Canada–Critical Opportunity Shortage

An economist at Canadian bank, CIBC, earlier this year likened household debt to a mortgage–not paid off in a month’s time but over one’s lifetime. The basis of his assumption is the growth of the Canadian economy that supplies Canadians with opportunities for income growth and expansion. Now, near the end of the year, investors are shying away from his bank as his assumption about the national economy is not in the favor for households.

“Some investors are avoiding CIBC and BMO stocks on concern that they have too much exposure to the Canadian housing market, where prices have reached a dangerous level after a decade-long boom.”

To everyone’s surprise, the OECD released a report, finding that Canadians (as a pack) owe more personal (non-business) debt than goods the nation can produce. There is no where left to expand other than to conquer another country and its indigenous businesses, poaching foreign consumers.

The main reason Canadians are obstinate in their condition of exceptional debt where monthly debt payments is 168% bigger than their net income (on an individual basis hoping for better jobs), is because of the internal rise in real estate prices.

“main driver of debt loads is inflated house prices.”

Ironically, those holding the most debt, are the least likely to think they need basic financial literacy.
“people with a larger household debt load (defined as those who had at least $250,000 in household debt) were more likely to perceive themselves as good financial managers, and were more likely than others to seek financial advice on a variety of financial matters.”

Bolstering that attitude is a lifestyle off a ‘second-mortgage’, which is a mortgage on the part of their home they own–in addition to a ‘first mortgage’ on the part of their home they owe.

“Canadians are using second mortgages to avoid bankruptcy”

They are using up their life savings, stored in the value of their home, to avoid bankruptcy, not to grow richer.

They’re more like that economist at CIBC than they are the worker at a manufacturing plant.

Ultimately it is not these matters that precipices the fall of empires, but this

“In our time all Greece was visited by a dearth of children and generally a decay of population, owing to which the cities were denuded of inhabitants, and a failure of productiveness resulted, though there were no long-continued wars or serious pestilences among us…. For this evil grew upon us rapidly, and without attracting attention, by our men becoming perverted to a passion for show and money and the pleasures of an idle life, and accordingly either not marrying at all, or, if they did marry, refusing to rear the children that were born, or at most one or two out of a great number, for the sake of leaving them well off or bringing them up in extravagant luxury.”

“In the United States, the ratio is just under 80 per cent. In Germany and France, the ratio sits below 60 per cent. In Italy, it’s barely 40 per cent.”

Meanwhile, Canada Public Pension Fund (run by the government for Canadians) sees its share value in Uber shrink by 30%

SoftBank Bids to Buy Uber Shares for 30% Less Than Current Value