Money Manager Who Bet Against U.S. Housing Market Before 2008 Crisis Says Canadian Lenders Are Not “Mentally Prepared”

Steve Eisman is predicting some tough times ahead for Canadian banks.

Steve Eisman the money manager who bet against the U.S. housing market before the 2008 financial crisis, is predicting tough times ahead for Canadian lenders.

In an interview with the Financial Times as reported by BNN Bloomberg, Eisman said “Canadian lenders are not ‘mentally prepared.’

‘“I’m calling for a simple normalization of credit that hasn’t happened in 20 years,” said Eisman, whose bets against the U.S. housing market before the 2008 financial crisis were chronicled in Michael Lewis’s 2010 book, which was later made into a film of the same name.”

Notably, with home sales falling 9.1% in February, and with the economy slowing, Eisman is expecting damage to ‘Canadian bank stocks and the real estate sector,’ though he doesn’t expect it to get as bad as it did in the U.S.: “This is not ‘The Big Short: Canada’ — I’m not calling for a housing collapse.”

Eisman’s warning is the latest in a growing number of concerns being expressed about the Canadian economy, concerns that were not addressed in the federal budget.

Spencer Fernando

Photo – YouTube

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Gonzo the Magnificent
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Gonzo the Magnificent

The budget as far as I can tell at the moment did every thing to add to the demand side and nothing to the supply side i.e. housing inventories will be unaffected. This means prices could be bid up just when the market tops. This will send many people into foreclosure probably post-election. I think the government is looking to add to the wealth effect; to increase sentiment just before the election. Housing prices are rising and so home owners and those now getting in at least are happy. As far as banking stocks taking a hit, well don’t become… Read more »

NancyW
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NancyW

I do not know if anyone can stop the financial mess the LIEberal/ndp free fall party has made in Canada, almost all our provinces have massive debt, except Quebec which is claiming a balanced budget, for the last 5 years and this year admit they have a 2.5 billion dollars surplus, thanks Alberta, Ontario this year has to give the feds 12.5 billion dollars, even with our own debt being 345+billion, thanks to LIEberal/ndp mess left to Doug Ford. So housing, banks and everything else has been totally mismanaged, scary. Even if we do have a fair election this time,… Read more »