Canadian Financial Bubble Getting Ready to Explode

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John99's picture
John99
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Canadian Financial Bubble Getting Ready to Explode

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Canada is a ticking financial time bomb getting ready to explode, and very few people know about it.

We know that the first wave of the global financial collapse came from 'sub-prime mortgage' defaults, yet Canada seems to have weathered the storm pretty well. Why? Harper has now turned Canada into the world's largest sub-prime ponzi scheme that will soon explode. In other words, he has created a new financial bubble preventing a deeper recession to clean away the old and bad debts.

This Canadian bubble, like all bubbles will explode before long. We can prepare and can warn others.

Here are some excerpts from the CCPA article:

Canada's Sub-prime Mortgage Time Bomb

Harper government is now the world’s biggest sub-prime lender

What do the mid-recession housing boom and the Harper Conservatives’ rise in the polls have in common? Answer: the Canada Mortgage and Housing Corporation’s massive sub-prime mortgage scheme that is keeping up the appearance of an economic recovery.

But what few Canadians realize is that our housing market has avoided collapse because the Harper Conservatives directed the CMHC to change the mortgage rules to effectively make the Canadian government the biggest sub-prime lender in the world.

In an effort to prop up the real estate market in 2008 (when affordability nosedived), the Harper government directed the CMHC to approve as many high-risk borrowers as possible and to keep credit flowing. The approval rate for these risky loans went from 33% in 2007 to 42% in 2008. By mid-2007, average equity as a share of home value was down to 6% -- from 48% in 2003. At the peak of the U.S. housing bubble, just before it burst, house prices were five times the average American income; in Canada today that ratio is 7.4:1, almost 50% higher.

This high-risk policy actually prevents the natural playing out of the recession -- that is, the purging of the excesses of the previous boom period. CMHC’s easy-money resulted in a 9.3% increase in Canadian household debt between June 2008 and June 2009. Total mortgage credit in Canada will grow by 12-14% of GDP in 2009.

As Lepoidevin says in his warning letter, “Every single U.S. lender specializing in sub-prime has gone bankrupt. The largest sub-prime lender in the world is now the Canadian government.”

This is the ticking time bomb Harper has tossed at the Canadian taxpayer. Why? So that he can maintain the fiction that he is a good economic manager and win a majority in the next election.

The problem is that no opposition political party wants to expose the looming disaster and risk being responsible for a dramatic fall in house prices. The price of political cowardice will be very high. And, in the end, the housing bubble will burst anyway, putting taxpayers on the hook for tens of billions of dollars in defaulted mortgages."

 

Full article: http://www.policyalternatives.ca/publications/monitor/canadas-sub-prime-mortgage-time-bomb

guardia's picture
guardia
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Re: Canadian Financial Bubble Getting Ready to Explode

Ouch.. that's going to hurt sooner than later.. thanks for the post

I am really starting to wonder which one of Japan or Canada is going to be in a better state in the midterm. I trying to make plans here..

Samuel

agitating prop's picture
agitating prop
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Re: Canadian Financial Bubble Getting Ready to Explode

That's what we get for being smug, ey?

knucklewalker's picture
knucklewalker
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Re: Canadian Financial Bubble Getting Ready to Explode

I live and work in Calgary......we have seen a 20% reduction in business due to the "recession".......house prices are down about 13% over 2009.  When the bubble on the canadian subprime mess we will see a further 30% reduction in business.

I turned down an offer to buy a high end veterinary clinic (most profitable in Canada actually) 2 months back because I feel that we are about to see the end of the Vet pet med business.  With the second wave of residential mortgage defaults south of the border coming now, with the CRE market starting to buckle in the USA I feel that Canada (an exporting nation) is about to enter the full fledged depression that the USA is in.

The Alberta Tar sands are idling with oil prices of 80 per barrel.  We need over 90-100 per barrel to be economic.  The world economy will not function over 80.00 per barrel...therefor...Alberta is finished.

I am in the process of setting up an alternative business and getting ready to purchase a doomstead with a few friends.......the world has changed forever now IMHO.

 

 

On Our Own's picture
On Our Own
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Re: Canadian Financial Bubble Getting Ready to Explode

Knuckle,  do you think this means that the tipping point has already been reached?  WHat do you see as having changed already?  We all have ideas of how it will change,  but from the canada perspective what already has?

guardia's picture
guardia
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Re: Canadian Financial Bubble Getting Ready to Explode
On Our Own wrote:

Knuckle,  do you think this means that the tipping point has already been reached?  WHat do you see as having changed already?  We all have ideas of how it will change,  but from the canada perspective what already has?

The major point here is that we export pretty much 100% of our oil to America, and that business alone is also pretty much what has been keeping Canada out of recession for the past few years...

Samuel

Ed Archer's picture
Ed Archer
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Re: Canadian Financial Bubble Getting Ready to Explode

Man, we are soooo screwed, lol.

knucklewalker's picture
knucklewalker
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Posts: 13
Re: Canadian Financial Bubble Getting Ready to Explode
On Our Own wrote:

Knuckle,  do you think this means that the tipping point has already been reached?  WHat do you see as having changed already?  We all have ideas of how it will change,  but from the canada perspective what already has?

I believe that we reached the tipping point in 2009 as the world oil consumtion began to decline off the "plateau" it has been on since 2005.  The world will never again see 74mbperday.  Demand destruction is now in the drivers seat and it will be unrelenting.  People that expect 200.00 per barrel oil will only see that now in relation to US dollar collapse.  Priced in Canadian I doubt that the real price of oil will ever be able to surge up to the prior 147.00 per barrel high.

The Alberta economy is in increasing dissarray were it not for the artificailly induced (CMHC low interest rate) res housing market people would be running for the hills.  I am/was a highly paid vet surgeon ....I was laid off yesterday as our clinic revenue is in freefall.  I hope to secure another position if possible to add to the savings pool of cash/PM/hard assets....but we shall see...if not I will head east back to Manitoba....cheaper land and frankly a better quality of people (no offense to the albertans on here though).

I think that I can secure a landbase back "home" with a few compadres and try to set up a "life" that is landbased and simpler.

The major current issue for the Canadian nation is the collective complacency and self absorption (out west at least) ...the concept thatoil is important has been internalized but the idea that the world may not be able to pay for it has not......

We are in the early stages of JM Greers catabolic collapse but I fear it might be a lot worse than he envisions.

 

 

 

 

 

 

 

 

 

 

 

 

agitating prop's picture
agitating prop
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Posts: 863
Re: Canadian Financial Bubble Getting Ready to Explode

Knucklewalker, It seems like a shame to waste umpteen years of veterinary education and experience. Have you thought of working on a kind of contractual basis, travelling from clinic to clinic, performing essential surgeries as required? I don't know if vet medicine is structured this way, or if a vet surgeon is a specialty or if all vets are considered surgeons.

When I l lived near Seattle, my vet charged a ridiculous amount , and really seemed to lard on extra procedures, that seemed crazily unnecessary to me. My dog had typical senior dog teeth, that required two of the small teeth between the canines on his lower jaw removed when he had his teeth cleaned, about 10 years ago. By the time all of the charges were added up, it came to 500.00! I remember thinking that if the lion's share of their business was based on this model,  it was just a matter of time before they would have to close down. I don't spend 500.00 to have my teeth cleaned! Part of the 500.00 was a flouride treatment, we didn't authorize, for heaven's sakes!

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