Tweet
http://futronomics.blogspot.com/2009...-of-world.html
In 2006, while home prices in the US began to roll over, some wondered whether the phenomenon would spread around the world. Most scoffed. Seemingly every spot developed it's own "it's different here because..." story. The sentiments were well suited to a general dislike of the US around the world. Americans were looked down upon (and still are) as morons. After all, if 50% of such a vast country could elect a moron like Bush II - twice, what does that say about the country? So when the US housing market started to roll over in 2006 and subprime lenders started going belly-up in early 2007, it played right into the growing world pretentiousness. "There go those stupid yanks again - buying houses they can't afford. Is there a scam those folk won't fall for? Would ya pass the maple syrup Norma?"
Indeed, these sentiments were most prominent in Canada. Every market had it's own little reason why prices would continue rising while the American markets tanked. Vancouver had the olympics, the Prairies had oil, Toronto had an endless stream of immigrants, Montreal had the Habs. But most of all, it was well known that Canada didn't engage in "subprime lending." Our banks were the most conservative in the world we were told.
Indeed, these sentiments were most prominent in Canada. Every market had it's own little reason why prices would continue rising while the American markets tanked. Vancouver had the olympics, the Prairies had oil, Toronto had an endless stream of immigrants, Montreal had the Habs. But most of all, it was well known that Canada didn't engage in "subprime lending." Our banks were the most conservative in the world we were told.
The fact of the matter is that Canadian banks are no different than many of their international counterparts. They operate on the same fractional reserve system as every other bank. And just because their reserve ratios were 8 or 9 to one as opposed to 11 or 12 to one will not matter much when all is said and done.
And were they really as conservative as is commonly believed? A week after that Globe and Mail article, another one was published titled, "Canada's Dirty Little Secret." It shows what goes on in reality. As it turns out, there's an enormous sector of the Canadian lending business that has been making garbage loans, helping to drive up prices.
And were they really as conservative as is commonly believed? A week after that Globe and Mail article, another one was published titled, "Canada's Dirty Little Secret." It shows what goes on in reality. As it turns out, there's an enormous sector of the Canadian lending business that has been making garbage loans, helping to drive up prices.
Comment