Provincial deposit insurance, Manitoba rates, etc | Page 2 | General comparisons | Discussion forum

Most high income earners have no CDIC coverage because they have wads of money in one place, usually mananged, and they are sleeping easily. Maybe we are all too conservative and falsely comforted by deposit insurance.

Hi Loonie - I think you can only decide on one entity (Home Trust OR Home Bank) - please correct me if I'm wrong

Loonie Wrote....
"If you and your spouse maxed out with TFSA, RSP, unregistered, in joint accounts where possible, at Oaken, you could have up to 1,000,000 coverage. However, it's unlikely you would because TFSAs haven't been around that long and you may not yet have this much in your RSPs.
It would go like this:

TFSA 100K x 2 entities x 2 people = 400K
RSP 100K x 2 entities x 2 people = 400K
Unregistered Savings/GICs 100K joint x 2 entities = 200K
TOTAL.....................................................................1,000,000. "

Norman1 said
An $1 million deposit with the Royal Bank (rated AA) would have $100,000 of CDIC coverage. The remaining $900,000 would be at a higher risk than in a Canada Savings Bond (rated AAA) but lower risk than in an Ontario Savings Bond (rated AA(low)).  

I don't know if I would go that far and say that a national bank is less risky than say, for example the Province of Ontario. I realize that Ontario is a fiscal disaster at the moment, but its ability to generate revenues through taxation makes its debt less risky in my option regardless of its lower credit rating.

I'm not sure if your trolling me or not. Do you really believe the government cannot raise additional income or sales taxes or get creative with other fees, like the health care supplement? There is always money to be had; unfortunately, it's always poorly managed.

Twotons, I'm not disputing that the government can raise taxes here, there and everywhere. My point was that a family of 4 is responsible for paying off about $90K at today's Ontario debt levels so I was asking you if you had any specific suggestions on how to get that much additional taxes out of that family in order to pay off the debt. Increasing their income, sales or other taxes and fees by a few hundred or thousand per year is easy and obvious, but the real issue is how do you get $90K more out of that family? And climbing by about $7 - $8 per day for that family in Ontario. And that's not even talking about ever-increasing federal and municipal debt amounts we all also share.

Twotons said
And, yes Norman1, I don't place my full faith in any credit rating agency because its just a tool and not gospel. Do peeps still remember when Moody's and Standard & Poor's gave out AAA ratings to all that sub prime debt? Were they naïve mathematicians? I vote yes.

Just because the ratings agencies are not perfect doesn't mean they are "just a tool".

Warren Buffet must be a lousy investor then. Lost around $100 million once by investing in an airline.

Ever wonder why that AAA rated mortgage-backed debt defaulted? Maybe it had something to do with something no-one expected? Like whole neighbourhoods in the US being foreclosed and property values collapsing under the weight of all those houses coming onto the market at once?

That "it's a government, it is safer" reasoning has been debunked decades ago. The banks used to believe that in the 1970's. They lent large sums of money to lesser-developed countries as a result. After all, how could a country default, with unlimited powers of taxation and currency issuance?

By the 1980's, the lesser-developed country loan defaults threatened to wipe out the capital bases of the big Canadian banks.

As for what the ratings agencies are, a previous discussion examined what they do and how they reach their opinions. In having a closer look at the ratings for Alberta and Ontario, we were surprised to find out how well Alberta and Ontario are actually doing, in contrast to the sensationalized reporting in the media.

Top It Up said

Maybe you could share your sources that tell us just how well Alberta is doing ... you know, something other than the socialist, Ms Notley, telling everyone that "... the debt ... is “absolutely manageable”" or the ever dubious past history of credit ratings agencies.

I'd particularly like to hear about your sources for oil price forecasting and, when the Keystone, Energy East, and TransMountain pipeline projects will come on stream …  

Don't need those forecasts. Just look at their situation today. Assume oil won't recover and the pipelines won't get built.

Our findings about Alberta and Ontario are at the tail of the previous discussion.

Ontario is expected to require less than 10% of its revenues to service its debt. Alberta will require less than Ontario. Can't say debt load is unmanageable with a debt-service-to-income ratio of under 10%.

A while ago, I read that the UK is still carrying debt that they acquired in the 1700s (sic). They just keep refinancing it.

Doug said

Wow! I knew they'd had World War I era debt still, but the 1700s? Geez. 😉

Cheers,
Doug  

I think this is what Loonie talks about. The wiki article say the UK government have fully redeem it as interest rate becomes more favorable and induced the government to refinance instead.

Government is not an individual, it is an entity that will never die, hence, there is no need to pay down all the debt of the government as creditor expect someone will always pay for the obligation of the debt.

Borrowing by government of developed country is useful if it is use for financing infrastructure projects because the alternative maybe much more expensive (worst economy, lower tax revenue etc). It is however, not recommended for the purpose of day to day operation.