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Was Canada’s 1993 debt really as disastrous as the media claimed? Why did the media lie about Canada’s federal debt?
In 1993, Canada was nearing a debt crisis—or so the media claimed. The overall message was that Canada was spending far more money than it could afford to. If this overspending continued, the media claimed, Wall Street would soon lower Canada’s credit rating. If that happened, wealthy investors would take their money somewhere safer.
As it turned out, Canada’s debt crisis was a lie manufactured with a goal in mind.
An Invented Crisis in Canada
In February 1993, Canada’s national newspaper warned that a debt crisis was looming. A TV special reported that Canada’s credit would run out within a year or two. According to national media, Canada’s federal debt was growing at unprecedented rates. If it continued to grow at that rate, a debt crisis would inevitably ensue.
Canadians were told that the only way to avoid economic disaster was to drastically reduce government spending on things like healthcare and unemployment benefits. The Liberal Party, which was in power at the time, did exactly that—despite having run on a platform of job creation and social programs.
The Lie Is Exposed Too Late
Two years after the peak of Canada’s debt hysteria, an investigative reporter named Linda McQuaig exposed the fraud. She showed how the crisis had been invented by a few far-right think tanks, which were funded by some of Canada’s largest corporations and banks.
McQuaig spoke with Vincent Truglia, the analyst in charge of determining Canada’s credit rating, and he told her something unusual: He’d been heavily pressured by Canadian bankers and corporate executives to lie about the country’s financial situation. Canada was the only country, he said, where people wanted him to lower the credit rating instead of raise it.
Eventually, Truglia got so sick of the demands and the politicized numbers coming out of Canada that he personally issued a commentary on it. He promised that Canada’s spending was not excessive. He took aim at the manipulated numbers coming from the think tanks, showing exactly where and how they were misrepresenting Canada’s finances.
However, by the time Canadians learned that there was no debt crisis looming, it was already too late. Politicians had passed the budget cuts and gutted the social safety net. Despite numerous budget surpluses since then, the cuts have yet to be fully reversed.
It seemed that Williamson’s plan to create crises out of nothing worked perfectly. By 1995, political talk in Western democracies was filled with warnings about debt crises and impending economic collapse.
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Here's what you'll find in our full The Shock Doctrine summary :
- A study of the history of economic shock therapy
- How economic shock therapy gave rise to the disaster capitalism complex
- How communities are beginning to recover from the destructive shock treatments
