The Big Heist in the Great White North

Canada’s Housing Bubble and the New Economic Order

by MIKE WHITNEY | Published January 02, 2013 by counterpunch.org

Canada’s housing bubble has burst and prices have started to fall. Sales have dipped for 8 straight months as buyer interest has begun to wane. Housing sales in November dropped 12 percent from the same month last year, while previously-hot markets of Vancouver and Toronto saw declines of 28.6% and 16% respectively. Despite the media’s repeated predictions of a “soft landing”, Canada’s real estate market is headed for a bloodbath that will end in a wave of foreclosures, higher unemployment, slower growth, bigger budget deficits, and an aggressive campaign to implement harsh austerity measures aimed at dismantling the social safety net. This is the real objective of bubblemaking, to abolish the publicly funded programs that provide vital assistance for the poor, the elderly, the sick and the unemployed. Ballooning deficits provide the rationale for an assault on the institutions that protect individuals from the ravages of free market capitalism.

As was true in the US, Canada’s massive bubble was created by government and central bank policies intended to shift more of the nation’s wealth to large financial institutions via reckless credit enhancement. Low interest rates, lax lending standards, bogus appraisals, and giveaway gov insurance programs have all fueled a real estate boom which has more than doubled housing prices since 2002. At the same time, “household debt in Canada has risen by 135 percent, while disposable income and nominal GDP have risen by 54 per cent. Household debt growth over the past decade has risen nearly three times as fast as income growth, a trend that is clearly unsustainable. The average Canadian now has a record-high debt load equal to 154 per cent of their disposable income.” (“Is household debt threatening Canada’s economy”, The Globe and Mail) Actually, things are worse than the article suggests. Currently, the household debt-to-income ratio is 165 percent, up from 137 percent in 2007. That means that regulators, big finance, and the BOC have all been working together to inflate the gigantic bubble that’s is now beginning to unwind.

Read more: http://www.counterpunch.org/2013/01/02/the-big-heist-in-the-great-white-north/

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