Consumers worried? Really?

  Nearly 60 per cent of Canadians have changed their behaviour by doing things such as cutting back on spending on both extras and essentials to brace themselves for rising interest rates, a new survey from Manulife Bank suggests. Among those who have taken steps to prepare for higher rates, 27 per cent pared back on entertainment such as movies and bars, 17 per cent put more money into savings accounts, and 10 per cent spent less on essential items, such as groceries, the poll data showed. The online survey of 2,003 Canadians was conducted between May 11 and 14,…

Understanding Tin Foil Hats

Never judge a man by the fact that he may be wearing a tin-foil hat. Rather seek to understand the reasons why. We found one such item that, either downplayed or completely absent from the mainstream, may drive some to question true reality from the reality that the masses are fed. Impaired Mortgages Soar at Canadian Banks A new accounting framework adopted by Canadian banks is sending impaired loan numbers soaring. TheInternational Accounting Standards Board (IASB) released a new standard, improving accounting transparency in a few key areas. The standard, known as IFRS-9, became mandatory for members starting January 2018. Despite…

Debt Trap!

The day of reckoning for over indebted Canadians does not appear to be coming soon, but a new survey indicates a rising proportion of Canadians fear the fallout from higher interest rates. Thirty-three per cent of respondents to a survey conducted on behalf of MNP said they could be pushed toward bankruptcy due to rising rates.   That’s up five percentage points over the last six months. The Bank of Canada has raised interest rates three times since last summer, taking its benchmark policy rate to 1.25 percent. Although the Bank of Canada announced on April 18, 2018 that Canada’s key…

Our Head-In-Ass Phenomenon & Interest Rates

Like many central bankers nowadays Stephen Poloz, Governor of the Bank of Canada, finds himself in a bit of a pickle these days. Like central bankers elsewhere, Poloz is trying to figure out how to bring historically low interest rates to more normal levels without inadvertently triggering another downturn. To walk that line, he must answer two questions: where is normal; and how quickly should policy makers raise borrowing costs to get there? In his comments in late April at a media roundtable in Washington where he was attending the spring meetings of the International Monetary Fund (IMF) Poloz gave…

Global Gluttony Continues

Taking on debt in basic terms simply means stealing from our future income in order to purchase or consume something today. If we do enough of it what will be left of our future income in order to purchase or consume in the future?  Is there not an inevitable wall that will be hit?  Will the bowl of popcorn not eventually register empty if we gorge and stuff our faces in two fisted fashion? Speaking of two fisted gluttony global debt jumped to a record $237 Trillion last year. Norway, Canada, Sweden and China all exceeded 2008 pre-crisis debt levels…

Sustainability; just a fancy new word for “common sense”

A few years ago, BC Comfort Air Conditioning, a B.C.-based company with over 45 years experience in mechanical HVAC services, noted employees were leaving the doors wide open in the chilly season for convenience. One simple change—asking workers to keep that bay door closed—helped cut natural gas use by 65%, saving the company $7,000 a year and reducing carbon emissions by the same amount as planting 500 trees. The company appears as one of 12 case studies in a new report, 200 Million Tonnes of Opportunity: How small and medium-sized businesses are driving Canadian clean growth, a report from Climate…

Uuuum…Alberta We Have a Problem….

According to a recent by RBC report focusing on Canada’s Household Debt Albertans would be hardest hit by further interest rate hikes.   Mortgage debt in Alberta rose almost 30 per cent on average from 2010 to 2016. Households in Alberta will feel the most pressure from rising interest rates because residents in the province carry the highest debt loads in the country. “Alberta residents would see the biggest increase in debt-service payments in Canada of more than $1,200 a year on average if interest rates rose by one percentage point”, Robert Hogue, a senior economist at RBC Economic Research, said…

Canadian Debt Dogpile

Our Federal government recently admitted that they will never eliminate the deficit. In fact, Finance Canada now projects deficits for another 25 years, totaling almost a half-a-trillion-dollars! The fiscal victory being claimed by the federal government however is that the debt will grow ‘slower’ than the economy’ – lowering the debt-to-GDP ratio with program spending growing at only 1.6% for the next 5 years. Keep in mind however that program spending growth over the last 2 years has been 5.6%; during a time that the Canadian economy was performing reasonably well!  So much for keeping some powder dry for tougher…

Pending Credit Market Dumpster Fire?

Moody’s Investors Services joined the Bank of International Settlements (BIS) and S&P Global Ratings this month warning that Canada’s banking system, dominated by the Big 5, is facing a growing threat of souring consumer loans amid rising interest rates.  Canada’s ratio of household debt to disposable income reached a record 171 percent in Q3 of 2017. The proportion of uninsured mortgages has also increased 60 percent from 50 percent five years ago.  The credit quality of Canada’s biggest lenders is under a triple threat of unsecured credit card portfolios, longer tem car loans and the fact that more than half…

The 1.8 Trillion Dollar Millstone

Canadians’ collective household debt has climbed to $1.8 trillion as the Bank of International Settlements (BIS) sounded an early warning that the country’s banking system is at risk from rising debt levels. China, Canada and Hong Kong are among the economies deemed most at risk of a banking crisis.  Yes, you read that right.  Not Greece, Italy or Spain but Canada!  It was less than 10 years ago, during the 2008-2009 global credit crisis, that Canada was lauded as the global ‘poster-person’ of sound banking. Earlier this week Equifax Canada reported that consumers now owe $1.821 trillion including mortgages as of…