For Canada, Carney said the No. 1 risk continues to be household debt, which currently stands at a record 153 per cent of disposable annual income.
Here is Carney's dilemma. He has rates low to try and stimulate business spending and give businesses a break on their borrowing. However the consumer is doing all the borrowing and despite all the jaw-boning from him and Flaherty the banks are still the big pushers of debt. Witness the BMO shenanigans.
Lower rates can give borrowers a break and leave them more money for food and clothing or they can let them borrow more than they should. Will the BMO mortgage officers tell their clients to calm down and not over-leverage with the low rates and be sensible..what do you think?
Of course we will have all the other banks getting on the band-wagon. Remember those huge pay-packets have to be earned ($11 Million for the CEO of TD Bank).
This shows us that the banks are not responsible. Who lent this record amount to Canadian consumers..they did! Yes the Government is the enabler with low rates and the CMHC but the banks have been using aggressive US-style money back, lair loans, teaser rates to get people into huge amounts of debt and pumped up this RE and debt bubble.
We have a big reckoning to come. And I would say to bears that this too is good. Yes it may draw some more feeble minded into buying too much house for their wallet but it will prove to Flaherty and Carney that if they care about the future of this country at all, they have to rein the banks in big time.
Had the banks been more responsible they may have been more reluctant to cross them (think plum future jobs at risk). Now they have no choice.
I will put up some FVREB numbers over the week-end. Checking them Sat or Sunday seems the most reliable.
ReplyDeleteThe irony of it all is just too much: things are well, but we have to continue with negative interest rates.
ReplyDeleteI guess the powers that be just can't find away out of this highly leveraged mess that they have created.
I'm choosing to hord cash which I flip in and out stocks, looking for a way to leave Vancouver, but both my wife and I have good jobs and no debt, so we can wait for the right opportunity.
Like every central bank, the Bank of Canada both moves and follows the market in setting interest rates. In the table below, compare three-month bankers acceptances and the overnight rate. The market signals when interest rate should move up, and the BoC either follows or holds.
ReplyDeletehttp://credit.bank-banque-canada.ca/financialconditions
If Carney's goal was to tighten credit, he has had a signal for 1.25% since October 2010. The market isn't giving him a stronger signal. Instead we get inflation and more housing bubble.
In my opinion, Carney has completely blown his call.
well it didn't take long for the next street-side psuher to get on board
ReplyDeletehttp://www.thestar.com/business/article/1143214--td-bank-joins-bmo-in-2-99-per-cent-mortgage
HAM army marched into West Van big time today
ReplyDeleteThey had been a no show for a couple if weeks
I am still amazed how a buyer can transfer millions from a country that allows 50k a year per person
Maybe laws don't applly to the supertich
Well at least the sellers and the realtors are feasting on these obscene prices
Fish, it's called Macau... It's all in the article:
Deletehttp://www.economist.com/node/21541417
"Lower rates can give borrowers a break and leave them more money for food and clothing or they can let them borrow more than they should."
ReplyDeleteOkidoki. Others offer more food and clothing or services for your hard earned savings without giving out receipts, to each his own.
If all players are wrong the murderer gets away and everyone
ReplyDeleteloses. I've played Nancy Drew for years and even her saccharine personality is more 3D than Lindsay or 'Linds') as she calls herself. Play games all night long in keeping with the twenties theme such as various card games and crossword puzzles.
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