Canadians stretched to the limit as Moody's warns of sky-high debt loads

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    Nov 18, 2012 10:48 PM GMT
    "With debt-to-income ratios at an all-time high around 150 per cent, Canadians have stretched themselves to the limit since the recession and have left little head room to buffer against another economic downturn, Moody’s suggests in the report released Thursday.

    “With the economy now relying heavily on the continued expansion of household spending, any retrenchment in the consumer sector will likely place the economy on the brink of a second recession,” the report’s authors say.

    The study — “Storm Clouds Gather Around Canadian Consumer Credit” — says while Canada has managed to outperform other G7 countries since the recession it has been propped up by consumer spending, while exports continue to lag. ...

    But this time, household debt is out of control. ...

    In fact, Canadians, driven by ultra-low borrowing costs, have racked up so much debt since the recession that Canada’s debt-to-income ratio is now higher than what the U.S. faced just prior to its mortgage crisis that sparked the so-called “Great Recession.”"

    http://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/canadians-stretched-to-limit-as-moodys-warns-of-sky-high-debt-loads/article4523113/
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    Nov 19, 2012 12:11 AM GMT
    Why hasnt Riddler been all over this?
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    Nov 19, 2012 2:11 AM GMT
    yourname2000 said
    Caslon22000 saidWhy hasnt Riddler been all over this?

    Because he lives in Hong Kong. He's only up on his American news because it suits his business purpose of being a parasite and helping companies in your country outsource American jobs to his own sweat-shops in China.

    If you think he's Canadian, I've got a prince in Nigeria who really needs your help moving several millions of dollars out of his country. icon_rolleyes.gif

    Well, why doesnt he want to move Canadian companies to his own sweat shops in China? Doncha have any worth moving?
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    Nov 19, 2012 2:32 AM GMT
    Those most likely to be affected aren't worrying, They're too busy playing with their new Ipad Mini's to notice.
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    Nov 19, 2012 7:07 AM GMT
    Those guys haven't even seen their bubble burst yet. Seems by the graphs that they're in line for a pop. I've no idea what it will look like--I'd imagine Canada will fall with China and Australia--but it is hard to imagine it coming out pretty.

    http://www.crackshackormansion.com/

    1germanyjapan.jpg

    2japana.jpg

    3japanbusa.jpg

    crashes thru...
    4ireland.jpg

    On the way down...

    6spain.jpg

    7netherlands.jpg

    5denmark.jpg

    8italy.jpg

    9britain.jpg

    ouch, this one's gonna hurt...
    10southafrica.jpg

    On the way up...

    10switzerland.jpg

    11singapore.jpg

    11achina.jpg

    12newzealand.jpg

    16belgium.jpg

    14canada.jpg

    13hongkong.jpg

    17australia.jpg

    18sweden.jpg

    15france.jpg

    Where have we seen this before?
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    Nov 19, 2012 3:46 PM GMT
    Not_Superman said
    Caslon22000 said
    yourname2000 said
    Caslon22000 saidWhy hasnt Riddler been all over this?

    Because he lives in Hong Kong. He's only up on his American news because it suits his business purpose of being a parasite and helping companies in your country outsource American jobs to his own sweat-shops in China.

    If you think he's Canadian, I've got a prince in Nigeria who really needs your help moving several millions of dollars out of his country. icon_rolleyes.gif

    Well, why doesnt he want to move Canadian companies to his own sweat shops in China? Doncha have any worth moving?

    I'm sure he is a big fan of FIPA.


    Don't mind yourname2000 - he's a bitter nativist who apparently drinks a bit too much. I think you might know one of my friends who moved out to Calgary - who can also attest to the fact I am both Canadian and live in Canada. Given that yourname is factually wrong on this point, who says he's right on any other?

    FIPA and treaties like FIPA are necessary to ensure that companies in both respective countries have standing. The fears of trade have pretty much been around forever. The same fears are being repeated of the Japanese through the 80s. There have been a number of FIPAs negotiated with a number of countries and a number more in process.
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    Nov 19, 2012 3:50 PM GMT
    Caslon22000 said"With debt-to-income ratios at an all-time high around 150 per cent, Canadians have stretched themselves to the limit since the recession and have left little head room to buffer against another economic downturn, Moody’s suggests in the report released Thursday.

    “With the economy now relying heavily on the continued expansion of household spending, any retrenchment in the consumer sector will likely place the economy on the brink of a second recession,” the report’s authors say.

    The study — “Storm Clouds Gather Around Canadian Consumer Credit” — says while Canada has managed to outperform other G7 countries since the recession it has been propped up by consumer spending, while exports continue to lag. ...

    But this time, household debt is out of control. ...

    In fact, Canadians, driven by ultra-low borrowing costs, have racked up so much debt since the recession that Canada’s debt-to-income ratio is now higher than what the U.S. faced just prior to its mortgage crisis that sparked the so-called “Great Recession.”"

    http://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/canadians-stretched-to-limit-as-moodys-warns-of-sky-high-debt-loads/article4523113/


    It's a definite issue of concern - but I think the new restrictions from CMHC will help. They have to do more... and privatizing CMHC would be ideal to reflect the true costs and risks of real estate ownership/lending.

    Have a look at the following graphs - cuz if you're concerned about Canadian debt loads... be even more so about American ones - here are comparative charts:

    http://worthwhile.typepad.com/worthwhile_canadian_initi/2011/04/americas-dangerous-debt-.html

    6a00d83451688169e20147e419dcb1970b-pi

    6a00d83451688169e2014e879d0b13970d-pi

    6a00d83451688169e20147e419e37d970b-pi
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    Nov 19, 2012 3:58 PM GMT
    NO two FIPAs are exactly alike in performance as each is dependent on the legal system of participating countries. The Chinese courts are a bastion of democratic justice, lol. icon_rolleyes.gif
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    Nov 19, 2012 4:00 PM GMT


    Riddler, give us all an example where privatization ended up costing LESS and was more efficient and effective.
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    Nov 19, 2012 4:07 PM GMT
    meninlove said

    Riddler, give us all an example where privatization ended up costing LESS and was more efficient and effective.


    Indiana has a plethora of examples - the basic rule of thumb they took was that if a service had 3 or more listings in the phone book, they'd privatize it. That said, even look at Canadian healthcare and optometry. Did you know for instance, that most medical equipment rises in cost over time? There's one that many of use that has actually fallen in costs - eyeglasses. That's because they compete with opticians and in some cases in the US, ophthalmologists.

    Then there's the airline industry... even Petro Canada compared to say other nationally owned oil companies. Or shall we look Ontario's service center bureaus - which were contracted out - and the wait times have improved dramatically. There's even the highway 407 - where it costs the taxpayers far less than it would have and is actually a reasonable drive when you can't wait and sit in traffic.
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    Nov 19, 2012 4:15 PM GMT
    Not_Superman saidAren't you concerned with how little discussion there is around FIPA? And being that you're an entrepreneurial type, don't you find it concerning that the Canadian government only wants to strip away resources to other countries? Maybe it's the scientist in me, because we know that diversity brings ecological and cultural stability, so I just think we could use a little bit of diversification in our economy. I think this diversity needs to be at every level of the economy, not just at the global scale.


    I think resources are only useful insofar as we have ideas to power them - ie a piece of steel is just a rock until you make it into something useful like a car. I am under no illusions that some countries will want to buy/consume resources - but ultimately you still have safeguards if there's something that as a company is still governed by local laws.

    I agree we could use a lot more diversification in the economy - and that's why I think it's important for more trade agreements to be negotiated - also a reflection of the fact that Canada is a trading nation. Something like 60% of GDP is dependent on trade in some way shape or form. I think there are things the Canadian government can do to encourage more startups and better startups, but I don't think these should be (or need to be) at the cost of other industries either.
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    Nov 19, 2012 4:31 PM GMT
    riddler78 said
    meninlove said

    Riddler, give us all an example where privatization ended up costing LESS and was more efficient and effective.


    Indiana has a plethora of examples - the basic rule of thumb they took was that if a service had 3 or more listings in the phone book, they'd privatize it. That said, even look at Canadian healthcare and optometry. Did you know for instance, that most medical equipment rises in cost over time? There's one that many of use that has actually fallen in costs - eyeglasses. That's because they compete with opticians and in some cases in the US, ophthalmologists.

    Then there's the airline industry... even Petro Canada compared to say other nationally owned oil companies. Or shall we look Ontario's service center bureaus - which were contracted out - and the wait times have improved dramatically. There's even the highway 407 - where it costs the taxpayers far less than it would have and is actually a reasonable drive when you can't wait and sit in traffic.


    Canada Riddler, not Indiana.

    Service centers is too vague and fuzzy.

    As for eyeglasses, a pair at lencrafters for simple astigmatism and being careful to only buy discontinued frames just cost Bill over 1,000 bucks. As well, the eye exam performed by an optician was another 85 bucks cash.
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    Nov 19, 2012 4:33 PM GMT

    "but ultimately you still have safeguards if there's something that as a company is still governed by local laws. "

    Better check the wording of the China FIPA again.
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    Nov 19, 2012 4:49 PM GMT
    meninlove said
    riddler78 said
    meninlove said

    Riddler, give us all an example where privatization ended up costing LESS and was more efficient and effective.


    Indiana has a plethora of examples - the basic rule of thumb they took was that if a service had 3 or more listings in the phone book, they'd privatize it. That said, even look at Canadian healthcare and optometry. Did you know for instance, that most medical equipment rises in cost over time? There's one that many of use that has actually fallen in costs - eyeglasses. That's because they compete with opticians and in some cases in the US, ophthalmologists.

    Then there's the airline industry... even Petro Canada compared to say other nationally owned oil companies. Or shall we look Ontario's service center bureaus - which were contracted out - and the wait times have improved dramatically. There's even the highway 407 - where it costs the taxpayers far less than it would have and is actually a reasonable drive when you can't wait and sit in traffic.


    Canada Riddler, not Indiana.

    Service centers is too vague and fuzzy.

    As for eyeglasses, a pair at lencrafters for simple astigmatism and being careful to only buy discontinued frames just cost Bill over 1,000 bucks. As well, the eye exam performed by an optician was another 85 bucks cash.


    You didn't specify Canada. They call them service centres here - and they do everything from get your driver's license to registering for a new health card. Not vague or fuzzy - you just lack context.

    As for eyeglasses, Bill almost certainly didn't shop enough. Nevertheless, this is probably still less than what he would have paid given that the data that's out there suggests that prices have gone down substantially with time. I'm also pretty sure it sounds like Bill didn't get the cheapest frame. A future tip - optometrists are only allowed to charge 10 or 15% (I forget) above the cost of a frame but they do charge a bit more for dispensing fees. I have an astigmatism as well - and my glasses have ranged anywhere from 200-450 (I've bought several in this past 2 years because one broke, lost one, and got two different pairs of prescription sunglasses).
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    Nov 19, 2012 5:21 PM GMT
    Is Steve the Riddler? But you aren't in the same cities for lunch? What's FIPA?
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    Nov 19, 2012 5:34 PM GMT
    Caslon22000 saidIs Steve the Riddler? But you aren't in the same cities for lunch? What's FIPA?


    No. Not_Superman had lunch with a friend of mine who used to live in Toronto but moved back to Calgary a few months ago. FIPA is just the acronym for the type of trade/investment agreement - most recently a more controversial one was signed with China:

    http://www.ottawacitizen.com/business/Understanding+FIPA+under+words/7472421/story.html
  • roadbikeRob

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    Nov 20, 2012 12:31 AM GMT
    What else is new, most of the first world, industrialized countries are facing serious financial problems including problems with increasing personal debt. This is a worldwide crisis.