shelley748

http://www.debtdeflation.com/blogs/2...bble/#comments

FirstRatofftheShipUK

Oh dear. Grass & Green spring to mind.
My friend, if The UK even plateaus by 2017, I, and most economists (& politicians in private) would be pleasantly surprised.

The troubles here will not even start to actually bite until after the 'actual' Public cuts from April 2013. Remember there was an MP a few years back (his name escapes me currently) that said something truthfully and candidly along the lines of "The British have never had it so good - what is the problem?"

Said MP was duly crucified and binned from the party, and beaten up in the press of the great unwashed but...he was spot on.

All the present moaning at the moment has simply been carefully crafted and stoked up by the Media-Politicians in preparation for the big change (the one where 'normal' people feel it in their pocketbook, including crucially Middle England, for the first time in a very long time).

I take it you keep up on the Banking news from The UK? The jiggery-pokery from 2008 is about to seriously take a back seat to a full scale melt down in the Housing Market.

Stay put; ride it out. Despite its shortcomings, Canada has a wonderfull way of staying 'insular' to global problems.

God Bless Protectionism.

FROTSUK

FirstRatofftheShipUK

But do you really postulate that the actual 'soul' of this country could not use a good 'changing', as one said awhile back?

FROTSUK

FirstRatofftheShipUK

M-a-r-i-j-u-a-n-a.
Do not under estimate the input of the Black Market, so to speak, generally.

FROTSUK

fish.01

While I see the point you are making about a two speed economy and slow down in retail, housing, construction etc Australia has a long way to go to be in the doldrums, the unemployment rate shows that - it could be far worse and historically this would be considered pretty ok.

"limited job prospects outside major metropolitan or mining areas"

Just about every decent sized city in Australia has a reasonable unemployment rate and for the first time in a generation many country areas are booming due to mining. Not sure what you mean here as the unemployment rate is good by historical standards?

I would imagine Canada would be going through something similar - not all great but not that bad compared to some other times in the past.

Alan2005

If you think Canada is immune to the rest of the worlds economic woes then you wrong. Yes, the shenanigans started in 2008 haven't played out yet; but that includes Canada as well - or did you not notice how low interest rates are and how any rise at all will push Canada into serious trouble give how much debt Canadians are in (more than Americans and Brits btw)

Also protectionism always costs the end consumer more money - if you think it's a good thing, then you are either i) not very clever or ii) unproductive to the point that you need subsidising at the expense of others.

douglasgrant

yes, the interest rates are artificially low and created so by the government.
the sooner the gov raises them the better. i know its a party pooper thing to say but its true. while they are artificially low, they are screwing everything up.

FirstRatofftheShipUK

Sounds like the backbone of modern Britain to me. Any country where serious numbers of the populace are content - and actually see it as the correct and natural way - not to be a 'net contributor' in any society, is doomed to reap those rewards. The UK is just such a society.

I will not go into the details of 'Protectionism' with you here as I do not wish to give the impression that I under-value the input of Immigrants to any society...do remember that "Protectionism" does not just bite in Employment...it also keeps a Banking sector healthy.

I will let others decide on how "clever" I am, or not, as the case may turn.

FROTSUK

jericho

OK, so interest rates are increased and hundreds of thousands of people default on their mortgages. The housing market is flooded with repo's and everyone else ends up in negative equity, and way over extended on their lines of credit etc. People will stop paying their credit cards, car loans etc, before they stop paying their mortgage.

How much worse do you think it will be then?

Alan2005

Yes, they are. But it's too late now. They can't raise them - as jericho says, nobody (including the government) can afford it .

We are in a low/zero interest environment for the foreseeable future - probably decades.

douglasgrant

Sure, maybe. But I don't think its going to be decades. Probably much sooner than that.

douglasgrant

I don't think it works that way here b/c of the CMHC. The bank is covered, that's why a banker is more than happy to lend you $500k for a house but they poop their pants if you ask to borrow $10k for a small business idea. But yes, you can easily get the $10k if you put it against your house as a second mortgage.

pacepeter

Eats this us and them is it not the same country when one part gains so does the other?

Alan2005

No, it won't be. The BoC might talk about it and try to scare people into reigning in their debt - but it won't actually do it, at least not significantly. It can't - because to do so will kill what little growth there is. The days of what you and I would consider 'normal' interest rates are over.

The only possible reason for a significant interest rate hike is that the bond market will decide that it's had enough of Canadian debt and stops buying it. I just don't see this happening myself

jericho

Not so fast.
CHMC is only if you have a deposit of less than 20% (usually, first time buyers). But it protects the bank, not the borrower. If you default, you're still up shit creek and will be foreclosed. They'll sell the house for whatever they can, and CMHC pays the difference between that and the mortgaged amount.

Anyone who has a downpayment of over 20% doesnt have CMHC (if my understanding is correct). People who might have significant equity, but remortgaged recently to get a good saving on their repayment could be faced with the prospect of paying a huge increase in monthly repayment on a house that's lost 40% (or more) of its value. Here you go Mr Banker, have the keys back.
It's exactly what happened in the US and to a lesser extent, the UK.