Housing bubble bomb.....have we learned NOTHING??
Jan 3, 2016 1:45:51 GMT -5
Post by Cranky on Jan 3, 2016 1:45:51 GMT -5
A few weeks ago, I was waiting for my smarter half to finish shopping so i picked up a copy of the local real estate rag. Simply STUNNED at house prices. When are sh*t boxes on postage stamps lots worth a million dollars?
Fast forward to early last week and a short conversation with my bank manager. Apparently, if you make $60,000 and you put down 10% you can qualify for a $500,000 house loan. FIVE HUNDRED THOUSAND dollars. I had to ask the question twice simply because i couldn't believe the answer.
Why this crazy? 2.5% interest rate and 30 year terms gives us this lunacy.
But wait...there is more....
We have the highest household debt in history, Household debt is up around 1.4 TRILLION for mortgages and overall debt is almost 2 TRILLION. Almost as much as our GDP.
Have we learned NOTHING from our neighbor bubble? And the cute little economic explosion that sent the mighty US into a seven year tailspin?
Just for the record, I'm not blaming The Little Prince for this. I'm blaming Harper for letting this bubble happen. On the other hand, had he done what he should of done and raise interest rates, it would of slowed the economy....and got rewarded with burning effiges from coast to coast. Ultimatly, it boils down to the shoulders of Canadians who borrowed and borrowing over their heads and punishing anyone politicaly who comes in front of their dreams .
With investment in the oil patch comming to a halt, with the US raising interest rates, with the collapsed dollar fueling inflation, with politicians having no b*lls to let some air out for a small correction before the inevitable market forces stab that bubble, well, wear a helmet. A nice big soft one.....
Ahh wait....we have unemployment insurance and our banks are strong....said a little joyous voice. Really? How long does it take to dive into a recession and panick take place? The fun part of a bubble is that it's tied to the survival gene. Once fear sets in, it feeds on itself. If we look at history the difference between peace and panick is no more the 4 or 5 percentage points of unemployment. 6% unemployment and all is normal, 11% unemployment and the sky is falling.
Final thoughts on my first thread of 2016 optimism....
I don't want to hear the media muppets claim that this was a big suprise. For a few years now, we were told there is a problem by the Bank Of Canada, but politicians of every stripe ignore it and so do Canadians. When it does come, of course they will blame the banks. And the "rich". And whatever little hate on of the little hate group they are addressing. But no one will blame the real culprits. No one will blame themselves....although every single one of them will want to be bailed out because......it wasn't their fault. It's NEVER their fault. It's all Greek to them.
Plus ça change, plus c'est la même chose.....
Fast forward to early last week and a short conversation with my bank manager. Apparently, if you make $60,000 and you put down 10% you can qualify for a $500,000 house loan. FIVE HUNDRED THOUSAND dollars. I had to ask the question twice simply because i couldn't believe the answer.
Why this crazy? 2.5% interest rate and 30 year terms gives us this lunacy.
But wait...there is more....
We have the highest household debt in history, Household debt is up around 1.4 TRILLION for mortgages and overall debt is almost 2 TRILLION. Almost as much as our GDP.
Have we learned NOTHING from our neighbor bubble? And the cute little economic explosion that sent the mighty US into a seven year tailspin?
Just for the record, I'm not blaming The Little Prince for this. I'm blaming Harper for letting this bubble happen. On the other hand, had he done what he should of done and raise interest rates, it would of slowed the economy....and got rewarded with burning effiges from coast to coast. Ultimatly, it boils down to the shoulders of Canadians who borrowed and borrowing over their heads and punishing anyone politicaly who comes in front of their dreams .
With investment in the oil patch comming to a halt, with the US raising interest rates, with the collapsed dollar fueling inflation, with politicians having no b*lls to let some air out for a small correction before the inevitable market forces stab that bubble, well, wear a helmet. A nice big soft one.....
Ahh wait....we have unemployment insurance and our banks are strong....said a little joyous voice. Really? How long does it take to dive into a recession and panick take place? The fun part of a bubble is that it's tied to the survival gene. Once fear sets in, it feeds on itself. If we look at history the difference between peace and panick is no more the 4 or 5 percentage points of unemployment. 6% unemployment and all is normal, 11% unemployment and the sky is falling.
Final thoughts on my first thread of 2016 optimism....
I don't want to hear the media muppets claim that this was a big suprise. For a few years now, we were told there is a problem by the Bank Of Canada, but politicians of every stripe ignore it and so do Canadians. When it does come, of course they will blame the banks. And the "rich". And whatever little hate on of the little hate group they are addressing. But no one will blame the real culprits. No one will blame themselves....although every single one of them will want to be bailed out because......it wasn't their fault. It's NEVER their fault. It's all Greek to them.
Plus ça change, plus c'est la même chose.....
