Canada's economy is suddenly the envy of the world

[Azure]

TORONTO — Canada thinks it can teach the world a thing or two about dodging financial meltdowns.
The 20 world leaders at an economic summit in Toronto next weekend will find themselves in a country that has avoided a banking crisis where others have floundered, and whose economy grew at a 6.1 percent annual rate in the first three months of this year. The housing market is hot and three-quarters of the 400,000 jobs lost during the recession have been recovered.
World leaders have noticed: President Barack Obama says the U.S. should take note of Canada's banking system, and Britain's Treasury chief is looking to emulate the Ottawa way on cutting deficits.
The land of a thousand stereotypes — from Mounties and ice hockey to language wars and lousy weather — is feeling entitled to do a bit of crowing as it hosts the G-20 summit of wealthy and developing nations.
"We should be proud of the performance of our financial system during the crisis," said Finance Minister Jim Flaherty in an interview with The Associated Press.

http://www.google.com/hostednews/ap/...bY8DwD9GF5JBO0

I know, I know....mind boggling.

[FlamesAddiction]

Posted a somewhat similar article in another thread... Actually, I killed the UK election thread with it probably because of the pro-Chretien angle of the article...lol.

http://news.bbc.co.uk/2/hi/business/10254055.stm

But yeah, nice to see we are a good example for something. I find it funny how for so many years, our "restrictive" system made people look past Canada to the States, but now they are they are trying to shuffle their feet towards Canada.

[cmyden]

Did we dodge the meltdown or just delay it? Remember, Canadians took on a lot of new private debt in 2009 to keep the party going.

And instead of bailing out the banks, we kind of gave them a 'pre bailout' via the CMHC policies.

A good read:

http://www.progressive-economics.ca/...hurts-so-much/

But the implication of Keen’s analysis is that when the expansion of the private debt burden does stop (as it must sometime), it will wreak disastrous results on spending power, GDP, and labour markets. It’s not just that a decline in debt would be associated with another downturn; that’s something most of us are well aware of. Because our economy has become so dependent in recent years on the rapid (and obviously unsustainable) expansion of private debt, merely stopping (or substantially slowing) the growth of that debt would knock a giant hole in aggregate spending - enough to send us into a double dip.

The implication of Keen’s model is that the only reason the recession was not much worse in Canada (like Australia) is because of the surprising continued expansion of private indebtedness right through the downturn. In both countries, this was entirely due to feverish activity in real estate markets (mostly the resale of properties, not new construction), sparked by near-zero interest rates and a healthy dose of speculative greed. That expansion of private debt, despite declining incomes, has pushed private debt ratios to record highs. Clearly it cannot continue forever (although it’s not easy to predict exactly when it will turn around).

[Bertuzzied]

Being able to write off mortgage interest is what killed the US.

[chemgear]

Not surprising what happens when you throw free money at the average moron/person in the general population. Borrowing money when you cannot begin to pay back = bad ending.

[calumniate]

Originally Posted by cmyden

Did we dodge the meltdown or just delay it? Remember, Canadians took on a lot of new private debt in 2009 to keep the party going.

And instead of bailing out the banks, we kind of gave them a 'pre bailout' via the CMHC policies.

A good read:

http://www.progressive-economics.ca/...hurts-so-much/

Good points but at the same time what other choice did we have? The move also helps maintain equilibrium - invest / spend in downturns and try and save in upturns. My question is that should there be an upturn do we have the capacity to erase those debts and actually save? The americans are the worst culprit of not saving btw. They spend on upturns and go into debt on downturns. Downward spiral model.

PS it's cheaper to invest / spend during downturns, and our purchasing power is very good right now.

[DrJ]

Originally Posted by Bertuzzied

Being able to write off mortgage interest is what killed the US.

When I found out that you could do this I had a huge WTF moment.

[Azure]

Originally Posted by chemgear

Not surprising what happens when you throw free money at the average moron/person in the general population. Borrowing money when you cannot begin to pay back = bad ending.

Pretty much.

To me that is common sense. Just plain ol' common sense.

[Locke]

Originally Posted by DrJ

When I found out that you could do this I had a huge WTF moment.

Its absolutely asinine.

[Sylvanfan]

The problem with the US method of writing off mortgage interest is that most people don't keep using their home equity to get cheap money to invest and grow their wealth. They keep using it to buy Hummers and bling.

As conservative as our system is, it does tend to force people to be a bit more money savvy if they want to try something like the Smith maneuvre to write of mortgage interest. Generally people who will do smarter things with the money if they figure this out because the average person has no idea that these options exist. So the average person with a mortage is forced into saving a few dollars and building home equity rather than constantly re-financing their home so they can continue with an excess life style for another 5 years.

[Bownesian]

Originally Posted by Bertuzzied

Being able to write off mortgage interest is what killed the US.

It's not as simple as that. I understand that they have to pay capital gains tax on the sale of their houses so they are just getting taxed at a different point in the transaction. I suppose that this might get people into houses earlier but how much tax does the at risk lower middle class american really make (and thus how much are they really getting back from this write-off)?

[Bunk]

Mortgage default swaps is a big factor in what brought down the US banking system. Lack of proper regulations.

[Shazam]

Originally Posted by Bertuzzied

Being able to write off mortgage interest is what killed the US.

Someone correct me if I'm wrong, but you can only either write off your interest, or take your standard deductions, whichever is greater (or less, I suppose, if you're stupid).

Anyhoo, any Canadian can do the same thing with the Picard Manoeuvre.

[Slava]

Originally Posted by Shazam

Someone correct me if I'm wrong, but you can only either write off your interest, or take your standard deductions, whichever is greater (or less, I suppose, if you're stupid).

Anyhoo, any Canadian can do the same thing with the Picard Manoeuvre.

I've never heard of the Picard Manoeuvre?

[Barnes]

Originally Posted by Slava

I've never heard of the Picard Manoeuvre?

The Picard Maneuver is a battle tactic invented by Starfleet Captain Jean-Luc Picard. In 2355, Picard was in command of the USS Stargazer when it was attacked by an unknown alien vessel, later determined to be of Ferengi origin.
During the engagement which came to be known as the Battle of Maxia, the Stargazer, which was holding station several million kilometers away from its adversary, suddenly accelerated to warp 9 directly towards the Ferengi ship. Because the enemy was only equipped with light speed sensors, they had no way of knowing that the Stargazer had moved until it was too late. When the light from the newly-moved ship reached the Ferengi ship's sensors, the light from its previous position was still arriving, so the Ferengi saw two Stargazers. Even if they had figured out that the new image was the genuine one in time, it would have been too late, as the Stargazer opened fire as soon as it dropped out of warp, and the Ferengi ship had no time to maneuver out of the way before the phasers and photon torpedoes hit. The Ferengi ship was destroyed. This technique was so successful that it was named after Picard, and there was no known defense against it until 2364.
In 2364, Lieutenant Commander Data calculated the only known defense to the Picard Maneuver, by scanning for gaseous displacement as an indicator for when the Stargazer had moved. This defense was used when Picard attempted to use the Picard Maneuver against the USS Enterprise-D while under the control of a thought maker deployed by DaiMon Bok.

[Cactus Jack]

A bit of regulation isn't a bad thing. People don't need to be allergic to it or call it communism.

[Azure]

Originally Posted by Cactus Jack

A bit of regulation isn't a bad thing. People don't need to be allergic to it or call it communism.

Agreed.

But I think the key is proper regulation.

[Clever_Iggy]

Originally Posted by Barnes

The Picard Maneuver is a battle tactic invented by Starfleet Captain Jean-Luc Picard. In 2355, Picard was in command of the USS Stargazer when it was attacked by an unknown alien vessel, later determined to be of Ferengi origin.
During the engagement which came to be known as the Battle of Maxia, the Stargazer, which was holding station several million kilometers away from its adversary, suddenly accelerated to warp 9 directly towards the Ferengi ship. Because the enemy was only equipped with light speed sensors, they had no way of knowing that the Stargazer had moved until it was too late. When the light from the newly-moved ship reached the Ferengi ship's sensors, the light from its previous position was still arriving, so the Ferengi saw two Stargazers. Even if they had figured out that the new image was the genuine one in time, it would have been too late, as the Stargazer opened fire as soon as it dropped out of warp, and the Ferengi ship had no time to maneuver out of the way before the phasers and photon torpedoes hit. The Ferengi ship was destroyed. This technique was so successful that it was named after Picard, and there was no known defense against it until 2364.
In 2364, Lieutenant Commander Data calculated the only known defense to the Picard Maneuver, by scanning for gaseous displacement as an indicator for when the Stargazer had moved. This defense was used when Picard attempted to use the Picard Maneuver against the USS Enterprise-D while under the control of a thought maker deployed by DaiMon Bok.

Oh man. I'm sure you pulled that from a google search, but I'm holding out hope that you put that down from memory. LOL.

[Rutuu]

Originally Posted by Bunk

Mortgage default swaps is a big factor in what brought down the US banking system. Lack of proper regulations.

A mortgage default swap is a zero sum trade. Bad lending caused the crisis.

Ex:
Q. Would you lend $500,000 to someone without checking their income, doing a credit check or even securing properly valued collateral (aka the house the mortgage is assigned to)?

A. Yes...if you knew that an institution would back the mortgage and you had no risk.

[Shazam]

Originally Posted by Rutuu

A mortgage default swap is a zero sum trade. Bad lending caused the crisis.

Ex:
Q. Would you lend $500,000 to someone without checking their income, doing a credit check or even securing properly valued collateral (aka the house the mortgage is assigned to)?

A. Yes...if you knew that an institution would back the mortgage and you had no risk.

See, that's why it brought down the US banking system. You should only do trades that are positive for both traders.