From an Article in the Vancouver Sun:
VANCOUVER – Dropping real-estate values are sending more British Columbians into financial crisis and causing a spike in personal bankruptcies, according to professional debt counsellors.
Federal Industry Ministry data show that B.C. consumer bankruptcy filings for August were up more than 10 per cent over the same period last year.
August also saw a 16.3-per-cent increase in proposal filings, an alternative to bankruptcy.
And that was an improvement over July, when B.C. consumer bankruptcy filings were up 14 per cent over the same period last year and proposal filings were up 20 per cent.
“It’s a big jump,” said B.C. Association of Insolvency and Restructuring Professionals director Lana Gilbertson. “We don’t know if it will continue upwards, but during the recessions of 1981 and 1990-91 there were rapid increases in insolvency rates.
“Our professional community is seeing more and more individuals who can’t sell their property for what they thought it was worth and who can’t refinance or borrow more money against their property. They’re stuck,” she said.
For several years, Canadians have suffered from high levels of household debt, low rates of personal savings and feelings of stress about their finances, said Gilbertson.
“But a strong real estate market in B.C. kept many afloat as homeowners were able to use a growing equity in their property to offset their consumer debt,” she said.
Funny how the answer to consumer debt was house debt, even after we saw how well that worked out in the US. Meanwhile at least one economist is saying get ready for deflation:
Japan was mired in a nearly decade-long bout of deflation, which is defined as a sustained fall in asset prices. Economic theory indicates the solution to falling demand for prices is stimulus – either from the central bank, or by the fiscal authority to increase demand and borrow at interest rates that are below those available to private entities.
Rosenberg was one of the few economists on Wall Street who rang alarm bells about the housing bubble, and warned that the fallout from the bust on credit markets and the underlying economy would be huge. He now forecasts the worst consumer-led U. S. recession since the 1970s.
Other economists have also warned of a deflationary-like scenario, not just in North America but also Britain.