[chemgear]

Actually, the more I think about it – I would suggest that yes, having interest rates go up sooner rather than later would probably be a good thing.


The Canadian economy added over 100,000 jobs last month – the most since 2002. Inflation report will come out Friday but it’s been going at a fairly decent clip recently. I don’t think increasing interest rates will instantly automagically cause the “Canadian economy to collapse and people to lose their jobs/homes.” That’s a bit of fear mongering to be honest. Current interest rates are at emergency levels as indicated by the Bank of Canada. They are absolutely unsustainable into the future.


The low rates have motivated every man, woman and child (back allocated mathematically speaking) in Canada to borrow up to $41,000+ in non asset (house, car, etc.) debt during the greatest economic downturn in 50 years. Worse than the US peak before their housing crash. So that is not mortgage/car debt, it’s credit cards, pay day loans, lines of credit, etc. Housing prices are not following market/logical fundamentals. The longer interest rates are this low, the worse that’s going to get. Right now, 15% of all Canadian mortgage holders already face “hardship” if rates go to something like 5.25%. You want to keep rates super low to get more people to buy homes they can’t afford and make that percentage even higher? Isn’t this like déjà vu from the US crash – can you imagine the crash if the easy access to credit when on for another year at the peak of their bubble?!


Why would you/the Bank of Canada want to prop up something that is fundamentally unsustainable/untenable?

(I’m not pointing at “you” specifically; the pronoun is kinda in the royal sense of people cheering for low rates for longer I guess, hehe.)

I’m just thinking out loud here, but wouldn’t cheering for low rates for an even longer period be like handing out more rope for the average Canadian to hang themselves with?


Oh . . . and almost forgot:





But who knows, I could certainly be wrong – I do tend to focus on historical fundamental numbers/statistics/trends. Perhaps the obvious US analogy is too easy and tempting to use. If so, I’ll be more than happy to catch up to the average Canadian take out a pay day loan for 140% of my annual income – party time! Or better yet, I’ll go finance a Lexus LFA and if things go bad you all should feel sorry for me and bail me out when I can’t pay for it. I’ll start collecting your bailout money now!