Trade deficit at record levels

Patriotz pointed out this article at the CBC: Canadas trade deficit has grown to the largest level ever, and this at a time when oil and commodity prices are high.

The gap between what Canada sells to the world and what it buys from other countries expanded to the largest point on record in July, as its trade deficit expanded to an all-time high of $2.3 billion.

Exports fell 3.4 per cent during the month, Statistics Canada reported Tuesday. That was more than the corresponding decline in imports, which were down 2.2 per cent.

Exports of energy products fell 8.5 per cent to $8.2 billion for the month, the data agency reported, while exports of automotive products dropped 5.3 per cent to $5.9 billion.

“This is about as bad as it gets for Canadian exporters, at least so far,” Scotiabank economist Derek Holt said in a note following the release of the data. “[And] the details are worse.”

Read the full article here.

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southseacompany
Member
southseacompany

Charlie Smith in the Straight:”Toronto bankers put the squeeze on Vancouver real-estate developers”

http://www.straight.com/article-805306/vancouver/real-estate-squeeze-play

” Simpson declared that first-time buyers face significantly higher monthly payments because of this limit… It definitely is impacting first-time home buyers,” he stated. “That’s where this whole thing starts—with that first-time buyer.”

“He added that it wouldn’t surprise him if the Conservative government is crafting public policies to move the country’s wealth away from real estate and into paper assets to please CEOs of the chartered banks, no matter how disruptive this might be to the Vancouver economy and to first-time home buyers.”

There it is again, a govt conspiracy to crash the Vancouver market therefor ‘hurting’ the first time buyer. Charlie likes to push this angle. He must dream of Eugen Klein in his sleep.

patriotz
Member

Real estate IS a paper asset, because its market price is driven by the availability of credit, not its actual economic value.

What could be more obvious.

VMD
Member

held up in moderation yesterday, I’ll try this again (without the link):

RBC new mortgage rule effective now:
(according to RBC mortgage specialist Jason Wang)

1. personal mortgages: upper limit now restricted to 2.5M (used to have no firm upper limit)

2. LTV ratio decreased “Especially to Greater Vancouver Area”. First $1.25M, 80% max LTV. The rest: 50% LTV
(previously no firm rule)

so CMHC rules focus on first time buyers (and houses >1M), while OSFI is pressuring existing home owners (via HELOC rules) and high end markets (via upper limit on mortgages and LTV caps).

Ralph Cramdown
Guest
Ralph Cramdown

I never understood the way most people use “paper asset” as an epithet. If I own 1/100,000th of a railroad as common stock, is that a “paper asset” notwithstanding that the 3:15 from Kamloops could crush your puny Kia like a… er, nevermind.

I understand how a ticket to next week’s 6/49, or an option contract or a credit default swap could be considered mere paper. But an actual claim on the profits of an operating enterprise? How about a mortgage secured by land? A REIT? Is that mere paper?

If anyone can honestly explain the legitimate difference these people are trying to make, I’d be grateful. But if they’re just disparaging other asset classes to their own benefit, as I suspect…

VMDaway
Guest
VMDaway

Comment held in mods yesterday x2, will try again:
RBC new mortgage rule now effective:
1. Personal mortgages: upper limit now set at $2.5m. Previously there was no firm cap.
2. LTV ratio decreased “especially for Vancouver area” First $1.25m:80%max Ltv. The rest:50%.
According to RBC mortgage specialist Jason Wang.

VMD
Member

September sales dollar volume graphs by region:
http://s7.postimage.org/qexnhvut7/Sept_Graphs.jpg

joe_blown_away_by_high_housing_costs
Guest
joe_blown_away_by_high_housing_costs
From the Georgia Strait Article linked to by Southseacompany: “Meggs said that city staff recognize that a condo sold to an investor can boost the stock of rental housing, but this doesn’t provide a long-term solution for tenants. “Because people are owning it for fundamentally speculative reasons, they tend to rent it out for a while, and then cash out,” he noted. “And it ceases to be part of the rental market, so it’s not sustained.” This is why condos are not included in the CMHC vacancy rates. On Tuesday I posted stats from CMHC showing the vacancy rate in the City of Vancouver was 0.7% last year and has been as low as 0.3% in recent years. Some dismissed these stats because they don’t include condos, only purpose-built rental buildings. Then I showed stats from CMHC showing the vacancy… Read more »
VMD
Member

Due to repeated failed attempts posting the following (stuck in mods), I posted it in Vancouver Peak forum:
RBC’s New Mortgage Rule Change now in effect! http://vancouverpeak.com/groups/data-hounds/forum/topic/sandbox/?topic_page=2&num=15#post-2627

we probably have OSFI to thank for

joe_blown_away_by_high_housing_costs
Guest
joe_blown_away_by_high_housing_costs
I am also a bit curious about this trade deficit issue. Why is the Canadian trade deficit at record levels despite strong oil prices? My guess is the value of the Canadian dollar plays a big role. When we had large trade surpluses, the Canadian dollar was much lower than it is today making our goods cheaper for other countries to buy. Now with our Canadian dollar worth more than the American, our goods are more expensive for other countries to buy so they are buying less of it. A strong Canadian dollar also means it is cheaper for us to import goods so maybe we are importing more from other countries now, adding to the trade deficit. That’s my armchair economist’s attempt to answer the question posed by Patriotz yesterday. But I would appreciate if someone with better economic… Read more »
Boombust
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Boombust

Well, with Stephen Harper, the CIA’s Bureau Chief in Ottawa, I don’t doubt that there is a massive amount of manipulation of all kinds of things.

joe_blown_away_by_high_housing_costs
Guest
joe_blown_away_by_high_housing_costs

“Flaws in a national databank that helps determine the value of houses across Canada have helped fuel inflation in home prices, putting mortgage lenders and borrowers at greater risk, key players in the housing sector have warned.

Documents obtained by The Globe and Mail detailing confidential statements from banks, appraisers and mortgage insurers show rising worry over the use of a database operated by the Canada Mortgage and Housing Corporation (CMHC). The documents suggest the data are flawed and help push home prices up.”

http://www.theglobeandmail.com/report-on-business/potentially-flawed-data-used-by-banks-and-lenders-bump-up-house-prices/article4603237/

Harry Wang
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Harry Wang

@joe_blown_away_by_high_housing_costs: OUR SYSTEM IS SUPERIOR!

all the cockroaches are going to start coming out now.

Just Looking
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Just Looking
A couple of days ago there was a discussion on international students driving up rents. As we’ve come back to trade deficits (education is currently a big ‘export’ for us), I thought I would bring it back up: a lot of misinformation was being passed around. How do I know? I work in enrolment management at a local U. ‘Foreign Students take seats away from domestic students’ This is not technically true. Colleges and universities are funded for a certain number of students by the province. The two big universities locally have been running at about 105% of this number of domestic students. International students are over and above this number. Eliminate all the international students and we’d still be funded for the same number of domestic students. Those remaining would have to deal with fewer choices for courses, as… Read more »
Anonymous
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Anonymous

@joe_blown_away_by_high_housing_costs:

“During a hot housing market, a wider margin of error on estimated values was less of a concern, since there is smaller likelihood a mortgage or loan refinancing will end up under water. But if the market starts to fall, as some economists expect, the accuracy of appraisals becomes paramount. When a lender is forced to liquidate a home in the event of a default, it could incur a loss. In the case of CMHC, the federal government would be left picking up the tab.”

This reads like something posted on VCI. How did the media get smart so fast, after all those years of being stupid?

rp1
Guest
rp1
#7 @joe_blown_away_by_high_housing_costs: “I am also a bit curious about this trade deficit issue. Why is the Canadian trade deficit at record levels despite strong oil prices?” I have worse economic qualifications, but I’ll chip in anyways. Canadians are borrowing heavily from the rest of the world and importing goods using borrowed money. That credit is available because international investors think Canada’s economy is in relatively good shape. And we appear to be in good shape because Canadians are spending lots of borrowed money. If Canadians invest this money wisely into productive assets then we will be able to repay the loans with interest and make ourselves wealthier in the process. That is what investors collectively believe will happen. But if Canadians are financing consumption then it takes on the characteristics of a ponzi scheme. It should also be pointed out… Read more »
vangrl
Member
vangrl

http://www.theglobeandmail.com/report-on-business/economy/housing/potentially-flawed-data-used-by-banks-and-lenders-bump-up-house-prices/article4603237/comments/

this comment from “Elucidate” in the comment section says it all

“Exactly. The CMHC should have never existed in the first place. Affordability? My posterior.

All they’ve done is kill affordability by fueling speculation and a giant housing bubble that’s going to deflate the economy for years to come.

Young buyers across the country have hamstrung their financial future thanks to the CMHC, Flaherty and Carney.

Meanwhile, the tax-payer gets the shaft while the banks reap profits the whole time. The banks, who should have been absorbing the risk of lax lending. But instead it’s you and me. Thanks to the Canadian Moral Hazard Corporation.

Thank you Flaherty and your so-called “conservative” policies. Absurd.”

jesse
Member

@joe_blown_away_by_high_housing_costs: The thing about that article is that everyone seems to be complaining about CMHC’s EMILI system, but from diametrically opposing sides: there seem as many complaints that the automated valuations are causing CMHC insurance to be TOO HIGH as there are complaints the potential systematic overvaluation and algo gaming are causing a housing bubble.

But I think above all people like being angry at CMHC 😉

joe_blown_away_by_high_housing_costs
Guest
joe_blown_away_by_high_housing_costs

@rp1:

Impressive analysis of Canada’s trade deficit. I think you are more qualified in economics than I am. I’ve never heard of “Triffin’s paradox” before.

Best place on meth
Member
Best place on meth

@southseacompany:

Good luck to Vancouver condo developers getting future projects 50% pre-sold with 20% down payments as prices continue to fall.

And goodbye speculators – Aloha, suckers!

jesse
Member

@Best place on meth: ” Aloha, suckers”
a·lo·ha/əˈlōˌhä/
Exclamation: Hawaiian word used when greeting or parting from someone.

How true, BPOM.

Patiently Waiting
Member
Patiently Waiting

@Just Looking: Many thanks for your contribution.

“preparation and motivation are both big, big factors”

Is it the lack of decent jobs for graduates? I’d have a hard time getting motivated too if I graduated with a $60K debt and a job making coffee at Starbucks.

Patiently Waiting
Member
Patiently Waiting
jay
Guest

An interesting article by Garth Turner 9 months ago, regarding Emili and robotic appraisal system:

http://howestreet.com/2011/01/emili/

Patiently Waiting
Member
Patiently Waiting

High-end getting hammered.

V939075 1451 Angus Drive

Westside character mansion reduced by $2 million or over 16%. From $11.9 to $9.9 million.

V947974 1575 Acadia Road

Third reduction. Now $7.99 million down from $10.38 in May. That’s about $2.4 million in total reductions.

Soon hopefully professors will be able to buy these places again.

Best place on meth
Member
Best place on meth

@Patiently Waiting:

Also, no huge sales so far this month.

The 3 highest:

1990 W 18TH AV, ask $8.5, sold $7.5

1725 KNOX RD, ask $6.80, sold $5.95

1251 W 46TH AV, ask $5.19, sold $4.54

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