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ANALYSIS: A looming coronavirus debt crisis could swamp Canadian households – Global News

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The coronavirus pandemic that began as a public health crisis then metastasized into an economic crisis is likely to finish as a debt crisis that could end up swamping not only some governments but also hundreds of thousands — if not millions — of Canadian households.

The growing accumulation of debt at the household level combined with reduced incomes to service that debt — two phenomena characteristic of this pandemic — also threatens to slow the recovery.


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And dealing with a future debt crisis is going to present some new challenges to policy-makers, who will have to account for one of the unique aspects of this recession: it disproportionately affects women.

“What is absolutely clear is that women have been hit harder than men in this recession. And that’s the first time ever in history because in most recessions, usually, men take it on the chin first,” said Armine Yalnizyan, an economist and Atkinson fellow on the future of workers who has, among other things, acted as an adviser to federal government departments.

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Even before the pandemic, Canadian households had been taking on more and more debt. Fuelled by a long period of low interest rates, Canadians eschewed savings in favour of more spending — spending sometimes done with cash on hand but, increasingly, spending facilitated through lines of credit, credit cards or other borrowing.


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The national household savings rate has been steadily drifting downward in the last decade so that, just as the pandemic hit, Canadians were saving only about $3.60 for every $100 earned.

Meanwhile, the relative size of Canadian household debt has been ballooning over the last 20 years. In 1999, Canadian households had $106 of debt for every $100 of disposable income. Twenty years later, in the quarter before the pandemic, Canadian households owed $176 for every $100 of disposable income — a debt-to-income ratio of 176 per cent.

“And you’re probably going to see it at something like 230 per cent,” said Craig Alexander, chief economist at Deloitte Touche. “And the reason is that the denominator — income — will have fallen because of the employment shock that we’re having during the pandemic and the lockdown.

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“Before the pandemic, Canada’s No. 1 economic risk was the amount of leverage that households had taken on the enormous amount of debt that had accumulated during an exceptionally low interest rate environment for an extended period of time.”

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Canada’s big banks can see the writing on the wall. Lower incomes caused by job losses or reduced hours means it will be more difficult for Canadians to service current debt levels. As they reported their financial statements for the first quarter of 2020, banks increased their loan loss provisions by $11 billion. That’s not to say that banks expect they will one day be forced to write off all of that, but they certainly will have to write off a portion.

And yet, as of right now, income replacement programs like the Canada Emergency Response Benefit (CERB) are, so far at least, keeping the debt wolf at the door.

“Government supports and payment deferrals for some of these debts are giving Canadians, to a certain degree, a false sense of security, which is actually allowing them to put off dealing with the debts, even though those debts may be just as bad, if not worse, when the situation ends,” said Keith Emery, CEO of the non-profit credit counselling firm Credit Canada.

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But government supports are unlikely to last forever. The CERB is set to expire at the end of July, for example. And bank programs to allow mortgage holders to defer some payments only buy a few months of relief.

“The mortgage payments are going to start again,” said Alexander. “And then we’re going to find out what the real economic toll is because it’s when the mortgage deferrals end that you’re going to see whether or not there are Canadians that are having difficulty making their mortgage payments.”


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The Canada Mortgage and Housing Corp., the federal Crown corporation that provides mortgage insurance for most Canadian homeowners, recently told the House of Commons finance committee that it estimates 12 per cent of the country’s mortgage holders had already entered into a mortgage deferral agreement with their bank and that by September, that number could rise to 20 per cent, or one in five.

But those deferrals won’t last forever. Eventually, the bills will come due again.

“I think what we’re looking at potentially is sort of what’s being termed the deferral cliff, meaning that government supports and payment deferrals end while the economy hasn’t fully recovered, or in some cases, for personal consumers, they haven’t fully recovered,” said Emery.

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Getting everyone back to work at their pre-pandemic wage levels, of course, is the best solution for all.

But as governments consider policies to reflate the economy, they will be forced to confront the gender effects of the COVID-19 recession. That means, in the first place, accounting for the decimation of the service industry — everything from salons and stylists to restaurants and tourism — an industry that has typically relied heavily on female labour.

And since the ability of many women to work depends heavily on access to child care, ensuring child-care providers are up and running becomes a critical priority if the country is to emerge from what has been dubbed the “she-cession.”

“There is no recovery without a ‘she-covery,’” said Yalnizyan. “But there is no ‘she-covery’ without child care, and we don’t have a plan for either.”

And, however you term it, there is a much slower recovery as a result of these sky-high levels of consumer debt.

“Part of the question around how strong the recovery is going to be is how are we going to power growth with that much amount of debt being carried by the economy?” said Alexander. “The consumer is 60 per cent of the Canadian economy. So if we have households with weaker finances, it could be the case that they save more.”

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To economists, “saving more” is about the same as “paying down debt.” But neither paying down debt nor saving more is equivalent to spending more — which is what powers growth.

“Globally, the single biggest risk to the global economy, pre-pandemic, was the amount of leverage or debt that had been taken on. And now we’re going to have a situation that’s far worse when we get to the recovery,” said Alexander.  It doesn’t mean we won’t get a recovery, but it means that this recovery could be very slow and drawn out.”

David Akin is the chief political correspondent for Global News.

© 2020 Global News, a division of Corus Entertainment Inc.

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Virginia Democrats advance efforts to protect abortion, voting rights, marriage equality

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RICHMOND, Va. (AP) — Democrats who control both chambers of the Virginia legislature are hoping to make good on promises made on the campaign trail, including becoming the first Southern state to expand constitutional protections for abortion access.

The House Privileges and Elections Committee advanced three proposed constitutional amendments Wednesday, including a measure to protect reproductive rights. Its members also discussed measures to repeal a now-defunct state constitutional ban on same-sex marriage and ways to revise Virginia’s process to restore voting rights for people who served time for felony crimes.

“This meeting was an important next step considering the moment in history we find ourselves in,” Democratic Del. Cia Price, the committee chair, said during a news conference. “We have urgent threats to our freedoms that could impact constituents in all of the districts we serve.”

The at-times raucous meeting will pave the way for the House and Senate to take up the resolutions early next year after lawmakers tabled the measures last January. Democrats previously said the move was standard practice, given that amendments are typically introduced in odd-numbered years. But Republican Minority Leader Todd Gilbert said Wednesday the committee should not have delved into the amendments before next year’s legislative session. He said the resolutions, particularly the abortion amendment, need further vetting.

“No one who is still serving remembers it being done in this way ever,” Gilbert said after the meeting. “Certainly not for something this important. This is as big and weighty an issue as it gets.”

The Democrats’ legislative lineup comes after Republican Governor Glenn Youngkin, to the dismay of voting-rights advocates, rolled back a process to restore people’s civil rights after they completed sentences for felonies. Virginia is the only state that permanently bans anyone convicted of a felony from voting unless a governor restores their rights.

“This amendment creates a process that is bounded by transparent rules and criteria that will apply to everybody — it’s not left to the discretion of a single individual,” Del. Elizabeth Bennett-Parker, the patron of the voting rights resolution, which passed along party lines, said at the news conference.

Though Democrats have sparred with the governor over their legislative agenda, constitutional amendments put forth by lawmakers do not require his signature, allowing the Democrat-led House and Senate to bypass Youngkin’s blessing.

Instead, the General Assembly must pass proposed amendments twice in at least two years, with a legislative election sandwiched between each statehouse session. After that, the public can vote by referendum on the issues. The cumbersome process will likely hinge upon the success of all three amendments on Democrats’ ability to preserve their edge in the House and Senate, where they hold razor-thin majorities.

It’s not the first time lawmakers have attempted to champion the three amendments. Republicans in a House subcommittee killed a constitutional amendment to restore voting rights in 2022, a year after the measure passed in a Democrat-led House. The same subcommittee also struck down legislation supporting a constitutional amendment to repeal an amendment from 2006 banning marriage equality.

On Wednesday, a bipartisan group of lawmakers voted 16-5 in favor of legislation protecting same-sex marriage, with four Republicans supporting the resolution.

“To say the least, voters enacted this (amendment) in 2006, and we have had 100,000 voters a year become of voting age since then,” said Del. Mark Sickles, who sponsored the amendment as one of the first openly gay men serving in the General Assembly. “Many people have changed their opinions of this as the years have passed.”

A constitutional amendment protecting abortion previously passed the Senate in 2023 but died in a Republican-led House. On Wednesday, the amendment passed on party lines.

If successful, the resolution proposed by House Majority Leader Charniele Herring would be part of a growing trend of reproductive rights-related ballot questions given to voters. Since 2022, 18 questions have gone before voters across the U.S., and they have sided with abortion rights advocates 14 times.

The voters have approved constitutional amendments ensuring the right to abortion until fetal viability in nine states: Arizona, California, Colorado, Maryland, Michigan, Missouri, Montana, Ohio and Vermont. Voters also passed a right-to-abortion measure in Nevada in 2024, but it must be passed again in 2026 to be added to the state constitution.

As lawmakers debated the measure, roughly 18 members spoke. Mercedes Perkins, at 38 weeks pregnant, described the importance of women making decisions about their own bodies. Rhea Simon, another Virginia resident, anecdotally described how reproductive health care shaped her life.

Then all at once, more than 50 people lined up to speak against the abortion amendment.

“Let’s do the compassionate thing and care for mothers and all unborn children,” resident Sheila Furey said.

The audience gave a collective “Amen,” followed by a round of applause.

___

Associated Press writer Geoff Mulvihill in Cherry Hill, New Jersey, contributed to this report.

___

Olivia Diaz is a corps member for The Associated Press/Report for America Statehouse News Initiative.

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Vancouver Canucks winger Joshua set for season debut after cancer treatment

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Vancouver Canucks winger Dakota Joshua is set to make his season debut Thursday after missing time for cancer treatment.

Head coach Rick Tocchet says Joshua will slot into the lineup Thursday when Vancouver (8-3-3) hosts the New York Islanders.

The 28-year-old from Dearborn, Mich., was diagnosed with testicular cancer this summer and underwent surgery in early September.

He spoke earlier this month about his recovery, saying it had been “very hard to go through” and that he was thankful for support from his friends, family, teammates and fans.

“That was a scary time but I am very thankful and just happy to be in this position still and be able to go out there and play,,” Joshua said following Thursday’s morning skate.

The cancer diagnosis followed a career season where Joshua contributed 18 goals and 14 assists across 63 regular-season games, then added four goals and four assists in the playoffs.

Now, he’s ready to focus on contributing again.

“I expect to be good, I don’t expect a grace period. I’ve been putting the work in so I expect to come out there and make an impact as soon as possible,” he said.

“I don’t know if it’s going to be perfect right from the get-go, but it’s about putting your best foot forward and working your way to a point of perfection.”

The six-foot-three, 206-pound Joshua signed a four-year, US$13-million contract extension at the end of June.

This report by The Canadian Press was first published Nov. 14, 2024.

The Canadian Press. All rights reserved.

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Trump chooses anti-vaccine activist Robert F. Kennedy Jr. as health secretary

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NEW YORK (AP) — President-elect Donald Trump says he will nominate anti-vaccine activist Robert F. Kennedy Jr. to lead the Department of Health and Human Services, putting him in charge of a massive agency that oversees everything from drug, vaccine and food safety to medical research and the social safety net programs Medicare and Medicaid.

“For too long, Americans have been crushed by the industrial food complex and drug companies who have engaged in deception, misinformation, and disinformation when it comes to Public Health,” Trump said in a post on his Truth Social site announcing the appointment. Kennedy, he said, would “Make America Great and Healthy Again!”

Kennedy, a former Democrat who ran as an independent in this year’s presidential race, abandoned his bid after striking a deal to give Trump his endorsement with a promise to have a role in health policy in the administration.

He and Trump have since become good friends, with Kennedy frequently receiving loud applause at Trump’s rallies.

The expected appointment was first reported by Politico Thursday.

A longtime vaccine skeptic, Kennedy is an attorney who has built a loyal following over several decades of people who admire his lawsuits against major pesticide and pharmaceutical companies. He has pushed for tighter regulations around the ingredients in foods.

With the Trump campaign, he worked to shore up support among young mothers in particular, with his message of making food healthier in the U.S., promising to model regulations imposed in Europe. In a nod to Trump’s original campaign slogan, he named the effort “Make America Healthy Again.”

It remains unclear how that will square with Trump’s history of deregulation of big industries, including food. Trump pushed for fewer inspections of the meat industry, for example.

Kennedy’s stance on vaccines has also made him a controversial figure among Democrats and some Republicans, raising question about his ability to get confirmed, even in a GOP-controlled Senate. Kennedy has espoused misinformation around the safety of vaccines, including pushing a totally discredited theory that childhood vaccines cause autism.

He also has said he would recommend removing fluoride from drinking water. The addition of the material has been cited as leading to improved dental health.

HHS has more than 80,000 employees across the country. It houses the Food and Drug Administration, the Centers for Disease Control and Prevention, the Medicare and Medicaid programs and the National Institutes of Health.

Kennedy’s anti-vaccine nonprofit group, Children’s Health Defense, currently has a lawsuit pending against a number of news organizations, among them The Associated Press, accusing them of violating antitrust laws by taking action to identify misinformation, including about COVID-19 and COVID-19 vaccines. Kennedy took leave from the group when he announced his run for president but is listed as one of its attorneys in the lawsuit.

__ Seitz reported from Washington.

The Canadian Press. All rights reserved.

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