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http://www.bloomberg.com/news/2013-02-27/canada-losing-debt-halo-as-bull-market-housing-peaks-with-carney.html
Highlights:
"Now, as the former Goldman Sachs Group Inc. banker prepares to cross the Atlantic, Canada’s households are burdened with record debt, and third-quarter growth, at 0.6 percent, was the lowest in a year. Canada is scheduled to report fourth-quarter gross domestic product on Friday, with economists surveyed by Bloomberg News forecasting no change in growth. Moody’s Investors Service weighed in on Jan. 28. It downgraded six banks the WEF had lauded, saying debt and soaring home prices have left Canadians vulnerable to more bad news"
"While Canada may get stellar marks for navigating the global credit crisis, it did so with a borrowing binge, says Benjamin Tal, deputy chief economist at the investment-banking unit of Canadian Imperial Bank of Commerce"
"Canada’s property blitz is winding down just as U.S. housing perks up. Construction of new Canadian homes plunged 19 percent in January from December to the lowest number since the end of 2009; sales of existing homes fell 8.8 percent from a year earlier. Toronto suffered a 36 percent decline in new condo sales in 2012 from 2011; resales dropped 10 percent, the first annual decline since 2008, Urbanation says"
"Encouraged by cheap money, Canadians couldn’t resist the housing market. The average price of homes sold jumped 82 percent during the 10 years through January, rising more than 30 percent from January 2009 alone, according to the Canadian Real Estate Association. Carney slashed benchmark interest rates more than four percentage points to 0.25 percent during the recession, pushing five-year mortgage rates to less than 3 percent. That helped Canadians enjoy the lowest borrowing costs in the Group of 20 nations outside Europe, Japan and the U.S. Flaherty increased the stimulus with guarantees and tax credits for homeowners."
"The value of mortgages insured by the government’s housing agency swelled 98 percent to $575.8 billion at the end of September from the end of 2006, foisting a growing liability onto taxpayers. Meantime, Canadians became more indebted than Americans in 2011. The ratio of household debt to disposable income has continued to rise, hitting a record 165 percent in the third quarter of 2012, according to Statistics Canada"
"There’s little evidence exports will help Canada offset any drag from its housing-sparked debt addiction. In the third quarter, outbound shipments, including oil, plunged 7.8 percent from the second quarter and had dropped 8 percentage points to 30 percent of GDP since 2000. Meantime, the share of GDP linked to housing, including construction and renovation, soared to more than 20 percent. A similar U.S. measure peaked at 18 percent in 2005. Canada’s share of construction jobs in total employment was 7.3 percent in January, above the 4.3 percent in the U.S."
Bottom line: Carney is a bubble maker, like every other central banker. That's what these people do. And far more important, he works for the banks, not for you.
Highlights:
"Now, as the former Goldman Sachs Group Inc. banker prepares to cross the Atlantic, Canada’s households are burdened with record debt, and third-quarter growth, at 0.6 percent, was the lowest in a year. Canada is scheduled to report fourth-quarter gross domestic product on Friday, with economists surveyed by Bloomberg News forecasting no change in growth. Moody’s Investors Service weighed in on Jan. 28. It downgraded six banks the WEF had lauded, saying debt and soaring home prices have left Canadians vulnerable to more bad news"
"While Canada may get stellar marks for navigating the global credit crisis, it did so with a borrowing binge, says Benjamin Tal, deputy chief economist at the investment-banking unit of Canadian Imperial Bank of Commerce"
"Canada’s property blitz is winding down just as U.S. housing perks up. Construction of new Canadian homes plunged 19 percent in January from December to the lowest number since the end of 2009; sales of existing homes fell 8.8 percent from a year earlier. Toronto suffered a 36 percent decline in new condo sales in 2012 from 2011; resales dropped 10 percent, the first annual decline since 2008, Urbanation says"
"Encouraged by cheap money, Canadians couldn’t resist the housing market. The average price of homes sold jumped 82 percent during the 10 years through January, rising more than 30 percent from January 2009 alone, according to the Canadian Real Estate Association. Carney slashed benchmark interest rates more than four percentage points to 0.25 percent during the recession, pushing five-year mortgage rates to less than 3 percent. That helped Canadians enjoy the lowest borrowing costs in the Group of 20 nations outside Europe, Japan and the U.S. Flaherty increased the stimulus with guarantees and tax credits for homeowners."
"The value of mortgages insured by the government’s housing agency swelled 98 percent to $575.8 billion at the end of September from the end of 2006, foisting a growing liability onto taxpayers. Meantime, Canadians became more indebted than Americans in 2011. The ratio of household debt to disposable income has continued to rise, hitting a record 165 percent in the third quarter of 2012, according to Statistics Canada"
"There’s little evidence exports will help Canada offset any drag from its housing-sparked debt addiction. In the third quarter, outbound shipments, including oil, plunged 7.8 percent from the second quarter and had dropped 8 percentage points to 30 percent of GDP since 2000. Meantime, the share of GDP linked to housing, including construction and renovation, soared to more than 20 percent. A similar U.S. measure peaked at 18 percent in 2005. Canada’s share of construction jobs in total employment was 7.3 percent in January, above the 4.3 percent in the U.S."
Bottom line: Carney is a bubble maker, like every other central banker. That's what these people do. And far more important, he works for the banks, not for you.
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Interesting reading cheers M:
Based on the tables at:
.
http://www.statcan.gc.ca/pub/11-402-x/2011000/chap/gov-gouv/tbl/tbl01-eng.htm
govt tax and other receipts peaked in the 07/08 year but the growth in govt expenditure ploughed on regardless as if nothing had changed.
It's not nearly as appalling as the US govt reaction to the financial crisis but something will have to give eventually.
Based on the tables at:
.
http://www.statcan.gc.ca/pub/11-402-x/2011000/chap/gov-gouv/tbl/tbl01-eng.htm
govt tax and other receipts peaked in the 07/08 year but the growth in govt expenditure ploughed on regardless as if nothing had changed.
It's not nearly as appalling as the US govt reaction to the financial crisis but something will have to give eventually.
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