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cashinmattress

Canadians Have More Debt Than U.s.a

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Canada’s top economic officials yesterday urged households to be wary of taking on too much debt after data showed the indebtedness of Canadians surpassed U.S. levels for the first time in 12 years.

Bank of Canada Governor Mark Carney, Finance Minister Jim Flaherty and Prime Minister Stephen Harper said in separate public appearances that they are concerned about rising debt. The ratio of household debt to disposable income in Canada was 1.48 in the third quarter according to Statistics Canada, exceeding the U.S. level of 1.47.

“Our parents were more inclined to pay off that mortgage as soon as possible, and some Canadians are not as inclined to do that now,” Flaherty told reporters yesterday. “I encourage them to do it.”

The comments by the policy makers underscore government concern that debt levels in Canada could threaten the recovery if borrowing costs rise and households struggle to pay their bills. Canada has relied on regulatory steps to rein in mortgage borrowing, most recently in February, and Flaherty said yesterday he is prepared to take additional measures if needed.

“The fear is that were we to see sharp rises in interest rates or were we to see sharp rises in unemployment, that a significant number of people might not be able to afford their debt obligations,” Flaherty said.

In Canada, where banks largely escaped the global financial crisis and continued to lend even as credit dried up elsewhere, low interest rates have encouraged consumers to take on debt.

Limits to Divergence

Carney, 45, left the benchmark target rate at 1 percent this month to gauge the global recovery after three earlier increases, while the U.S. Federal Reserve has kept its benchmark rate in a range of zero to 0.25 percent since December 2008. Carney said in a Sept. 24 interview on CNBC that “there are limits to the divergence that there can be between Canada and the United States.”

While Canada’s economic recovery could be threatened in the future by elevated debt levels, higher Canadian interest rates could also cause the Canadian dollar to appreciate. Speaking to reporters after a speech in Toronto, Carney noted that the bank had flagged as a risk to the economy that “persistent strength of the Canadian dollar” and weak productivity could crimp exports and hinder Canada’s recovery.

“To some extent that risk is being realized, which is one of the things we will have to assess as we sit down in January,” Carney said, referring to the bank’s next interest rate decision and monetary policy report.

“The Bank of Canada is in a bit of a box, given where the Fed is and where the Canadian dollar is,” said Doug Porter, deputy chief economist with BMO Capital markets in Toronto.

Canada’s dollar rose for the fifth consecutive day today to post the longest winning streak in more than a month. The currency has gained 2.2 percent this month versus the U.S. dollar. The Canadian dollar rose 0.3 percent to C$1.0047 per U.S. dollar at 1:19 a.m. in Toronto, from C$1.0074 yesterday. One Canadian dollar bought 99.53 U.S. cents.

Measures to restrain lending taken earlier this year included changes for government-backed mortgages that forced buyers to meet standards for five-year, fixed-rate mortgages even if they opt for variable rates. Limits on refinancing were made stricter and down payment rules were tightened.

The proportion of Canadians in a stretched financial position “has grown significantly,” Carney said in his speech -- entitled “Living with Low for Long” -- adding that authorities continue to monitor households’ finances.

“The level of vulnerabilities of households remains high” Carney said at the press conference. “The authorities are cooperating closely, we are continuing to monitor the situation closely.”

“We have debt levels that are unprecedented in this country,” Carney said in an interview broadcast today on BNN Television. “We are in uncharted territory.”

To be sure, Harper said his government cannot “exaggerate” the degree with which it can control borrowing.

“We are a free country and people are entitled to make their own financial decisions,” Harper said. “This is a matter that is of concern to the government, we continue to warn Canadian households that interest rates are unlikely to go down.”

And even worse here, if this article in 2008 is any measure (we're at 1.73).

Canada does have assets, and lots of them. Too bad they are so heavily shackled to the behemoth south of them.

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We are top of the league with debt, 10TR or more according to PWC, including off balance sheet. But it has not impacted our credit rating for some reason. The IMF say the Koalishon have a plan to deal with it.

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http://www.telegraph.co.uk/finance/economics/8202225/US-will-lose-AAA-credit-rating-says-MandGs-Jim-Leaviss.html

Economics
US will lose AAA credit rating, says M&G's Jim Leaviss
A leading fund manager has warned that the world's largest economy will be downgraded within two years because of its high levels of debt...../
Although the UK is under pressure, he believes, he did not state whether it would also lose its rating.

Its because the Koalishon have a plan, at least according to the IMF. Saw something on t' tele last night that "the plan" has a back up plan B.

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The only plan I've seen from the ConDems is one of kicking the can down the road in the hope something magical will come along and save us.

When the world works out we've been selling them Snake Oil (cuts that never come) then we'll be in a whole heap of trouble.

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  • 284 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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