[ernie]

The US real estate market crashing contributed quite a bit to the overall economy crash the country felt. The reason was that the way the US runs the mortgage system. Fannie May and Freddie Mac have the mandate to encourage home ownership even among those that really can't afford it. A very large percentage of people had no down payment and interest only mortgages. Even those that didn't need to took out these mortgages. And you had numerous other mortgages with families that quite frankly would not be able to get a mortgage in any other industrialized country but are welcomed with open arms to the US home ownership group.

For example, the folks we bought our house from when we moved were stably employed making good money but had one of these mortgages. They took a significant loss on their house. I know this because they begged and pleaded for us to bring our offer up to help them out as they were moving to a higher real estate larket area (he was a TV anchor moving to be the anchor at his home town station in Florida I think). We didn't budge especially because they were willingly moving. There was no job loss or anything. We paid what the house was worth. In the end you had a lot of people with these loans that had not managed to pay down a cent of principal and when the prices crashed they couldn't get their heads above water. And that had a disastrous effect on the economy.

The US in "recent" times has had 16 bank crises...Canada 0. That doesn't mean there won't be a crash. There will be and there will be some pain associated with it, but it is not likely to be as severe as what you'd see in the states.