If this is run anything like the CPP, it will underperform both the market and their own benchmarks yet lead to executives awarding themselves huge bonuses.
Usually a sovereign wealth fund is funded by excess profits, like Norway for example. In this case, it's being seeded by $25 billion dollars of debt. Can anyone more financially gifted explain how this is any different from, well, regular government spending and money printing?
If I understand democracies, the private sector get easy access to credit via the creation of debt. You win you win. You win we lose. but also get money invested on behalf of the tax payer.
I believe wealth taxes (really, wealth restitution) should go into sovereign wealth funds - not least as then the public can see how that money is working for them, and so support the continuance and expansion of such taxes.
One of the biggest challenges is finding investable projects these days. If they put this money in as a hold to time projects well than could be a good future asset for Canada. If it ends up actually being more of a jobs production vehicle for political gain then probably less successful.
This is a great way to sidestep the political process to fund popular projects. The political constraints will ensure returns are middling, so unless they subsidize with tax breaks on dividend income I think it would be a poor commercial investment.
Whether its perfect or not, it almost has to be better than the current status quo.
Norway extracts 1/2 oil as Canada but has 1/8 the population. Canada too big to be petro state. Canada has lots of other resource endowments, but not enough to sustain norway tier of per capita sovereign fund returns even if it massively increased extraction game. Only hope for Canada is US being really friendly, or even more friendly and force Canada to retool internal trade / reduce braindrain and build and capture more value in commodities and other sectors.
14 comments
[ 3.7 ms ] story [ 30.9 ms ] threadalso why all the love for Canadian Pacific rail?
I guess it benefits my kids though
Hopefully turns out better than BCRIC.
The market economy is brilliant.
Whether its perfect or not, it almost has to be better than the current status quo.
This is not a wealth fund at all. This is a debt fund. It doesnt even try to hide the debt that's drowning the federal government.
We are borrowing money to play the stock market.
That is how Norway did it
https://en.wikipedia.org/wiki/List_of_largest_companies_in_C...
#1 is Brookfield Corporation.
The now prime minister of Canada headed the ESG there. He is also an international central banker.