Financial Delusions: Wash, Rinse, Repeat

delusionsIn follow up to our August post on consumer delinquency rates, and the oddity reported two weeks ago that non-mortgage debt levels in Calgary and Edmonton actually decreased year over year (leading us to speculate that perhaps Albertans have stuffed a whole lot more money under the mattress “this time”) we have clearly been far too optimistic and rather gullible in believing that mankind somehow learns from history.

Equifax Canada this week reported that Q3 delinquency rates (accounts 90 days + past due) have spiked year over year in Alberta by 13.4% (Calgary 8.5% and Edmonton 7.9%).  Alberta is also leading the nation in total non-mortgage average debt of $27,490 in comparison to the rest of the countries average of $21,312.

Different cast of characters versus the early 80’s but the storyline remains the same given how the oil price collapse (not to mention the collapse in commodity prices in general)  has impacted the economy and employment.

Get laid off – you get the package – then you go on EI – then EI ends and you start using up savings and other available assets at a faster clip – then when that’s all done one is left to use what’s left of available credit lines and credit cards – and once making minimum payments back and forth from one credit line to the other (to keep them open and going just a little bit longer hoping for things to rebound)  – then suddenly one day the ponzi scheme that is the game of consumer credit comes screeching to a halt.

Wash – rinse – repeat.