David Cameron says a second financial crash is imminent. If he's right, it's because the government bailed out the wrong industry, argues Renegade Economist host Ross Ashcroft. He says the last recession was brought on by too much debt. Today private debt is at the greatest level in recorded human history. By ignoring this and instead focusing on the banks, we are heading for economic armageddon.
DYI Comment: Short video from The Guardian newspaper U.S. edition spells out how world wide private debt house of cards falls the world economy will once again deflate. When this happens (DYI forecast not Guardian) 10 year and 30 year Treasury bond yields will be below 1% and 2% respectfully.
Oh Canada, Oh Canada!
I doubt that the majority of Canadians have any idea that bad times are coming with average debt to average income at 165%? The U.S. peaked at a mere 130%! Canada has a very real possibility of entering a horrific recession and possible depression as their economy is geared toward natural resources which will drop precipitously during a world wide recession.
You may or may not know Canada due to the debt binge has created a real estate bubble far greater in scope than the U.S. Most likely the first leg down in prices in the cities for single family homes will be around 30% and the sky high condo market easily by 50%. A decade from now on a inflationary corrected price 50% decline for single family homes and 70% seems about right.
Canada has a greater aging population due to a much lower birth rate.
| Country | 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Canada | 1.64 | 1.6 | 1.6 | 1.61 | 1.61 | 1.61 | 1.61 | 1.61 | 1.57 | 1.58 | 1.58 | 1.58 | 1.59 |
As aging Canadian Baby Boomer's sell off their homes or pass away, the ownership rate will need to rise to soak up these excess properties. Future buyers will be encouraged through lower prices. Prices will have to go low enough to offset the possible risk of future lower prices.
Canadian household debt load may be 'unsustainable'
The report was based on data to the second quarter of last year.
Since then, several factors make the picture in Canada more stark: Household debt-to-income ratio rose further, to a record 162.6 per cent in the third quarter. House prices continued to climb, though the pace is slowing. And the Bank of Canada cut interest rates last month – with another reduction possible in March – moves that could spur even more borrowing.DYI
No comments:
Post a Comment