Several people have pointed out this article in the Globe and Mail, but I believe Strataman was the first. This article is one of a growing number that are looking at the negatives of government pumping a house-price based economy rather than a more diversified productivity based financial ecosystem.
The stories are all too common. There’s the couple down the street who haven’t dined out in years and the kids wearing hand-me-downs, all to make the mortgage payment and cover the interest on the line of credit that paid for their home’s renovation.
The tales are not apocryphal. The shifting spending patterns are clearly evident in retail sales data.
Canadians are funnelling more disposable income to homes at the expense of most anything that isn’t housing related. The government is aiding and abetting this with policies designed to support housing, such as tax credits for renovations and mortgages backed by the Canada Mortgage and Housing Corp.
The article goes on to cover some of the reasons why governments pump housing at the expense of the rest of the economy and what the inevitable fall-out of these policies are. Read the full article here.
