Monday, November 9, 2009

The Great Canadian Housing Bubble of 2009

Following on our post about the Canadian Housing bubble, BNN had a short segment on this, interviewing the CEO of ING Direct.

When the CEO of a major mortgage originator says he is concerned there is a bubble, we should probably all be concerned. The current debt to income in Canada is higher than it ever was in the US. That is a scary fact.
There is no question that there is a bubble going on where I live. All bubbles eventually deflate. The question is, how much are the Canadian banks on the hook for. Some reports say thay 15% is insured through CMHC, but most of the erst can be insured through CDS, which is what the government has been doing since this crisis started. If this is correct, ultimately it is all tax payers who will pay. Why?

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