Why so negative?

As long as our economy remains strong it shouldn’t be necessary to implement negative interest rates.

A link from southseacompany:

Bank of Canada: rates can go to -0.5 percent, but no need now

“The Bank of Canada estimated on Tuesday that it could if needed set its benchmark interest rate as low as minus 0.5 percent, but stressed that the economy was recovering as expected and it did not expect to use such unconventional monetary policy.”

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southseacompany
Member
southseacompany

“Canada’s condo boom spikes to heights not seen since 1971 — and that’s making economists nervous”, Financial Post

http://business.financialpost.com/personal-finance/mortgages-real-estate/canadas-condo-boom-spikes-to-heights-not-seen-since-1971-and-thats-making-economists-nervous

“Construction of multiple units as a share of total new housing starts is at the highest level since 1971, data from Canada Mortgage & Housing Corp. show, as builders in Toronto and Vancouver press ahead with new development.”

southseacompany
Member
southseacompany

“First-time homeowners driving higher household debt: study”, Globe & Mail

http://www.theglobeandmail.com/report-on-business/economy/housing/first-time-home-buyers-spurring-rise-in-canadian-debt-study-suggests/article27649443/

“Soaring levels of mortgage debt have left one in 10 Canadian homeowners vulnerable to an economic shock. But with much of the risk concentrated among a small group of borrowers, policy makers are in a difficult spot of having to cool an increasingly niche segment of the housing market.”

“a new study for the C.D. Howe Institute, economist Paul Jacobson and former Toronto-Dominion Bank chief economist Craig Alexander argue that most Canadians have handled their debts responsibly and that much of the risk from rising household debt comes from the core group of homeowners whose debts have soared in the wake of rising home prices and falling interest rates.”

GreenSalad
Guest
GreenSalad

Any drop in homeowner’s equity is called “stealing” but negative interest rates is called “unconventional policy”….

patriotz
Member

Canada caught in middle of China’s dissident dragnet

Over the past six months, Chinese authorities have repatriated hundreds of people from neighbouring Southeast Asian countries, some using methods that critics have called abductions, in the midst of broader crackdowns on corruption and dissent that have seen more than 300 lawyers and human-rights activists arrested or questioned in China…

In China, “this new generation of the Communist Party is growing harsher. Actually, harsh is the wrong word. They are cruel,” said Shi Fukui, who fled China for Thailand in February, after being warned that he would soon be arrested. He had documented illegal school taxes, videotaped election fraud, exposed corruption among family-planning officials and gave money to a website publishing reports on graft and environmental destruction. He also signed Charter 08, a 2008 manifesto calling for the end of one-party rule.

patriotz
Member

Translate Australian road signs to lure Chinese travellers, says tourism minister

The federal tourism minister, Richard Colbeck, has proposed translating road signs into Mandarin in an effort to capture more of the lucrative Chinese tourism market.

“With close to a million visitors from China coming to Australia, injecting $7.7bn into the economy annually and growing, we must do whatever we can to ensure they enjoy their experience and want to return,” he said.

Brian Ripley
Guest
Brian Ripley

The “real’ (rate less CPI) 10 year Canadian bond yield was negative earlier this year, chart:

http://www.chpc.biz/real-10yr-rate.html

In 2012 it was -1%

Brian Ripley
Guest
Brian Ripley

The Canadian real long bond was also negative in 2012
Chart: http://www.chpc.biz/real-interest-rates.html

Brian Ripley
Guest
Brian Ripley

The real BoC bank rate is negative now.
Chart: http://www.chpc.biz/interest-rate-spread.html

southseacompany
Member
southseacompany

“Investors think Bank of Canada could cut rate before May, despite Poloz comments”, Calgary Herald

http://calgaryherald.com/business/local-business/investors-think-bank-of-canada-could-cut-rate-before-may-despite-poloz-comments

“Odds that the Bank of Canada will cut its benchmark interest rate by May jumped to 25 per cent Tuesday from 6.2 per cent Monday as a deepening commodity rout weighs on the outlook for the resource-heavy economy. The current rate is 0.5 per cent.”

southseacompany
Member
southseacompany

“C.D. Howe warns of major vulnerabilities in Canada’s housing market”, BNN Video

http://www.theglobeandmail.com/report-on-business/video/video-cd-howe-warns-of-major-vulnerabilities-in-canadas-housing-market/article27657439/

“One in five Canadians have less than $5000 to cover higher mortgage rates or job loss, according to a study by the C.D. Howe Institute. Greg Bonnell has the details.”

Bull! Bull! Bull!
Guest
Bull! Bull! Bull!
left already
Guest
left already
lets see how things might play out here, CAD going to 60 probably 50 cents, what implication for the economy. 1- Canadians will be poorer, no doubt about it as their money buys less. 2- RE getting a boost, except people to go more in debt as they finance evth. 3- Government will be the biggest employer as it starts investing massively in infrastructure projects, borrowing at negative rates. 4- How will inflation play out? Will BoC have to defend the CAD at some point by increasing rates? I give this a low probability, as I see deflation for another 3 to 5 years. 5- RE will be the asset to be in as the flow of cheap money starts poring in again. 6- Eventually the economy will start picking up as inflation will be eating even more the savings… Read more »
Amy
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Amy
I have been reading this blog for several years because I wanted to believe that we were in a housing bubble and all my years of university and saving were going to be for something – that the city I grew up in was going to be the one I raised my children in (albeit in much smaller quarters!) that is no longer going to happen. Guys, this is not a bubble, and it never will be. This is the new normal, and it has been for many years. Wanting to believe that there will be a crash doesn’t make it so. Rent is as out of control as the mortgages and this is never, ever going to be the city it was. Shame. I’m not sure the point of this post other than to say that at the end… Read more »
space889
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space889

@patriotz – you kind of just proved why systematic corruption is so hard to root out. The top wants corrupt officials arrested but before these officials are even investigated, they arrests people who could expose their corruptions first.

space889
Guest
space889

@Amy – But Amy, Amy, Amy, renting is so much CHEAPER than buying and you are coming out ahead everyday relative to the homeOWERs, and if you just your $$$ into equity markets, your gains would more than offset any house price increases!! With no risk and no worries to boot!

The bears on here all said so! Especially in the last 5 to 7 years! Just look at Vangrl! She sold years ago and put her money into the market, that was the best decision ever, and now she can buy a Van West house anytime she want! She just doesn’t want to due to the bubble price, and all the empty neighbors, and Chinese people….

Madashell
Guest
Madashell

Recent reports suggest that money flowing out of China ends up in countries like Australia and Canada, where the real estate market serves as a means to launder money.

“This does not happen by accident. Many countries and their institutions actively facilitate — and reap enormous profits from — the theft of massive amounts of money from developing countries,” GFI (Global Financial Integrity) said, in the statement. “GFI believes that developed countries have a responsibility alongside developing countries to curtail the flow of illicit money.”

patriotz
Member

@16:

The Chinese state has been stealing from developed countries for decades in the form of intellectual property theft, manipulated currency, and lack of labour and environmental standards. The last three also amount to theft from Chinese workers.

The money leaking back to developed countries in the form of illicit outflows is peanuts in comparison.

patriotz
Member

26% of Ontario homeowners struggling to afford homes

As the article points out, 25% of Ontario would indicate a higher % in Toronto, as the rest of the province is a lot cheaper. And likely a higher % in Vancouver.

StupidityCheck
Guest
StupidityCheck

Amy, it is and continues to be a bubble. There is no time limit involved.

At this point the two best options for renters are:
1. Continue renting.
2. Move.

If you are going to let your emotions trump your logic and buy, make sure you will be happy there for at least 10 years.

You also might want to consider a co-op.

StupidityCheck
Guest
StupidityCheck

BTW Amy, this bubble has gone on so long because the BC Liberals and Vision Vancouver are working for developers, rich homeowners and Chinese money launderers. If you voted for either, you are partly to blame.

bestplaceonearth
Guest
bestplaceonearth

“I have been reading this blog for several years because I wanted to believe that we were in a housing bubble”

that is the real problem…reading this blog for too long…and believe to all the armchair economists and paid shill. These guys could not make it right for the past 11 years…there is a reason! Unfortunate, you believe them.

Best place on meth
Member
Best place on meth

@13

“This is the new normal, and it has been for many years.”

Sure it’s gone on far longer than it should have, but it’s not a “new normal” unless you believe that this is permanent and there will never be an end to the lowest interest rates in history or the massive of amounts of money laundering by the Chinese.

Either one could come to an end at any time, and if they both end simultaneously then there will be a bloodbath in this market.

For now though, the upward march continues.

patriotz
Member

@20:

To be fair, if you voted for any of NPA, Vision, or COPE, you were voting for continued high prices. For example:

Would you support policies that would lead to a drop in real estate values?

Tim Louis, COPEPeople who already own homes would be unfairly hurt by a policy that would lead to a drop in real-estate values. If the current homeowner has taken out a mortgage for say 90% of the worth of their home, and values then drop by 10%, the homeowner has lost 100% of her or his equity.

Not to mention the great majority of owner-occupied dwellings in the metro aren’t in CoV anyway, but that’s where the focus seems to lie.

https://vreaa.wordpress.com/category/24-policies-on-housing/

Christy Clark has already made her position clear, we have a year or so to see if the BC NDP wants to break away from the pack.

space889
Guest
space889

@patriotz – I find it interesting that the great and powerful western countries would continue to do biz in China and tolerate ongoing thefts of their intellectual properties all happy and sunshine. As well as tolerate crap quality products from their Chinese subcontractors/suppliers as if they have no choices but to accept them.

I don’t all the ins and outs of intellectual and patent laws, but I just find it interesting that Western countries & companies constantly complain about the theft and acts as if they are so powerless to do anything about it, when they aren’t that powerless.

patriotz
Member

@24:

As Lenin said, “A capitalist will sell you the rope to hang him”.

That is, in countries with free economic and political systems, the business interests of a few will often prevail against the collective good. That of course is why things like housing bubbles happen, with or without the participation of offshore buyers.

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