Government Policy Now Puts Canada At Growing Risk Of Crisis


Regulations are restricting our economic potential while higher taxes make the burden of debt even worse

As housing prices continue to rise and Canadian household debt levels reach new highs, we have seen rising concern surrounding Canada’s banks and lenders, as well as our overall financial & economic stability.

As Home Capital Group struggles to survive and all of Canada’s big banks had their credit ratings downgraded, there is a new warning about Canada’s housing market.

In a recent report, investment bank Goldman Sachs said Canada has a 30% chance of a housing “bust” – which Goldman defines as housing prices falling by 5% or more – adjusted for inflation.

This compares to a 40% chance of a housing bust in New Zealand, and 35% chance in Sweden.

According to Bloomberg News, Goldman calculates those odds by looking at the ratio of housing prices to rent and household income, as well as housing prices adjusted for inflation.

Says Goldman, “Using an average of these measures, house prices in New Zealand appear the most over-valued, followed by Canada, Sweden, Australia and Norway. According to the model, the probability of a housing bust over the next five to eight quarters is the highest in Sweden and New Zealand at 35 to 40 percent.”

Household debt worries

A key concern raised in the report is the rise of household debt. Canada’s household debt reached a new record high in the 4th quarter of 2016. Debt is now 167.3% of disposable income.

While analysts point to the housing market – particularly Toronto and Vancouver – as well as low interest rates as the cause of the rising debt levels, high taxes and low growth have had an impact as well.

Because low interest rates are not permanent, and the housing market will inevitably go down at some point, our economy is in a vulnerable position.

Policy changes to boost our economy could help. Instead, the government is doing the opposite.

Government policy is making things worse

If we were growing quickly, and if taxpayers had more money in their pockets, high debt levels would be more easily resolved, and our economy could withstand a decline in the housing market.

However, low growth gives people no breathing room and no cushion for any financial shock. With so many people barely making ends meet, a dip in the economy could quickly become a serious recession, and lead to an economic crisis.

In isolation, Goldman’s warning wouldn’t be a big issue. After all, who really wants to listen to a wall street bank “predicting” what will happen. Their record on predictions hasn’t been so great lately. However, the Goldman warning is part of an overall trend of growing concern about the fragility of our economy.

As long as the government continues squeezing taxpayers for every penny we have and restricts economic growth with over-regulation, we can see that the risk to Canada will continue to grow.

Of course, an economy that only serves the elites will become increasingly weak.

Now, we can clearly notice the damage being done by a government obsessed with controlling the economic decisions of Canadians. By concentrating so much wealth and power in the capital, our country is being set up for disaster. After what we saw in the financial crisis of 2008, we can only imagine the consequences.

Spencer Fernando

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2 comments Add yours
  1. The School System is responsible but they have never noticed it.
    We have known, for a long time ,that Canadians do not understand money.Their brains are cooked by naive Marxist principles and talking about money” is not nice”. I AM NOT INTERESTED IN MONEY, is the stupid comment we get from people at UNIVERSITY AGE.
    Many university graduates never came to understand what S. Harper had done for them, with the creation of the Tax Free Savings Account and with the provision to share part of the employed spouse salary for tax purposes,with the spouse that stays home to raise the kids.
    The burning brains of NDPers and Liberals made this to be for the benefit of rich people only. This is an interpretation of facts that makes anybody informed roll eyes in despair.
    The savings in these 2 items are not important for the rich. A few thousand $ savings a year, for both items well used, not more than 2k for the sharing of salary for people with children, do not make anybody rich, and the rich could not care less about it.
    However, for the Middle class, the ones who work hard and do not get paid like rock stars, these savings help with their children’s health and education.
    Still they have to learn first what to do with that Tx free Account, because the money does not do a thing if it is not invested. If you do not want to learn about money, be poor and dream big with your socialist instructions manual, but demand from the school board that they find somebody to teach your children how to manage whatever money they have. It is not what you earn, it is what you save that counts.

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