Economy 53,068 Posted May 22, 2019 Share Posted May 22, 2019 https://www.bnnbloomberg.ca/cmhc-says-canadian-debt-levels-hit-record-highs-at-end-of-last-year-1.1262624 In the same week Canada gets a study done from IMF saying Canada's banks are so well regulated and capitalized that they can withstand even a 40% of more collapse in housing prices and a surge in unemployment without failing, bad news also comes out Despite shortened mortgage amortizations to 25 years, the 2% interest premium stress test and stricter downpayment rules, consumer debt still reached a record high Consumer debt has now hit 178.5% of annual income a record high and way higher than the US record of 134% in 2007 by comparison Despite insanely high debt the banking and financial system remain stable and the economy continues to grow with unemployment at a 40 year low and wages are now growing above inflation Link to post Share on other sites More sharing options...
MrDaniel 14,666 Posted May 22, 2019 Share Posted May 22, 2019 Link to post Share on other sites More sharing options...
thewho 928 Posted May 22, 2019 Share Posted May 22, 2019 I’m going to Canada in a few weeks. I have a few bucks in my bag, I’ll venmo Trudeau Link to post Share on other sites More sharing options...
MrDaniel 14,666 Posted May 22, 2019 Share Posted May 22, 2019 Well my Aunt lives in Canada, Unlimited snows everywhere Link to post Share on other sites More sharing options...
AlexanderMagno 10,746 Posted May 22, 2019 Share Posted May 22, 2019 Economy never fails to surprise me. I've been concluding that, in the world of economics, it doesn't really matter your numbers, as long as you keep sustaining yourself one way or another. It's basically impossible to be positive in every aspect, but as long as you keep the country going everything's fine. I wish I could use that in my life, because I see everyone drowning themselves in debt and making a life out of it, how can they sleep at night knowing that if there's a new crisis or they get unemployed they might have the hardest of times. I wish I was a country lol Link to post Share on other sites More sharing options...
Miracle 14,068 Posted May 22, 2019 Share Posted May 22, 2019 How does Canada stand still? Very low taxes, huge debts, house bubble, very limited new jobs... Link to post Share on other sites More sharing options...
Delusional Aura 5,129 Posted May 22, 2019 Share Posted May 22, 2019 5 minutes ago, Miracle said: How does Canada stand still? Very low taxes, huge debts, house bubble, very limited new jobs... Probably because they invest in human development unlike the US who invest only in our military. Link to post Share on other sites More sharing options...
Miracle 14,068 Posted May 22, 2019 Share Posted May 22, 2019 14 minutes ago, Delusional Aura said: Probably because they invest in human development unlike the US who invest only in our military. Where does that money come from though Link to post Share on other sites More sharing options...
Economy 53,068 Posted May 22, 2019 Author Share Posted May 22, 2019 29 minutes ago, AlexanderMagno said: Economy never fails to surprise me. I've been concluding that, in the world of economics, it doesn't really matter your numbers, as long as you keep sustaining yourself one way or another. It's basically impossible to be positive in every aspect, but as long as you keep the country going everything's fine. I wish I could use that in my life, because I see everyone drowning themselves in debt and making a life out of it, how can they sleep at night knowing that if there's a new crisis or they get unemployed they might have the hardest of times. I wish I was a country lol Well cuz there's so many variables to consider Yes debt peaked at 134% in the US in 2007 and there was a financial crisis. Yet Canada is way higher and has not. Norway, Sweden, Denmark, Netherlands and Australia also have higher debt loads than the US ever have and have remained stable without collapse and I think Here's a few different circumstances with Canada's higher debt: - in Canada we have more government services we don't pay out of our own pocket so we do not need to divert as much of our disposable income to certain things - where is the debt? In Canada most debt is mortgage debt cause housing has been so heated for over a decade so there's equity and assets behind that debt it's not just pure debt. - Interest rates are rising more slowly this cycle than when the US collapsed giving consumers more time to adjust - Oil prices of nearly $150/barrel caused serious strain on economy last time. We do not have this pressure right now - Trade with the US is a big part of our economy and the US is doing well ATM. It helps compensate for imbalances in the domestic economy - Our mortgage rules are tougher especially downpayment rules. It's hard here to walk away from a mortgage like ppl did in the US. That means ppl walking away fueling a worse downward spiral is unlikely to happen here - We do not have an oversupply of homes coming on like the US did despite high prices so a trigger of pricing collapse is unlikely If I were to sit here for a while im sure I could think of more differences in circumstances that allow our consumer debt to be higher but nothing bad happened so far That's why bubbles are so hard to predict if they will pop, when they will pop or if a bubble will just deflate gradually without a crash. Depending on a wide variety of factors what causes a crash one time may not cause a crash another time in a different set of circumstances Link to post Share on other sites More sharing options...
Economy 53,068 Posted May 22, 2019 Author Share Posted May 22, 2019 1 hour ago, Miracle said: How does Canada stand still? Very low taxes, huge debts, house bubble, very limited new jobs... I honestly don't know what is supporting job creation (we got record job creation last month). So new jobs are not limited like u said... Cuz job creation over last 2 years has actually been solid... Month to month data is very volatile but averaging it out its been good... But: - Consumer Debt is extremely high - Energy sector has been struggling - economy super reliant on construction and retail and service sector and now consumers have been pulling back and real estate slower since new stress test rules Yet GDP, Housing, Retail and job creation keeps defying expectations... The deficit even came only at half of what was expected so the government increased spending on a few things and the deficit is still below 1% of GDP Economists don't know where this strength is coming from and why the economy always beats expectations. Macro economically speaking with all the imbalances especially debt we should have gone into a big recession years ago One theory some economists propose is that the digital economy has more services that are difficult to track properly and because of highly educated workforce and a booming high tech sector... There may be more ripple effect that's hard to measure that's providing invisible support to the economy that were simply not seeing in the official statistics That would go in line with investment in human resources and development as @Delusional Aura pointed out. Canada ranks #1 in the world for most educated workforce Link to post Share on other sites More sharing options...
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