a budget surplus, erasing the deficits created by the Reagan/Bush I years, opening up the possibility of paying down the National Debt. Then along came WPIUSH, and an all-too-brief period of fiscal responsibility was quickly reversed. So, the real reason that we decided to leave the US was that we were concerned that the country was going down the drain fiscally.
Yes, it’s easy to see where most of it went (the war in Iraq, for one thing, along with the tax cuts for the top 2% richest Americans, as well as a multitude of funding and oversight debacles, some that have yet to see the light of day). Today, the situation isn’t getting any better. In fact, it’s getting even worse now than it was 14 years ago, when the Federal Deficit (and Debt) first appeared on our radar, according to Reuters:
WASHINGTON (Reuters) — The Bush administration on Monday projected the U.S. budget deficit will soar to a record of nearly half a trillion dollars in fiscal 2009 as a housing-led economic slowdown cuts into government revenues.
The economic and fiscal deterioration will complicate efforts to bring the budget to balance and pose challenges for whoever takes over the White House in January, either Republican Sen. John McCain or Democratic Sen. Barack Obama.
“I believe whoever becomes the next president will have a very, very sobering first week in office,” predicted Senate Budget Committee Chairman Kent Conrad, a North Dakota Democrat.
Reacting to the White House’s new prediction that the budget deficit will hit $482 billion in the fiscal year that starts October 1, Conrad said that number easily could rise by an additional $80 billion when the full costs of the Iraq war are tallied next year.
The economy has been hobbled by the housing market collapse and soaring food and energy prices. In February, the Democratic-controlled Congress and President George W. Bush approved a $168 billion, two-year stimulus plan to ward off recession.
With the slowing economy and the cost of the economic stimulus plan, the White House said it thinks the deficit will hit a record $482 billion in fiscal 2009. However, it cut its forecast for the current fiscal year to $389 billion.
Even if we ignore where the money went or is even going now, the problem (the Debt) is still out there, like a ticking time bomb. Just as there were foreclosures on bad mortgage loans throughout the US, there will come a day when someone has to come up with a way of paying that debt. When will that day come? I’m not sure, but I can pretty much count on it being within the next 20 years, and the further out the US Government can push it out, the better for whoever is in power. Whether the President in that era is Barack Obama, Chelsea Clinton or perhaps one of the Bush Twins, there will come a day when the US Debt reaches some sort of a breaking point. What effect this will have is also hard to guess, but I can’t imagine a scenario where it will be a good thing. More than likely, the quality of life in the US will suffer, as it has suffered during the past eight years. People will work harder with less time for themselves for less pay, and under poorer working conditions. Decent Medical care will be harder to get and also be more expensive (again), Average Life Expectancy will get shorter (again), and daily life in general will get more brutal, violent, unfair and unpleasant, particularly if you are not very rich. There’s a good possibility that this event (call it a crash, a correction, a default, or whatever you like) will come at a time when Pam and I might wish to be retired and living on a fixed income, perhaps including some sort of a Government Pension. You can bet that those will get hit. Rather than end up poor and living in a country filing for bankruptcy (or something worse), we opted for a country that looked to be more solvent in the coming 20 years, at least.
So, once again, if this latest news (which came as little surprise) my instincts about where we went, and when we went have remained on track. I hope my good sense (and perhaps luck) holds. After all, part of ‘good fortune’ is being in the right place at the right time
It was very nice to see you and Pam at MJ’s! 🙂 See you tomorrow at VBM, right?
Excellent post, and right on target, David!
Sure wish my David and I had acted quicker on the US to Canada move — the financial situation would have been much better. The good thing is we bought a small place here — wish we had sprung for a larger unit! The bad thing is there is no way in hell we’ll be unloading our Florida properties anytime soon.
I’m going to link to your post on Moved to Vancouver, if you don’t mind.
You’re right: being in the right place at the right time is definitely a part of “good fortune”.
Glad we’re all here now .…
The best measure of the repayability of a country’s debt is its debt-to-GDP ratio.
Canada’s debt is 32% of its GDP, down from a high of over 60% around 1996.
The US in 2007 carried 37%, down from a high of 49% in 1994.
The US had and has the bonus of valuing its debt almost entirely in its own currency.
It’s good that the Canadian debt/GDP ratio is dropping, and it’s bad that the US ratio is rising, but if one describes the present US debt situation as “as bad as Canada was in 2003” it should add some perspective.
Raul — I’ll be there…
Bob — Link Away… 🙂
Good point, Ryan. The ratio of debt to GDP is a good indicator of a country’s fiscal ‘health’. It’s a little disquieting that Canada’s debt/GDP was so high as recently as 5 years ago. I can only hope that the country continues to live within its means, which may become more difficult as prices go up world-wide (but a stronger dollar does help there).
I had to take one last kick at this can.
Debt to GDP in the EU by country. They’re all over the place. Lowlights: Germany, 65%; France, 64%; Italy, 104%; my beloved Greece: 95%.
OTOH, Ireland at 25%, Denmark at 26%, and numerous small countries in the 0–20% range, with Estonia leading the pack at 3.4%.
As a commenter points out on the page linking to ‘The Bolt’, there’s probably some number at which it’s OK to have some debt:
Given the choice between paying down the debt faster (say, within the next 15–20 years) or…investing in an infrastructure that will help Canada deal with the eventual move away from an oil-based economy (whether by choice or due to further shortages/environmental damages), I’d be in favour of putting some of it toward encouraging further progress on that front.
I wonder how Estonian finances are these days? They’re the newest member of the EU, and perhaps their budgeting is still influenced by Soviet-style management. Interesting that Germany and France are so high — I never would have guessed it, given their standard of living.
As with all metrics, debt/GDP can’t be taken in a vacuum, and the direction that number is going is also extremely important.
I wonder if there is a group that looks at the ‘health’ of countries based on a variety of factors (aforementioned debt/GDP, Quality of Life index, Natural Resources, Level of Corruption, etc.) to come up with an overall rating (like a Bond rating). I’ve never heard of one, and the Economist listings we used to get rarely go much deeper than one or two of those factors.
I found your post through the link at Moved to Vancouver and find it interesting. My partner and I made the move last fall, after a 27 month wait for processing of immigration info, and are not looking back. I too wish we had started earlier but we were lucky to sell our home in WI, at a discount, and drove west to Vancouver Island to start in a new wonderful country that actually appreciates us. I always find it interesting to read of others who made the move and their reasons for doing so. I’ll be bookmarking your blog for weekly reading.
Welcome to BC, Douglas (or Doug, if you prefer). I must admit that I probably post a lot less about our move here and the differences between the States and Canada, as we now call this place home and feel that way about it. Still, every now and again I’ll see something that reminds me of how great a divide there really is between us and the country to the south and will write about it. If you want to see some stuff that might be more pertinent to your situation, you can check some older posts from say, late 2005 and 2006.