Unintended Consequences

The Trudeau government is about to stick it to the entrepreneurs in favour of the workers under the guise of creating an "even" playing field (a debate which we are watching closely on behalf of our clients who have small corporations).

The Bank of Canada, whose mandate is to fight inflation (which at the moment remains minimal), is sticking it to the indebted household with higher interest rates.

The housing market is on the verge of cracking.

Is the "perfect storm" developing?

And this is just in Canada.

I am biased, to a degree, as a small business owner, but I take risks with my (and my families) money to invest in and build a business. 

With all due respect to the hard working Canadians who do their jobs, day in and day out for large corporations or a government agency, they just don't have the same risks as we small business owners have. In that alone, the playing field is already uneven. 

Small business drives the Canadian economy, it should be encouraged, not discouraged, if you take away the tax advantages, you take away the desire for the entrepreneurs to take risk. If you take that away, then you lose a powerful economic force. 

That is the risk that the Trudeau government is taking. Unfortunately the downside (slowing economic growth) affects everyone.

Throw in higher interest rates and the rising cost of borrowing that the Bank of Canada is pushing on us with yet another record  household debt to income level as of the end of Q2 ($168 of debt per $100 of income per household) and there is a recipe for further economic slowing. The stronger $C is also adding to this issue.

Finally, add in the fact that the housing market (which is now somewhere in the vicinity of 20% of Canadian GDP) is showing signs of strain with new foreign buyer rules and higher borrowing costs and it becomes a very cloudy outlook for this country.

The US economy is looking a bit shaky after today's retail sales data for August (what happened to "back to school" buying?).

Need I mention North Korea (nuclear war risk), again?

Even Warren Buffet is accumulating cash:

And parallels are being drawn to 1987:

More here:

https://insight.factset.com/1987-crash-2017-will-history-repeat-or-just-echo?utm_campaign=econinsight&utm_content=60327475&utm_medium=social&utm_source=twitter

 Be careful what you wish for Mssrs. Trudeau and Morneau!