To the Editor: Welcome to a new year! Although, when you think about it, there really isn't much to be happy about.
Why? Because, as of 2011, each of us now owes about $44,000 to banks, credit card companies and mortgage holders. We've maxed out Visa and Mastercard and any other revolving-door lines of credit from lenders who have lured us with promises of a better life if we merely buy the latest toy such as plasma televisions, although I have had to revise my opinion on this recently.
What changed my mind was a pre-Christmas house party we attended in which the downstairs "man cave" featured not only the above giant television screen, set into the wall over the open fireplace, but a fully-equipped bar (refrigerator, sink, wine storage - all the bells and whistles), the requisite butter-leather seating and the piece de resistance - a floor-to-ceiling Plexiglas alcove jutting into the room from the garage.
This might sound strange, but in the alcove, with its hood raised so onlookers could marvel at the engine, was a mint-condition Ferrari (blessedly not red.) Two other high-powered sports cars in the pristine garage - one a top-of-the-line Porsche - brought the combined price of this boy's toys to at least half a million dollars. As none of these cars looked as if their tires had ever kissed pavement, I assumed that somewhere around the corner, or maybe in the backyard, hidden away in a shed, was the Camry this guy actually drives to work.
Facing such opulence makes that mere $44,000 - which Statistics Canada says every Canadian owes - seem picayune. Household debt, again according to Stats Canada, now stands at 148 per cent of disposable income. We've finally bested the Americans at something other than comedy, although it's nothing to be proud of.
Here is what I don't understand, however: How can a reasonable adult get himself into such debt without resorting to drugs, gambling or greed? To spend every cent you have after taxes and then almost 50 per cent more requires either sheer stupidity or the blithe belief that your fairy godmother will save you from yourself.
Maybe the latter is the truth. The wealthy generation, raised by Depression-era parents and taught the value of thrift and economy, has amassed a tidy nest egg. As demographer David Foot says: "Most of them had three or four children and that was the best investment they could have made. Their kids sent real estate prices into the stratosphere in the 1980s and, subsequently, they boosted the value of their parents' stock market holdings."
It doesn't take a mathematician to figure out that the parents of the baby boomers are dying and leaving their wealth to their children,
Maybe that's the reason there doesn't seem to be panic in the streets at the level of debt in Canada.
But there's another side to the story: Somebody out there is hogging my share of the debt and I doubt I'm alone. The last taboo subject for open discussion is money, but it's a sure thing that there are hundreds, thousands, of middle-class Canadians who owe nothing, who are not living paycheque to paycheque, who found responsibility early in life and regularly put away money for their retirement. They are mortgage-free, left with only the monthly bills to worry about.
So the $44,000 every Canadian owes is a lie, and that makes the real picture of debt in Canada even gloomier.
Mark Carney, governor of the Bank of Canada, warned in a mid-December speech in Toronto that the day of reckoning will come and Canadians won't be prepared for the bill. As reported by the Globe and Mail, Carney said: "Experience suggests that prolonged periods of unusually low rates can cloud assessments of financial risks. Low rates today do not necessarily mean low rates tomorrow. Risk reversals, when they happen, can be fierce: The greater the complacency, the more brutal the reckoning."
He's right, of course, but few of us are listening. There's a reason for that, and it comes with the whole package of being young, eager and vital. The bad things are never going to happen to us. We're immortal, we'll live forever and we'll never be drooling on our jammies needing full-time care. We'll live fast, die young and leave a good-looking corpse.
Those of us well past Freedom 55, even well past mandatory retirement age, recognize this lie. We've learned a thing or two in the journey: Take twice the money and half the expectations and be happy with what you've got.
Catherine Ford, Troy Media Corporation.
