BALLOONING household debt levels represent the biggest single risk facing the Canadian economy

Notre Gouverneur de la Banque du Canada commence à sentir la patate chaude.


Extrait de: Foreign money fuelling household debt: Carney, John Greenwood  Financial Post, Apr 2, 2012

Speaking to a business group in Waterloo, Ont. on Monday, Bank of Canada Governor Mark Carney said the growth in domestic demand and household spending has helped boost Canada’s economy, but

“the limits to this growth model are becoming clear.”

Qui eux-mêmes ont créé, en accordant du crédit facile pour acheter des maisons surévaluées.

Much of Canadians’ rising household indebtedness is being fuelled by cheap foreign capital, Mark Carney, Bank of Canada governor, said on Monday.

Mr. Carney has repeatedly warned over the past year about excessive consumer borrowing particularly around mortgages, but this time he fleshed out his concerns, noting that the phenomenon is being enabled partly by bond investors from “abroad” and that the trend is “unsustainable.”

Ballooning household debt levels represent the biggest single risk facing the Canadian economy, according to the Bank of Canada.

Enfin, il commence à l’admettre, ça ne doit pas plaire aux banques, aux courtiers, aux agents immobiliers.

Back in the financial crisis that began in 2008, the central bank lowered interest rates as a way to encourage borrowing and revive the economy.

But much of the lending that followed was not to businesses but to consumers focused on buying homes, and even after the economy revived the low interest rates remained in place, continuing to spur the spending spree.

Canada’s banks mostly emerged from the crisis unscathed, which helped burnish their international reputation. It’s also why foreign investors — especially in the United States — are so keen to buy bonds issued Canadian banks.

A primary reason for the strong demand is that many of the bonds are backed by mortgages that are guaranteed by the Canada Mortgage and Housing Corp.

In 2011 the big six Canadian banks issued a total of $74-billion of term bonds, of which 64% was sold to foreigners, according to George Lazarevski, an analyst at BMO Capital Markets.

Oui, nos chères banques émettent des bonds avec des garanties de la SCHL, et qui garantit la SCHL, c’est vous, le peuple !

Belle petite arnaque, on profite de la garantit du peuple, pour faire de juteux profits en vendant des bonds aux étrangers.

They raised “a lot of term funding outside of Canada,” said Mr. Lazarevski, who added that buyers were mostly in the United States, Australia and Switzerland.

A significant chunk of that funding, or about $25-billion — was in the form of bonds backed by mortgages insured by the CMHC, a Crown corporation.

“The Canadian dollar is consistently strong, our fiscal situation is still attractive relative to much of the developed world, and even at the provincial level… there’s still plenty of fiscal capacity to raise deficits if backs are against the wall,” said BMO economist Robert Kavcic.

Mr. Carney’s comments on household indebtedness were within the context of the main theme of his speech: the need for Canadian companies to “refocus, retool and retrain” if the country is to compete in emerging markets.

Mr. Carney said the growth in domestic demand and housing-driven spending has helped boost Canada’s economy, but “the limits to this growth model are becoming clear.”

Mr. Carney also pointed to ongoing uncertainty over Europe’s debt crisis — despite some recent signs of improvement — and a modest recovery in the United States, both regions where Canada is dependent for the bulk of its exports.

“Emerging markets represent the greater opportunity for Canadian exporters. Since the recession, these economies have accounted for roughly two-thirds of global economic growth and one-half of the growth in global imports.”

Business must develop new markets but also and new products, Mr. Carney said. As well, companies should “further exploit the tremendous opportunities in mobile computing and customer-focused applications. In addition, they need to invest in new plants and equipment.

“Innovation is critical to our success and Canada’s record is only average,” Mr. Carney said.

Belle théorie, d’un individu qui a travaillé pour Goldman Sachs pendant treize ans, et n’a jamais été entrepreneur, typique du discours officiel, mais sans aucun fond pratique, commence à instaurer une économie du marché plus propre, et après, on décidera si on veut investir.

Blah, blah, blah…


 

  1. gravatar

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    Richard Sagala