“Some Real Problems With Canada” – Investor Sees Shades Of 2008 Financial Crisis


Underneath all the elitist cheerleading about the GDP growth numbers, there are serious – and growing fears about the Canadian economy.

As reported by Bloomberg, prominent investor Carson Block believes there “could be some real problems with Canada.”

Block was referring to sinking Element shares. Element is a Canadian leasing company, and appears to be suffering from fears regarding the moribund Home Capital mortgage lender.

As Block told Bloomberg, “Particularly given what happened to Home Capital in recent weeks I kind of wonder if Canadian investors are really nervous about the stuff that they’re holding and that’s why there was so much sensitivity around Element this morning.”

More concerning was Block’s next comment:

“When I see a reaction like we saw to a stock that I had never heard of because people were evidently concerned that we were about to short it, that tells me that maybe we’re at a point in Canada where investor denial is just starting to crack.”

Comparison to US Financial Crisis

Ominously, Block – who built his Muddy Waters firm on successful bets against many companies (including Canadian timber company Sin-Forest Corp.) – has compared Canada’s financial situation to the US Financial Crisis.

As Block told Bloomberg, “Canada’s real estate market has “been pushed by foreign money” to the kind of “buying frenzy” the U.S. experienced a decade ago, Block said in the phone interview. He recalled a visit to Toronto in 2011 in which he was stunned to see posters throughout the financial district encouraging people to borrow aggressively for consumption. “I was thinking, my God, didn’t we just go through this in the U.S.?”

Not good.

Block also thinks Canada may become the biggest market… for investors betting against our economy.

A house of cards

As I’ve said, Canada’s economic “growth” is based on an incredibly weak foundation. Rising household debt is being pushed even higher by the rising burden of taxes, while the government goes further and further into debt. Meanwhile, wages are stagnant – and actually falling below the rate of inflation. This means many Canadians are getting poorer in real terms.

Even worse, Block sees the same attitude in Canada that has proceeded previous economic crises. And as Block says to those who think it couldn’t happen here, “Every time you hear that, you know that it can happen, and it’s going to.”

Our economy is like a house of cards, and is clearly at risk of falling into a serious crisis. So long as our politicians continue to take more of our money, direct it to their well-connected friends, and impose more and more restrictions on us, our economy will become more and more fragile, and economic security will fall further and further out of our reach.

Spencer Fernando

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The elites want to hide their many failures behind political correctness, deception, and manipulation. We need to push back and spread the truth.

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