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Susan Cui

The Daily, Thursday, May 12, 2011. New Housing Price Index - 3 views

www.statcan.gc.ca/...dq110512a-eng.htm

Housing Price Index

shared by Susan Cui on 23 May 11 - No Cached
  • The New Housing Price Index (NHPI) was unchanged in March following a 0.4% advance in February.
  • Between February and March, prices rose the most in Saint John, Fredericton and Moncton (+0.4%) followed by the metropolitan regions of Toronto and Oshawa, Winnipeg and Regina (all three registering increases of 0.3%).
  • The most significant monthly price decreases were recorded in Québec (-0.7%), Windsor (-0.6%) and Edmonton (-0.2%).
  • ...2 more annotations...
  • Year over year, the NHPI was up 1.9% in March following a 2.1% increase in February.
  • The largest year-over-year increase was observed in St. John's (+6.2%), followed closely by Regina (+6.1%). Compared with March 2010, contractors' selling prices were also higher in Winnipeg (+4.5%) as well as in Toronto and Oshawa (+3.6%). Windsor (-4.6%), London (-1.7%), Greater Sudbury and Thunder Bay (-1.3%) and Victoria (-1.2%) posted 12-month declines in March.
  • Susan Cui on 23 May 11
     
    The New Housing Price Index indicates that during the month of March, there was no change in NHPI. This was because the increase of housing prices in some metropolitan regions were offset by the decrease in housing prices in other metropolitan areas. The areas with the most significant housing price increase were Saint John, Fredericton, Moncton, metropolitan regions of Toronto, Oshawa, Winnipeg and Regina. The areas with the most housing price decrease were Quebec, Windsor and Edmonton. Increase in housing prices in some metropolitan areas were due to improving market conditions and higher material, labour, land development costs. Decrease in housing prices in other metropolitan areas were due to slower market conditions and lower land costs. Comparing to last year's NHPI in March, the NHPI went up 1.9%.
naheekim

Housing prices to drop 25%, forecaster predicts - thestar.com - 2 views

www.thestar.com/...to-drop-25-over-next-few-years

Housing Prices Recession

shared by naheekim on 28 May 11 - No Cached
  • House prices in Canada will fall over the next several years by as much as 25 per cent, creating a massive impact on the economy and possibly pushing the country into recession, says a forecast
  • predicting house prices will fall by a cumulative 25 per cent over the next several years
  •  Madani says the effects on consumer spending and housing investment could be significant and perhaps strong enough to “push the economy into another recession
  • ...7 more annotations...
  • “If house prices are to fall, there needs to be a mechanism — an excess of supply relative to demand,”
  • Last year, the Canadian Real Estate Association modified its forecasts at least four times. After initially predicting housing prices would increase in 2011, it now says prices will fall by 1.3 per cent — far below the eye-catching 25 per cent forecast by Capital Economics.
  • Financial agencies such as the Canadian Mortgage Housing Corporation, which provides mortgage loan insurance, could also be exposed to significant losses
  • The Capital Economics forecast is not the first to predict a bubble in the Canadian market. Gluskin Sheff & Associates chief economist David Rosenberg has also predicted a 25 per cent drop in Canadian housing prices, as has The Economist magazine.
  • As in the U.S., financial innovation and very low interest rates have allowed Canadian consumers to take on more debt, and house prices are high relative to income
  • However, consumers have remained complacent because low rates are keeping mortgage payments low.
  • The historical home price-to-income ratio is 3.5, but now it's hovering around the 5.5 mark, meaning average house prices are more than five times the income of workers
  • naheekim on 28 May 11
     
    The economists and forcasters are predicting that housing prices will decrease over the next several years by 25%.
Susan Cui

Best Way to Fix Housing Market Let Prices Fall (Fast): Tech Ticker, Yahoo! Finance - 3 views

finance.yahoo.com/...-Market-Let-Prices-Fall-(Fast)

Housing Price Best way to fix

shared by Susan Cui on 23 May 11 - No Cached
  • "Fixing the housing market" is usually defined as:Stopping house prices from falling Stopping foreclosures
  • Prices. The best way to stop prices from falling is to let them fall far enough to reach equilibrium, fast.
  • Foreclosed houses are selling like hotcakes because prices are finally attractive enough to draw in new capital.
  • ...15 more annotations...
  • Un-foreclosed houses are NOT selling like hotcakes, but this is because their owners have yet faced up to the reality of how little they are worth (or, put differently, because they don't yet have to sell).
  • The vast majority of plans to "stop prices from falling" involve subsidies of one form or another (tax credits, subsidized mortgage rates, etc.)  These may slow the decline, but they won't stop it
  • subsidizing/encouraging debt-bingeing and homeownership is what got us until this mess in this first place.
  • The fastest and most effective way to stop prices from falling is to let them fall until they've reached equilibrium. And then start rebuilding wealth, equity, and economic growth from there.
  • Lots of Americans are going to lose their houses in the next few years regardless of what we do.
  • Keeping the number of foreclosures as small as possible
  • will just delay the inevitable
  • Importantly,
  • Foreclosures are caused by owners' inability to make debt payments.
  • The best way to stop foreclosures, therefore, is to get people out of houses they can't afford and into houses they CAN afford (whether by renting or buying).
  • the house-price issue
  • (No reason to buy or build now if you think prices will be cheaper tomorrow).
  • Businesses and consumers
  • open up their wallets
  • when house prices stop falling. And the fastest way to get there is to let them fall.
Susan Cui

Bad housing advice of the day, Philly edition | Felix Salmon - 4 views

blogs.reuters.com/...vice-of-the-day-philly-edition

Housing Price Advice Gold vs House

shared by Susan Cui on 23 May 11 - No Cached
  • house prices are falling, gold prices are rising, and therefore before you go ahead and buy a house, you should probably consider whether you’d be better off buying gold instead.
  • house prices are falling, gold prices are rising, and therefore before you go ahead and buy a house, you should probably consider whether you’d be better off buying gold instead.
  • homes are not an investment, they’re more of a consumption good.
  • ...4 more annotations...
  • Maybe you’ve saved enough for a down payment. But should you bet your money on home prices, even with a tempting low-interest, fixed-rate mortgage? Or is it financially smarter to continue renting and invest the money in an asset that could appreciate for at least another few years?
  • Being “financially smart” is not the same as investing in whichever asset gives you the highest return over some given time horizon.
  • Essentially, Arvedlund is proposing an exotic relative-value trade here: she’s saying that houses will underperform gold, or that the price of a house in gold is going to go down rather than up.
  • the price of a house in gold has gone down, and you would have been financially better off buying gold than taking that money and using it as a down-payment for a house.
Susan Cui

Canadian house prices continue to rise, although April sales down - 6 views

www.montrealgazette.com/...story.html

Housing Price Falling sales Rising Prices

shared by Susan Cui on 23 May 11 - No Cached
  • Canadian home prices continued their upward march in April, driven by strong investor demand in Vancouver, while cracks in the Toronto condominium market may be starting to appear.
  • The Canadian Real Estate Association said Tuesday the average price of a home sold in April across the country was $372,544, up eight per cent from a year ago.
  • but the Ottawa-based group cautioned that the figure was skewed due to "surging multimillion dollar property sales in selected areas of Greater Vancouver."
  • ...13 more annotations...
  • slow April sales figures
  • saw activity dip 4.4 per cent from March
  • The slow sales are said to have been driven by new mortgage rules which came into affect April 19 and made it tougher to borrow.
  • Changes to mortgage regulations that took effect in April 2011 likely sidelined a number of first-time homebuyers. By contrast, higher end homes sales in Greater Vancouver and Toronto had their best April ever.
  • more than 50 per cent of condominiums sold in the past year were purchased by buyers who do not intend to occupy their units and plan to rent in many instances.
  • People are buying these for capital appreciation.
  • Don Lawby, chief executive of Century 21 Canada, says the housing market has been affected by foreign investors who have reacted to tougher tax rules in their home country by investing abroad.
  • They are not afraid to offer above price and they are not afraid to get into a bidding war
  • Nevertheless, Lawby says
  • these investors
  • are small and the impact on the larger market minimal.
  • while April numbers present a market with falling sales and rising prices,
  • market conditions were exaggerated by some one-time issues.
Peter Shishkov

Commodity price index - Annual - 1 views

www.bankofcanada.ca/...commodity-price-index-annual

Commodity prices

shared by Peter Shishkov on 01 Jun 11 - No Cached
  • Peter Shishkov on 01 Jun 11
     
    The new Bank of Canada commodity price index (BCPI) is a chain Fisher price index of the spot or transaction U.S. dollar prices of 24 commodities produced in Canada and sold in world markets, with weights updated on an annual basis. The new Fisher BCPI is also updated using recent commodity production data. The new index, therefore, produces a more accurate and more representative commodity price index.
Molly Fraser

Wikileaks: Saudis Warned About Oil Speculators in 2007 and 2008 - 2 views

www.nakedcapitalism.com/...culators-in-2007-and-2008.html

Oil and Resource Shortages

shared by Molly Fraser on 30 May 11 - No Cached
  • Molly Fraser on 03 Jun 11
     
    Kevin Hall of McClatchy wrote about Wikileaks releases showing that the Saudis were concerned about oil market speculation leading to unduly high prices in 2007 and 2008. In 2008, we wrote that the Saudis said they did not see tightness in the market, and they also warned that prices were excessive.
  • ...1 more comment...
  • Molly Fraser on 03 Jun 11
     
    It was quite frustrating in 2008 to see economics commentators reject statements by numerous oil market participants that supplies were more than adequate, that the price rise was driven by speculators.
  • Molly Fraser on 03 Jun 11
     
    The wikileaks releases confirm the fact that the Saudis were not attempting to shift the blame to speculators while privately enjoying profit, but were genuinely concerned over the effect that speculators had on spiking market prices. 2007/2008 saw a jump in oil prices that was unprecedented at the time; in 2007 alone, the price of oil was $58.74/Bbl in February, reaching $65.08/Bbl by June of the same year.
  • Molly Fraser on 03 Jun 11
     
    Ultimately this merely reaffirms anxieties that oil prices are likely at the whim of speculators rather than actual market availability. Unfortunately, markets are partially based on faith in one's investments; It would be wise in the future to trust the Saudi reports and take into consideration that everyone in the worldwide oil market- including western businesses- are in it for the money.
Susan Cui

The Progressive Economics Forum » Housing on the knife's edge - 6 views

www.progressive-economics.ca/...ng-on-the-knife%e2%80%99s-edge

Housing Price Unstable Housing Market

shared by Susan Cui on 23 May 11 - No Cached
  • On the heels of multiple warnings from the Bank of Canada that Canadians have taken on too much household debt for comfort (we hold the dubious distinction of having the worst consumer debt to financial assets ratio among 20 OECD nations), the federal government announced
  • On the heels of multiple warnings from the Bank of Canada that Canadians have taken on too much household debt for comfort
  • the federal government announced
  • ...13 more annotations...
  • these federal changes will have the greatest effect on middle class Canadians
  • With these moves, the federal government is starting to take seriously the risk of record-high housing prices and record-high household debt.
  • It will reduce the maximum insurable amortization period from 35 years to 30 years
  • The pessimistic possibility is that trying to reign in mortgage debt and housing prices could burst the housing bubble that simultaneously exists in six Canadian cities.
  • The optimistic possibility is that reverting to pre-2006 regulations could help put a lid on house prices
  • to get back to basics and start saving again.
  • It could also force Canadians
  • Between 1980 and 2001, housing prices in four of the six major markets in Canada (Edmonton, Calgary, Ottawa and Montreal) remained in a tight band of between $150,000 and $220,000 (in today’s dollars).
  • experienced three housing price declines between them brought on by interest rate hikes.
  • Toronto and Vancouver
  • When the bubbles burst, they wiped out in the worst case more than 35% of an average house’s value
  • Today it isn’t just Toronto and Vancouver; it’s all six major Canadian cities that are outside of the safety zone.
  • Canada’s housing market is still on a knife’s edge and isn’t clear which way we’ll fall.
Heshani Makalande

Home prices climb 8% despite drop in resales - Moneyville.ca - 0 views

www.moneyville.ca/...limb-8-despite-drop-in-resales

Mortgages

shared by Heshani Makalande on 28 May 11 - No Cached
  • OTTAWA—The national average home price rose by eight per cent last month even as housing sales fell by 14.7 per cent from the year before
  • National average home prices rose by eight per cent to $372,544 compared to last April — the third consecutive month in which the national average price rose by eight per cent from year ago levels, the Canadian Real Estate Association said.
  • the number of previously occupied homes sold in April fell to 17,230 from 18,745 a year ago.
  • ...9 more annotations...
  • The national average home price has been skewed upward in recent months due to a surge in sales of multi-million dollar properties in the Greater Vancouver area.
  • “Changes to mortgage regulations that took effect in April 2011 likely sidelined a number of first-time homebuyers,” said Gregory Klump, CREA’s chief economist.
  • “By contrast, higher end home sales in Greater Vancouver and Toronto had their best April ever.”
  • The drop in sales of previously occupied homes last month reflected changes to mortgage rules that came in midway through March that reduced the maximum amortization period and pulled forward some sales that would have otherwise occurred later in the year.
  • including Toronto, Vancouver and British Columbia’s Fraser Valley.
  • Government moves to tighten mortgage rules introduced last spring to reign in some buyers gave sales last year a boost, while a second round of changes introduced in March, ate into sales this April, CREA said.
  • “Last April, several transitory factors artificially boosted sales. This included the impending tightening of mortgage rules, speculation about higher interest rates and the looming introduction of the HST in some provinces,” said Klump.
  • sales were down 4.4. per cent from March of this year.
  • The number of newly listed homes edged up 1.3 per cent in April from March, but remained well below levels in January and February, when the coming mortgage rule changes were announced.
Maria Li

House prices fall sharply in May - Hometrack | Reuters - 0 views

uk.reuters.com/...ometrack-idUKTRE74S2XA20110529

Housing Prices

shared by Maria Li on 03 Jun 11 - No Cached
  • House prices in England and Wales dropped at their fastest annual pace in over 1-1/2 years in May as demand fell for the first time since January
  • Property research company Hometrack said prices were 3.7 percent lower in May compared with a year ago, the biggest decline since October 2009.
  • Economists expect high inflation, weak wage growth, tax rises and public spending cuts to weigh on consumer spending and house prices this year, despite record low interest rates.
  • ...5 more annotations...
  • The GfK NOP measure showed its biggest rise in almost 20 years in May, although analysts said it may have received a temporary boost from unusually fine weather, the royal wedding and a run of public holidays.
  • The Hometrack survey showed that the number of new buyers registered with estate agents fell by 0.5 percent in May, the first decline since January.
  • The number of sales agreed rose by 1.6 percent in May, lower than the 8 percent jump seen in April and March's 12.6 percent rise.
  • London continued to buck the national trend, with prices up by 0.2 percent on the month.
  • "With concern over household finances and the wider economic outlook, demand for housing is likely to continue to post further modest declines over the summer,"
Peter Shishkov

Food, oil prices hit US economy - 0 views

www.peopleforum.cn/redirect.php

USA Commodity Prices

shared by Peter Shishkov on 01 Jun 11 - No Cached
  • Peter Shishkov on 01 Jun 11
     
    Economists have cut forecasts for economic growth in the second quarter following the dismal 1.8 percent pace in the first, with indicators of industrial production, consumer spending and unemployment all appearing soft. Economists said they still foresee a stronger second half, as consumers and businesses adjust to the higher oil price Ian Shepherdson, U.S. economist for High Frequency Economics, said the sharp rise in the price of oil has helped stifle job creation. "The trend in claims has nudged up a bit as companies have responded to the rise in oil prices," he said.
Peter Shishkov

The gas-price debate - 0 views

www.economist.com/...fuel_prices

Commodity Prices

shared by Peter Shishkov on 01 Jun 11 - No Cached
  • Peter Shishkov on 01 Jun 11
     
    Neither the Republicans' nor the Democrats' policy proposals have much chance of having a significant effect on prices. Your taxis and town cars and commutes are not going to be made any cheaper-at least in the near-term-by ending oil company subsidies or drilling in the Arctic National Wildlife Refuge There isn't much that politicians can do to lower gas prices, but there is some good news for politicians panicked about the potential effect of high gas prices on their re-election chances.
Dmitri Tkachenko

Surprise: Low interest rates seen sticking around - The Globe and Mail - 0 views

www.theglobeandmail.com/...article2032075

Low Interest Rates Bonds Financial Industry Inflation Stock Market

shared by Dmitri Tkachenko on 25 May 11 - No Cached
  • Dmitri Tkachenko on 25 May 11
     
    "Interest rates have recently being going somewhere unexpected: down. With the United States government bumping up against its debt ceiling, inflation ticking upward, and a growing debt crisis in Europe, most expected interest rates to be increasing.If so, it will mean pain for savers, but good news for borrowers .A drop in interest rates is equivalent to a sale on the price of money, and corporations are already rushing to take advantage of the easy lending conditions, even if they're in no immediate need of funds. Mortgage rates have fallen, too - good news for homeowners looking to refinance. But lower rates have not turned out so well for some of the market's savviest players, including Bill Gross, the founder of Pimco, the world's biggest bond fund. Earlier this year, he sold his U.S. Treasuries, because he thought interest rates were poised to rocket higher, which would drive down prices of bonds. Oil has been trading consistently around the $100-a-barrel level, thereby lifting inflation, another bond-market negative. Investors are getting nervous and growing more willing to buy super-safe government bonds."
Peter Shishkov

Commodity prices rise amid economic turbulence - 0 views

news.yahoo.com/...commoditiespriceweekly

Greece Commodity Prices

shared by Peter Shishkov on 01 Jun 11 - No Cached
  • Peter Shishkov on 01 Jun 11
     
    Lately, oil price is extremely volatile due to disappointing economic data from the US and eurozone, uncertainty about a potential debt-restructure in Greece and weaker oil demand from the US, China and Japan. Gasoline demand is expected however to pick up in the coming weeks as Americans take to the road for their summer holidays. On the New York Mercantile Exchange, West Texas Intermediate (WTI) or light sweet crude for July climbed to $100.35 a barrel from $97.41. Gold and Silver remain to be the safest investments during problematic economic times. As a result the precious metals have increased in price: on the London Bullion Market, gold jumped to $1,533 an ounce from $1,491 the previous week; Silver rose to $37.69 an ounce from $34.80.
Peter Shishkov

Clement wants oil industry to explain gas prices - 0 views

www.cbc.ca/...clement-gasoline-prices.html

Commodity Prices

shared by Peter Shishkov on 01 Jun 11 - No Cached
  • Peter Shishkov on 01 Jun 11
     
    Federal Industry Minister Tony Clement said Thursday he wants the petroleum industry to explain how it sets gasoline prices. "No one can understand why last year, when oil per barrel was around $140 or $150, we were paying $1.37 per litre, when this year oil is south of $98 a barrel and yet we're paying more," Clement said.
Alexei Goudzenko

Higher oil price prompts increased drilling - Saskatchewan - CBC News - 0 views

www.cbc.ca/...oil-gas-drilling-forecast.html

price oil higher

shared by Alexei Goudzenko on 03 Jun 11 - No Cached
  • Higher-than-expected oil and gas drilling activity in Western Canada led the Canadian Association of Oilwell Drilling Contractors Wednesday to increase its forecast for the total number of wells to be drilled in 2011.
  • The forecast confirmed that more companies are drilling for oil, which has soared in price, and away from natural gas, where low price has stayed flat. Approximately 60 per cent of the wells being completed are directed at oil.
  • In the first three months of the year, exploration companies employed 68 per cent of the fleet of available rigs in western Canada, or 534 out of 788. That was 11 per cent higher than the Calgary-based CAODC's projection of 480 made last fall.
  • ...1 more annotation...
  • CAODC said it expects activity over the last three quarters of 2011 to increase by 24 per cent over its October estimate, with 200 rigs to be drilling in the second quarter, up from the 160 previously anticipated.
Chris Li

Will export restrictions on energy echo those on food? - The Globe and Mail - 2 views

www.theglobeandmail.com/...article2024760

Export Food Restrictions Trade

shared by Chris Li on 03 Jun 11 - No Cached
  • Instead of soaring food and energy prices encouraging food and energy producers to export more, they may export less and divert more of their output to domestic markets. The reason is simple: to keep domestic prices from matching soaring world prices.
  • But when it is food and energy prices, the political pressures become immense. They are so immense you can toss your economics textbook out the window.
  • Instead, no less than 29 food-exporting countries responded by banning food exports and kept their crop production for a hungry domestic market.
  • ...2 more annotations...
  • And food-importing countries that secured supplies, quickly started to hoard them in anticipation that more food exporters would decide to keep their crops at home.
  • “to maintain social stability and promote economic development”.
Molly Fraser

Pricey oil fuelling dirtier projects - 3 views

www.thestar.com/...-oil-fuelling-dirtier-projects

Commodity Prices Oil and Resource Shortages

shared by Molly Fraser on 30 May 11 - No Cached
  • Molly Fraser on 03 Jun 11
     
    It has often been said that even without a price on carbon there will be a meaningful shift to renewable energy sources once global oil supply peaks.
  • ...1 more comment...
  • Molly Fraser on 03 Jun 11
     
    So, has there been a mad rush to invest in cleaner, relatively more affordable alternatives to oil? Not really - it's been more like a casual stroll, even though such alternatives are highly competitive with oil above $100 (U.S.) a barrel.
  • Molly Fraser on 03 Jun 11
     
    Roberts is vice-chairman of renewable energy investments within CIBC's wholesale banking group. He says the big petroleum companies are making some investments in green energy, such a solar, wind and biofuels, but it's a "drop in the bucket" compared to the money being spent on the exploration, drilling and extraction of unconventional - i.e. heavy - oil.
  • Molly Fraser on 03 Jun 11
     
    Until there is a meaningful price on carbon in North America and China, oil companies will continue along this path. They'll go further, deeper and thicker. They'll take on more financial risk and take more chances with the environment. They'll scrape the bottom of the barrel, and they'll make generous profits doing it.
Carolyne Wang

Is income inequality just business as usual? - The Globe and Mail - 0 views

www.theglobeandmail.com/...singlepage

Income Inequality Historical Trends Cultural Attitudes toward Income

shared by Carolyne Wang on 02 Jun 11 - No Cached
    • Carolyne Wang
      Carolyne Wang on 02 Jun 11
       
      The visuals in this link show the distribution of wealth among the highest income earners in Canada.
  • international statistics show that poverty rates are lowest where income inequality is lowest too. That can be because of culture -- the wage spectrum is compressed, as in Japan, where it is unseemly to get too far ahead of others in pay -- or through active redistribution programs, where taxes and the services they buy redistribute incomes and opportunities to try to level the playing field a bit more.
  • For most of the 20th century inequality in Canada - and in virtually all developed nations, actually - had been declining. By the 1980s that long term trend reversed. First because of recessions (where the bottom end of the spectrum lost ground) then because of rowth (when the top part of the income spectrum zoomed ahead). So for the past generation inequality has grown in Canada, in good times and bad.
  • ...7 more annotations...
  • There are two reasons for hope. One is, oddly, the result of an aging population and the consequent shrinking pool of workers, which may push up wages for workers producing basic goods and services, not just those at the top of the skill spectrum. The other is a culture shift, where a growing number of boomers understand what is at play and start working with others to come up with ways to ensure there will be a resilient middle class for the next generation.
  • When the cost of something goes up, we tend to consume less of it. So, since living wages are higher than minimum wages, employers are likely to hire fewer workers. A living wage campaign is part of the effort to raise the visibility of a sorry development in Canada. The saying that "the best social policy is a job" is in many ways true; but a new reality has developed over the past decade or so - that you can't necessarily escape poverty by working. Working full-time full-year at a minimum wage job, as many adults do, condems you to poverty.
  • Professor Richard Wilkinson just finished a tour of Canada, discussing his research findings from the past 30 years or so. A social epidemiologist, he has gathered international data showing the very tight correlation between life expectancy and income inequality, between literacy and income inequality, between rates of incarceration and income inequality, etc. etc. Over and over again he shows a range of issues that have a strong social gradient which reveal that almost everybody is better off in a society with greater income equality, including the rich. You can see his presentation in Vancouver at this link. http://i.sfu.ca/TmyYCh
  • The Mincome experiment in Manitoba in the mid 1970s, the MacDonald Commission i n the mid 1980s, and the House Report from Newfoundland and Labrador in the early 1990s all had proposals for providing a basic income. Only Manitoba tried it, as a pilot project, for a few years. The problem with the guaranteed income idea is at what rate you set it, and at what rate you tax it back. It could remove the stigma of income support programs, but it could just as easily be a costly experiment that, essentially, guarantees poverty. Also, as Dr. Wilkinson has suggested, at some point on the GDP per capita curve, income inequality is no longer about material deprivation, but rather one of psycho-social responses. We are, after all, pack animals.
  • We can redress some of the vagaries of the market through public policies, but the root cause of growing inequality is how different peoples' work is valued. IN a slow growth environment, which seems to be the foreseeable future for Canada, it will become harder and harder for those at the top of corporate structures to take the types of increases they have been commanding in the marketplace and expect unionized workers to be happy about losing their pension, benefits and wage increases, and expect low-end workers to essentially stay put or lose more ground. Two things can happen - those at the top start moderating their increases; or those in the middle and the bottom start seeing solid increases, particularly as the wave of retirements starts accelerating. The problem with rising incomes, generally, is that usually goes along with rising prices; and we're about to host the largest cohort of retirees we've ever had in history, a group that lives on fixed and low incomes, to whom rising prices are toxic. So how will the highest priced workers get away witih demanding more in that context I wonder?
  • Historically, increasing economic growth first deliver rising inequality, then lowering inequality (Simon Kuznets' famous work back in the 1950s). That's still true of developing nations - economic growth is first badly distributed, then leads to demands for greater equality.
  • We can raise our kids more equitably - but it will take more taxes. We can have less of a winner take all society - but it will require some people at the top to trim their expectations. We can beat this in small ways, but we also need leaders to express the way forward. In the US they have Warren Buffett, Bill Gates and politicians leading the way. We're waiting for more people like Ed Clarke, the CEO of TD Bank, to weigh in on how to make Canada fairer (his suggestion is higher taxes on the rich).
Linda Lei

Stats Canada discusses household debt | The Economic Analyst - 1 views

www.theeconomicanalyst.com/...anada-discusses-household-debt

consumer debt mortgage

shared by Linda Lei on 03 Jun 11 - No Cached
  • Recent research suggests that if interest rates rise by three percentage points, the debt-to-income ratio needs to fall to between 125% and 130% for interest payments on the debt to remain the same
  • Interestingly, note the rise in mortgage debt which started in 2003.  This is the year that the price ceilings were removed by CMHC, meaning that CMHC would insure any mortgage no matter how high.  This, combined with a loosening in down payment requirements, is quite likely the largest driver in house price increase and debt expansion.  Some economists in Calgary recently calculated that the changes in CMHC insurance requirements have been responsible for 40-70 percent of all house price increases since 2004.
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