economics
Posts related to economic issues.
Is There A Hidden Real Estate Bubble in Canada?
Is there a “hidden” real estate bubble in Canada? This is a question I asked myself since last week when I started receiving panicked phone calls from people that purchased real estate during the height of the Toronto real estate market. Specifically, they purchased properties prior to April 21 2017 before the Non-Resident Speculation Tax came into force. There are two phone conversations that stand out in my mind which I’ll discuss… Investment Property Purchase Last week I received a call from a real estate investor who also happens to be a mortgage broker. He purchased a rental property just north of Toronto on Steeles Avenue in early 2017. It was financed…
Why Consumer Insolvencies in Canada Are Increasing (Despite A Strong Economy)
Why Are Consumer Insolvencies Increasing Among Responsible Canadians? I am what is called a Licensed Insolvency Trustee. People come to me when they need help with debt relief, in particular Canadian consumer insolvencies proceedings under the Bankruptcy and Insolvency Act. If they have little in assets or income, they’ll usually file for personal bankruptcy. If they have significant assets or income, they’ll usually settle with their creditors by a legal proceeding called a consumer proposal. Regardless of the proceeding chosen, a debtor is required to undergo something called Insolvency Counselling. So what is it? In colloquial terms, Insolvency Counselling is when the LIT sits down with a debtor and examines…
Preparing for the Next Recession – A Guide For The Canadian Middle Class
As a CPA and Licensed Insolvency Trustee, I had a front row seat during the Great Recession of 2009 – 2011. I saw the devastating impact it had on the lives of ordinary Canadians. These were everyday people who were for the most part honest, hard working, and played by the rules. Yet they found themselves on the short end of the stick when the Great Recession started 10 years ago: some lost their jobs, some had their financial portfolios decimated, some lost their homes and quite a few experienced losing all three. It’s been over 10 years since the onset of the Great Recession and Canadians are more indebted…
Wall Street Bailouts Caused the Canadian Housing Crisis
The consequences of the 2008 Financial Crisis and the remedies initiated by the Federal Reserve to deal with it have reverberated throughout the global housing markets during these past 10 years. Readers may recall that in late 2008, the U.S. Federal Reserve implemented a money-printing program euphemistically referred to as Quantitative Easing (“QE”) in order to prevent a total collapse of the global financial system. In colloquial terms, the Fed, the White House and the United States Congress co-operated to bail out Wall Street after they screwed up. Money-printing causes price inflation in that more dollars are chasing a fixed quantity of assets. This has been particularly true for real…
Millennials Woes – Ontario’s housing crisis is delaying adulthood
Millennials, it appears that you’re being economically squeezed out of the transition to adulthood. An excerpt from the news article by CBC News’ Kate McGillivray, April 5, 2017: A new report out from Vancouver-based campaign Generation Squeeze says Ontario has the second-worst economy for young people in the country, eclipsed only by British Columbia. “No province reports a decline in full-time earnings [for the typical 25-34 year old] since 2003 except Ontario. That wouldn’t be so bad if Ontarians’ primary cost of living — housing — was also not going up in price,” said the lobby group’s founder and University of British Columbia professor Paul Kershaw. The report, part of the…
Toronto real estate prices increase 33% in a year
The Toronto real estate market gets crazier and crazier – from the Canadian Press, April 5, 2017: The Toronto area saw real estate prices soar again last month, with the average jumping 33.2 per cent from the same time last year. The Toronto Real Estate Board says the average price in the area rose to $916,567 — up from $688,011 in March 2016. Compared with February, the average price was up 4.6 per cent from $875,983. At the high end of the range, the average price for detached houses in the Greater Toronto Area was $1.2 million in March — up 33.4 per cent from last year but about the…
Darwin, Trump, Globalization and the Shrinking Middle Class
This is a repost of an article I posted in January 2012. Donald Trump was recently elected U.S. President largely by working class Americans in the rustbelt states of Pennsylvania, Michigan, Ohio and Wisconsin (which were previously carried by Barack Obama in the 2012 elections). The mainstream media was in a state of shock – they clearly expected a Clinton win and were seemingly oblivious to the anger and desperation of working class voters across the United States. Here were some mainstream media predictions on the eve of the election: New York Times Los Angeles Times Associated Press Perhaps if the mainstream media read this article prior to the election,…
How will a Trump Presidency affect you? A guide for Canadians
TRUMP PRESIDENCY – INTRODUCTION As we head into the year 2017, we are faced with the possible consequences of a Trump Presidency; consequences that will reverberate throughout the world. Trump will certainly have an impact of the geopolitical landscape, but the economic impact of his administration will be even more acute, particularly within countries with high levels of household debt. One of the most significant impacts of “Trumponomics” will be on interest rates. President Trump has promised a massive infrastructure rebuilding program in the United States of $1 Trillion dollars. This has already had an impact on the bond market – yields have increased due to expectations of inflation. This…
The Bank of Canada is preventing you from getting debt relief
The actions of the Bank of Canada in slashing its key interest rate since the 2008 financial crisis has created a large number of individual debtors who are desperately seeking debt relief but are unable to do so because of real estate asset inflation. I have consulted with many debtors over the past few years who have become “house rich” but “cash poor”. To illustrate this, I recently had a consultation meeting with a young lady (let’s call her “Jaci”, not her real name) who desperately needed relief from her debts. Here was her situation: Jaci was a self-employed marketing consultant who barely earned enough to pay for her living…
Solving The Problem of Higher Education
Defining the Problem When I reflect on the subject of rising tuition costs and student loan debt in Canada, I’m struck by its parallels with the events that led to the U.S. housing crisis: Easy credit backstopped by the federal government allowed individuals who had no business in purchasing a home (i.e., inadequate down payment or household income) to do so. In the absence of government-guaranteed mortgages, banks would never have lent money to many home buyers were it not for an agency such as the Federal Housing Administration guaranteeing repayment in the event of default. As a result of easy access to credit, there was a huge demand for…
