This is exactly what us chicken little bears have been saying for several years. THIS WILL NOT END WELL. Over-priced housing puts the whole system in peril. Banks, Provincial, Local and National Governments.
The myth of the rock solid Canadian financial sector and our economic miracle has been exposed to be: the luck of being resource rich and pumping housing by drawing in future demand, dropping rates to zero, transferring the risk to the tax-payer and lax lending. The result.. well we are about to experience that and it gives me no pleasure to say that many of us saw this coming.
S&P: Outlook Negative on BNS, LB, NA, RY & TD
July 27th, 2012
Standard & Poor’s announced:
it has revised its outlooks on seven Canadian financial institution ratings to negative from stable. The financial institutions are:At the same time, Standard & Poor’s affirmed its ratings on all seven banks.
- The Bank of Nova Scotia
- Central 1 Credit Union
- Home Capital Group Inc.
- Laurentian Bank of Canada
- National Bank of Canada
- Royal Bank of Canada
- Toronto-Dominion Bank
…
The outlook revisions are linked to our evolving views of economic risk and industry risk for banks operating in Canada. A prolonged run-up in housing prices and consumer indebtedness in Canada is in our view contributing to growing imbalances and Canada’s vulnerability to the generally weak global economy, applying negative pressure on economic risk for banks. Growing pressure on banks’ risk appetites and profitability arising from competition for loan and deposit market share could also lead to a deterioration in our view of industry risk.
…
The negative outlook recognizes the potential for deterioration of Canadian banks’ financial performance and capitalization generally, associated with consumer debt burdens proving excessive in an unfavorable economic scenario, or due to competitive pressures amplified by the shift to a consumer deleveraging phase.
Over the past decade, Canadian consumer credit market debt (including residential mortgage loans and consumer credit) has risen to more than 150% from 110% of disposable income, and relative to GDP, consumer debt has increased to more than 90% from about 70%. Over the same period, Canadian house prices have approximately doubled, with compounded real growth in housing prices estimated to be about 5% per year.
…
Bank risk profiles have benefited from Canadian banks’ underwriting practices, stable performance metrics for banks’ credit portfolios, and the sharing of mortgage risk between the banks, the borrowers (extensively based on full recourse to the consumer), and the providers of mortgage insurance, notably the Canada Mortgage and Housing Corporation (AAA/Stable/A-1+). In our view, Canadian banks’ risk tolerances and risk management capabilities are generally strong and attuned to risks inherent in the Canadian consumer and housing sectors. Even so, we believe there is currently growing potential for deterioration of Canadian bank credit profiles associated with scenarios incorporating consumer sector stress.
Systemic factors are incorporated in Standard & Poor’s rating methodology primarily through its Banking Industry Country Risk Assessment, or BICRA. The BICRA framework takes into account economic and institutional risk factors present in the environment in which banks operate. Canada’s BICRA is currently set at ‘1′ (lowest risk) on a 1 to 10 scale. The BICRA component of the analysis is intended to highlight emergent systemic risks that may not be fully apparent when viewing the sector at the level of individual banks
Hat tip - preferred blog: http://www.prefblog.com/?p=19339
ReplyDeleteIt'll be more costly for Fed and our banks to borrow money now.
ReplyDeleteOh wait, I thought the overnight rate is going down another .50 basis points this year!
Thanks fishyRE for the timely post.
Fishy, Globe & Mail changed the wordings from "downgraded" to "cuts outlook".
ReplyDeleteBeing resource rich only helped because China went completely crazy in 2009.
ReplyDeleteOTTAWA — Canada's schools must stop charging foreign students higher tuition fees than Canadians pay
ReplyDeletehttp://tinyurl.com/bp9wmlp
Ahh .. of course!
http://www.greaterfool.ca/2012/03/09/the-harbinger/
We have shoeboxes, lane houses and now, ladies & gentlemen, welcome to the THIN STREETS" of Vancouver.
ReplyDeleteoops! forgot the link
Deletehttp://www.rethinkhousing.ca/view_submission.php?ID=23
Write more, thats all I have to say. Literally, it seems as
ReplyDeletethough you relied on the video to make your point.
You definitely know what youre talking about, why throw away your intelligence on just posting
videos to your weblog when you could be giving us something enlightening to read?
Feel free to surf my weblog loss weight Program
Thanks for your personal marvelous posting! I definitely enjoyed reading it,
ReplyDeleteyou are a great author. I will make sure to bookmark your blog and will often come back sometime soon.
I want to encourage you to continue your great writing, have a
nice evening!
Feel free to surf my website : clickbacnk
I seriously love your site.. Pleasant colors & theme. Did you develop this website yourself?
ReplyDeletePlease reply back as I'm wanting to create my very own blog and want to find out where you got this from or exactly what the theme is named. Thank you!
Also visit my webpage ... Schufa frei Kredit
I am sure this post has touched all the internet viewers,
ReplyDeleteits really really pleasant paragraph on building up new
webpage.
Also visit my homepage; private studentenversicherung
Feel free to surf my web site :
Woah! I'm really enjoying the template/theme of this website. It's simple, yet effective.
ReplyDeleteA lot of times it's tough to get that "perfect balance" between usability and visual appeal. I must say you've done a very good job with
this. Additionally, the blog loads very quick for me on
Chrome. Superb Blog!
My page ... new business trends 2012
Thanks for finally talking about > "Late to the party..." < Loved it!
ReplyDeleteVisit my weblog ... Working online From home
Thanks to my father who informed me about this webpage, this web site is actually remarkable.
ReplyDeleteFeel free to visit my site :: search engine optimization company toronto
I feel this is one of the most vital info for me. And i'm glad studying your article. However wanna commentary on some general issues, The web site style is perfect, the articles is in point of fact great : D. Excellent activity, cheers
ReplyDeleteHere is my web site: Consolidating Student Loans 2012
Visit my page Beitrag Krankenkassen
Hmm it appears like your website ate my first comment (it
ReplyDeletewas extremely long) so I guess I'll just sum it up what I wrote and say, I'm thoroughly enjoying your
blog. I as well am an aspiring blog blogger but I'm still new to the whole thing. Do you have any tips and hints for first-time blog writers? I'd genuinely appreciate it.
Here is my webpage ; top 10 reseller hosting
I read this article completely concerning the resemblance of hottest and earlier technologies, it's awesome article.
ReplyDeleteHere is my homepage sofort kredit trotz schufa
Please let me know if you're looking for a article author for your site. You have some really great posts and I believe I would be a good asset. If you ever want to take some of the load off, I'd love
ReplyDeleteto write some content for your blog in exchange for a link back
to mine. Please blast me an email if interested.
Many thanks!
my web-site: clickbank marketplace encuestas
Hello to all, as I am actually keen of reading this website's post to be updated regularly. It contains good information.
ReplyDeleteAlso visit my web site :: consolidating private student loans
I like it when individuals get together and share views.
ReplyDeleteGreat website, continue the good work!
Check out my site; krankenversicherung mitglieder
Why users still use to read news papers when in this technological world all is presented on web?
ReplyDeleteFeel free to visit my site ... stay at home income
My website :: Mom At Home Jobs
It's not my first time to go to see this web page, i am visiting this site dailly and get nice information from here every day.
ReplyDeleteHave a look at my webpage Suggested Resource site
Hmm it seems like your blog ate my first comment (it was extremely long) so I guess I'll just sum it up what I wrote and say, I'm thoroughly enjoying your blog.
ReplyDeleteI too am an aspiring blog writer but I'm still new to everything. Do you have any points for novice blog writers? I'd really appreciate it.
Feel free to surf to my web-site; bad credit refinancing mortgage
This design is incredible! You certainly know how to keep a reader
ReplyDeleteentertained. Between your wit and your videos, I was almost moved to start my own blog (well,
almost...HaHa!) Fantastic job. I really loved what you had to say, and more than
that, how you presented it. Too cool!
Feel free to surf to my homepage - gesetzliche krankenversicherung vergleich leistungen
I like it when individuals come together and
ReplyDeleteshare thoughts. Great site, stick with it!
Check out my page :: make money as affiliate
If some one wishes to be updated with most up-to-date technologies after that he must be visit
ReplyDeletethis website and be up to date every day.
Feel free to surf to my weblog ... multi website hosting
Also see my web site: Hosting Cheap
My brother suggested I might like this web site.
ReplyDeleteHe was totally right. This post actually made my day. You cann't consider just how so much time I had spent for this information! Thank you!
Feel free to visit my web blog :: wo bekomme ich einen kredit trotz schufa eintrag
Saved as a favorite, I like your web site!
ReplyDeleteMy blog post; affiliate internet marketing
Hmm is anyone else having problems with the pictures on this blog loading?
ReplyDeleteI'm trying to determine if its a problem on my end or if it's the blog.
Any suggestions would be greatly appreciated.
Feel free to visit my blog - best Home Equity loan rates
My page :: online home loans for bad credit
I think this is one of the most important info
ReplyDeletefor me. And i am glad reading your article.
But should remark on some general things,
The site style is ideal, the articles is really excellent :
D. Good job, cheers
Take a look at my weblog: tropical island vacations
Heya are using Wordpress for your site platform? I'm new to the blog world but I'm trying
ReplyDeleteto get started and set up my own. Do you need any html coding knowledge to make your own blog?
Any help would be really appreciated!
Visit my web blog: hosting Business
my web site :: en iyi reseller hosting
I constantly spent my half an hour to read this web site's articles or reviews everyday along with a mug of coffee.
ReplyDeleteMy blog post :: Business opportunity uk
Hi, I read your blog daily. Your humoristic style is awesome, keep up the good work!
ReplyDeleteHere is my site how to use clickbank to make money
Wow, fantastic weblog structure! How lengthy have you been blogging for?
ReplyDeleteyou make running a blog glance easy. The overall glance of your website is fantastic, as smartly as the content!
Feel free to surf to my blog ... professional web hosting
My family always say that I am killing my time here at net,
ReplyDeleteexcept I know I am getting experience everyday by reading thes fastidious articles or
reviews.
Here is my web site :: fha loans
I'm not sure where you are getting your information, but good topic. I needs to spend some time learning much more or understanding more. Thanks for wonderful information I was looking for this information for my mission.
ReplyDeleteCheck out my web site; die besten mode online shops
You really make it appear really easy along with your presentation but I find this topic to be really one thing which I feel I'd never understand. It seems too complicated and very wide for me. I'm looking forward for your subsequent
ReplyDeletepublish, I will attempt to get the hold of it!
Check out my webpage ... Best Seo Company India
You really make it appear really easy along with your presentation but I find
ReplyDeletethis topic to be really one thing which I feel I'd never understand. It seems too complicated and very wide for me. I'm looking forward for your subsequent publish, I
will attempt to get the hold of it!
Here is my site - Best Seo Company India
Thankfulness to my father who stated to me about this website, this
ReplyDeleteweblog is really amazing.
Also visit my site :: Go Here
I wanted to thank you for this wonderful read!
ReplyDelete! I absolutely enjoyed every little bit of it. I've got you saved as a favorite to look at new stuff you post…
my weblog; tips buying perfume
If all players are wrong the murderer gets away and everyone loses.
ReplyDeleteA murder mystery game is a fun way to pass the time during the twenties theme party.
Every Halloween party that people remember later in the year by
saying things like "Do you remember so-and-so's Halloween party last year.
Also visit my website: international Development
Havе you еver considеred creating
ReplyDeletean ebooκ or guеst authorіng on other
blogs? I have a blog bаsed on the samе informatiοn you ԁiscusѕ anԁ wοuld really like to
haνe you ѕhare somе stοгіes/infoгmatіοn.
I know my vіewеrѕ would enјoy youг work.
If уou're even remotely interested, feel free to shoot me an e mail.
Here is my website :: long term loans