The Fraser Institute, a pro market think tank, has released a report that predicates Ontario’s decline in manufacturing to investment interest in residential housing. And that the rapid rise in real estate prices and forecasted decline in buy-sell activity will bust a bubble upon which this investment rests.
“You can see the Bank of Canada pulling its hair out for the last couple of years going, ‘Why didn’t the manufacturing sector respond?’ ” Philip Cross (the report’s author) said. “It’s the high cost of doing business in Ontario.”[article]
Mr. Cross says it is because investment activity was taking place in the real estate sector, not the manufacturing sector. I would add, that Ontario’s high levels of poverty, creates an endangered working age population, many of whom live below the poverty line which means they can’t afford to seek better paying opportunities or invest time in slower approaches like education.
I believe poverty eradication is taking ownership of the economy that it will create wealth. The national government is moving to take ownership by funding more daycares, allowing poor parents to seek out better jobs. At the same time, the provincial government hopes that by ‘privatizing’ the government’s electrical utility it can lower electricity prices, which Philip Cross concludes is a barrier to manufacturing.
Which leads me to think that there is a bubble, being blown up on both sides of the real estate market. One is the under appreciation of ‘working poor’ or ‘working subsistence’ who live paycheck to paycheck. The other is ‘real estate’ as a capital gains vehicle not as a home. One undermines sales optimism and the other over inflates the impact of higher central bank prices (aka interest rates).
If you visit the Fraser Institute’s website they have other reports, most recently that banning temporary workers during labor strikes is bad for everyone, and another saying that Canadian’s $2 trillion household debt isn’t so bad since our household assets have grown to $10 trillion. As a home owner I have seen my condo purchase double in market value, but I don’t want to sell it. So its really just a gain in theory, meanwhile I am living with lack of ‘real’ opportunity and under employment, such that my mobility is limited to a rationing of money aka household budgeting and I have my own subjective reason for not taking a job at the Quik E Mart.
I am thankful to all the girls and women who didn’t love me back the way I wanted. Love is love. ‘What do you call that then?’ ‘Nothing!’