Canadian Household Debt at Record Levels
June 22, 2010 · Posted in Global Economics
To follow up on my recent post about the socialist basket case that is the Canadian economy, here is an older, yet nonetheless relevant story when it comes to accurately understanding the inevitability of a US-style bank meltdown in Canada:
Canadians’ debt-to-income ratio now ranks first among 20-advanced countries in the OECD and a new study suggests the recession did little to dampen the country’s enthusiasm for taking on household debt.
The level of household income soared to an average of more than $40,000, according to a report from the Certified General Accountants Association of Canada.
“We were a little bit surprised that throughout the recession we continued to take on debt,” Rock Lefebvre, a vice president for CGA Canada, told CTV News Channel.
Household debt reached an all-time high of $1.41 trillion, according to the report. If spread out evenly among Canadians, every man, woman and child would owe $41,740 – more than two-and-a-half times greater than 20 years ago.
Lefebvre said Canadians used to save up to 20 per cent of their disposable income as recently as the 1980s but that number is now less than one per cent.
“Consumerism has taken hold (in Canada) and people who have access to credit, are taking advantage of it,” he said.
Lefebvre said some debt is necessary to stimulate the economy and fill the government’s coffers.
However, he noted bankruptcies were up significantly during 2009 and governments’ debts are on the rise.
“The question becomes at what point has society taken on too much debt?” Lefebvre asked.
Elena Jara of Credit Canada says many Canadians didn’t change their spending habits in spite of the recession.
“People have problems including certain expenditures in their budget or even creating a budget,” she told CTV News Channel.
People were telling me as a response to my last post that I was making things up and that my story lacks backup. I didn’t intend to write an elaborate analysis about the Canadian economy. If you are so interested in the details, then do your own research!
I am merely pointing out that what didn’t work in the US (namely a completely government controlled, politicized, and legislated banking system, subsidized loans on homes, and a central bank with a legal monopoly on creating money to buy up assets such as mortgage securities) ain’t gonna work north of the US or anywhere else for that matter either.
Anybody who tries to tell you that “It’s different here.” or “This time it’s different” because “the Canadian government regulates these things soooo much better blah blah blah” is repeating meaningless platitudes that he read in some newspaper paragraph or heard someone say somewhere on TV.
This has been true since time immemorial, and it won’t change until people genuinely start caring about the world, their own lives, and their progeny’s future.