dre Posted February 29, 2012 Report Share Posted February 29, 2012 However, I don't know enough about this to argue it myself. I simply know that as of now, most of the analysis I have read disagrees with your position. Most of the analysis claimed the US realestate market was healthy as well, and all these so called financial experts were still telling people to take ARMS with teaser rates right up until 1996. Its impossible to say whether Canada will have the same type of situation or not... but we definately ARE seeing some of the same warning signs... realestate is way overvalued and we have the lowest personal savings rates ever. Basically what happens when you finance consumption with credit is you borrow economic growth from the future. All that consumption stimulates the economy and creats jobs now, but the problem is eventually people will have to rebuild their savings and when they do that theres going to be a recession and thats probably when the air will finally get let out of the realestate bubble. Quote Link to comment Share on other sites More sharing options...
msj Posted February 29, 2012 Report Share Posted February 29, 2012 However, I don't know enough about this to argue it myself. I simply know that as of now, most of the analysis I have read disagrees with your position. That's what it was like from 2005 through about 2008/2009. Most economists in the US said the US recession wasn't going to be that bad and that house prices would come back etc... They were wrong while the people looking at the fundamentals (Paul Krugman, Barry Ritholtz of The Big Picture, Calculated Risk) all were right, eventually. The more people there are who agree with something while ignoring fundamentals the closer we are to the bubble popping. Quote Link to comment Share on other sites More sharing options...
Smallc Posted February 29, 2012 Report Share Posted February 29, 2012 Most economists in the US said the US recession wasn't going to be that bad and that house prices would come back etc... That's true, but a recession was still predicted. That isn't true here....not yet, anyway. Quote Link to comment Share on other sites More sharing options...
msj Posted February 29, 2012 Report Share Posted February 29, 2012 That's true, but a recession was still predicted. No it wasn't. The recession was "predicted" well after it had already begun for many many months. We had a thread on this forum discussing it at the time with all kinds of links to people that I listened to who said that yes, the US was in a recession, and lots of people had all kinds of links/opinions denying it. In hind sight it was quite funny. As for Canada - the risks are many - a recession, the US recovery turns out to be real leading to higher mortgage rates (which are set in the bond markets and not by the Bank of Canada), the clamp down on lending rules in the upcoming budget restricting amortizations to 25 years (rather than the previous 40 then 35 then 30 years), the realization by many that all the people who are going to buy houses have done so and, therefore, there just aren't many "first time buyers" to keep the game going, Mark Carney decides to stop playing the hypocrite and puts his interest rate setting policy where his mouth is when it comes to indebtedness in Canada. This is why it's not great to have so many people in so much debt - any one of these could be enough to shock us into a recession. Or Canada could enter a recession which would exacerbate the situation. And it is likely that two or more of these factors will gain the upper hand within the next year or two. But that's what happens when people get drunk on nearly free debt. Quote Link to comment Share on other sites More sharing options...
dre Posted February 29, 2012 Report Share Posted February 29, 2012 That's true, but a recession was still predicted. That isn't true here....not yet, anyway. Dont listen to these economists and economic pundits. Theyve never accurately predicted ANYTHING. Watch the BOC. If they thought this economy was sound then the overnight rates would not be pegged at near historic lows for a prolonged ammount of time. Those low rates cause credit bubbles, and those credit bubbles cause asset bubbles. This is DESPERATE monetary policy. Theyre trying to ward off a recession by draining peoples savings. Nobody should have a hard time understanding why we are going to have a hangover after snorting all this cheap cocaine/credit. http://www.bohknowsdough.com/wp-content/uploads/Bank-of-Canada-Interest-Rates3.png Quote Link to comment Share on other sites More sharing options...
Smallc Posted February 29, 2012 Report Share Posted February 29, 2012 (edited) I'm not saying everything is perfect, but the two of you are sounding even more dire than the most dire of predictions. We aren't at that point. But what do I know? I'm supposed to disregard any experts, and go with a few articles right now. I admit, people have too much debt, and in BC in particular, house prices are still too high. I'm still not expecting a recession. Edited February 29, 2012 by Smallc Quote Link to comment Share on other sites More sharing options...
dre Posted February 29, 2012 Report Share Posted February 29, 2012 I'm not saying everything is perfect, but the two of you are sounding even more dire than the most dire of predictions. We aren't at that point. But what do I know? I'm supposed to disregard any experts, and go with a few articles right now. I admit, people have too much debt, and in BC in particular, house prices are still too high. I'm still not expecting a recession. You dont seem to be acknowledging the link between todays debt and tomorrows consumption. What happens when all this debt based consumption stops, and the central bank can no longer convince us to borrow more money no matter HOW low the cut the rate? And I dont know if my predictions are "dire" really. A recession would be a GOOD thing in the long term and we shouldnt be afraid of economic slowdowns. It would also be a good thing in the long term if realestate prices returned to where they were in the mid nineties. Realestate overvaluation hurts Canadas ability to compete, and negatively effects our balance of trade. And who cares if people lose home equity, the did not do any labor or produce any goods and services to obtain that equity in the first place. Its not real wealth, is fake bloated paper value. We could avoid big problems if the government would stop trying to prevent a correction in the housing market, but dumping insane ammounts of almost free credit into the economy. The dire consequences will present themselves if we keep rates too low for two long. Thats what we REALLY oughtta be afraid of. Quote Link to comment Share on other sites More sharing options...
huh Posted March 1, 2012 Report Share Posted March 1, 2012 Because the "rich" have had their taxes significantly lowered over the last 30-40 years. I am apparently rich according to the numbers thrown out around here, my taxes are not low sorry, you cant call people who make 100k a year rich and claim they also dont pay taxes like the real rich. So i pay a lot of income tax and i also spend a lot which is good for the economy, and i am taxed on that, at the end of the day this is all about wealth redistribution and the belief that some people have a responsibility to take care of others. I work, I expect anyone else who can to do the same, we take care of too many people who wont take care of themselves. If you are talking about making millions and using loopholes to cut your tax burden way down then i agree, but 100k a year isnt really that much, its a decent living, it doesnt make you rich, believe me. Quote Link to comment Share on other sites More sharing options...
dre Posted March 1, 2012 Report Share Posted March 1, 2012 If you are talking about making millions and using loopholes to cut your tax burden way down then i agree, but 100k a year isnt really that much, its a decent living, it doesnt make you rich, believe me. Thats true. 100k is the new 40k. Thats what happens when your only answer to every single economic problem is inflation. Quote Link to comment Share on other sites More sharing options...
CPCFTW Posted March 1, 2012 Report Share Posted March 1, 2012 Thats true. 100k is the new 40k. Thats what happens when your only answer to every single economic problem is inflation. I think you're missing the point. 100k is the new 40k because half of your income goes to taxes. Quote Link to comment Share on other sites More sharing options...
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