And with such huge consumer debt and low average wages, getting lower as capitalism pushes to offset it's falling rate of profit on the backs of the workers who produce them, if a credit or capital crisis hits North America, this personal debt will have a greater impact than the Great Depression. Economists warn on US debt crisis
Family debt soars as incomes stagnate
And nothing the new Conservative government will address this crisis. All they have offered is tax credits to the rich and an inadequate baby bonus. Tax credits do not put real money in your pocket, as ING would say. In fact they only help those who pay taxes, and result not in a lower pay cheque per se but as a balance against earnings on your annual income taxes. Instead a tax cut on those earning under $100,000 would put real money back in your paycheque.Canadians outspend their ability to repay, new report finds
Eric Beauchesne, The Ottawa Citizen; with files from CanWest News Service
Monday, February 13, 2006Cash-strapped Canadian families are racking up debt at an alarming rate and the record number of households declaring bankruptcy will continue to rise unless people tighten their belts now, a new report warns.
"The alarm bells are ringing louder than ever," says the Vanier Institute for the Family, in a report on the state of family finances in Canada released on the weekend.
"They rang for governments and for many businesses and they did something about it. It is now time for families to do something about their own situations."
The average household income is now about $55,000 a year, roughly the same as at the start of the decade and up only one per cent, or about $500, from 1990.
In contrast, average household debt now stands at about $70,920, up 16 per cent from 2000, and 40 per cent from 1990.
"On average, households are putting nothing away for a rainy day, for a bout of unemployment, or for retirement," the report says.The real hourly earnings of Canadians have increased by just a dime over the past decade and a half, the report says.
The marginal 10-cent-an-hour-after-inflation increase in hourly earnings since 1990 has been accompanied by fewer hours of work, says the respected social policy think-tank.
"As such, more members of cash-strapped families are stepping into the growing paid-labour market," it says.
While that has produced record levels of employment and dual-income families, their disposable income, after taxes and government benefits, has stagnated over the last five years.
With the booming real estate market and interest rates at historically low levels, Canadians have reduced their savings and taken on more debt, it notes.
The days of cheap debt, however, are coming to an end, it says, predicting interest rates will continue to rise over the short term at least.
Total debt per household is now equal to 125 per cent of disposable incomes, up from 91 per cent in 1990, an increase that has helped push insolvencies to record levels and will continue to do so.
Unfortunately those tax cuts implemented by the Liberals before the election are going to be killed by the Conservtive government in order to pay off its GST promise. Once again helping the rich who are the only ones who really benefit from a GST cut, since it really only appears as a cost savings on big ticket items, like cars and other luxury goods.
See:The Real Debt and Deficit Crisis January 2006
Storm Clouds Over The US Economy
Greenspans LegacyThe Wit and Wisdom of Warren Buffet
Housing Boom or Bust
Debt CrisisAir Canada Profits From Bankruptcy
Jobs Not Tax Cuts
Retirement Reverse Discrimination
Social Insecurity- The Phony Pension Crisis
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