Canada’s Mortgage Monster?

Leo Kolivakis's picture

Via Pension Pulse.

Chris Sorensen And Jason Kirby of Maclean's report, The CMHC: Canada’s mortgage monster:

David LePoidevin isn’t the first person to suggest Canada’s roaring housing market is headed for a U.S.-style crash. But he is a rare breed of money manager for daring to point a finger at the Canada Mortgage and Housing Corporation, the country’s biggest mortgage insurer. In a fall 2009 note to his clients, LePoidevin questioned what was underpinning the country’s skyrocketing home prices, aside from rock-bottom interest rates. “The stock market was sure not providing huge capital gains to the masses,” he wrote. “Did the banks all of a sudden open up the lending spigots? In fact banks have actually reduced the number of their mortgages held from the peak of third quarter of 2008. The smoking gun is the CMHC and its securitization policies.”


As mainstream economic commentary in Canada goes, it was damning stuff. And it provided ammunition to critics who argue the Crown corporation’s policies have inflated a housing bubble. The CMHC is arguably the most influential player in Canada’s $1-trillion housing market. Its main function is to provide mortgage insurance for prospective homeowners who put less than 20 per cent down on their houses, protecting the banks in the event of defaults. The CMHC also helps to spread risk by finding investors to buy CMHC-insured mortgages that have been pooled together into so-called mortgage-backed securities. All of this is guaranteed by the government.


Almost immediately, LePoidevin’s bosses at National Bank leapt to the CMHC’s defence. In a letter to an Ottawa newspaper that had referred to the commentary, co-chief executive Ricardo Pascoe said the Vancouver portfolio manager’s views were “personal” and “do not reflect the views of National Bank Financial Group.” When reached by Maclean’s, LePoidevin declined to talk about the public rebuke or the CMHC in general. A National Bank spokesperson justi?ed its actions, saying the company “felt that the commentary was treading on social and political issues.”


The apparent unwillingness of the country’s sixth-largest bank to challenge the CMHC is curious given the role similar U.S. institutions Fannie Mae and Freddie Mac—quasi-government agencies that securitized mortgages—played in the U.S. housing crash. But it’s far from unusual. Several other critics, including economists, realtors, lawyers and analysts contacted by Maclean’s, say they have also been the target of attack. One bank economist who once publicly raised fears about a housing bubble says he didn’t dare openly criticize the CMHC because of the agency’s reputation for snuffing out dissent—an allegation the CMHC denies. The economist spoke on the condition his name not be used.


Even worse, the public knows next to nothing about what lurks inside the CMHC’s books, aside from the smattering of details it releases in its annual report. And, unlike every other major insurance provider in the country, the CMHC doesn’t answer to Canada’s top financial services regulator. It falls under an amalgam of government acts and departments, including Finance and Human Resources, while also working with the Bank of Canada. Yet on specific decisions that dramatically loosened mortgage lending rules last decade, CMHC officials have testified they did so on their own with the approval and oversight of the CMHC’s board of directors—a board that includes a political consultant, real estate developers, a small-town lawyer and even the owner of a plumbing company—though not one single economist or recognizable financial services professional.


It all raises troubling questions about the agency, its oversight and, ultimately, the health of the country’s frothy housing market, a key driver of the Canadian economy. And, as LePoidevin found out the hard way, asking hard questions seldom yields satisfactory answers.


Since taxpayers, through the CMHC, and not the banks are ultimately on the hook in the event of a housing crash, a growing chorus of critics has been calling for more transparency and oversight, if not outright reform. Stephen Jarislowsky, a billionaire Montreal investor, says home prices are likely overvalued by as much as 20 per cent in some Canadian markets thanks to CMHC policies that encouraged banks to lend far too much money to people to whom they shouldn’t have. The core problem, he argues, is that promoting home ownership makes for good politics in Canada, if not always sound economic policy.


“The CMHC is influenced by the political process, just like [Fannie Mae and Freddie Mac] were in the United States,” says Jarislowsky. He notes the average debt-to-income ratio of Canadian households recently surpassed that of the U.S. for the first time in 12 years. “The political folks are guaranteeing mortgages that the banks might never have made if they had to keep them on their own books,” he says.


At the end of 2009, the CMHC insured roughly $473 billion worth of mortgages (it expected that figure to rise to $519 billion last year, though updated figures haven’t been released), which is nearly the entire mortgage insurance market in the country. The CMHC also assists the financial sector by buying pooled mortgages and reselling them to investors as bonds, giving banks and other institutions an immediate source of cash that they can re-lend. As of 2009, the CMHC had securitized $300 billion worth of mortgages. So critical is this function that Ottawa relied on the agency to prop up the country’s big banks during the financial crisis, giving the CMHC permission to buy $66 billion worth of mortgages.


It’s a familiar-sounding story to American ears. “The Canadian government mortgage apparatus echoes uncannily our experiences down here with Fannie and Freddie” says Jim Grant, author of the widely read Grant’s Interest Rate Observer newsletter. “CMHC has distorted the housing market by making homes, especially ones that are on the pricier end of the spectrum, more affordable and encouraged a lot of people to get in over their heads.”


Grant and other critics argue the CMHC’s balance sheet looks strikingly similar to both Fannie and Freddie if you compare the mortgages the agency insures against its equity. Using the CMHC’s 2010 forecasts, it insures $519.1 billion in mortgages against $9.9 billion in equity, which works out to around 1.9 per cent (although the CMHC says it has another $6.7 billion in “unearned” premiums that could be used toward future claims). By comparison, in 2007, at the peak of the bubble, Fannie Mae backed up US$2.7 trillion of mortgage-backed securities with US$40 billion of capital, or 1.5 per cent equity against its overall exposure. But the CMHC says its capital levels are double what the Office of the Superintendent of Financial Institutions requires of mortgage insurers (though the CMHC is not regulated by the OFSI). But such assurances in the absence of transparent disclosure offer limited comfort. As C.D. Howe researcher Finn Poschmann wrote in a recent report: “Parliament and the voters to whom it answers have no formal documentation of the way these exposures are calculated or managed.”


What bothers Grant is that the CMHC’s government-backed guarantees encourage banks to feel they have less to lose if loans go bad. “The risk has been shifted, rather than reduced, from the stockholders and depositors of the big Canadian banks to the Canadian taxpayer,” he says. And if house prices fall and borrowers get into trouble, the ripples would run far and wide. “A sharp break in Canadian house prices would inflict terri?c damage to consumer con?dence, would hurt the Canadian labour market, and ultimately produce a lot of the unpleasant results that have been America’s burden to bear since 2007.”


The CMHC argues such concerns are overblown. It points out that the Canadian mortgage system is fundamentally different than in the U.S. That’s because mortgage interest is not tax-deductible, a relatively small number of mortgages are securitized, and lenders can generally go after homeowners who don’t make their payments. The CMHC also points to Canada’s low rate of mortgage arrears, currently less than one per cent. Finally, the industry never got swept up in the subprime lending trend, the CMHC says. “We don’t have those products in Canada,” says Pierre Serré, the CMHC’s vice-president of insurance product and business development. “And if we did, CMHC certainly did not insure them.” Lending weight to the CMHC’s claims, a 2009 IMF report called Canada’s residential mortgage markets “boring but effective.”


Canadian lenders didn’t go overboard with the sorts of gimmicky mortgage products—loans with low initial “teaser” rates or so-called NINJA loans (no income, no job or assets)—that got Americans into so much trouble. But it’s not like they shied away from taking risks. For two years beginning in 2006, the CMHC offered insurance on mortgages with amortization periods of up to 40 years, nearly double the traditional 25-year period, and loans with zero down payments. The products were later reined in by Ottawa after the U.S. housing market tanked.


The CMHC dove into such high-risk products largely without supervision. While the government had previously relaxed conditions for guaranteeing mortgage insurance as part of a plan to introduce more private sector competition, it was the CMHC’s management and board that ultimately made the decision to go to 40-year amortization periods. In the same way, in 2007, the CMHC introduced a program for self-employed Canadians who have difficulty documenting their earnings to nonetheless obtain mortgage insurance by “stating” their income. While the program was restricted to borrowers with good credit ratings, one mortgage broker told Maclean’s self-employed Canadians were able to get much larger mortgages than those in the same field who had documented incomes. Then, a year ago, the CMHC backtracked and significantly tightened its rules on stated-income mortgages.


“We’re allowed to operate and make decisions with regards to mortgage insurance products and policies within the [government's] guarantee, and when we do so we advise the government of any changes,” says Peter De Barros, a spokesperson for the CMHC. Still, the move to riskier mortgage products drew the ire of then-Bank of Canada governor David Dodge, who sent a letter to CMHC chief executive Karen Kinsley in 2006 warning about the dangers of throwing fuel on a hot housing market. “A home purchaser is able to borrow at very low interest rates because you and I as taxpayers essentially guarantee that mortgage,” Dodge said during an interview earlier this year on Business News Network. “So it’s not at all unreasonable for us as taxpayers to say, ‘Look, Mr. Borrower, you’ve got to have an equity stake in this as well, so if things go really bad it’s not all on the Canadian taxpayer—part of it is on you.” (Dodge declined to be interviewed for this story.)


Critics say that, given what happened in the U.S., it’s irresponsible to not have someone watching over the CMHC. “They are the only major ?nancial institution in Canada not regulated by OSFI,” says Ian Lee, an assistant professor at Carleton University’s Sprott School of Business and a former bank manager. “Housing is so huge and the consequences are just so large. It’s not like they’re deciding what to do about the price of ballpoint pens.”

So how much risk have taxpayers been exposed to? The CMHC doesn’t reveal specific data about the credit exposure that it has taken on, other than to say it is manageable and in line with internal guidelines. As for the question of whether the CMHC’s policies could contribute to a housing crash, the agency says there’s no reason for Canadians to lose sleep. It says more than half of CMHC-insured mortgages have a loan-to-value ratio of less than 80 per cent based on the value of the original loan, and that the average equity in a CMHC-insured property is 45 per cent. “The mortgages are getting paid down—as a matter of fact, we see that about half of our folks made extra payments, more than just the minimum required principal payments,” says Serré, adding that rising home prices have also helped improve the debt picture.


But such aggregate figures don’t necessarily provide an accurate snapshot of how homeowners are faring, according to Poschmann at C.D. Howe. Important questions remain unanswered—like what is the geographic breakdown of its mortgages? Of those people with lower equity in their homes, what is the size of their mortgages? What classes of loans are they? What are their terms? “You can’t come up with an independent assessment of exposures based on the information they publish,” says Poschmann. “You can manage risks better with oversight and daylight, but right now we have pretty opaque books.”


While the CMHC says it has a sophisticated automated system to check creditworthiness of borrowers and property values, its biggest private sector competitor (which also has its mortgage insurance guaranteed by taxpayers, albeit only up to 90 per cent) nevertheless suggested during a 2007 hearing of the Senate banking committee that more than a third of all mortgages insured by the CMHC could be considered risky. Winsor Macdonell, the vice-president and general counsel of Genworth Financial, told the committee he assumed the CMHC’s portfolio looks similar to Genworth’s given that both provide mortgage insurance for the entire Canadian market. “When I talked about our portfolio, 36 per cent are people with low or poor credit,” he said. “Those are the people who are at risk.” Genworth declined to talk to Maclean’s for this story.


Serré declined to comment directly on Macdonell’s remarks. “I’m not exactly sure what low or poor credit is,” he says. “But I want to make clear that our mandate is not to get people into home ownership, our mandate is to provide the housing of choice. The last thing we want, as a government insurer, is to get people in a position where they can’t manage their debt.” For the sake of Canada and its fragile economic recovery, let’s hope he’s right.

Wow! Where do I begin? It was only a week ago when I delved into the topic of the Canada bubble and now another bombshell article from Maclean's questioning the practices of the Canada Housing Mortgage Corporation (CMHC). (Track daily news on the Canadian housing bubble on and

First, I used to work at the National Bank of Canada. I never met Ricardo Pascoe but I heard he's not exactly the type of guy you want to piss off. I can only imagine the phone call Mr. LePoidevin got after he wrote that stinging memo, probably telling him to "zip it". The CMHC is extremely important to Canadian banks.

In October 2009, Murray Dobbin wrote a commentary, Why Canada's Housing Bubble Will Burst. It was way too political for my taste, blaming "Harper Conservatives," (Liberals are as much to blame) but Mr. Dobbin did make a good point on banks passing off risk:

The banks themselves have taken on virtually no new risk. According to CMHC numbers in the two years from the beginning of 2007 to January 2009, Canadian banks increased their total mortgage credit outstanding by only 0.01 per cent. Fully 90.5 per cent of all growth in total Canadian mortgage credit outstanding since 2007 has been accounted for by Mortgage Backed Securities. Of course, the banks have no interest in saying no if you have qualified for a securitized CMHC loan -- because they bear no risk if you default.


If that sounds like sub-prime mortgages, it should. Sub-prime is any loan below prime. If a bank refuses you a loan, and CMHC gives you one, the loan is sub-prime. As Lepoidevin says in his warning letter, "Every single U.S. lender specializing in sub-prime has gone bankrupt. The largest sub-prime lender in the world is now the Canadian government."

But is it right to compare the CMHC to US agencies and subprime lenders? No, but let's go back to that Maclean's article above. The CMHC says "more than half of CMHC-insured mortgages have a loan-to-value ratio of less than 80 per cent based on the value of the original loan, and that the average equity in a CMHC-insured property is 45 per cent." In other words, a sizable portion of CMHC-insured mortgages have a loan-to-value ratio greater than 80 per cent based on the value of the original loan. Moreover, the CMHC does not publish the weighted loan-to-value ratio of their mortgage book pre and post 2007. As for the "average equity in a CMHC-insured property being 45 per cent," that too doesn't tell us much. You have to take the median and separate out CMHC-insured properties pre and post 2007.

Keep in mind, there are a lot of young two-income couples who bought homes in the last five years that they were able to purchase because they took out huge mortgages (insured by the CMHC). If one of them loses their job, they're going to be in big trouble. I'm not worried about two doctors who have a guaranteed high income taking out a huge mortgage (even though I think it's stupid). I'm more worried about some salesperson making a lot of money, taking out a huge mortgage thinking they're going to be able to make the payments in the future because they'll continue making a lot of money. If they lose their job, they're cooked. There is no way they're going to find another job that pays them as much. Just look at what happened in the US.

The Maclean's article made some mistakes too, citing some Carleton professor who said the CMHC is the "only major financial institution in Canada not regulated by OSFI." This is false. The two largest Crown corporations in Canada, the Canada Pension Plan Investment Board (CPPIB) and the Public Sector Pension Plan Investment Board (PSPIB), manage hundreds of billions in assets among each other and are not regulated by OSFI even though OSFI regulates private pension plans. Why is this the case? It's all about governance. These public pension investment boards want to operate at "arms-length" from the government. While I agree with this "arms-length" approach, best governance standards around the world have the same entity in charge of oversight for private pension plans also in charge of oversight at public pension plans. OSFI isn't perfect but they have qualified people who can ask some tough questions to these financial institutions and assess the risks they're taking. Whether or not OSFI wants this responsibility is another matter.

Other large financial Canadian Crown corporations like the Business Development Bank of Canada (BDC) and Export Development Canada (EDC) are also not regulated by OSFI, however, they fall under the Financial Administration Act and are subject to a lot more public scrutiny than most Crown corporations. The truth is there is no perfect governance anywhere, and all Crown corporations have secrets they don't want to share publicly. The problem is that someone somewhere has to aggregate and assess all the risks these Crown corporations take. Is it going to be OSFI or another entity? Who knows? All I know is that if I was advising the Prime Minister of Canada, I'd tell him to create a new financial supervisory agency and ask David Dodge to head it (I'm biased, I like David Dodge a lot because he understands what's at stake).

After my last post on the Canada bubble, I received emails from a few money managers asking me the best way to short Canada. Let me be clear on something, this bubble isn't going to burst anytime soon. When it does, it's going to be painful and last for years, but I continue to believe Canadian equities will make new highs. Don't bother shorting Canadian banks either, and if you do, be aware that some banks are a lot more prudent than others in their lending standards. I wouldn't short Canadian bonds either. The best way to "short Canada" is through the Canadian dollar, but it will continue to track oil prices higher. It might decouple if housing tumbles, but it's a tough call to make right now. All this to say that this bubble will last longer than skeptics think. And don't just blame banks. Large Canadian credit unions are aggressively lending to pretty much anyone looking for a mortgage. This is another disaster waiting to happen (can't short credit unions either).

Finally, I want to publicly apologize for some silly comments I made about suburbia USA when I wrote about my recent experience with the CCSVI procedure. Those comments were rude, arrogant and stupid. There are a lot of hard working, decent folks living in these towns and I shouldn't have written anything negative about their way of life. I'm sorry if I offended anyone. Below, some serious humor on the CMHC.

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Double down's picture

Good Article Leo, thanks

longorshort's picture

Another question on canada.  What % does canadian mortgage insurance cover on losses.  From what percent of loss to what on the average contract?  Also you think banks are immune look at what PMI did renogotiating payouts after the fact.  Its gonna be a real soap opera.

CapitalHole's picture

Canadian mortgage insurance covers more or less 100% of the principal in case of default.

CMHC insurance is 100% guaranteed by the government of Canada. Private mortgage insurance is 90% guaranteed by the government of Canada.

In the US, private insurers would have gone bankrupt so the policy holders had to take cents on the dollar like creditors in a reorganization. Fannie and Freddie had the implicit backing of the Treasury.

In Canada, the taxpayer is on the hook for the full losses. The insurance is backed by the full faith and credit of the feds. Unless the government defaults on its obligations, the banks lose almost nothing.

Seer's picture

Also, what percentage of the Canadian market does the real estate sector represent?

Contraction isn't kind to a grow-or-die system...

Seer's picture

Couldn't wait, had to go fetch it...

From reading the financial news you may have been under the strong impression that Canada's GDP is now dominated by the commodities including particularly oil, gas, and various minerals. You may have also heard that manufacturing is no longer such an important component of Canada's economy. (And that therefore we should not worry much about all the manufacturing job losses that we hear about).

The actual figures show that "Finance, insurance and real estate and leasing and management of companies and enterprises" is by far the largest segment of Canada's economy.

Manufacturing, while it may be lower than in years past, is still a very large portion of GDP at 13%. (We understand that manufacturing includes refining industries).

Amazingly enough, mining and oil and gas extraction shows up way down in the eleventh row at only 4.5% of GDP. That seems shocking, the financial press constantly talks about the importance of the commodity sector to Canada's economy. Somehow I think this 4.5% understates the importance of this sector. But according to this GDP data it is extremely far from being the most important sector.

Review the rest of the list and you will at least be more knowledgeable about the actual composition of the Canadian economy and the percent contribution of different segments. See the link to the latest available source data just above to see the raw data and you can calculate the precise percentage figures if desired.


So, what a relief, Canada's GDP ISN'T all about resouces, no, it's about Real Estate and Finance!  That should make Canadians feel so much better, because the gold standard, the US, uses this very same model!

What this should tell folks is that it's very unlikely that increases in resource exports could make up for declines in their dominant sector(s).

As for "production," I recall reading that most (on an export basis - $$) was autos.  Kind of makes Canada look like one big General Motors!

longorshort's picture

Hi, Anyone have some good info on how to short this with something like futures or credit default swaps when its starts cracking?  Everything cant go up.  I have been watching this issue for two years.  Anyone serious out there as well?  That is a huge chunk of mortgate insurance compared to the Canadian GDP.

CapitalHole's picture

Short MIC.TO. It is an excellent proxy for the CMHC.

Sadly there are no traded options so you will need to put up cash margin.

Arch Duke Ferdinand's picture

Ladies and Gentlemen,

North America is facing a major decision in the next few days and weeks.

.....How many Japanese immigrants do we allow into North America should Fukashima be declared a National Disaster?


pirea's picture

Something is very strange.

I built a nice house somewhere in BC and I was the general contractor.

I bid each phase with at least 3 contractors, and I did the finishing by myself.

At the end the the cost of the house was C$512,000, without my contribution.

If I would sell the house tomorrow I will make maybe C$450,000.

The cost of materials and contractors are very high in Canada. We miss the mexicans.

Do you want to say that if the prices of houses are going down. the contractors are going to do the job at half price? I do not think so, they will rather go on welfare.

CapitalHole's picture

If you built it to be exactly what you want, chances are it's worth more to you than everyone else.

falak pema's picture

Its supply and demand. Sit it out for ten years...

pirea's picture

I did not build the house for sale.

I have intention to live longer in this house. I was just doing a price analysis.

falak pema's picture

Fanny insisted to Freddie..."I want to take your pulse". Freddie replied, "Do I look that worn out?" Fanny queried. "When was the last time it pulsed all the way to your toes?"

""I can't remember that far back" said Freddie. "I've been on those blue pills for so long. I don't feel any tingling throbs down in my toes any more". "Hum, we'll have to check your heart" Fanny was adamant. "If you want full pension treatment you have to prove to me you warrant it. Now take your clothes off". "Are you stripping too?" Said Freddie defiantly as he unbuttoned his shirt. "If you want to see the whole product you better be in shape to service it". "Ha" replied Fanny, "You men are all the same. You think we have to prove we are full fledged intelligent, reactive, appreciative females, not just Adam's rib". "Yes" growled Freddie getting hot not just under the collar. "Any dame called Fanny better have her box in good shape before I'll spend a penny of my well earned money to pulse my pension into her!" He dropped his pants to his ankles in a show of now imperial pulsation.

""What a mortgaged monster you are" said Fanny coyly, not repulsed at all.

AN0NYM0US's picture

Garth Turner (the Greatest Fool)

From three years ago

Housing crash could happen here


Will Canada See The Same Kind Of Housing Meltdown As The U.S.?


Devore's picture

It did happen here, you tool, or have you not looked at a Canadian housing chart the last 3 years?

Seer's picture

"Never"... until a black swan comes and shits on your head!

Yeah, everything's hunky-dory in the Great White North:

Canada Government Falls After Vote Of No Confidence Gets Enough Votes To Pass

They KNOW they are fucked.  They will have no idea how to fix it because there IS NO FIX!  Sooner or later you're going to have to swallow...

Seer's picture

No, "can't happen here!"

All those who have died of cancer were "cancer free" at some point.

Sold your real estate yet?  No?  Well, for your sake I hope that you see it as a HOME and not an investment, because when the bottom drops out (If you can't see a forming bubble then how the hell would you be able to see one popping?) you're stuck there.  Just not seeing that someone who can toss around the "never" word is likely a big-time investor who is closely linked into the underpinning such that he/she could have advanced warning of the economic tsunami that's going to hit.

I feel sorry for those who are ignorant of what's coming.  No so much for the idiots...

Just click your heels together and keep that dream going!

DosZap's picture

Yep, I feel for some of the Canucks, but for the smart asses here, not at all.

All I have heard is how they have their shit together, and were a heaping pile.

I posted here 6-8 mos ago that they were headed for a major Crash,JUST like ours in housing.

$500k for a dump, they are human and fell for the Canadian dream, like our buffoons here.

The wailng will start shortly.

Seer's picture

I walked that talk back in July 2010 when my wife sold her house (greater Vancouver area).  Smart woman, that's why I married her (because she's smart).  Whether looking back in the rearview mirror designates that as the peak (which I hit on my US house) I don't know; all I know is that she got out before the crash.

Only those struggling to hook the greater-fool are yapping away about how great the Canadian housing market is.  Sad, really...

AN0NYM0US's picture

seems that in Oz they too have their share of doomsayers - I no little of that market but they appear to want to emulate the US as well with one guy suggesting Gold Coast will decline by 70% - (I don't think his name is Garth Turner though)

Why Australia is Set to Follow US Path of House Price Doom

25 March 2011

Seer's picture

Down under will really go under when China's economy self-destructs, which is only a matter of time (I'd place it in the short-to-mid timeframe).

Rogerwilco's picture

I like Canada. sells me "Outer Limits" DVDs not available here, and when the U.S. finally gets around to annexing that northern hotbed of terrorism, we'll have plenty of pulpwood for cheap toilet paper.

Housing bubble?, of course. Don't worry though, the banks and pols will rig the action so your kids will foot the bill for your mistakes.

PulauHantu29's picture


I was shcoked when I saw the house prices in Calagry, Edmonton, Vancouver and formerly out-of-the-way places like Jasper; 10-15x annual income (historic norms around 2-3x).

 I hate suffering alone. Good to know Canadian Middle Class Sheeple is about to get screwed (without the KY) like we did in the USA.

"Let them eat cake!"

Kayman's picture

Pulau 29

KY ? They gave you KY first ?  How did you rate that ?



AN0NYM0US's picture

Jasper is such a hole - hard to imagine anyone wanting to visit let alone live there

I wonder what the carrying costs are compared to historic norms? funny no one likes to use that stat.


It's interesting that doomsayer cheerleaders seem to be made up of underwater yanks or homeless canucks.  Down in FL the crazy canucks are scooping swampland at an alarming rate paying cold hard cash, I guess it's something about a currency 25% stronger and sales prices 20% lower than two years ago.

Seer's picture

"It's interesting that doomsayer cheerleaders seem to be made up of underwater yanks or homeless canucks."

Well, that's what you want to see...  But, as a "yank" who is NOT underwater because he believed in downsides (call it doomer, I call it understanding that the world does not work on positive feedback loops alone), I was able to get out of TWO properties (one in the US and one in Canada, taking profits on both) before meltdowns occurred and make money off the CAD as it rose (well, as a fiscal conservative that should be "conserved my wealth").  Now have LOTS of land!  Oh, and my US household is pulling in income from Canada (strong CAD = BONUS)!  I write this not to brag (though, after years of being ridiculed it IS nice to feel redemption), but to demonstrate that your perception of "doomers" is fucked up.

Thanks for playing! Oh, yeah, and thanks for sending CAD down to the swamps of Florida!  Warms my heart to know that Canadians may clean out That swamp (fucked up by years of snake oil salesman, developers and the Bush clan)!

CPL's picture

OSFI is the Office of the Superintendent of Financial Institutions to those that aren't in the know of Canadian financial practices. 

They act as the watchdog in an odd way.  All of their funding comes directly from the banks themselves, it always struck me as strange and even a conflict of interest if your funding comes directly from the people you are trying to regulate.

Oh well, doesn't matter, the GoC is going in for a non-confidence vote against the current minority government at 2 o'clock today.


Leo Kolivakis's picture

OSFI's funding comes from Canadian banks? News to me...please provide some links to back up your claim! Last I checked, it's an independent federal gvt regulatory body.

CPL's picture


Here you go.  Looks for this line.


Since OSFI's regulatory activities are funded entirely by assessments and fees collected from regulated financial institutions and pension funds.


Fox owning the hen house.  Plus I've put guys in there for ten years on contract arrangements.  Not anymore though, dumped my company, sick of the taxation nonsense.

Leo Kolivakis's picture

OSFI's funding comes from Canadian banks? News to me...please provide some links to back up your claim! Last I checked, it's an independent fedderal gvt regulatory body.

Seer's picture

Fox, chicken coop...

Arch Duke Ferdinand's picture

Salient facts to consider...

Population of Canada...@ 35 million

...No Armed Forces to speak, (unlike the US's Armed Force's cost of 25% US GDP)

...Hence CMHC's investment of 25% GDP insuring it's citizen's home mortgages.

...Eastern Canada 24 million....manufacturing based economy???

...Four Western Provinces..only 12.5 million...a plethora of natural resources!!!

...Asia's Billions of Citizens considers Canada's Western Provinces as the only safe haven left in the world.

...Canada also provides free Education and Healthcare.

It is so easy to become a skeptic/critique without knowledge of the facts....

and because of the Japanese Tragedy... the US will in short time initiate PROTECTIONIST POLICIES, imo....

Seer's picture

Wishful thinking is, well, wishful thinking...

I used to boast of the same things as you, but I grew up...

Pretty easy to knock down your straw-man.  Who is Canada going to export to, when everyone else's economies are contracting? (key being the US)

Sitting on all those resources means squat if you can't sell them.  Further, and this is the KEY, without growth to hide all the externalized costs (such as "free" education etc.) things start to fall apart.

Go ahead and take a look at Canada's top exports: energy (oil/NG) and autos.  These two items/sectors are in competition: as energy costs go up auto sales go down.

As I've noted many times, when China's economic bubble bursts it'll take out Canada's escape hatch: nothing as severe as likely is going to happen to Australia, which is really strapped onto the China rocket...

Canuckistan Al's picture

ADF: Come on and get real. First off, I suspect you are a Western Real Estate shill of some type constantly pumping the West. I take it you have an wildly over priced house whose price you want to protect?

Secondly, you are classically naive to think that Healthcare and Education are Free here, far, far from it. My 42% marginal income tax rate, tells you that.

Arch Duke Ferdinand's picture

Be logical...Food, water, natural resources, population and climate.

...Australia is surrounded by billions of potential refugees.

...South Africa already has 50 million citizens


...Hawaii is not self sufficient, is tiny and it is a collection of active volcanoes

...Canada has 35 million...Western Canada has only 12.5 at a world map...this is a no brainer folks.

SumSUN's picture

Yes, we have food, land, water, and the same corrupt banks who own it all.

If something goes sour, taxpayers are left high and dry.


Kayman's picture

Hey Archie Duke

While you are defending the indefensible, I got to ask you- how many attempts did it take to get your realtor's license?

Look at the legal titles in Vancouver, then tell me again that foreigners aren't the backbone of Vancouver pricing.

Arch Duke Ferdinand's picture


....the vast majority of canadian critiques posting are either Renters or those who sold and wait for a correction, or Americans who would love to move to Gateway City, Vancouver BC but cannot afford it.

...Vancouver is set to become North America's next Financial, Cultural and Leisure Capital.

...Never rule out Western Canada seceding from Eastern Canada.(Quebec and Ontario are running humungus Provincial Debts where Western Canada is awash in natural resources w/ but only 12.5 million citizens....that is correct....only 12.5 million citizens.

The Asians appreciate Western Canada's potential.

cpaspareil's picture

Quebec and Ontario do run huge deficit and in Quebec, the pain of cutting back is coming (don't know about Ontario).

But regarding natural ressources, Quebec as nothing to be ashame of compare to any other provinces. It might be good for a minority, friends of the policitian, a few corportation and for the market but for the average Joe, it doesn't make him richer. It just make everything he buys more expensive... 


AN0NYM0US's picture

never rule out the US annexing Western Canada or the West being willing partners. Water, Oil, Wheat and Nat Gas (maybe they'll even let Van be a Special Administrative Region - 2025 will be a much different world than today, who knows maybe even the UN will support an invasion of Alberta to help free liberal democrats from their conservative oppressors

Jessica6's picture

Nope. House owned outright and in the top income tax bracket looking forward to getting even more soaked in the comin years (not!).

Nothing steams me more than the idea of having to bailout the reckless credit-addicted idiots I see all over Toronto, some of whom are even my friends.

Also - free education? Really? Post-secondary? That's news to me.

Greaterfool debunks a lot of the myths about 'hot Asian money' and take a look at how well Calgary real estate is doing in spite of a return to $100 oil.

As for wanting to move there? I've lived in Vancouver, I was even born there. There is nothing on this planet that could make me consider living there again. A God-awful climate, cruddy beaches, and still more meth and crackheads per square block than anywhere else in the country.

Arch Duke Ferdinand's picture

I stand corrected....reduced Education costs.

""Greaterfool debunks a lot of the myths about 'hot Asian money' and take a look at how well Calgary real estate is doing in spite of a return to $100 oil.

A God-awful climate, cruddy beaches, and still more meth and crackheads per square block than anywhere else in the country.""

......So move Mr Sour Grapes...wait for US Protectionism to take hold..... and the millions emigrating here will gladly bask in the God awful climate, cruddy beaches amongst meth and crackheads.


AN0NYM0US's picture

Turner certainly gave his blog an appropriate name.

Arch Duke Ferdinand's picture

jmo, If Fukashima's Radiation activity expands, it not only threatens Japan but also Mainland China, Koreas and Asia.

.....Can you say Billions and Billions of citizens affected.

To escape, will the Asians escape to Europe? or Arab Countries?

Perhaps to Africa or South America.

However, North America seems most logical and Canada's Four Western Provinces seem the most logical...

freedmon's picture

I don't think it's a bad thing that the CHMC's board has neither economists nor financial services professionals on it. Ben Bernanke and Lloyd Blankfein? Then we'd really be in the shit.

Seer's picture

While this quote was directed at the US, it applies to all other governments:

"The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money." - Alexis de Tocqueville

And that's what the CHMC with it's stacked board of pro-development/real estate people have done.  This is a prefect example of how Canadians manage to pretend that they're NOT as fucked up as the Americans; yet, they, the Canadians, want to be like the Americans (who are caught up in their own deceptions)!  Self-deception doesn't turn out well...

billwilson's picture

The Conservatives brought in American ideology to the Canadian marketplace and we will pay for it in the end. We used to have sersible mortgage policies until Harper and the boys came around. Hopefully in a couple of months we will be done with the Republican "no regulation" wanna bees.

Leo Kolivakis's picture

Why do we have to politicize everything? Smartest move the Conservatives did was present a budget they knew wouldn't get approved and launch us back into federal elections. This is their (small) window of opportunity to gain a majority government. It's now or never...and they know it.

Jessica6's picture

This budget failure was as predictable as the sun rising. Opposing candidates were already hiring and putting up posters in vacant store fronts. A month or two earlier there'd been an even quieter signal when hiring plans underway at some Federal ministries suddenly got the axe.

Having said that the worst case scenario is he gets a majority. Rumor has it their own internal polling isn't nearly as positive for them as the public ones are.