So much for the ‘conservative’ Canadian consumer: Another look at Canada’s credit bubble

The ‘conservative’ Canadian consumer has been often cited as one of the primary reasons for Canada’s miraculous escape from the depths of the Great Recession.  In fact, earlier this week, the deputy governor of the Bank of Canada attributed our ability to largely side step the worst of the recession to our, “relatively strong household balance sheets“.

This has never quite sat well with me.  I’ve long believed that Canada is in the midst of a fairly significant credit bubble, fueled largely by a massive expansion in mortgage credit and HELOCs.  I’ve written about Canada’s credit bubble before, but now I’d like to revisit it.

Let’s start by noting that mortgage debt as a percentage of GDP is currently sitting at approximately 63%.

While well above its long-term average, it is certainly well below the peak the US experienced (~73% of GDP) and it is a country mile from the ridiculous levels of mortgage debt relative to GDP those crazy Aussies are carrying (nearly 90%).  Thanks to Steve Keen for this chart.

However, mortgage debt alone is but one part of the puzzle.  Indeed the total debt burden including other consumer debt is significant in this discussion.  First, let’s look at the US experience with total consumer debt as a percentage of GDP.  Thanks to Calculated Risk for this gem.

Notice that once other consumer debt is factored in, we see that the US consumer credit bubble peaked at  slightly less than 95% of GDP with mortgage debt comprising roughly 77% of total consumer debt burden.

Now let’s turn our eyes to Canada.  For those who want to replicate this data, look at CANSIM tables 176-0027 and 176-0069 and well as Stats Canada for historic GDP data.  Here it is:

Note that when other consumer debt is added to mortgage debt, we are currently sitting at ~93% GDP with only 68% of that debt total being mortgage debt (compared to 77% in the US).  This is why discussions of Canada’s mortgage debt alone are not sufficient to fully appreciate the full scope of our made-in-Canada debt bubble.  Note also that the CANSIM data does not include debt issued by car dealerships or department stores.  So much for the conservative Canadian consumer story!

If we look at cumulative growth in total consumer debt relative to GDP and inflation we find the following:

Indeed we know that the HELOC is the fastest growing form of debt, now accounting for 12% of all consumer debt outstanding.  Canadians have a love affair with home equity.  The wealth effect spending associated with our strong and bubblicious housing market is by far the most significant factor that has helped Canada side step (or is that ‘delay’) the most significant effects of the credit crisis that gripped much of the world.

For more on Canada’s consumer debt levels, check out these related posts:

Credit risk across the nation: Who’s most at risk from an interest rate shock?

Debt Crunch: A look at Canada’s record level of household debt

Cheers,

Ben

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45 Responses to So much for the ‘conservative’ Canadian consumer: Another look at Canada’s credit bubble

  1. BBC says:

    Yikes! What else is there to say…….

  2. backwardsevolution says:

    Ben – such fantastic research! What a good job you are doing!

    12% on HELOCS – wow! Maybe someone can refresh my memory: did CMHC insure these too, or is the bank liable if people walk away? Who is taking these out? Investors/speculators who are banking on appreciation, or is it ordinary people who want to upgrade their homes or take trips?

    If this all comes apart, this is going to be one heck of a mess. It’s running on fumes.

  3. John in Ottawa says:

    In 2010(Q3) the average Canadian family’s debt reached just over $100,000. Net worth was just over $410,000 for a debt to net worth ratio of 25%. Interest payment as a % of disposable income was 7%, down from 8% ten years ago and 10.3% twenty years ago.

    The interesting number that Ben and I are both looking into more closely is debt to income, the number the Deputy Governor of the Bank was describing to suggest Canadian balance sheets were stronger than American when the recession started.

    As Ben has stated and the Bank confirmed, debt to disposable income is standing at 150%, up from 113% ten years ago and 93% twenty years ago. In 2008 dollars, consumer credit is up 43% over ten years ago while mortgage credit is up 35%. It is the increasing spread in consumer credit that is worrisome to me. Consumer credit generally has a higher interest rate and a shorter repayment period than mortgage debt.

    Consumer credit represents 102% of consumer durables assets. That is, we haven’t paid a dime on our cars and stainless steel refrigerators. Worse yet, unlike the general case for houses, consumer durables always depreciate and depreciate quickly. It is not an asset class that can be easily sold to retire the debt.

    HELOC debt would show up as mortgage debt, so not all of consumer credit is being transfered to more affordable HELOC debt.

    Note that the relative percentage of consumer credit in the US was less than for Canadians. Americans had a very strong incentive to transfer credit card debt to HELOC debt as quickly as possible due both to lower rates and the mortgage interest deduction on income taxes. Thus the coining of the term “house ATM.”

    I am somewhat concerned about how many of the mortgages are set up in Canada. The RBC Homeline for instance, associates a line of credit (HELOC) with the mortgage. As the principal in the mortgage is repaid, it automatically appears as available credit in the HELOC. I fear there is a terrible incentive to spend the equity that should be growing in the home as the HELOC is used to pay for consumer credit. This convenient access to credit may explain why overall debt has mushroomed over the past ten years.

    I believe consumer credit may be the real weak link in the family balance sheet. Our family balance sheets may have been stronger than those of our neighbors to the south, but they could hardly be called strong.

  4. John in Ottawa says:

    Ben and I have been struggling with Stat Can’s New Home Price Index (NHPI). The NHPI, which is the value used by the Bank of Canada to calculate the housing cost portion of the CPI, shows very little price appreciation over the past 20 years, and indeed suggests that the price of a new home in Vancouver has gone down!!

    The NHPI is “quality adjusted,” that is it accounts for size and new fangled gadgets like bidets and stainless steel. Over at The Big Picture blog they are highlighting a graphic that I think you may all like to look at. It suggests that from a “quality adjusted” point of view there wasn’t a housing bubble in the US.

    Quality adjustment doesn’t imply that today’s homes are built to a higher construction standard, indeed the quality of construction has decreased in my (well informed) view. Quality adjustment in these terms refers more to quality of life factors. Hot water anyone?

    Ben and I have talked about this and today’s as well as several recent posts are supportive of this view. What there has been is a “credit bubble,” a bubble in expectations and the credit available to meet what are probably very unrealistic expectations. It isn’t that basic shelter has increased in cost so much as what we expect our shelter to be….a status symbol or at the very least, pretty damned special.

    Check out the graphic Real Median Home Values. I think you will find it interesting.

  5. LRM says:

    With regard to consumer credit, I was wondering where the auto companies are getting access to the money available for the 0% 6 and 7 year loans available as seen on many recent ads in news papers. Really, how is this even possible given the recent need to bail out some of these companies and or their finance arms. I am not a finance guy and just want to understand how this type of arrangement really works. It just does not seem possible given that for example banks need to pay something to raise capital. Preferred shares do still return something after all.
    Is it just that with creation of the loan ,money is created out of thin air, and there is really no cost to the finance entity for this money creation and so what difference if the loan does default. Can someone explain how this basic every day transaction occurs with no cost to the borrower? How many of these 0% deals are causing the interest payments as a percentage of disposable income to be distorted downwards and not reflecting the true nature of household debt ( ie these sweetheart deals are pushing consumer closer or over the edge)

    • John in Ottawa says:

      There is no free lunch and the whole “out of thin air” internet meme is simply and utterly incorrect.

      These 0% loans are created in the marketing department. Automobile manufacturers can borrow for six or seven years at very low rates. 2-3% or so. That discounted cost can be tacked onto the price of the vehicle without being noticed in any appreciable way, so it appears to the consumer like they are getting a deal.

      Try this. Tell the dealership you are paying cash (or arranging your own financing) and want a discount for not financing through the company. You’ll get it.

      • LRM says:

        Thanks J in O for your response.
        Just to be clear as I do not want to be repeating this “out of thin air” meme : every loan that banks and finance companies make come from money that the bank has on hand from a deposit, bond sale or preferred share sale etc and that they need to pay some interest on as a cost. The profit from that loan is the spread between the loan rate and the interest cost to the bank for the money that was obtained. These people that say that banks “create” money by creating a deposit in a chequing account are not being honest and that each and every loan has in fact 100% cash that was the source for that loan. I know this is pretty basic but I may have a misunderstanding about this as I had this impression that banks loan first and if needed will adjust reserve requirements but that in Canada we don’t actually have strict reserve requirements.

      • pricedoutfornow says:

        My parents bought a car with cash a couple years ago. It was a used car though, maybe this is different, but there was no discount for not financing. To the contrary, the dealer thought that they were really odd for paying cash and kept pushing the financing. “Everyone finances! Why would you pay cash??” they said. There was no discount. Which makes me wonder if there isn’t some incentive to the dealer for making the loan in the first place-more fees they can charge maybe?

      • John in Ottawa says:

        Yes, a used car would be a different story as factory incentives are long gone and applied only to the original owner.

        In the case of the used car salesman, he would be looking for an origination fee, basically a commission from the finance company.

        You have smart parents. Let someone else pay thousands of dollars for the new car smell. You can get that stuff in a spray now.

  6. jesse says:

    On the HELOC/unsecured debt meme, does anyone know how complete the withdrawal of non-amortizing lines of credit through CMHC is going to be in a couple of weeks? For LOCs below 80% LTV, what methods will banks use to hedge, if at all?

    Interesting comments, John, though it sure seems to me land values have increased significantly in the past decade.

  7. Sams Mango says:

    CHECK THIS OUT…

    • tap-tap says:

      reminds me of news Gobbels was getting from the eastern front at the end of 1943.

    • LRM says:

      It is nice to know that this low, stable , predictable inflation of just 2% will mean that over the 35 year working life each $1000.00 saved will have its purchasing power cut in half. You buy a government bond for $1000.00 and when they fulfill their agreement and return the $1000.00 35 years later you must consider that a payment in full. Inflation at any rate is a theft and is insidious. Would you loan 1000 liters of something and be happy to get a half full 1000 liter bottle in return ? Please reject this propaganda froM BOC

      • Sams Mango says:

        You have to ask yourself – Why in the world would the BoC need to create this window? Are Canadians actually that confused/worried about the paper they hold. Scary thoughts.

  8. John in Ottawa says:

    US Supreme Court orders the Federal Reserve Bank to disclose bank loans during the financial crisis.

    For those of you who are paying any attention to this issue, which has been fought all the way to the Supreme Court, we finally know which banks received credit from the Fed in order to keep them afloat during the crisis.

    The Fed made no secret that it had set up emergency swap lines with foreign central banks during the crisis so that they would have enough US dollars to make US denominated payments as they came due.

    Virtually all the G8 banks and the ECB took advantage of the credit facilities, with one glaring exception. After running through all 933 pages of disclosure I have discovered that the Bank of Canada used the facility only once, for approximately $15 billion, and only for one day (pages 250 and 251). One day in several years probably equates to a routine transaction related to a bond maturity or some such benign thing.

    So, it might be said that Canada made it through the crisis in a different way than most of the other central banks, if for no other reason than it didn’t maintain an outstanding balance with the Fed of hundreds of billions of dollars over long durations.

    It really was different here.

    • LRM says:

      Would that one time transaction be included in this analysis or is this something different
      http://www.zerohedge.com/article/why-fed-redacting-bank-canadas-presence-fx-swap-lines-and-hiding-terms-its-currency-transact

      I don’t understand the swaps so it does not mean a lot to me

      • Sams Mango says:

        Must be a lawsuit pending by XYZ vs BofC or clients vs banks, etc. If the BoC created an “event” by engaging into a swap line that caused a fake need for USD and selling of CAD, ISDA contracts allow for immediate breakage of contract/cancel and payment. The lonnie went mental during that time and I am sure many desks/clients faced large losses from the “Event” created by the bank of canada.

      • John in Ottawa says:

        Yes, it is included on pages 250 and 251. For some reason, the Fed redacted any line for which there was no transaction, so the BoC only shows up twice.

        I think Zero Hedge jumped the gun a bit on this post.

    • Lumpen says:

      You’ve probably looked through it more than I, but the big Canadian banks could tap the Fed via their US branches. A few examples from the TAF alone:

      Dec 1st:
      CIBC ~$600mm
      BNS ~$2bn
      TD $1.25bn
      RBC $160mm

      Dec 15th:
      BNS $500mm
      RBC $2.9bn

      Dec 29th:
      BNS $2.3bn
      TD $1bn
      RBC ~$1.2bn
      CIBC $600mm

      It’s not entirely about the central banks. The swap lines were facilitated so the local banks without a US regulated entity could get easy access to dollars. The local banks in the EU could then tap into the ECB for dollars from the swaps.

      We don’t know why BNS/TD/RBC/CM tapped into the system – the need could have been in the US, Europe, or elsewhere. But to say the Canadian banks had no need for USD when everyone else did is distorting the events.

      • John in Ottawa says:

        I only said the BoC didn’t need to tap the swap facility.

        On third of our Canadian chartered bank’s assets are in foreign markets. It would not be unexpected for some aspect of their foreign business to take advantage of the Fed.

        There was no shame in going to the TAF. Banks sometimes need cash instead of bonds in the normal course of business. When the interbank liquidity market dried up, the Federal Reserve established the TAF to keep the system running.

        From the Fed’s website:

        All depository institutions that are judged to be in generally sound financial condition by their local Reserve Bank and that are expected to remain so over the terms of TAF loans are eligible to participate in TAF auctions. All TAF credit must be fully collateralized; loans for which the remaining term to maturity is more than 28 days are subject to additional collateralization requirements stated below.

        If a bank wasn’t eligible for TAF, it had to turn to TARP.

      • Lumpen says:

        I’m not disagreeing with you. My only point was that the CB swaps allowed non-US regulated institutions to get USD, while the largest banks from around the world could go direct.

        Also, agree on the need for cash, in any currency. Otherwise CMHC wouldn’t have bought its MBS from the Canadian banks. Doesn’t necessarily indicate strength or weakness long term, but says to me that there was a significant blockage that needed clearing, and the banks weren’t in a position to do it on their own.

        As for “sound financial condition” – well, the Canadians are in some fine company then. They’re right beside stalwarts like Fortis, RBS and Citi. In this situation, everyone got a pass, or the test was so weak as to be irrelevant. Doesn’t mean they were weak, just doesn’t prove they were sound.

      • John in Ottawa says:

        OK, you have me confused. You seem to know something I don’t, so I would appreciate it if you would share some specifics.

        I’m completely surprised to see you mention a Canadian bank in the same sentence as RBS, Fortis, or Citi. I don’t remember any Canadian banks being nationalized during the crisis. Heck, I don’t remember any Canadian bank even missing a dividend payment.

        What did I miss?

      • Lumpen says:

        Apologies if I wasn’t clear. The two points I was trying to make are:

        1. Canadian banks used extraordinary funding sources during the crisis.

        2. Access to the TAF doesn’t necessarily indicate strength. As you (John in Ottawa) state, there was a “sound financial condition” requirement to access the TAF. Along with the Canadians, Fortis, RBS and Citi also used it. So while it doesn’t mean that the Canucks were basketcases, it also doesn’t prove that they were sound.

      • John in Ottawa says:

        Thanks for the clarification.

  9. Sams Mango says:

    This fed data release is not going to stop this rally in my view. What should be focused on is how commercial real estate is going to do from the following

    1. High Leverage Plays
    2. More people working at home/part-time/off-shore
    3. Amazon crushing bricks
    4. Increase cost of borrowing and larger down payments.

    I am looked into buying some buildings, yields are lower then downtown Toronto condo’s! These assets must drop in price, after speaking to tenants who have “we will make the rent work, please stay”, they have not been able to increase the rents

    You might ask why the banks are not asking questions? Because these tenants did’t get a rent reduction, however 14 months for 12, etc. This keeps the value of the building to the bank the same, thus no more margin has to posted.

    I believe this game will play out in the next 12 months. The days of eating out at KFC and stopping into your local store to grab a book are gone. It has become to clip coupons and find the cheapest organic food and order online from amazon. Both remove the need for commercial retail frontage. I believe this is a huge changing landscape and will need to be addressed fast as people continue to benefit from the deflation of doing things online and smarter.

    • Lumpen says:

      I agree that the fed data is nearly irrelevant. Talking heads will talk for a week, and then it will be forgotten. It might pop up alongside something else from the past, like L3 asset classification and valuation, but not relevant to asset values today.

      I’m not convinced that commercial is going to be a big problem. A problem, perhaps. But it’s not going to be the cow that derails the train. Banks generally have enough capital to deal with it, and they can stretch it out in a really bad case.

      The train “derailer”, if it exists, will be the global macro environment. Canada is a price taker in both commodities, and general economic conditions. If international demand declines, fiscal stimulus can mitigate, but not offset the crunch, and it will lag. You’ll see the fund flows reverse, and while a declining dollar will cushion some of the impact, it will still hurt. Just as today, a rising dollar isn’t completely offsetting the improved demand for mfg’d goods in Ontario.

      • Sams Mango says:

        I don’t see this market breaking, however where is the future demand for retail space going to come from?

    • John in Ottawa says:

      The Fed won this round. They used tax payer money to drag the issue out three years until it just didn’t matter any more. Historians will be happy, but the market couldn’t care less.

  10. Lumpen says:

    I agree with you – fundamentals of retail space, especially non-prime, aren’t great. But some things will hold up better than others. Alot of things, such as apparel, furniture, groceries, will remain a heavy in-person purchase, as long as the pricing is the same online. (As an aside – went into a BR at Christmas – jeans in-store, $100. Same model online – $50, with free shipping. Guess where I bought?)

    One mitigant (albeit small) is space repurposing. Can the Best Buy become a restaurant? There seems to be waves of changes in various retail trends – you’ve got Bell/Telus/Rogers/etc. stores all over the place. There weren’t any ten years ago.

    From a bank’s perspective though, if there’s too many properties in default, stretch out the repossessions to avoid flooding the market and unduly pressuring prices below a reasonable cap rate. There’s enough money out there just waiting for distressed commercial that it may never actually materialize. Look at the US example – so much $$ was raised in anticipation of this, that the prices got some nice support.

    The big gotcha (which applies well beyond this domain) are interest rates. Cheap money supports a lot of things. Normalized money would pressure existing pricing across all asset classes. I wouldn’t offer any hard prediction as to timing, but it seems to me there’s only one possible direction in the medium term.

    • ATP says:

      What I don’t understand is why businesses with retail outlets don’t take the most advantage of their stores to also function as delivery points and service centres for on-line purchases. Does playing the pricing hide-and-seek game with customers really help their bottom line that much that they’d rather risk losing to Amazon et al.?

  11. John in Ottawa says:

    Over at Garth’s blog, the only pornographic economic analysis sight in the English speaking world, Garth is suggesting that a BoC interest rate hike is baked in the cake for May. He seems to be suggesting that Carney wants to stop consumers from digging a deeper hole.

    In my view, monetary policy is for controlling inflation. Regulatory policy is for controlling lending. I think the Feds did the right thing at pretty much the right time when they tightened lending standards in January. I don’t think the BoC should get involved in lending policy.

    Headline inflation is at 2.2%. Subtract fuel, it is at 1.6%. Carney can’t control the price of oil and he doesn’t try to. If Headline inflation went to 10% on fuel alone, there wouldn’t be a damned thing Carney could do about it.

    So, riddle me this. Why would Carney tighten when core inflation is lower than his target rate? What do you folks think?

    Also, today’s Non Farm Payroll (NFP) numbers in the US fell right into the ambiguous zone. They are neither too low or too high to give us a clue as to the Fed’s next move on QE.

    • Dmitri says:

      John, I think (speculate) there are a few reasons for M.C. tightening –

      1. He realizes that ‘core inflation’ means nothing in the world of real people when the cost of living is increasing.
      2. He is in fact being forced to become a regulator as the govt. is dragging it’s feet.
      3. He does not feel very comfortable being in the unchartered territory for so long (w.r.t. ultra low interest rates).
      4. He probably is anticipating that USD will up once the QE ceases this summer (although, I believe it will continue under a different guise) and does not want sharp fluctuation because: a) our economy is finally taking an advantage of low USD, consumer items are bought using USD (and the consumer is already stressed).

      • ATP says:

        5. He thinks a down turn is coming despite the ultra low rates. He needs to hike before there will be room to fall in case of ’emergency’.

  12. Lumpen says:

    Neither OSFI nor BoC policy is suitable in targeting specific markets – too blunt. They’ve got a situation like the US had in 2000 – California in a massive boom with huge inflation, Midwest in a slump. Your policy affects both. What do you do?

    Maybe the answer is you simply let the market handle it. The dot-com boom pushed most non-tech industry out of the SF-SJ corridor and drove up the price of res RE. Why shouldn’t the same thing happen in Canada? You could allow, and even encourage foreigners to buy in BC. Let the existing locals leave if they want with their proceeds and find a new life if they want. Should the government really be in the business of protecting the horse-and-buggy-whip businesses if the market is saying hovercars are the future?

    There is an easy way to control mass-level inflation for non-global commodities – i.e., for those outside the top 5% earners. Simply put a cap on CMHC insurance – say $400k for Ottawa, $600k for Toronto, $??? for Vancouver (mortgage, not house price). Grow by CPI. My sense is those limits cover probably 90%+ of situations. They won’t insure anything above that any longer. Now the banks need to decide how much they want to lend. It will also have a natural deleveraging effect.

    • John in Ottawa says:

      We agree on your key point and I’ve suggested before that there should be regional regulatory policy. Probably politically impossible.

      I’m all for CMHC caps. CMHC was formed to make housing affordable for the middle class. CMHC should not be in the business of insuring jumbo loans.

      • Dmitri says:

        Do we actually need CHMC ? Since it did not make housing more affordable, this experiment should be scrapped and considered a failure.

    • jesse says:

      “Maybe the answer is you simply let the market handle it.”

      The problem with letting the “market handle it” is that it doesn’t. When you have a nationally-run underwriter of credit — CMHC — it either has to impose regional restrictions to prevent credit bubbles from forming or tacitly acknowledge more austere parts of the country will have to bail out another’s profligacy. Any look at certain regions’ debt loads and leverage indicates much more at-risk taxpayer money there.

      • Lumpen says:

        By and large, the banks are national, not regional. Whether there’s an asset crash in one city or everywhere, 5 banks comprise the substantial majority of lending, and CMHC, are on the hook.

        My point wasn’t that there shouldn’t be some new guidelines. It was that the most effective one won’t come from BoC or OSFI.

        As for regional disparity, well, Canada’s built on transfer payments. This one just happens to go the other way. I’m being glib, but that’s part of the reason there is a single country instead of a bunch of provinces – diversifying risk is much easier to do than stopping risky activities.

      • jesse says:

        “diversifying risk is much easier to do”

        Why would you “diversify” a risk that can be avoided? Do you think banks operate like this?

        Go ask for a business loan and, since banks have so many AAA business loans under the hood, see if they will toss in your lower tier loan for the same rate as the others because their portfolio is “diversified”.

    • Financial Newbie says:

      I like the idea of caps on CMHC insurance as well, but why would you have different price points for different markets across the country?

      Maybe a better idea would be CMHC insurance to the tune of the average or median valued Canadian home – that way you could get the CMHC to help you get a home, just not one wherever the hell you want (as a taxpayer and someone who believes in equity, that doesn’t seem right to me).

      So if Vancouver is too pricey, sorry, but don’t buy houses there. I know it’s a crazy idea, but perhaps we Canadians should learn to live within our means…

      • Lumpen says:

        Different prices for different locales. There’s significant disparity around the country. A $250k house in Windsor, where you can walk to everything you need, is probably $1mm in Toronto, and I have no idea how much in Vancouver. But the income opportunities are also higher in Toronto, so there should be some price differential.

        The more I thought about the limits I wrote above (about 2 mins of thinking), I came to the conclusion they’re probably too high. A first purchase in Ottawa is probably ~$200-300k. The “family” upgrade is probably $350-450k after 5-10 years. By that time, they should have some equity in their place, saved other money, received raises, etc.. So by upgrade time, there might be $150-200k or so of equity. Maybe the limit for Ottawa should be around $300k. It seems to work well with the average family income in the area.

        Toronto has much greater disparity in prices and incomes, but a $400k limit seems to make some sense using the above logic. You could even apply it today, and let the banks create MBS that don’t have a CMHC guarantee for higher priced places. Probably a significant market for the securities and they wouldn’t have much of a yield premium to the riskless ones – after all, “house prices never go down.” If there was ever a time to put this kind of policy in place, it’s now, while Canada is “golden” on the international stage.

        A country-wide median is a non-starter in my opinion. A $300k place in Cape Breton is probably mansion-like, while it’s a studio in Vancouver. It doesn’t take into consideration the income potential in the two cities. And I’m not sure CMHC should be subsidizing “the rich” in Cape Breton at the expense of the studio-loving crowd in BC.

  13. jesse says:

    “I know it’s a crazy idea”

    It’s not “crazy”!!! But for example, say a specific area of the country is producing significant economic output and inflation is high. In those conditions, under your suggestion, CMHC would not be able to take part in facilitating household formation in this region. Maybe that’s the answer: if a region is booming it can afford to go it alone without government assistance. On the other side, if credit is difficult to obtain in certain regions, it could be argued that CMHC has a role to play by looking at the “long term big picture” and spackling the gaps. I don’t think it’s as easy as dogmatically calling for privatization.

  14. Pingback: Bank of Canada holds the line; Royal LePage releases ‘reasearch report’; “Canadian 30 year olds are screwed!” | Financial Insights

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