[Newsbot]

Title: Canadians borrowing in uncharted territory
Category: Economics
Posted By: Curtman
Date: 2010-12-14 12:43:17
Canadian

[andyt]

I guess we're next for a collapse. People living in a fools paradise, thinking they're doing well because they can get cheap credit. Then it's time to pay the piper. In Vancouver the housing market is just waiting to collapse with any sort of interest rate increase.

[KorbenDeck]

This is why i said that credit needs to be cracked down on hard by the government. Aside from Vehicles and Homes Canadians should not be borrowing. Credit card limits should be tied in with ones income, not their credit rating. If you make minimum wage than a $500 should be you max allowed TOTAL credit.

I mean I have a credit limit that is almost the same amount as I make in a year. Granted I only work full-time 4 months out of the year due to school, and part time while in school. I still make more than someone working full time at minimum wage. If I were to ever use the total amount of credit I have, I would be royally screwed for the next 50 years.

[Freakinoldguy]

In this the media age you think that people would take a look at what happened in the states, then wake up and smell the Coffee. It's not like we live in caves up here. Anyone who says they didn't know about the meltdown in the US is either a liar or imbicile.

Well standby, the entitled generation is about to become the impoverished generation and they'll have nothing or no one to blame but themselves and their I deserve it all attitude.

The sad part of it all is that anyone who still has an income left will be paying outrageous sums to the big banks to pay for the losses they incurred lending money to these ingrates.

[fifeboy]

Freakinoldguy Freakinoldguy:

In this the media age you think that people would take a look at what happened in the states, then wake up and smell the Coffee. It's not like we live in caves up here. Anyone who says they didn't know about the meltdown in the US is either a liar or imbicile.

Well standby, the entitled generation is about to become the impoverished generation and they'll have nothing or no one to blame but themselves and their I deserve it all attitude.

The sad part of it all is that anyone who still has an income left will be paying outrageous sums to the big banks to pay for the losses they incurred lending money to these ingrates.

They will all move in with mom and dad.

[wildrosegirl]

KorbenDeck KorbenDeck:

This is why i said that credit needs to be cracked down on hard by the government.

Noooooo.. YOU(the consumer) need to crack down on yourself. It's not up to the government to manage our finances for us. By the time we're old enough to borrow money, we should be big enough boys and girls to make responsible decisions. If not - then pay the price and suffer the consequences. It's called living and learning and being accountable for your own actions - not putting someone else in charge so you can blame them when it goes wrong.

(Not directed at you personally. You made the point that you live within your means. I'm talking the "you's" that don't.)

[Thanos]

It's being played out as more serious than it actually is. As opposed to the US we haven't had the same sort of catastrophic permanent job losses over the last few years. As long as we're avoiding that kind of situation, and are able to pay back at least the required minimum on credit and loans, then we're not in danger of the same type of default crisis that's hanging over the heads of the Yanks as their next financial debacle.

Credit's a huge portion of what keeps a national economy functioning these days. The idea of being able to save up cash for major purchases like vehicles or homes is preposterous, especially after decades of inflation and massive tax hikes have made the accumulation of the necessary amount of on-hand personal savings practically impossible for the majority of non-wealthy consumers. It's as patently ridiculous an idea as the endless push by some vested interests to return to the false 'safety' of the gold standard and effectively cut the value of the world economy in half. And look at the American banks for a clear example of how they deliberately made things worse over the last two years by tightening up on credit and loans at precisely the wrong time. If access to personal loans had been liberalized, the foreclosure and bankruptcy rates of the previous 24 to 36 months would have been a fraction of what they turned out to be. The bail-out money the government gave to the banks should have been circulated instead of the banks hoarding it up and refusing to release it. And how they managed to be bailed out by the taxpayer but not have any requirement to ensure that the money got back to the taxpayer through new loans and credit remains a mystery. Regardless of why such things happened a tightening up of loans and credit was the exact wrong thing to do at worst time possible.

We need to look closely at what's been done wrong elsewhere before we mindlessly repeat alleged financial 'conservative' propaganda and end up making the same mistakes in Canada.

[ASLplease]

OMG!!!!! Google maps found the uncharted territory!

http://maps.google.com/maps?f=q&source= ... =4&iwloc=A

[Prof_Chomsky]

The system is deeply broken. It goes well beyond personal accountability too.
Individually I agree people are responsible for their finances, but when they collectively make bad choices, or are coerced into making bad choices by bankers, predatory lenders and other “financial experts”, it becomes a national crisis.
We are now in a situation where most of the “recovery” was actually financed by borrowed money that will have to be paid back with interest. Everyone was also quite happy when the “value” of their homes doubled over the past 10 years (which then caused many people to take that fake equity out and spend, spend, spend). Now here we are 10 or 15 years later.

Lot of good those inflated housing prices are doing our kids. They aren’t making double wage to cover the higher costs, so they can’t afford to buy into the market, and since the whole inflated price structure is based on the perpetual increase in home prices I think we are in for an eye opener. Houses are NOT an investment, they are a necessary commodity. Higher home prices are good for no one except the banks and other money lenders – and even then, only short term.

I think we’re again headed for a cliff and the government is doing everything they can to slow our speed (shorter mortgages, forcing people to qualify for harsher than current loan requirements, higher downpayments, less investor freedom). It should help, but we are still going to see a mighty large price correction.

[Zipperfish]

Canadians borrowing in uncharted territory

Yeah whatever. Got a fiver you can lend me till Tuesday?

[andyt]

Prof_Chomsky Prof_Chomsky:

The system is deeply broken. It goes well beyond personal accountability too.
Individually I agree people are responsible for their finances, but when they collectively make bad choices, or are coerced into making bad choices by bankers, predatory lenders and other “financial experts”, it becomes a national crisis.
We are now in a situation where most of the “recovery” was actually financed by borrowed money that will have to be paid back with interest. Everyone was also quite happy when the “value” of their homes doubled over the past 10 years (which then caused many people to take that fake equity out and spend, spend, spend). Now here we are 10 or 15 years later.

Lot of good those inflated housing prices are doing our kids. They aren’t making double wage to cover the higher costs, so they can’t afford to buy into the market, and since the whole inflated price structure is based on the perpetual increase in home prices I think we are in for an eye opener. Houses are NOT an investment, they are a necessary commodity. Higher home prices are good for no one except the banks and other money lenders – and even then, only short term.

I think we’re again headed for a cliff and the government is doing everything they can to slow our speed (shorter mortgages, forcing people to qualify for harsher than current loan requirements, higher downpayments, less investor freedom). It should help, but we are still going to see a mighty large price correction.

Apparently, even as house prices are rising, equity in homes is not. Ie people are doing the same stupid thing that Americans did, financing their consumer spending with their home equity. Then, when the bubble bursts, they'll be under water.

[2Cdo]

andyt andyt:

Prof_Chomsky Prof_Chomsky:

The system is deeply broken. It goes well beyond personal accountability too.
Individually I agree people are responsible for their finances, but when they collectively make bad choices, or are coerced into making bad choices by bankers, predatory lenders and other “financial experts”, it becomes a national crisis.
We are now in a situation where most of the “recovery” was actually financed by borrowed money that will have to be paid back with interest. Everyone was also quite happy when the “value” of their homes doubled over the past 10 years (which then caused many people to take that fake equity out and spend, spend, spend). Now here we are 10 or 15 years later.

Lot of good those inflated housing prices are doing our kids. They aren’t making double wage to cover the higher costs, so they can’t afford to buy into the market, and since the whole inflated price structure is based on the perpetual increase in home prices I think we are in for an eye opener. Houses are NOT an investment, they are a necessary commodity. Higher home prices are good for no one except the banks and other money lenders – and even then, only short term.

I think we’re again headed for a cliff and the government is doing everything they can to slow our speed (shorter mortgages, forcing people to qualify for harsher than current loan requirements, higher downpayments, less investor freedom). It should help, but we are still going to see a mighty large price correction.

Apparently, even as house prices are rising, equity in homes is not. Ie people are doing the same stupid thing that Americans did, financing their consumer spending with their home equity. Then, when the bubble bursts, they'll be under water.

And whose fault would that be? When are people going to start accepting responsibility for their actions instead of whining that the government is not doing enough? Have we become so fucking weak that we need a government to do everything for us?

The upside is that when the morons start getting foreclosed and the market starts to fall, people who have prepared themselves by paying off their debt and minimizing their credit card use, will be able to buy these properties for far less than they are worth!

[Zipperfish]

Reminds of the bum thyat came up to me the other day. "Can you spare any change, sir. I have no money."

My response: "If someone came along right now and gave me $50,000 I'd be in the exact same position you're in."

[Prof_Chomsky]

2Cdo 2Cdo:

andyt andyt:

Prof_Chomsky Prof_Chomsky:

The system is deeply broken. It goes well beyond personal accountability too.
Individually I agree people are responsible for their finances, but when they collectively make bad choices, or are coerced into making bad choices by bankers, predatory lenders and other “financial experts”, it becomes a national crisis.
We are now in a situation where most of the “recovery” was actually financed by borrowed money that will have to be paid back with interest. Everyone was also quite happy when the “value” of their homes doubled over the past 10 years (which then caused many people to take that fake equity out and spend, spend, spend). Now here we are 10 or 15 years later.

Lot of good those inflated housing prices are doing our kids. They aren’t making double wage to cover the higher costs, so they can’t afford to buy into the market, and since the whole inflated price structure is based on the perpetual increase in home prices I think we are in for an eye opener. Houses are NOT an investment, they are a necessary commodity. Higher home prices are good for no one except the banks and other money lenders – and even then, only short term.

I think we’re again headed for a cliff and the government is doing everything they can to slow our speed (shorter mortgages, forcing people to qualify for harsher than current loan requirements, higher downpayments, less investor freedom). It should help, but we are still going to see a mighty large price correction.

Apparently, even as house prices are rising, equity in homes is not. Ie people are doing the same stupid thing that Americans did, financing their consumer spending with their home equity. Then, when the bubble bursts, they'll be under water.

And whose fault would that be? When are people going to start accepting responsibility for their actions instead of whining that the government is not doing enough? Have we become so fucking weak that we need a government to do everything for us?

The upside is that when the morons start getting foreclosed and the market starts to fall, people who have prepared themselves by paying off their debt and minimizing their credit card use, will be able to buy these properties for far less than they are worth!

I agree with you in principle 100%... but in practice, this is what drags our entire economy down the tube ala USA style crisis.

Not only would the decrease in “available funds” that false home equity appears to provide cripple our economy, but think about the new university graduate with his first job. He went to the bank like his parents did 30 years ago, got a loan on a starter home he could afford and started paying his mortgage. Whoops, the market crashed. Sorry kid. That house you just paid 350k for is now only worth 200K. You’re screwed for the rest of your life. His crime? Wanting to own his own home and paying current market value… his alternative? Flush rediculous amounts of rent down the drain until the market corrects.

The whole system is a sham right now.

[BartSimpson]

Part of the problem facing the financial markets is that it is no longer shameful to default on one's obligations. In days of yore it carried quite a social stigma if you skanked on your debts or went bankrupt - even for good reason. What tweaks me is that these people who have the ability to pay and who are bailing out of mortgages they undertook with open eyes are turning around and getting new mortgages sometimes in as a little as 18 months.

I'd say society has yet some distance to fall before the banks are forced to get back to the good practices of requiring 20% down on low priced homes and up to 50% down on high priced homes. Until such time as people are reuqired to invest in their homes they'll continue to just walk away from their obligations.