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Tough financial decisions ahead

Tough financial decisions ahead

July 8, 2020

COVID-19: Canada responds with financial support, writes Peter Watson.

When Canada suddenly found itself in the COVID-19 crisis I was extremely impressed with the government’s quick response to support Canadian businesses and workers.

Prime Minister Trudeau, from the very beginning, was offering support and was handing out money by the truckloads. To me that was an excellent strategy.

Then I started to wonder, and worry, about the financial implications of the government providing so much financial support. The support I agree with, but the nagging question was how is this all going to be paid for?

Then I had the opportunity to listening to Ed Lazear during two webinars.

Professor Lazear teaches economics at Stanford and was Chairman of the Council of Economic Advisors in the United States from 2006 to 2009. That was the last time the world suffered a major financial recession.

The role of the Council was to provide economic guidance to President George W. Bush and his administration.

It is far easier, and financially feasible, to keep an existing business going than to watch it cease to exist and then have to re-create that business and the benefit it was providing to the economy plus employment to its labour force.

The conclusion we can draw from that comment is given the choice to support a business or watch it go under, it makes more economic sense to make every effort to keep the business solvent.

Will Canadians and our political leaders be able to make the difficult decisions necessary to resuscitate our financial well-being after the COVID-19 crisis is behind us?

Peter Watson is registered with Aligned Capital Partners Inc. (ACPI) to provide investment advice. Investment products are provided by ACPI. ACPI is a member of the Investment Industry Regulatory Organization of Canada. The opinions expressed are those of the author and not necessarily those of ACPI. Peter Watson provides wealth management services through Watson Investments.