Thursday, December 29, 2011

No Kidding!

The CMHC came out and warned about the huge debt load of Canadians. No kidding!? And who helped them get into such a morass of debt and obligations??

The CMHC for one!

Of course we have been screaming on the bear blogs about the huge debt load of Canadians for years, and now- late to the party- Carney, Flaherty, the Banks and even the CMHC are jumping on board.

Of course none of us bloggers can do diddly squat about it- only the four mentioned about can AND THEY WON'T.

No point shouting 'FIRE' while you keep pouring gasoline on the flames!

The first part will make you laugh. The CMHC says that the debt situation warrants closer monitoring by 'the authorities' and yet the IMF says the CMHC needs closer monitoring by 'the authorities'. What a joke!

OTTAWA (Dow Jones)--Canadians' record level of household debt is a "serious issue" that merits closer monitoring by authorities in the years ahead, Canada Mortgage and Housing Corp. (CMH.YY) said.

In a year-end publication released Thursday, CMHC - the government-owned provider of mortgage insurance in Canada - said mortgage debt accounts for 68% of total household debt, by far the largest contributor. The agency, which is Canada's largest mortgage insurer and benefits from explicit government backing, said personal lines of credit have surged in recent years, increasing at higher growth rates than any other sub-component of household debt held by chartered banks.

"It is important that consumers and stakeholders continue to be vigilant in monitoring both the magnitude as well as the composition of household debt and take appropriate action," CMHC said.

The major risk in the mortgage market, it added, is the emergence of another, deep recession that sparks a series of job losses that would affect households' ability to pay their mortgages. Still, "most Canadian households have the capacity to deal with adverse economic conditions, due to the high quality of mortgage credit in Canada, the substantial equity position of most Canadian homeowners with a mortgage, and households' ability to adapt their discretionary spending."

Canada's ratio of household credit market debt to disposable income stood at 150.8% as of the third quarter, prompting warnings this month from the International Monetary Fund. The IMF said further "vigilance" is required by Canadian policymakers, including the possibility of increased supervision of CMHC, which the Washington-based body said has emerged as a key financial institution in Canada.

Federal Finance Minister Jim Flaherty has repeatedly warned - as lately as two weeks ago - that Canadians need to exercise caution in taking on additional mortgage and consumer-loan debt. Under his watch, the Conservative government has tightened mortgage-lending rules three times in an effort to avoid a U.S.-style housing bust.

-By Paul Vieira, Dow Jones Newswires: 613-237-0669;


  1. And here you thought we had to wait for the New Year's Air Farce show for our year-end comedy (LOL).

    Happy New Year, Fish.

  2. The "authorities". There are no adults in the room.

  3. It sounds like the CMHC is almost begging to be regulated before a bust can be hanged around it's neck.

  4. Great post to sum up the Canadian Real A-State Scam on the Population (CRAP).

    Happy New Year, Fish10.

  5. I can only chuckle at the quote found in the article:

    "Still, "most Canadian households have the capacity to deal with adverse economic conditions, due to the high quality of mortgage credit in Canada, the substantial equity position of most Canadian homeowners with a mortgage, and households' ability to adapt their discretionary spending."

    High quality of mortgage credit? What is he talking about? 5% down on a $500,000 box equals a $475,000 mortgage. Does he think this person will ever pay off his mortgage in his lifetime? Canadians are in the verge of default and he's saying high quality? The only reason banks are lending to high risk groups is because CHMC is guaranteeing the loan. I wouldn't call this high quality when you're passing the risk to us taxpayers.

    Substantial equity? Maybe to the owners who bought ten years ago or longer? The ones that have bought the past ten years or earlier are the ones at most risk.

    Ability to adapt their discretionary spending?
    The ratio of household credit market debt to disposable income increased to 150.8% which has increased year over year. Debt is so high because they are paying interest on interest.

    I think the person who wrote the article needs a reality check.

  6. Ability to adapt their discretionary spending.
    They can always go to no-name instead of real KD, I suppose. There have been so many stories about how stretched the finances are in a substantial portion of Canadians, I don't think it is fair reporting to assume that averages apply here and that those most at risk are not already living off KD and beans. Even if they can still afford real Kraft KD, there's not a lot of discretionary savings available.

  7. Thanks everyone for the New Year's wishes, back at you.

    2012 will be an interesting year in many ways. We are in the 9 or 10 th year of a very long-in-the-tooth housing upswing that had a brief correction in 2008/9 that the Fed's quickly aborted.

    What now? More of the same or will the proper correction finally start? If it does start what will the Fed's do this time? Take the shackles off the CMHC again? Auction Canadian Visas in Shanghai? Allow credit card debt as down-payment for CMHC insured mortgages?

    We will have to see.

    Hope everyone has a healthy and prosperous year.


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