Canadian Credit Deflation: Chase Bank forgiving all debt owed by its Canadian credit card customers – August 8, 2019,
As a former Chase Canada customer myself who paid off his credit card debt I feel a sense of bewilderment after reading the CBC article below
‘It’s crazy’: Chase Bank forgiving all debt owed by its Canadian credit card customers – CBC
Now, I’ve been writing for years about Creditors leaving Canada, is this a sign? or just Chase Canada having a hard time making a profit? The Canadian credit market is already unsustainable, this is no, secret, sure many Canadians are making their minimum payments, however, because there are so many Canadians already so deep in debt, most credit card companies are having a hard time finding that next sucker to add to their minimum monthly payments club.
Most of the people with good credit shop around for credit cards and will only take credit cards that offer the best rewards, people who don’t have great credit will typically max out their credit cards and pay the minimum monthly balance until either they can consolidate or they’ll pay the minimum monthly balance until they’re dead. Fueling the flames of what I believe is a coming credit market crash in Canada is housing inflation. Home equity loans are very important to the Canadian housing market, home equity loans or equity in ones home is what allows most homeowners to live beyond their means. Imagine one day Canadians real estate investors couldn’t use their home equity like an ATM card?
There are a lot of homeowners in Canada who may have small mortgages but have large home equity loans, furthermore, there are a lot of people in Canada that use home equity to expand their real estate portfolio, home equity loans in Canada are drying up and there is a huge auto lease and financing bubble that’s being ignored. Consider typing “auto lease takeover Canada” its such a big market that even dealerships like TorontoHonda.com have affiliated themselves with lease take over companies. So when I read that Chase Canada wants to get out of Canada so much so that they won’t even sell their credit accounts to the collections market, that tells me that they either really hate Justin Trudeau’s policies or they see a credit disaster happening in Canada in the next few years and they don’t want any parts of it.
JPMorgan Chase has investors to answer too, JPMorgan Chase is a publically traded company, this news hasn’t exactly cratered the JPMorgan Chase stock, so from my vantage point I’m going to pay very close attention to Canada’s sub-prime market, because possible there’s something happening there that the JPMorgan Chase people see that the rest of us in Canada haven’t been able to comprehend yet.
As stated in previous paragraphs the Canadian housing or credit markets aren’t structured to deflate based on how the government via regulations designed it. Inflation is the tax of choice used by the government, remember regulations like the minimum wage are actually a tax stimulus for the government, the higher your wage the more likely you are to get closer to higher tax bracket. If you’re unfamiliar with the damaging effects of minimum wage hikes, if as a manager I used to make $14 an hour and all of sudden $14 an hour becomes the minimum wage, the owner of the private establishment will usually have to bump the wages up of the people in higher positions, otherwise those individuals might quit. Of course, the minimum wage creates more disasters than it solves, but it can serve as a temporary economic stimulus for the government.
The Bank of Canada has kept interest rates low in Canada to cater to the Canada Mortgage and Housing Corporation(CMHC) in order to continue stimulative credit growth. Based on my research CMHC is Canada’s most profitable Crown Corporation in Canada for the Federal Government, CMHC provides MORTGAGE insurance. Canada used to have its own version of the Glass Steagall Act (separating commercial and investment banking.).
Well, if you know anything about the Bank of Canada and the CMHC both of which are Federal Crown Corporations, you’d see why Canada somewhere down the line is going to have some serious financial problems. To tell you how damaging the BoC and the CMHC have been to the long term stability to credit markets in Canada the CMHC is now looking into a First-Time Home Buyers Incentive (FTHBI).
You see because although the home prices have ballooned in Canada, the assumption by Government people is that the CMHC and the BoC have been a positive for the Canadian economy and therefore more expansion is necessary. Being that the Government can’t force homeowners to sell their properties for less money, the Government deems it wise to allow consumers to borrow more money in order to qualify for debt. Does this sound sustainable to you?
Now, I can’t say when this crash is going to happen, but a Canadian Politicians worst fear is that they won’t have anyone to blame if the Canadian Credit market crashes while the rest of the world doesn’t experience the same economic downturn. If there’s an economic or credit market crash in Canada, Canada wants to make sure it happens while the rest of the world is experiencing something similar. Because if let’s say the Canadian market crashes while the rest of the world is doing fine, well people can start pointing fingers at the root causes of the Canadian crash. Now, most Canadians that can at the very least comprehend Austrian economics, know what I’m talking about even if they see things a bit differently, the real problem, however, are the Socialists in Canada, the Keynesians, the Justin Trudeau types who will assume that the government can solve this problem without Austerity measures.
Based on my data, the Canadian market crash will fall on whoever is Canada’s next Prime minister. So, I’m more than okay with the People’s Party of Canada losing to Andrew Scheer or Justin Trudeau in the upcoming election. I’d really prefer the crash happen while Justin Trudeau is Prime Minister because this disaster was actually created because of Pierre Trudeau a beloved figure in Canadian politics who really helped to destroy Canada’s economy.
Sure Brian Mulroney took all the blame, but the atmosphere during the reign of Brian Mulroney was that Socialism works, and Canada will not be like the selfish greedy Americans, even during Olympic hockey games Canadian fans would cheer for the Russia team and boo the American team if people wonder where these sediments come from, look no further than our policymakers. Lucky for the Liberals the corrupt Paul Martin and Jean Chretien Liberals saved the day in the 1990s.
Actually, most of us know the brains of the operation was Paul Martin, you know this by simply listening to Paul Martin and Jean Chretien speak. If you listen to Chretien and Martin talk economics, it’s easy to see that Chretien isn’t much smarter than Justin Trudeau is regarding the economy, which is one of the reasons there was so much friction between Paul Martin and Jean Chretien.
Paul Martin actually created the credit bubble Canada has today, but hey, I give credit where credit is due, those corrupt Liberals gave Canada 25+ years of economic expansion, unfortunately, it appears that the numbers aren’t making sense anymore, so much so that Chase Bank Canada is simply closing its doors and forgiving its debtors. I don’t know maybe they’re just being nice? But I find it odd that a publically traded company would do this. Because that money could have been a windfall for their investors?
Being that Canada is over-regulated when you compare us to modern-day America, Chase doesn’t see the point in going through all the red tape and has basically locked its doors and left Canada, in conclusion, I want to make it clear to the reader that this is what happens during a credit crash. Sure loans might be forgiven in certain respects, but if people who are reliant on credit to survive can’t get any credit, this is what causes economic depressions. Taxes and regulations are very high in Canada which equates to a very high barrier of entry, which equates to fewer companies wanting in on Canada’s credit market. Canadian culture is such that private businesses are often demonized by politicians to get votes.
A large segment of the Canadian population believes that it’s the governments’ job to take care of them financially. So even though Canada’s credit market is over-regulated now, during an economic downturn, Canadians might ask the government to create even more regulations. In Brazil as an example, their Populus President in order to save the country from bankruptcy is attempting minor austerity measures, but you see the Brazilian people who expect the government to take care of them financially for life, don’t see the need for austerity measures, voters after years of socialist brainwashing have been taught to believe that the problem is the evil, Greedy Capitalistic Private Sector.
I think the same reigns true in many parts of Canada if there’s an economic downturn, a large segment of the Canadian population will assume that the Government can solve this problem without cutting regulations or cutting the size of the Government. Although its only speculation on my part I wonder if Chase Banks sees an economic disaster brewing in the Canadian economy?
‘It’s crazy’: Chase Bank forgiving all debt owed by its Canadian credit card customers – CBC
Interesting times ahead.