Every level of Government in Canada has many guarantees, from pensions to healthcare to many other different social programs. Some will get cut, some will get squeezed. In regards to housing, CMHC will take a hit, and if the housing bust is bad enough, CMHC will need to be bailed out by taxpayers as has been mentioned by a few economic think tanks this year. And in Saskatoon, their Mortgage Flexibility Support Program will be toast. If you are taxpaying citizen, remember you are back stopping this.
Now to add to all this, is that Provinces and Cities have not addressed obligations such as infrastructure that will need to addressed very soon. For instance, in Saskatchewan,
Regina recently reported that it needs $2.1-billion over 10 years to repair and maintain its infrastructure. With 80,000 households, the average Regina home owes $25,000. Saskatoon is not too far behind.
Our University needs some cash:The fact that our deferred maintenance costs have risen over decades to $617 million is of concern to the U of S and to the provincial government.
Now the scary thing is that during Saskatoon's "boom", debt has increased from 27 million to over 175 million in about 7 years. Spending has doubled in 5 years. The Provincial Government is drinking the same kool-aid as well. On the Federal level, want to see how fiscal mismanagement has led to our 500 Billion dollar public debt? Go here.
From past history in Saskatchewan, we know that the commodity and housing boom then bust during the late 70's early 80's left Saskatchewan with huge debt loads that we see to this day. Irresponsible Government spending at it's finest as they thought the boom would never end and when it did they thought it would come back soon. So they continued spending during the 80's that if continued would have bankrupted the province. Spudco? Really?
With a housing bust, along will come the wealth effect... in reverse. An economy that is 58% to 65% consumer spending receives one heck of a wake up when the credit bubble busts. One glance south of the border and we see many States are clinging on by the skin of their teeth. "Endless growth" was the phrase during the good times, so they ramped up spending. When revenues collapsed, the debt remained, not to mention many obligations. In Canada, Governments have more obligations than down south. That is one of the reasons why Canadians are taxed more than Americans. With a housing bust in Canada, expect debt levels to rise throughout all levels of Government even with cuts to social programs. And you know what that means for Joe taxpayer.