Tightening the vice - it begins

We've been warned, and today, Canadian banks announced that they are hiking fixed mortgages rates.  While the Bank of Canada has announced repeatedly over the past year or so that rates would be held until June, banks aren't waiting.  Nor should this be surprising to mortgage holders, as fixed rates based on bond yields typically will begin to rise before the central banks hike rates.

The move comes as many Canadians with variable-rate mortgages have been anxiously watching for signs of exactly when the Bank of Canada will begin hiking interest rates, in a bid to wait and lock into a fixed-rate mortgage at what they hope will be the ideal time.

While the Bank of Canada may nicely "announce" when they are going to change their rates, banks don't have to give notice.  It's based on long bond yields which (if you've been paying attention) have been steadily rising.  The 30 year treasury is poised to break a signicificant resistance level (this doesn't guarantee it will), but IF it does, it likely indicates targets for 30 year mortgages are likely to head back to historical norms in the range of 7-8% (within the next 2 years).  If you're interested, Karl Denninger has an outline of the inverted Head and Shoulders pattern in the 30 year treasury yield (and it's implications) in "On Deficits and Debt Financed Government".  You've been warned.

Getting back to the Globe article though:

Rising rates present a dilemma for many homeowners who face decisions about whether to lock variable rate loans into fixed terms or ride it out and hope that rates will come down again in 2011 as the economy slows and inflationary pressures subside.

Yes, but remember, those fixed prices you think you'll have the option to lock in at will not be available when you (later) want to lock in.  They'll be a hundred (or more) basis points higher.  

Potential homebuyers entering the market also must consider rising rates when they decide to bid on a house. Is it better to wait until rising rates have cleared out some potential bidders or will a flurry of buyers and sellers spooked by the prospect of higher mortgage costs affect the supply-demand balance?

Wow, REALLY?  Buyers shouldn't just consider the current monthly cost associated with a mortgage?  They should perhaps factor in future interest rate hikes, inflation, cost of living increases associated with housing, the HST, they're future earnings potential...etc?  Why?!? Maybe because a house isn't a "one time cost", and the buyer is spreading their amortization over the bulk of their lifetime, spending hundreds of thousands of dollars that the buyer doesn't currently have?   Hoocoodanode!?!

Historically, staying short-term and flexible has been the best strategy, but banks usually advise that locking in at still-attractive longer-term rates of five years and more is always a good bet for many consumers who want to ease their risk.

Short term and flexible is the best plan?  Why this sounds awfully like RENTING!  Thank goodness the bank's "advice" is to instead lock in at "longer" fixed rates, since this "eases their risk".  First off, Canadians don't have "longer" fixed rates.  They have 5 years, 7 years, and at most 10 year fixed rate mortgages.  In the US however they actually have the option of locking in for a 30 year mortgage...ie they don't have to face renewal risk every 5 years.  Who knew that the US housing basket case actually has lending practices that actually make sense for a consumer.

Secondly, locking in for a 5 year term does NOT reduce your risk, it just moves it out.  You pay a guaranteed rate for your term, but then you (potentially) face rate renewal shock.  Let's say you lock in today at the (new) 5 year posted fixed rate at 5.85% with a 250K mortgage over 25 years (I know, who takes a 25 year am these days).  You would be looking at monthly payments of $1577.  In 5 years you're up for renewal, but the new 5 year rate is at 7.5% (this is still less than a 50BP rise each year).  After 5 years, you still have $224 112 owing on your principle (congrats, you've managed to pay off a measly 5K per year in principle...with the rest going to interest).  Finincing over 5 years 20 year AM, at 7.5% you'll see your payments jump to $1790/month (a 13.5% increase, or over $200/month more).   And for those that say "that's fine I'll get a raise to match"...OK, except that giant sucking sound you hear is what happens when people have their personal disposable income cut by $200 a month solely to service debt.  That's money that's gone, that can't be spent on anything useful, and that doesn't bode well for anyone other than the banks and holders of MBS.  Needless to say, that doesn't exactly bode well for the economy as a whole...

Any more advice guys?

If the current bank prime rate of 2.25 per cent rises by 2.5 percentage points to 4.75 per cent, a homeowner with a variable mortgage should expect to pay about 30 per cent more on their monthly mortgage, says Robert McLister, a mortgage planner and editor of the Canadian Mortgage Trends website.

“If that causes you discomfort then perhaps a fixed rate's where you want to be and if a fixed rate is where you want to be...if you're closing in the next six months, I suggest people do that quickly.”

Generally, long-term fixed rates rise by about half of the variable rate, he said.
While the fixed versus variable decision is specific to each individual, Mr. McLister said if prime rates spike by more than 2.5 percentage point, odds are good homeowners will save money in a five-year fixed rate mortgage.

Potential homebuyers should get their pre-approval applications in fast and expect delays in pre-approvals due to increased application volumes, he said. And homeowners' with mortgages up for renewal would also be wise to lock in rates as far in advance as possible.

Typical broker/media  publication jackassery spouting off that you must buy now or never.  I mean seriously, ask a broker how interest rates affect housing prices, and what you should do about it,  and this is what you will hear:

1) Mortgages rates have never been lower, so now's a GREAT time to buy.
2) Mortages rates are starting to go up, so you better hurry, because now's a GREAT time to buy.
3) Motages rates are falling, but you better hurry while they're low, because now's a GREAT time to buy.
4) Mortgages rates are steady, but they won't stay that way, so you better hurry, because now's a GREAT time to buy.
5) Mortgages rates are very high, but are only going higher, so you better hurry, because now's you're LAST CHANCE to buy.

(The irony is that if have you have cash, and are in scenario 5, it MIGHT actually be a good time to buy, because prices should be utterly annihilited by that point).

CIBC chief economist Avery Shenfeld said mortgage rates hikes are a trend consumers should expect to continue.

“Once the Bank of Canada starts pushing up short-term interests rates, and even in anticipation of that, it tends to spill out across the rest of the curve."

He predicts the Bank of Canada will gradually raise key lending rates this summer, resulting in an increase of 0.75 per cent to one per cent by the end of the third quarter.

That would raise the average prime rate at the banks from 2.25 per cent to three per cent, which could tack on three-quarters of a per cent to the rates of homeowners with floating mortgage rates, Shenfeld said.

“Consumers are forewarned that when they look at borrowing today they have to factor in potentially higher costs,” he said.

“Consumers have to be aware in taking on debt at historically low interest rates that down the road they will be higher and have to leave room for their ability to pay those higher rates.”

Gee, ya think?  And of course the problem with taking on debt at historically low rates is that people GORGE themself with it, vastly overpaying for the underlying asset (in this case houses).   You don't hear the house pumping media say that consumers need to look further down the road very often...as it should be OBVIOUS to anybody that decides to take on a 6 figure debt financed by someone else.  Sadly, the entire concept of "renewal risk" is something most new homebuyers haven't yet experienced.  They've grown up in a period of declining rates, and appreciating home prices...a rude awakening is coming to many.

Government ads - cut the bullshit!

So,  I came across a CDIC ad while watching the hockey game last night and thought to myself:

Why the hell is the CDIC running ads (in primetime no less on HNIC)?  I actually found the prospect of the government actually running the ad (maybe not all Canadian banks are "safe"?)  scarier than the message of reassurance they supposedly are projecting.

Couple that with the endless "Economic Action Plan" propaganda bullshit ads, and I'm utterly appalled at the level of spin the government is hellbent on projecting without doing anything of actual substance.  But I guess that's the point of politics, convincing the masses "things are under control" while willfully doing nothing.

Worrying about your own stupidity

In my mind that's what this equates to.

Canadians are "scared" about potentially rising mortgage rates.  And in response to this "fear" naturally, they rush out to buy overpriced houses before cheap credit dries up.

“There's definitely a sense of urgency among home buyers,” said Lynne Kilpatrick, senior vice-president of personal banking at BMO. 

This is like being scared of heights before deciding to jump out of an airplane.   Here's a thought: Maybe if you're "terrified" of higher rates, you shouldn't be leveraging yourself to the teeth and buying a massively overpriced asset with borrowed money.  But of course this is far too rational a thought to be covered by the mainstream media, we need to embrace the thought that what goes up will never go down, and that we don't need to be responsible for our actions because someone (presumably) will bail us out if we fuck up.

More than two-thirds of Canadians expect mortgage rates to rise over the next year, with about the same number of mortgage holders concerned about higher rates, a Royal Bank of Canada annual homeownership survey showed.

Two-thirds?  TWO-THIRDS?

Translation:  1 in 3 Canadians is utterly fucking delusional that rates won't be going up.  Has the Bank of Canada already told us for the last 12+ months that rates will rise by June/July?

Try even suggesting to a homeowner that they may face modest rate increases in the range of 50-100 BP by end of year (with potentially another 100-200BP rise next year), which STILL leaves us below historical norms and just watch their reactions:

-Are you kidding me, don't you know rates only go down or stay current?
-That CAN'T happen!  You're dreaming...
-That BETTER not happen, or I'm fucked.
-If that happens, I will stab in the face.
-The government will save us.

What part of denial am I missing here?

Oh ya...they've been TOLD "It's OK"

On Tuesday, Bank of Nova Scotia forecast in its real estate trends report that home sales are expected to rise 10 per cent to 510,000 this year, while average prices are expected to jump 8 per cent to a record $345,000.

Like most economists' expectations, Scotiabank said the housing market in the spring should see a flurry of activity, particularly ahead of new sales tax regimes in Ontario and British Columbia and tighter qualifying criteria for insured mortgage

And the stupid thing is...they're probably right.  Prices probably do rise in the first half of the year, the most marginal buyers are always the last in before the crash...rush to buy before rates rise, the HST hits, etc...I'm sure that will work out spectacularly...

Why Democracy fails

It's not because it's a bad idea.  It's because politicians become dominated by special interest groups that are more organized than the average Joe (ie lobbyists).  Small groups that are extremely motivated by their own issues (often corporations) get what they want because they're organized, press for their wants, and the hell with everyone else.

Case in point, Stephen Harper is posting answers to questions via youtube .

I actually thought this might be worthwhile, in that you can raise questions, vote on which questions you like, etc?  Then I remembered...oh ya, this is the INTERNET.  I decided to browse through the "questions" that would be posed.

To summarize:

49% of the questions revolve on whether or not the the government is going to change bankruptcy laws such that pensioners become preferred creditors (most of these cite Nortel specifically).

While this is worthy of discussion, I sure as hell don't think 49% of Canadians number one issue is to ensure that Nortel employees get a full bailout.  But apparently they're organized, so their issue becomes "important".

Another 49% of the questions are related to the legalization and taxation of pot.

Again, maybe this is a valid question, but should it really be a BIG issue?  Don't we have bigger more important things to worry about than creating a new sin tax so we can enjoy legalized bud?  Again, the pro-legalization group seems motivated, and like the Nortel pensioners, felt obliged to spam the same issue thousands of times on an internet "discussion" via youtube...

Of course that leaves about another 1.9% of questions in the "smart-ass" category eg.  "Stephen Harper, are you sick of hearing about legalizing pot yet?"

And maybe another 0.1 percent of questions that might actually be worth posing...if you can find them amongst the "Nortel pensions good, pass the spliff" crowd.  Go democracy.

Being as I was unaware of this venue for engaging in democratic action in the first place, unlike the motivated pensioners and potheads (maybe they're the same people!), I'll pose a question no-one else seems to care about but constantly scares the shit out of me:

Is the CMHC adequately capitalized to withstand losses due to a potential collapsing housing bubble in Canada, and if so, can you provide figures demonstrating this?  If not, is the government going to force the holders of CMHC MBS to eat the loss, or is the taxpayer going to eat it through massively increased taxes/reduction in government services?

Not that they'd answer that one even if the question was asked...

Savings - A Little Perspective

Mish has a good post on the fuzziness of big numbers and puts the perspective of various "savings" found in the Obama budget.

Similarly, the Canadian Taxpayers Federation provides similar perspective on the Canadian budget.  A picture says a thousand words, so that will keep this rant short.

Lehman Autopsy

While it seems everyone on the planet wants to ignore the events that led us to the brink of an economic collapse, the Lehman report provides a stark reminder that:

1) Balance sheets mean nothing when you can just hide assets/liabilities that are convenient for you to hide.
2) Most major banks in the US (and likely worldwide) are basically insolvent.

A new report details how Lehman executives made business decisions that would ultimately prove suicidal, then used financial manoeuvres to mask the depths of their predicament. Finally, demands for payment by competitors helped push the firm over the cliff.

The report, produced by a U.S. court-appointed lawyer and released late Thursday, will have immediate ramifications. It provides a green light for lawsuits against Lehman's top executives, who allegedly manipulated the company's books, and its auditor, Ernst & Young, which the report says was aware of the scheme.

Let's hope that the ensuing shitstorm of lawsuits doesn't stop there.   Let's hope it leads to criminal investigation, not just within Lehman, but with their counterparties and within the willfully blind complicit parts of goverment "oversight" which was supposed to prevent shit like this from happening in the first place.

But the report also points to vulnerabilities that remain to be addressed. One of its major revelations is that Lehman used an accounting sleight-of-hand at several key junctures in 2008 to make its debt level appear smaller than it actually was.

Under the move, known as a “Repo 105,” Lehman shifted tens of billions of dollars of assets off its books as though they had been sold. In fact, they had been pledged as collateral in exchange for short-term loans, on terms favourable to the lender, and would return to Lehman's balance sheet within days. During that time, however, Lehman would take its quarterly snapshot of its financial health and present those figures to investors.

“It's basically window-dressing,” wrote one Lehman executive in an e-mail, according to the report. It also revealed that lawyers in the U.S. didn't endorse such accounting, so Lehman turned to a U.K. law firm and routed the transactions through Europe

While Lehman had employed the manoeuvres since 2001, it expanded its use of them in mid-2007, sailing through internal limits. “I am very aware,” of the impact of the transactions, one executive wrote in April 2008. “It is another drug we' r on.”

Comforting that this kind of crap has been going on since 2001 isn't it?  If Lehman was engaged in this sort of crap for near a decade, how many other financial institutions are playing similar games?   How many would have imploded had the former Treasury Secretary thief Paulson not passed a 3 page Tarp bill extoring billions of dollars from US taxpayers. 

Mr. Fuld, the company's hard-charging leader, comes in for tough criticism. He was a person “who heard only what he wanted to hear,” former Treasury secretary Henry Paulson Jr. told the lawyers preparing the report.

 Ya, and unfortunately for Mr. Fuld he didn't have the benefit of having plenty of insiders controlling the purse of the Treasury either.  I'm sure that didn't really hurt Goldmans Sach's did it?   

Time to take the gloves off and start prosecuting these cocksuckers.   Instead of wasting a fucking year in office and doing literally nothing about the root cause of the problem, and instead devising new and even more retarded ways of "stimulating" the economy by racking up monstrous amounts of debt.  Hope and change my ass.  Obama is possibly even more ensnared by the banking interests than Bush ever was.   At least Bush could use the excuse of being complacent because no-one had noticed the problem yet.  Obama, on the other hand, has been frantically attempting to look anywhere but where the problem actually lies. He has the full will and anger of the US populace to start taking these corporate lobbyist pieces of shit down...and yet he does nothing because he's completely and utterly dominated by them.

This shit will continue until politicians begin serving the interests of their consituents, rather than that of their corporate masters...when that will occur is beyond me. 

Stupid Questions

Disclaimer:  This is not related to housing, politics, the economy, or anything I typically rant about, just stupidity in general.  Read on if you wish...

Whoever coined the phrase: "There is no such thing as a stupid question." must have been one of the most utterly retarded people to have ever walked the earth.

Stupid questions exist.  This is a fact.  We all get them.  I am not saying all questions are stupid.  Nor am I saying that only stupid people ask stupid questions.  Indeed many stupid people don't ask any questions, and many otherwise intelligent people ask plenty of dumb questions.

Stupid questions exist in many forms, and for many reasons...let's look at some of them.

The stupidity of a question relates directly to how likely the individual asking the question should know the answer.  As such, 2 different people can ask the exact same question, and only one of them may be posing a "stupid" question.

Example:  If a 5 year old asks what 2+2 is, it's not a stupid question.  If a 10 year asks the same question, you may think he is mildly handicapped.  If a univesity student asks the question he may want to reexamine his life.

This isn't specific to educational levels either, clearly experience plays a role.

If an airline pilot asked you how to land a plane...or a dentist asked you what the difference between an incisor and a molar was, they would both be deemed incompetent.  Reverse the questions and everything is fine.

OK, so we've established that education/experience plays a direct role in how stupid a question may be.  Let's move on to how many times questions can be asked before it becomes stupid.

If you ask a person a reasonable question, it is reasonable specifically THE FIRST TIME.  If you keep asking the same fucking question over and over, each subsequent question indicates that your mental capacity may be closer to that of an amoeba than that of a human being.  (If you manage to ask different people the same question, they may not notice how much of a mental midget you are)

Not only is each subsequent question more and more stupid, it also has the added benefit of completely and utterly wasting the time of the questionee.  Said individual probably considers you the equivalent of dirt (except dirt doesn't ask any stupid questions...so that's clearly a bad analogy).

Another niche stupid question is one where the question is virtually incomprehensible.

Examples:

How think you is that because?  Problem: improper command of the English language.
If the sky is a blue and 6 times 8 is 48 and motor oil is a lubricant, do you think 48 cans of motor oil being drunk by a squirrel that has a kidney disease and farts rainbows is a good idea?  Problem: Too many drugs.

How to deal with stupid questioners:

1. Answer them anyways. (this sucks because then they continue to ask the same fucking question over and over ad nauseum).
2. Ignore them.  (I like this one - it frees up your time and tells them "fuck off and be self sufficient")
3. Point them in the direction of where they can find the answer.  (This one sounds good in theory, except if you repeatedly point them to documentation, Wikipedia, Google, etc. you inevitably STILL get asstards that can't find the freaking answer)
4. Provide sarcastic anal reaming responses that completely insult their feeble intelligence and generally let them know how retarded they are, potentially with the goal of making them cry. (Cathartic...so I like...may be difficult to pull off in a work environment if you have to behave "nicely" with your co-workers)
5. Fuck with them and give them crazy answers...then deny you gave them that answer because only a "complete idiot" would believe that shit. (More entertaining than 4...but with the same problems).
6.  Physical violence or the threat thereof.  (may be problematic if the questioner is bigger than you, carries a gun, or is a ninja...similar problems to 4, 5 as well).
7.  Scream insanely, confide in friends (or apparently the internet in general) the utter stupidity of Stuipid McStupidson (often over drinks)...and then concede and "politely" do 1, 2, or 3.

Seriously.  Before being "that guy" ask yourself these questions first::

1."Should I know the answer?"  If answer is yes, determine the answer.
2."Have I asked the same person the same question (numerous) times before?"  If answer to this is yes, and you still intend on asking the question, at least apoligize in advance for asking the question.
3. "Can I find this information somewhere else myself?"  If yes, determine where you can find the answer.
4. "Is the question specific and comprehensible?"  This one may be tricky to determine, but here's a hint:  If the questionee gives you a "WTF is this guy smoking?" look and almost laughs with an annoyed look while shaking his head...followed by "What?" or "Pardon?" - you may have just asked an incomprehensible question.  Congrats dummy!

Seriously, I should be a fucking life coach.

Unanimity - Do the elites even care?

So, Iceland officially said "No" to the UK/Netherlands repayment request. 

According to results released Sunday, just over 93 per cent of voters said “no” in Saturday's ballot, while only 1.8 per cent voted “yes.” The rest were blank or spoiled ballots. The results were based on a count of all but 2,500 of the 143,784 votes cast.

Good on the Icelandic voters; the results were a virual unanimous decision by the people.  The deposits of foreign investors were NOT officially covered by the banks, as such the depositor assumes a degree of risk in chasing yield.  The general public should not be held accountable for ridiculous risk practices of Iceland's banks (especially when the deposits were never legally covered by the bank nor the government). The UK/Dutch governments reimbursed their depositors and assumed they could just bully tiny Iceland into repaying them.  They assumed wrong.

Despite the vote, the Icelandic government said it would continue talks with Britain and the Netherlands on a new agreement.

Translation:  None of the politicians inside or outside of Iceland give a shit about the vote and will negotiate some type of convoluted backroom deal with the British/Dutch that is complicated enough to confuse the average voter, and then will ram that deal through, voters be damned.

He said, however, the British and Dutch would get their money back eventually. The two countries have already offered Iceland more favorable repayment terms than the deal voted on Saturday.

“The referendum was not about refusing to pay back the money,” Mr. Grimsson told the BBC. “Iceland is willing to reimburse those two governments, but it has to be on fair terms.”

 Really? I'd be interested in seeing how a repayment plan more favourable than "we're not paying you" works.

Last-minute talks on Icesave broke down last week, despite the debtor countries saying they had offered better terms for a new deal — including a significant cut on the 5.5 percent interest rate in the original deal.

That would have required each Icelander to pay around $135 a month for eight years — about a quarter of an average four-member family's salary.

A quarter of their salary?  Ridiculous!  Clearly, they will attempt some new deal that is modestly more affordable...but will inevitably result in working class Icelanders, their children and grandchildren assuming this debt.  Way to sell your children into debt serfdom.

Despite the referendum result, both sides said they were confident a deal would eventually be reached.

The voting public just voted against this deal at a ratio of over 50:1 against this deal.  And that somehow suggest just a few minor "tweaks" to work out the deal?   A vote skewed that much is akin to trying change 2nd Amendment rules in US red states, making Judiasm the national religion in Arab nations, or banning Catholism in the Vatican.

If voters can be unanimous in rejecting this and politicians ram this through anyways, democracy simply doesn't function.  You simply have a dictatorial state ruled by the elite class, but you throw the public "votes" to make it appear that it's something else.  The trouble is, eventually the public figures out that the rule of law simply doesn't mean much when it doesn't apply to everyone, and they simply start to take matters into their own hands...

Canadian Budget - Reality Check

Let's cut through the BS spin of the budget.  The short of it is, spending increases have been reined in dramatically, but "cuts" aren't yet in place.   The Conservatives "plan" appears to be:

1) Slow down spending increases (but don't actually cut spending).
2) No tax increases.
3) Hope the economy improves.

Emphasis on 3).  They REALLY REALLY hope that happens, because 1 and 2 sure as shit won't balance a record $56 Billion budget deficit.

Mr. Flaherty’s program relies on an outlook for economic growth in 2010 of 2.6 per cent and of 3.2 per cent in 2011, estimates that are based on the consensus of 15 private forecasters.

Those are cautious estimates, because history suggests that economies rally much faster after recessions. While that leaves room for a pleasant surprise, Mr. Flaherty, unlike in his previous budget, hasn’t made allowances for the possibility the consensus could turn out to be too optimistic.

Cautious estimimates?  REALLY?  Is that what the "private economists" (handpicked by the government) say.  They look hopelessly optimistic to me.  After all, the only reason we managed 5.0% growth in the 4th quarter was due to a combination of massive government stimulus spending, and a ridiculous housing boom.  Neither of those are sustainable; we're due to see a snap back to reality this year.  Double dip is very much a likely outcome despite what everyone HOPES happens.  Hope is not a plan.   Look how "hope" is working out in the US.

Some of the "cuts":

Mr. Flaherty’s budget would reduce the planned growth in the Defence Department’s budget by $525-million in the fiscal year ending March 31, 2013 and $1-billion annually the following year. The government will freeze the international aid budget this year, scrapping a previous pledge to increase it by 8 per cent a year, which will save $4.5-billion over five years. Also, departmental operating budgets will be frozen at current levels in 2011-12 and 2012-13.

 The government said it would not cut major transfers to provinces (such as health care and employment insurance), though some minor programs will be affected.

Defense is actually a good start, but where's health care (provincial transfers), education, government pension plans?   Provincial transfers should definitely be on the radar (again).  Too many provinces are utterly dependant on the feds for their funding.  If the federal funding shrinks, maybe the provinces will push towards their own improvements.

Making cuts to every tiny little discretionary program is not going to balance this beast of a deficit.  Some of the "meat and potato" programs have to be trimmed too.  Departmental budgets should be cut 5-10%, not frozen (and just for 2 years).  The aid cut doesn't surprise me in the least.  In fact I don't even recall the pledge to increase aid by 8%  YOY in the first place...seems pretty uncharacteristic of the Cons.   I guess the key to finding savings is to make plenty of unrealistic "pledges" in the first place to buy votes, hope the suckers buy it, then cut when you feel like it so you can make the "Look at the savings!" announcement.   And you wonder why people despise posturing of the liars in office.  That being said, cutting foreign aid is a drop in the bucket and entirely political - "Look we're worried about us, fuck everyone else."

The G&M article cited has an interesting breakdown of revenues/expenses over the last year.

Out of curiosity, I figured I'd take a look to see how revenues and expenses have fared since the Conservatives took office in 2006.

In 2006 revenues were at $235.4B and expenses at $222.2B for a surplus of $13.2B.
In 2007 revenues were at $242.1B and expenses at $232.6B for a surplus of $9.5B.
In 2008 revenues were at $235.9B and expenses at $237.2B for a deficit of $1.3B.
In 2009 revenues were at $213.8B and expenses at $258.6B for a (projected) deficit of $44.8B (this is now revised closer to $56B)

The projections for 2010 have revenues at $231.4B and expenses of $280.5B for a projected deficit of $49.1B.

So, in 4 short years.  Revenues have declined by 1.7% (based on the rosy rebound in revenues projected next year.  And government spending has increased by 26.2%.  Granted, politicians will cite the recession is cause for both the decline in revenues (income and corporate taxes) and the increase in spending due to automatic stabilizers (EI, social assistance).

But if that's the case, and governments have counter cyclical policy firmly in place, then WHY the need for the ridiculous Keynesian stimulus programs?

Answer: Because a politician will never cease to take an opportunity to spend other people's money without being accountable for it.

The Conservatives economic policies have been dismal from the beginning.  Ie. letting CMHC run wild to let people with no money buy houses, cutting progressive consumption taxes like the GST instead of reducing personal income taxes, etc., and letting program spending explode.

Unfortunately, the other parties "plan" is to DO MORE OF THAT.  Seriously, the Liberals have been MIA since Iggy took over.  I guess I can't really blame them, the Conservatives had literally NO POLICY last election beyond "Stephane Dion is a little weeny loser", and look how that worked out.  At least he had a FUCKING PLATFORM (yes a carbon tax might make a lot of sense if it was done correctly, you know, tax the polluters, and give everyone else a tax break).  And don't get me started on Jack "I'm at Gretzky's" Layton.  His plan is to spend even faster than the Liberals...while taxing everyone to pay for it.  Clearly government can't be too big for the NDP.

Seriously, the only reasonable option is "None of the above", or a protest vote for the Greens or a decent independant.  Democracy doesn't work when all the parties are incompetent.