"We're proposing a strong and real plan, one that invests in the middle class, so we can grow the economy, not from the top down, the way Mr. Harper wants to, but from the heart outwards. That's what Canada has always done well.” – Justin Trudeau





I t’s been one year in power for Trudeau’s Liberals. Despite endless criticism of Stephen Harper’s economic record during the election, the Liberals haven’t fared any better. The unemployment rate hasn’t budged. The GDP growth is constantly revised downwards to the point where – in 2016 – we will be lucky to pass 1% growth. Big industrial projects are still in limbo. Layoffs on a large scale are becoming constant. The malaise continues...and will continue to do so.



Here’s ten big problems the Liberals are up against...much of it being their own doing.







#1 . Commodity Bust



Justin Trudeau and his Liberal gang of sophisticates are embarrassed by Canada’s reputation for having an over-reliance on primary resource based industries. As Canada gets more urban and removed from the bounty of Canada’s rich geography, the disdain for utilizing our natural resources grows.



Nevertheless, our natural resources are crucial to our prosperity and standards of living. With a worldwide commodity bust currently raging into it’s third year, Canadian wealth is getting crushed. Without selling our natural stuff, we can’t build a vibrant economy. We’re a small population tied to a sprawling land. It’s our destiny to be “drawers of water and hewers of wood”. So long as commodity prices are depressed, so too will be our economy.





#2 . Consumer Debt



Canadians have never been saddled with more debt in our entire history. Credit cards are maxed. Mortgages are enormous. Lines of credit run to the brim. As a result of this already-spent money, future growth in the consumer economy is limited. The growth that comes from spending tomorrow’s paycheck today has already happened. Now everything already bought is getting paid for...slowly...grindingly...over the course of years.





#3 . Housing Bubble (and the policy to correct it)



People have been warning of it for years and if you want some hardcore doom-and-gloom surfing, head over to Garth Turner’s THE GREATER FOOL blog and check it out. The housing bubble in Canada is now comparable to what happened in the United States in 2008. Of course we were told it could never happen here, but as prices got more and more insane, the people up top realized that it totally could happen here.

Thus, the Liberals have introduced new regulations making it harder to buy a house. The problem is that the policies introduced may incite the exact bubble-burst it is intending to avoid. We’ll have to stay tuned to see how this plays out, but either way, housing is a major driver of the economy and we’re looking at a slow down soon.





#4 . Demographics



Probably the most important macro-economic factor in this list is demographics. The peak of Canada’s baby boom was 1959. This makes the average baby boomer roughly 57 years old. There are more people over 65 in Canada then under 15. We’re an old and greying country.



In order for a nation to have a vibrant, dynamic, growing and innovative economy...you need to have the people to drive it. Canada is instead heading down the same path as Japan and Europe. People are trying to save for retirement and they don't have enough money. As houses get liquidated and consumer goods go unpurchased, Canada’s economy is destined to decline. At the same time, public demands for more entitlements will grow.



What could possibly go wrong?





#5 . Diversification Dream



Justin and the Liberals want Canada to have a “cool” economy. Natural resource extraction, manufacturing cars, and paper-pushing in cubicles is a hallmark of Canada’s real economy. We don’t have Canadian Googles or Amazons or Microsofts or Facebooks or “a knowledge economy” or “green-collar jobs”...and that’s what Liberals are infinitely infatuated with.



Their determination to force this love affair to happen is going to leave us with more Nortels and Blackberries. Fast burners with lot’s of promise and no follow through.



Countries need to play to their strengths, but the Liberals want Canada to be a northern Silicon Valley.