Dear Editor
Enough is enough of Russell Lahti’s rhetoric (“The bad old days,” Regional Optimist March 24). Presenting a small portion of the whole truth regarding the Devine years is so typically NDP. Take half of one per cent of the truth and present it as the whole truth. This is also called propaganda.
Now to the whole truth about the Devine years. During those years I doubt if there was any level of government that didn’t incur debt during the 1980s. To refresh memories and inform those that were not alive or old enough during the 1980s, one must remember the interest rates. I am sure at this point there are a few groans from those who do remember and also major groans from all farmers from those years.
Interest rates topped out at roughly 24 per cent. Mortgage rates topped out at roughly 18 per cent. These are rates from the bank not from credit card companies. Every government was trying to keep things afloat with those kinds of interest rates. In an effort to keep people from losing their homes, the Devine government brought in a budget where, among other things, where the government paid the interest for any mortgages that had an interest rate above 13 per cent. I sure appreciated this when we had a mortgage renewal come due during those years.
The affect on farmers was brutal. One bank was aggressive in calling in farm loans during those years. The havoc that created and the emotional brutality those farmers went through was unbelievable. There were even governments that enacted legislation to help farmers dealing with this. There was a suicide help line for farmers.
To help put this into perspective, let’s look at interest rates today. Mortgages run about three to five per cent. Analysts predict a one per cent increase in mortgage rates would cause serious problems. So, how many people would be in dire straits if their mortgage went to 18 per cent?
Loans can be had for about four to six per cent. What if you had to pay 20 per cent or higher for a bank loan? Could you survive that? There will be many people who would say they just wouldn’t take a loan if rates were that high. What they don’t realize is that there are times you have no choice but to take a loan. For example, if your furnace dies. What do you do if your child needs to take a student loan during these times? Would you tell them no, they can’t get an education? These are some pretty hard things to deal with.
I don’t recall for sure what credit card interest rates went to during this time but 36 to 39 per cent is probably a reasonable estimate.
The interest rates were a killer and the resulting interest expense on past debt was also brutal on government budgets. There were governments spending upwards of 40 cents on each tax dollar collected just to pay the interest on government debt. A lot of that government debt came from the years prior to the 1980s. Add to this that virtually every government was incurring more debt during the 1980s just to try and keep the economy afloat. This then snowballed on the interest expense side. Pretty brutal stuff.
Governments did what they could during those times. It didn’t matter if they were Conservative, NDP or Liberal. It was a horrible time to be running a government. This is the side that Mr. Lahti so conveniently left out.
C.C. Smith
