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Canadian economy shows the way …


 

Canada has done a good job, in concentrating their problems in one mortgage institution – public sector behemoth, the Canada Mortgage and Housing Corporation, (CMHC).

Whu runs Canada - USA, Britain or Canadians?

Whu runs Canada – USA, Britain or Canadians?

Canada leads …

In obfuscation, cover-up  and propaganda.

Canada has done a good job. In concentrating their problems in one mortgage institution – public sector behemoth, the Canada Mortgage and Housing Corporation, (CMHC).

Then funding the CMHC with public monies, and postponing the crises to another day, may be in another form.

Strangely, there has been much talk that the Canadian economy is in better shape – especially compared to the US and Britain. This is surprising, going by the way the Anglo-Saxon bloc members mimic each other.

The only and real reason why Canada can still manage despite all its debt and mortgage problems is oil. With huge proven reserves of oil, and a small population, Canada can simply sell oil to work its way out of recession.

The Canadian problem

Europe has taken away attention from some other problem economies. The most prominent of those is the Canadian economy – actually,

“according to the IMF, actually the third worst of the G7 countries, behind the US and Britain, in terms of financial stabilization costs.(Canada spent some) $75 billion to buy up iffy mortgages from the big five banks, through the Canadian Mortgage and Housing Corporation, taking them off the banks’ balance sheets … equivalent the US bailout – it spent ten times as much, $700 billion, and its economy is about 10 times as large. Harper government established a fund of $200 billion to backstop the banks … called the Emergency Financing Framework … the government now insures 100% of virtually all mortgages through CMHC eliminating risk for the banks …

“These measures are considered ‘non-budgetary’ or ‘off book.’ They do not show up as expenditures, which increase the federal deficit and debt. Rather, they appear on the books of CMHC and the Bank of Canada. But they have increased the government’s borrowing from $13.6 billion in 2007-08 to $89.5 billion in 2008-09, or double the fiscal deficit now projected for 2009.”

Premature celebrations? Lull before the storm?

Premature celebrations? Lull before the storm?

Similar views have been echoed by others too! The Financial Post goes to uncover that,

In Toronto, 44% of disposable income goes to housing and in Vancouver the figure is a whopping 68%. The trend is likely not sustainable.

The Canada Mortgage and Housing Corporation, the crown-owned business that owns a large proportion of Canadian mortgages, has seen the value of mortgages it holds on it’s books (appropriately called ‘liabilities’) rise from $80-billion to $400-billion over the last five years. Jackson rightly notes, “any time you see a business increase its liabilities by that amount, it’s intriguing.” Some say intriguing, others say worrying.

Canada’s GDP last year was US$1.5 trillion.

Just one business entity, CMHC has debts equalling 25% of Canada’s GDP. Canadian household debt is “an all-time high of $1.41 trillion.” Gross Household debt equal to GDP is one, very scary situation. After a round of crises in EU, action could shift to Canada.

Welcome to the Great Recession!


 

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  1. Ron
    July 6, 2010 at 5:51 pm

    What I would like to know is how stable are the mortgages that the CMHC bought up.
    If they are stable then the risk is lower and the money can be recouped. Still I agree it was a bank bailout.

  2. July 28, 2012 at 6:50 am

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