Provincial overspending could put us all over a barrel 0
Europe's 50-year spending party is over. The wine is gone, the kitchen is closed and the bill has landed with a thud, but not before Greece, Italy, Spain, Portugal and Ireland all started coughing into their napkins and left the table.
Germany and France were left to pick up the tab.
And it's not like you need a PhD in economics to understand the fall of Europe, just some arithmetic and a basic understanding of human nature.
For instance, my personal experience as a person and my downright expertise in arithmetic tell me two things. First, people don't like to be told no, even when they know they're overspending, so you always need a big heavy to insist that the rules be followed.
Second, if you spend without the revenue to match, you end up with a disaster. You end up with Europe.
For instance, the European Union rules stipulated that EU countries couldn't run large deficits. But enforcing the rules was discretionary and people didn't like to be told no, so everyone kept spending.
Now France and Germany are putting Humpty Dumpty back together again because he was such a good egg. Under their new Stability Pact, heavily indebted EU countries would be forced to bring forward their budgets for approval before they'd receive bailout funding.
The bad news politically is that those almost bankrupt EU countries would be required to surrender some sovereignty to belong to the Stability Pact.
But that's also good news. If you're a legislator it's a handy thing to be able to say to constituents that we must be frugal if we wish to stay within the EU and the Euro Zone that provides so much opportunity and protection.
Canada has its own version of this. Canada's economic union includes all the provinces and territories. Our bad boy jurisdictions are Ontario and Quebec.
Ontario's solar and wind-powered debt is now sitting at $250 billion. But the plan is to take it to at least $300 billion before Ontario theoretically balances its budget, and that's only if the Ontario economy continues to grow modestly.
But those growth projections assume Europe remains Europe, which is a tad shaky as assumptions go.
The Quebec situation is even worse. With a much smaller population, our Quebec friends are rocketing toward $200 billion in debt and a debt-to-GDP ratio of 55%.
I say, only half joking, where is the Canadian Stability Pact? No, seriously, where is it?
I don't wish to be alarmist, but Central Canada is picking up momentum as it floats in a barrel toward Niagara Falls. Unfortunately I'm chained to that barrel and I can't find the key. Why are you laughing? You're chained to it as well.
After all, Ontario and Quebec's debt is implicitly backed by the taxpayers of Manitoba, New Brunswick and Nunavut. It's backed by all Canadian taxpayers in our vast and strong, but not indestructible, country.
In the end Canada can survive almost anything, however one thing it can't survive are governments who govern without regard for human nature or the iron laws of arithmetic.