thehousingbubble@gmail.com
Blog

This Reckless Myopia

Two reports from the Globe and Mail in Canada. “In a letter to the House of Commons finance committee, Evan Siddall, chief executive of Canada Mortgage and Housing Corp., offered an aggressive defence of the controversial mortgage qualification standard, saying it is needed to forestall potentially devastating economic consequences if house prices and debt levels rise even further.”

“He said the consequences of Canada’s ‘debt-fuelled real estate boom’ are serious and collapses of asset bubbles have historically created panic. He drew comparisons to the tulip bulb crisis in the Netherlands in the 17th century, the stock-market bubble of the 1920s and the collapse of the real estate bubble in the United States in 2009.”

“‘Just 10 years after such a crash, we have fallen into the ‘this time is different’ trap of complacency,’ he warned. ‘We have a responsibility to prevent these tragedies. And while I’m not predicting, it nonetheless could happen here: Of the 46 banking crises for which we have housing data, over two-thirds were preceded by real estate boom and bust cycles.'”

“He accused real estate industry groups such as Mortgage Professionals Canada (MPC) of proposing changes to the stress test that would drive up home prices in major cities while stimulating more borrowing by Canadians who are already deeply indebted.”

“‘Apparently the MPC is content to see home builders, real estate agents and mortgage brokers receive short-term benefits while Canadians bear the long-term costs,’ Mr. Siddall said. ‘My job is to advise you against this reckless myopia and protect our economy from potentially tragic consequences.'”

“Evan Siddall, the guy who backstops $448-billion in mortgages for Canadian homeowners, is calling out the big banks for what he calls irresponsible behaviour that’s fuelling a highly leveraged residential real estate market.”

“He turned his guns on the banks, which drum up mortgages and backstop their higher-risk loans at the CMHC. Looking back at recent bank publications, Mr. Siddall said: ‘In an astonishing piece of work, economists at TD Bank argued that the stress test should be removed so that house prices can increase by $32,000. CIBC’s economist has also called for a re-assessment of the stress test.'”

“‘Since a federal government guarantee stands behind lenders’ insured mortgages, these appear to be cases of evident moral hazard. I doubt they’d be as cavalier if it were their risk,’ he said.”

From CTV News Vancouver. “Homeowners gathered outside of Vancouver-Point Grey MLA David Eby’s office on to protest NDP policies and taxes. Many blame the government’s efforts of putting downward pressure on the housing market for causing the value of their homes to plunge.”

“‘There’s divisiveness here: it is assets versus no assets. Well, excuse me, we worked — we did. We saved,’ said protester Tom Michaildies.”

“The protest was staged by a group called ‘STEPUP Now,’ which commissioned a new analysis that found Metro Vancouver properties have lost nearly $90 billion over the past year. The data was compiled by Paul Sullivan, a senior partner at Burgess, Cawley, Sullivan and Associates Ltd., who specializes in commercial real estate and property tax appraisal.”

“West Vancouver and Vancouver saw the biggest dips of market value at 14.68 per cent and 13 per cent respectively. ‘I think this is now the beginning of something that’s very scary, a government that’s not really looking out for me at all and a lot of British Columbians,’ said protester Garth Edgar.”

“Protester Michaildies directed a simple message towards Eby. ‘You do not represent me. You represent anybody that doesn’t own anything,’ he said.”

“Biology student Evan MacKay, 20, said he feels the province is looking out for him with its policies. ‘I think overall, it is going to help people,’ he said. ‘I want to own a house here one day, so it would be nice to actually be able to.'”

Related Posts
This Post Has 59 Comments

  1. ‘He accused real estate industry groups such as Mortgage Professionals Canada (MPC) of proposing changes to the stress test that would drive up home prices in major cities while stimulating more borrowing by Canadians who are already deeply indebted…‘Apparently the MPC is content to see home builders, real estate agents and mortgage brokers receive short-term benefits while Canadians bear the long-term costs’

    This is a rare example of the whole con being pulled into day light.

    ‘The protest was staged by a group called ‘STEPUP Now,’ which commissioned a new analysis that found Metro Vancouver properties have lost nearly $90 billion over the past year’

    These are REIC dogs, of the sort that the previous liberal party used to encourage/cover up money laundering etc.

    2. Evan Siddall is one of many Goldman Sachs alumni with highly influential roles in finance:

      “Siddall spent five years at Burns Fry Limited (later BMO Nesbitt Burns) (1989-1994) before leaving as Managing Director to become a Vice President of Goldman Sachs & Co in 1997. Promoted to Managing Director in 2001, he left Goldman in 2002 to join Lazard Frères & Co as Resident Managing Director and Head of Canada.”

  2. ‘There’s divisiveness here: it is assets versus no assets. Well, excuse me, we worked — we did. We saved’

    Stamp your little feet, stamp em’!

    ‘In an astonishing piece of work, economists at TD Bank argued that the stress test should be removed so that house prices can increase by $32,000. CIBC’s economist has also called for a re-assessment of the stress test. Since a federal government guarantee stands behind lenders’ insured mortgages, these appear to be cases of evident moral hazard. I doubt they’d be as cavalier if it were their risk’

    Here’s where the banks can put up or shut up. Simply lend your own money and take the risk. What’s that, you don’t have any money? Sit down please…

    1. Bankers have hijacked the worlds’ economies and saddled the entire system with crushing, unrepayable debt. And their answer to the problem? More debt. It is time to sit bankers the f**k down, indeed. Enough is enough.

  3. ‘More than $3 million in cash was seized in a raid on a subsidized home in Burnaby, court documents allege.’

    ‘According to a civil forfeiture claim, police searched the home of Rolando Enrique Guajardo and found cash throughout the residence, including “under the mattress, in a teapot, in suitcases, in drawers, under beds (and) in boxes and bags.”

    ‘The money, the documents allege, was seized by RCMP in connection with the largest drug bust in Australia’s history.’

    ‘On Jan. 7, 2019, Abo Abdo lodged an export document for the shipment of loudspeakers from California to Australia. Three days earlier, Guajardo attended Abo Abdo’s business “where they remained until late in the evening moving boxes and pallets.”

    ‘The shipment was intercepted by U.S. authorities, who found 1,728 kilograms of methamphetamine, 25 kilograms of cocaine and five kilograms of heroin inside 850 amplifiers.’

    ‘They also searched the residence on Maple Grove Crescent, which is owned by Metro Vancouver Housing Corporation, described in documents as “a non-profit organization that provides affordable housing for low- and middle-income households.”

    “The residence was extremely dirty and disorganized inside,” the documents say of the Maple Grove residence. “Storage boxes and luggage were strewn about.”

    ‘In the master bedroom, RCMP allegedly found weapons and “various bundles” of cash.’

    https://globalnews.ca/news/5303832/cash-burnaby-home-australia/

      1. The reaction of the globalist BBC and Guardian is funny. “This clearly shows we need…another referendum!”

        Or in other words, we’ll keep voting until we get the result we want. And they wonder why people despise them.

        1. Anyone who doubts how comprehensively the media has been captured by the globalist oligarchs just needs to see their reaction to the EU parliamentary elections. Without exception, all of these globalist propaganda outlets are expressing shock and dismay that populists and nationalists routed the “centrists” i.e. the political prostitutes of the captured Establishment parties who serve only the elites while betraying their own people.

          Watch for the globalists to redouble their assaults on freedom of speech and expression, especially on the Internet, to try and force blind conformity to The Narrative and blacklist all who refuse to go quietly onto the globalists’ incorporated neoliberal plantation.

          3. They are plastering all media with scare tactics about why Brexit is so bad, etc., but people see right through it. These globalist cucks even have online troll armies who do nothing but post to comments sections on websites which still allow them, though the move over the years has been to eliminate comments on news articles.

            It’s not working, because the commenters rarely even go to news outlets anymore, they comment on private blogs and things such as this one. Unless they can shut down sites like this, they’ll never silence the masses.

      2. Unfortunately, it is past time and probably too late. If you look at the external debt of the EU countries you see they really are walking dead. European socialism is just as unsustainable as South American socialism and in the end will lead to the same type of tyranny. While you can tax wealth within your countries, if the people who own your debt live outside the country the money you pay in interest flows outside the country and cannot support the local economy. Look at Greece and Ireland, they have never really recovered from the 2008 collapse, it has just been papered over: https://www.usdebtclock.org/world-debt-clock.html

        1. Another thing to look at is the public debt of the US compared to the GDP. Actually, it looks low but that is only because Obama was allowed to monetize our debt during his presidency. Trump would never be allowed to do this. Monetizing made the deficits look lower since the debt was created out of thin air and the interest paid on the debt lower the deficits since it was paid to the Federal Reserve and then turned over to the treasury as “profit”. Nevertheless, we accumulated 9 trillion in additional debt almost doubling all the debt accumulated since the founding of the country, These actions prevented the housing correction and is the reason millennials cannot afford housing. Obama has the worse results of any president but the MSM was and is so in the tank that millennials and some on this board still think he was successful. Even with the magic wand of creating money out of thin air he could not create a true recovery. Trump is dealing with Obama’s nearly doubling of the national debt and trillions of magic money slowly disappearing and still has created a growth rate significantly higher than Obama’s average. The Boeing problems have created manufacturing difficulties but those are transitory. The Democrats are conducting a sideshow investigation while the Americans should be asking why do we adopt policies under Obama to promote the world economy which have left us deep in debt and with monetized debt which needs to be converted instead of just trying to get our economy on track? Globalism has destroyed Europe and severely damaged the US and why are the leaders of the movement like Soros not being held accountable?

          1. I agree with you. To bad people can’t even seem to vote their own interest anymore , or not enough people understand how lopsided the power balance is .

          2. “…Trump is dealing with Obama’s nearly doubling of the national debt and trillions of magic money slowly disappearing and still has created a growth rate significantly higher than Obama’s average….”

            And Trump is calling for more rate cuts and cheap money. Wake up, buddy. And I voted for Trump, but his cheap money nonsense has me looking for a new candidate!

          3. Maybe Bush, Obama, Trump are merely figure heads for the true rulers of our government. The central banks are responsible for this global-generational-debt-based-fiat-Ponzi scheme.

          4. Maybe Bush, Obama, Trump are merely figure heads for the true rulers of our government.

            Sure. But Trump has proven to be a loose cannon that can not be trusted by them. Which automatically makes him different than most. I wouldn’t put him in the same category.

          5. Trump has proven to be

            I don’t think he was supposed to be allowed to be a candidate or to be elected. That would mean we weren’t supposed to be allowed to send the loose cannon of our choice to Washington. The tools in Congress still think it is all unpossible. I expect worse is to come.

        2. Which is why Greece bonds should have been given a haircut, not this “extend and pretend” nonsense. Of course that would have wrecked French and German banking sectors, so better to punish Greek citizens so blood-sucking banksters can get theirs.

          1. “… so better to punish Greek citizens so blood-sucking banksters can get theirs.”

            I totally agree.

        3. “…Look at Greece and Ireland, they have never really recovered from the 2008 collapse, it has just been papered over…”

          That’s no different than the US.

    1. We’re a stone’s throw away from Poway, and I have to admit we don’t yet see the crater. Homes in our hood have recently sold at their highest level ever.

      1. The a$$umption$ are that HBB l … will be $imilar to HB.B ll

        (Amu$ing to ob$erve the co$tly de$igner spectacle$ the True.Believer$ are $porting this go.around.)

      2. Prices in 92129 are still insane. I guess my old neighborhood has a median income of $250,000. Those Marines make some money!

    2. Bizarre Poway listing: https://www.zillow.com/homedetails/12919-Avenida-La-Valencia-Poway-CA-92064/16747326_zpid/

      $999,900 5bd/3ba/3,300sf
      Coming June 25

      Description:
      NEW BUILD / REMODEL OPPORTUNITY IN PROGRESS – SELECT ALL YOUR FINISHES!!
      ***Call/Text Brian (619-647-1739) for information or to schedule a showing***
      Located in Green Valley, the heart of Poway, with award winning schools and an amazing location! This private, single story home, on a near 1 acre lot with pool, garage with optional casita, and plenty of parking (to include RV/boat parking). Marvel at this amazing lot the that features a large swimming pool, built-in BBQ, sport court, seasonal creek and a flat grassy area perfect for a corral (yes, horses are ok) or just play time. This property has so many possibilities!!! Numerous windows and skylights throughout allow natural light to pour in. Whether you sit out on the porch at sunset / sunrise and hear the soothing sound of the creek rushing in the backyard after a good rain, you will enjoy this absolutely wonderful home all year long. Buyer to verify all details listed on this post.
      ***Call/Text Brian (619-647-1739) for information or to schedule a showing***

  6. “Homeowners gathered outside of Vancouver-Point Grey MLA David Eby’s office on to protest NDP policies and taxes. Many blame the government’s efforts of putting downward pressure on the housing market for causing the value of their homes to plunge.”

    Stamp your little feet, you soon to be insolvent speculator scum. I hope every FB who drove housing to such unaffordable levels ends up being a cautionary tale for a generation to come.

    1. Bailouts stand in the ready to ensure that specuvestors never get their rightful comeuppance.

  7. No “pent-up demand” for $500,000 starter homes happening here:

    “According to new data from the New York Federal Reserve, some members of the generation known for staying out of consumer debt have found themselves swimming in it. Credit card delinquencies among 18-to-29-year-olds is now at an eight-year high of 8 percent. Though there are a variety of reasons for this, one of them is undeniably grim: In an economy that is by several indications doing great, as many as four out of 10 young people still seemingly can’t pay for basic necessities with their paychecks alone. That’s leading some to embrace credit cards as a way out.”

    https://www.vice.com/en_us/article/mb89pa/millennials-face-high-credit-card-debt-because-we-cant-afford-necessities

    1. “…as many as four out of 10 young people still seemingly can’t pay for basic necessities with their paychecks alone. That’s leading some to embrace credit cards as a way out.”

      Anything that cannot continue forever will stop.

      — Herbert Stein’s Law

  8. ‘In an astonishing piece of work, economists at TD Bank argued that the stress test should be removed so that house prices can increase by $32,000′

    Notice they didn’t say tear down shacks so prices could go up. It’s the lending, as Canadian policies have shown. And I’d bet these same economists have said for years, “oh, regulations are keeping us from building enough shacks to bring down prices so the poor people can have a roof over their head!”

          1. Re Cold Lake, AB… You need to wear a turtleneck in August? No thanks!

    2. “In an astonishing piece of work, economists at TD Bank argued that the stress test should be removed so that house prices can increase by $32,000.”

      Yeah, well this is how wealth is created anymore; It sure beats working.

      It is especially wonderful to open the bank’s doors in the morning and see lines of ignorant pukes ready to create wealth by bidding up prices of houses paid for by money belonging to strangers but controlled solely by me and loaned out to them by solely by me (of which I get to extract some hefty fees 😁).

      Life is good.

      1. Yes, until inflated housing in the developed world is no longer needed to support demand in the developing world. Then, the developed world’s housing will be allowed to correct. Leaving many with mortgages far greater than the asset backing the mortgage. However, do not think that world government will make it quite so easy to walk away from the mortgages then. Be prepared to be a debt slave and maybe even your children be debt slaves until Mr. Banker gets his money back.

    1. Inventory up 21%. Wow, Castle Rock has been one of the hottest housing markets of the past few years as more and more buyers have been priced out of Denver (and opt out of the joys of living under a “progressive” city government).

  10. So would it be correct to see Canada as a microcosm of what is to come in the U.S. for example?

    “Protester Michaildies directed a simple message towards Eby. ‘You do not represent me. You represent anybody that doesn’t own anything,’ he said.”

    “Biology student Evan MacKay, 20, said he feels the province is looking out for him with its policies. ‘I think overall, it is going to help people,’ he said. ‘I want to own a house here one day, so it would be nice to actually be able to.’” A classic have and have not war usually has those in power on the side of the haves. However when it comes to governments with elections the elected will side with the greatest number of votes available to keep them in their job. As the “haves” become more of the baby boomer generation/ former middle class who are starting into their die off period, the combined numbers of the generations naturally inherits the influence. So the 20yo has more votes ahead of him than the Boomers. Is that too cynical? Perhaps Eby just wants to do the right thing?

    1. “Biology student Evan MacKay, 20, said he feels the province is looking out for him with its policies. ‘I think overall, it is going to help people,’ he said. ‘I want to own a house here one day, so it would be nice to actually be able to.’”

      😁 ah, youth, who says it is wasted on the young?

      I, too, want this puke to own a house and after paying me some huge chunks of his paycheck over go me each and every month for, say THIRTY YEARS it is just quite possible he WILL EVENTUALLY own a house. Possibly, but not probably; The puke will be likely be conditioned to do the “smart thing” as the years flow buy which is to cash out every dollar of equity that happens to land in his lap. Bahahahahaha a dream come true. He works, I reap.

  11. Buddy of mine has a friend who inherited a house in Hawaii back in the day near the beach – only problem is, she cannot rent it out to tourists. He said she cant sell it which means she cant get a price anywhere near what her neighbors homes that are vacation rentals sell for. Owning a house on the beach doesnt pencil out otherwise unless you can get 5K/week in rent because the property taxes alone are ~30K/year. As a result many of the beach homes around the state have no permanent residents. State government greedheads working their magic as usual!

    1. “…because the property taxes alone are ~30K/year.”

      How much house are we talking about here?

    2. Second-hand incomplete information. What restriction(s) apply to that property but not the neighbors’ properties? She “can’t sell” or “won’t sell”? Do the restrictions pass to the buyer? Is she paying the $30K/yr in property taxes or assuming that’s what a buyer at her desired price without restrictions would pay?

    2. Nothing occur.
      Just some clever man moved out some money from the bank.
      Every community party member did that.
      The central government picked up the back and continues to run as usual.
      No one lost anything.

Comments are closed.