The agency said a 40 per cent drop in prices or rising interest rates would put pressure on Canadian households, but not have a large impact on mortgage defaults.The astute credit agency has instead pointed to this as the problem:
"However, a combination of higher interest rates, lower property values and a drastic increase in unemployment would be of great concern as mortgage defaults are closely related to employment and individual family situations," DBRS said in a report.Yes, so the high amount of personal debt isn't the problem. The problem is that increasing unemployment (probably due to the global economic crisis) will cause people to not afford to pay their debts. Good thing that we have credit agencies like this to tell us up from down, or we'd never figure it all out huh? Of course, I am being facetious. This report is simply splitting hairs.
It's a good thing though that Canadian personal debt isn't an issue, as home prices continue to climb despite Flaherty's mortgage lending rules being "tightened". Don't worry though, unlike other countries Canada couldn't possibly have a severe housing bubble on it's hands - because - because - we're Canada! We survived the recession! We're the model for the world! Yadda Yadda.
The three major world economies continue to get worse, I don't care what it says about them on paper. Here is the real Japan. Here is the real Europe. Here is the real United States. What are the leaders doing to address the problem? Well they are holding numerous expensive summits which never result in solutions all in hope that they can find a way out which leaves them and their financial fraud on top. All citizens are expendible. Worldwide it's being made clear that the obligation of governments is to save the economy. Of course they are not talking about the real economy, the one that feeds you and me, or produces actual product. They are actually talking about the fraudulent leveraging system in place and how to keep the ponzi scheme running. If you can't eat, can't afford gas, or can't find a decent job well that's the price all of the citizens must pay so that these governments can continue to "tighten their belts".
Now why would "unemployment" be more of concern than personal debt in this hair splitting excercise? Well maybe this is why.
"A disorderly exit of Greece from the eurozone represents the No. 1 risk to Canada's economic outlook."The results are already being witnessed due to continued downward revisions of global growth:
But Canada's real exposure is via world commodity markets, upon which the value of Canada's dollar is largely based and which make up an increasing proportion of Canada's GDP.
Opposition Leader Danielle Smith of the Wildrose Party expressed concern Wednesday with the price of oil dipping below the $90 a barrel mark, about $10 less than Alberta’s 2012 budget estimate.Oil price usually rises with good outlooks for global growth as demand rises. Of course Canada's concern is not just oil but all commodities. Lower demand and prices of commodities in Canada of course will have a major impact on jobs. This is why "unemployment" is the concern, not personal debt. In reality they are two sides of the same coin.
There is an increased risk of a Greek bank run currently which many suspect will lead to a European bank run. The outlook for "Growth" is dismal, and anyone who claims otherwise is either lying to you, or is so lost in our money printing system they can't see the forest for the trees.
As I've been telling you, unrest also can have severe economic impacts which compound on to the already ever-growing list of problems. In the end though the core problem is our debt based economy, and the unprecedented amount of growth needed to pay it all off and no amount of economic hair splitting can change that fact.
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Richard Fantin is a self-taught software developer who has mostly throughout his career focused on financial applications and high frequency trading. He currently works for eQube gaming systems.
Nazayh Zanidean is a Project Coordinator for a mid-sized construction contractor in Calgary, Alberta. He enjoys writing as a hobby on topics that include foreign policy, international human rights, security and systemic media bias.