Well the monthly round-up is consuming a bit more time than expected. I’m hoping to release the final numbers tomorrow instead.
However, I would like to quickly highlight a very brief blog entry by Nobel Prize winning economist Paul Krugman. Though our economic and political ideologies vary markedly, the man can nonetheless see the writing on the wall when it comes to our current housing market and debt situation:
My take on the US economic crisis has increasingly been that banks were less central than many people think, while the housing bubble and household debt are the key players — which is why financial stabilization by itself wasn’t enough to produce a V-shaped recovery.
But if I take all that seriously, I should be very worried about Canada
Note that this second graph which appeared in the blog entry is almost a year and a half old. We know that since then, our total consumer debt to income ratio has ballooned past 150%, eclipsing the US number and rapidly closing in on the UK…..two nations now in the midst of housing market corrections and weak organic growth among declining consumer spending. Canada take note!
This is not the first time that Krugman has voiced concern for Canada. In an August 2010 speech to the Canadian Bar Association, Krugman noted that, “Canada is by no means insulated. Canadians borrow an awful lot. Savings rates have been very low. Household debt relative to income is very high here.” He also suggested that the Canadian housing bubble ”has yet to burst”.