I was passed an interesting article this week about the US federal debt that I thought our readers might find interesting.

Currently the US debt is sitting at $15 trillion dollars, and the interest payments owned by the government on that debt is either 0 or near zero.  In 1998, it took roughly 14% of the tax revenue to the interest owed on the debt. In 2004, it took only 9% of the tax revenue to pay back the interest on the debt. In 2011, it took slightly more but still less than 1998, with 10%.

That means for a dime on every tax dollar, the US gets to float 15 trillion dollars in debt. That is what we call leverage. *In 1993, it took 45% of Canadian tax revenue to pay the government debt when we prime minister Chrétien put  the brakes on spending. * But more importantly, what this really means is that with all the extra spending since 2008, the American tax payers only had to pay a penny for every dollar spent. That is a great deal in my mind. Well….it is a great deal until interest rates catch up…wait doesn’t this sound kind of familiar…kind of like the housing crisis…but that argument is for another day. Today we are focusing on the fact that the US has the ability to borrow and spend with great freedom.

This brings around the point that the US dollar is just another debt instrument that does not pay interest but meaning  can be redeemed for face value at any time, with no penalty. If other countries were to be concerned about rising interest rates and decided to stop buying US debt, they would be swapping them for US dollars. This is why Chinese debt holders have been exchange dollars in the open market and buying US treasuries securities, because they would rather be holding interest baring bonds then non interest baring dollars.

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Canadian audits of Chinese based businesses are under fire.

The Canada Audit Regulator has review the work by Canadian accounting firms who audit the statements of Chinese companies listing on the TSX, and have labeled the reviews as disappointing.

After three months of reviews done on Chinese clients, the Audit regulator has released statements saying that they found major gaps in the audit work preformed. For example, one audit firm has been restricted from taking on any more Chinese clients. Several other firms have been required to do additional work on 12 of the files they reviewed.

“The disappointment we had was a lot of things that we felt were fundamental auditing processes and procedures were just not applied,” CPAB chief executive officer Brian Hunt said in an interview, “It’s just a disappointment on our part that things we would consider fundamental here in Canada just were not done, and I’m at somewhat of a loss to explain it.” Hunt would not comment if Sino Forest was among the files reviewed.

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Stephen Harper talked earlier this week about making changes to the age at which Canadians can be eligible for old age security, basing his statement on changing demographics that have resulted in a threat for social programs in Canada.

The efforts come at a time when Harper is working on returning to a balanced budget which also includes making efforts to sustain social programs and fiscal positions over the next generation. He added that the center piece of the Canadian retirement system is the Canada Pension Plan which is currently fully funded.

Before jumping on the band wagon of people yelling and screaming at the proposed changes, lets talk about how the OAS works.

OAS is sent out to all seniors, but it is a income test benefit and depending on your income, your OAS payment may be clawed. Currently any senior who earns less than $69,000 a month gets full monthly OAS payment to a max of $540. Once your income is above $112, 000 your OAS is completely eliminated.

The Guaranteed Income supplement is paid to seniors who make less than $16, 368 and pays a maximum of $732 per month. Since Harper just raised this amount it is unlikely that he will change this.

Although the Harper government hasn’t announced the changes they will be making they did say that the focus of the program would be on medium and long term OAS collectors and ensuring the stability of the program. Current OAS collectors will continue to collect with out any changes.

This morning on the CBC eye opener, discussed the changes and their discussion with Jim Yih, a personal finance blogger went to the major changes 2012 (previously announced and passed).

Changes that will be happening in 2012:

Everyone will be receiving a CPP raise, since they have been building a surplus, making it easier to qualify for the maximum.

Currently you can take CPP at 60, without stopping work. To prevent it from draining, CPP will be increasing the penalty for collect it early (before your 65 birthday). Previously it was a 30% reduction, and it will be phased in over five years to a 36% discount.

They are also encouraging people to leave their CPP longer, so if you take it after 65, you could get a 42% bonus if you waited until 70.

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CEO Howard Schultz spent more than year planning the chains merchandise and drinks and it seems to have paid off. Starbucks profit went up 10% on holiday’s sales as consumers soaked up the holiday specialty drinks.

The resulting sales drove up net income per share from 45 cents a share to 50 cents, beating the average estimate of 49 cents. Helping to drive the stores sales were their instant coffee, keurig brand single serve coffees and the low-calorie peppermint mocha. They ended their first quarter on a high note, stating that it was their most successful holiday season to date.

Ending this quarter on a high note, the store is planning on rolling out their product line which will bring happy hour to Starbucks. The store plans on introduction beer and wine to their stores after a successful experiment in six locations tried to increase traffic during the afternoon and evenings. The stores also paired the new drinks with a new menu that included fruit and cheese plates as well as focaccia with olive oil.

Starbucks was also making news today for being more expensive in Canada then the United States due to the higher-raw ingredient costs especially milk.

Starbucks ended the day up 1.19% at $47.48.

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