BoC warns of possible mass home foreclosures

[jdobbin]

http://www.ctv.ca/servlet/ArticleNews/stor...?hub=TopStories

The Bank of Canada is warning of severe economic turmoil, including the risk of many Canadians losing their homes, if the financial-market crisis worsens.

The central bank's December financial systems review says the "most likely outcome" is for markets and credit conditions in Canada to gradually improve as extraordinary measures by central banks and governments take hold.

But that outcome is by no means certain, it warns, saying uncertainties remain about how long it will take for credit markets to return to normal.

A pretty scary result if true.

Now that we are in recession, monetary policy will only take us so far. Confidence in the economy will have to come in the form of many different initiatives.

[madmax]

http://www.ctv.ca/servlet/ArticleNews/stor...?hub=TopStories

A pretty scary result if true.

Now that we are in recession, monetary policy will only take us so far. Confidence in the economy will have to come in the form of many different initiatives.

The Bank of Canada announcement is like pretending like they are at the forefront of a prediction. Asleep at the switch is all I have to offer about the BoC. At the same time that I am watching new housing starts continue in my area, while the number of working class people losing their homes is rapidly increasing. HOwever, these things take time. Banks are trying to carry these mortgages, and many people have purchased insurance from loss of job.

[Shakeyhands]

Hmmm... we better hurry and appoint some senators then. That will fix the situation.

[Vancouver King]

Not a single word in the BofC update on the major chartered banks refusal - for the second time - to pass on to consumers the full amount of the central bank's interest rate reduction. How are homeowners to cope with variable mortgages if their banks keep a huge portion of interest reductions as increased profits? All this while the banks continue userous 20% rates on credit card balances.

This BofC update simply confirms it's usual function: pouring coffee for the Bankers Association.

Edited December 11, 2008 by Vancouver King

[JerrySeinfeld]

Now that we are in recession, monetary policy will only take us so far. Confidence in the economy will have to come in the form of many different initiatives.

Yay! More left leaning government intervention!

Now Naomi Klein's "Shock Doctrine - the rise of disaster capitalism" can officially be dubbed completely false.

[Smallc]

Yay! More left leaning government intervention!

It has nothing to do with ideology (or it shouldn't). It has to do with trying to keep the economy moving...something everyone should be working at.

[-VMG-]

I think a major problem is that we no longer have gold backing... Our currency is meaningless....

I suppose corruption and greed doesn't exactly help either... it might help the initial boom of an economy... but that only means the economy has that much further to fall to stabilize.

[Smallc]

I think a major problem is that we no longer have gold backing... Our currency is meaningless....

Here is a question I always ask in respond to this. How is gold any more meaningful than money?

[madmax]

Hmmm... we better hurry and appoint some senators then. That will fix the situation.

ROTFLMAO

[OddSox]

That news story says nothing about 'mass home foreclosures'. It does say "The report warns it's still possible that the situation here could take a turn for the worse, driven by panic linked to household debt." and that "The impact on the balance sheets of financial institutions would, however, be substantially mitigated by mortgage insurance."

Doom and gloom headlines don't help the situation at all.

[-VMG-]

Here is a question I always ask in respond to this. How is gold any more meaningful than money?

Gold is a limited resource (as far as we know) you can only have so much gold in the world.... There is likely billions of more trees in the world that can be turned into paper currency.

Now, the idea is that gold is stable... Paper COULD be stable if managed correctly... but if it is not then it becomes are very unstable thing.

It doesn't help that a bank account has become simply numbers with no real meaning considering it doesn't need to be backed by anything physical.

At least with gold there is something physical that allows for limitation.

The question you should ask is, why is gold any more valuable than anything else.... Romans were paid in salt... it serves the same purpose.

Money does not exist physically... anything can be considered money.... gold and other such things are physical... they have meaning...

This is the age of sending imaginary numbers from one person to another and no physical exchange.

I sen my number 250 to your bank account.... is anything really being exchanged here? Where did the 250 come from? most likely somebody elses bank account... that came from someone elses bank account.

I suppose we could have physical money and it would serve the same purpose and it is really this digital worlds fault... but i would still say gold is more stable than paper... contrary to rock-paper-scissors mechanic of paper > rock.... or maybe man's intelligence is the scissor... and has much power over paper... but then rock still has more power over scissors... lol anyways...

Edited December 11, 2008 by -VMG-

[Smallc]

Gold is a limited resource (as far as we know) you can only have so much gold in the world.

My point is that gold is just as useless as money. It is good for very little (well, besides making pretty things), just like paper money.

[Renegade]

How are homeowners to cope with variable mortgages if their banks keep a huge portion of interest reductions as increased profits?

Ask the homeowners themselves. They wern't forced into variable mortgages. They presumably chose those variable mortgages because they felt they could withstand the flucations in interest rates.

All this while the banks continue userous 20% rates on credit card balances.

Again, consumers CHOOSE to use this credit instrument. They are also free to refuse to borrow on the credit terms the banks offer for credit cards.

[Topaz]

I think alot of it has to do with the unknown auto sector and there's couples that work at the same place and if one loses their job because of closing or layoff then the other could also be in the same boat. They have kids, mortgage, car payments, maybe two, property taxes increases, increases in the hydro, gas, water, food. The same thing with the forest industry, some guys couldn`t deal with losing and died, hoping the life insurance would cover the expenses. Then on the other side, I`m sure some people bought more than they could afford.

[msj]

That news story says nothing about 'mass home foreclosures'. It does say "The report warns it's still possible that the situation here could take a turn for the worse, driven by panic linked to household debt." and that "The impact on the balance sheets of financial institutions would, however, be substantially mitigated by mortgage insurance."

The article specifically states "A statement on the central bank's website said softening housing prices, slowing income growth, weak equity markets and record-high debt levels could contribute to "a substantial increase in default rates on household debt."

This is consistent with this thread's headline.

Doom and gloom headlines don't help the situation at all.

People should be smart enough to know to look beyond the headline to read the entire article (which is reasonably balanced).

The point of headlines is to grab people's attention to get them to read the details.

So the problem is not with the "doom and gloom" headline so much as with the people who solely rely on headlines to be informed.

[-VMG-]

My point is that gold is just as useless as money. It is good for very little (well, besides making pretty things), just like paper money.

I think the idea is that it is something physical... and limited...

I'm not saying we need to make money out of gold... i'm saying we need something that has value to determine how much value in money should be physically produced....

It is mostly useless that is true.... Also why i said it doesn't have to be gold.. but it could be something else that may have more use... but i think gold is more stable (limited) than paper... which we seem to make a ton of all the time... where as we have limited supplies of gold.

But there is a problem... this gives countries that have high amounts of gold resources the ability to have stronger currencies... while countries with less gold have less strong currencies... It's fake inequality... and could be considered a sort of inflation in the broader light...

I also noted that it's not so much a problem of physical currency... but plastic digital currency that is probably creating the biggest problem...

[-VMG-]

Ask the homeowners themselves. They wern't forced into variable mortgages. They presumably chose those variable mortgages because they felt they could withstand the flucations in interest rates.

Again, consumers CHOOSE to use this credit instrument. They are also free to refuse to borrow on the credit terms the banks offer for credit cards.

I don't think you can blame it completely on the consumer... it can easily be blamed partly on the loaners as well... intimidation tactic... if you don't use this you will be nobody.

Why wouldn't consumers use credit? Don't have the money... no worries... use credit now, pay later when you have the chance... too bad the average person is stupid with their money and buy shit they don't need... then when they are broke they have all this pointless shit and no food.

[M.Dancer]

I think a major problem is that we no longer have gold backing... Our currency is meaningless....

Ummmm...not by a long shot. The sum total of our labour and economic output is worth more than all the gold in the world...which is why the gold standard is obsolete.

GDP (purchasing power parity):

$13.78 trillion (2007 est.)

https://www.cia.gov/library/publications/th...os/us.html#Econ

The total value of all gold ever mined would be $3.39 trillion at October 2008 prices.

http://en.wikipedia.org/wiki/Official_gold_reserves

Edited December 11, 2008 by M.Dancer

[-VMG-]

Would you agree though that economic output and labour can fluctuate by a lot? I suppose that would create a more dynamic and realistic economic scene... but it doesn't seem like it would be very stable (which is what people want).

[M.Dancer]

Would you agree though that economic output and labour can fluctuate by a lot? I suppose that would create a more dynamic and realistic economic scene... but it doesn't seem like it would be very stable (which is what people want).

So does gold. More even...

http://goldprice.org/30-year-gold-price-history.html

[-VMG-]

Do you have any more sources of info on that? I mean i could simply look at the price of gold and see that it goes up and down... but that doesn't exactly show the causes of the increase or decrease in price. Not doubting your information... It just needs more info attached to it than the gold price by itself...

[M.Dancer]

Do you have any more sources of info on that? I mean i could simply look at the price of gold and see that it goes up and down... but that doesn't exactly show the causes of the increase or decrease in price. Not doubting your information... It just needs more info attached to it than the gold price by itself...

The cause? Supply and demand..sellers and buyers. There is no other cause that affects price.

Now what motivates people to buy or sell is another story, but it all boils down to supply and demand.

[-VMG-]

The cause? Supply and demand..sellers and buyers. There is no other cause that affects price.

Now what motivates people to buy or sell is another story, but it all boils down to supply and demand.

Except that there are things that affect supply and things that effect demand.

To simply say it was supply and demand is an incredibly vague statement.

The supply of oil is why the oil price went down.... but what caused the supply to increase.... or not to decrease compared to earlier times..

Although i suppose Gold is a lot less useful than oil.... which makes it a more stable base than oil because so many things can effect the demand of oil... and maybe a few less things can effect the supply of gold in comparison to oil.

Edited December 11, 2008 by -VMG-

[Renegade]

I don't think you can blame it completely on the consumer... it can easily be blamed partly on the loaners as well... intimidation tactic... if you don't use this you will be nobody.

Yes, I can blame it completely on the consumer. Unless you are contending that the lender misrepresented the product, the lender can only try and convince the consumer that their product is worthwhile. Ultimately it is up to the consumer to decide. I wouldn't call that an "intimidation tactic"

Why wouldn't consumers use credit? Don't have the money... no worries... use credit now, pay later when you have the chance... too bad the average person is stupid with their money and buy shit they don't need... then when they are broke they have all this pointless shit and no food.

Doesn't stupidity deserve its consequences?

[-VMG-]

Yes, I can blame it completely on the consumer. Unless you are contending that the lender misrepresented the product, the lender can only try and convince the consumer that their product is worthwhile. Ultimately it is up to the consumer to decide. I wouldn't call that an "intimidation tactic"

Doesn't stupidity deserve its consequences?

It is ultimately up to the consumer... but it is such a good offer that people buy into it.

It does, but at the same time a lot of companies offer things through credit you can't recieve through cash... which makes it all the more enticing..

I do blame the consumer... but i wouldn't blame it ALL on the consumer.