Imagine The Value of Your Home Is Increasing In Value, But You Can’t Pay The Mortgage Nor Can You Afford Current Rent Prices – Welcome To Canada, Where Home prices post the second-biggest monthly jump since 2006 – August 19, 2023

I wrote about Canada’s housing market years ago, and one of the things I said was that the Canadian ECONOMY was going to look very strange in the future. My reason for this was because of the amount of what I consider price controls built into Canada’s regulatory systems.

I’m one of the very rare writers who write about the Canada Mortgage and Housing Corporation (CMHC), which is a State Owned Crown corporation that was initially designed to make housing more affordable and accessible to ALL Canadians.

CMHC has a mortgage insurance product, which, if allowed to fail, would leave Canadians with a tax bill that would likely bankrupt the nation or put a large number next to the Federal Governments Deficit, which would likely make DOMESTIC consumer prices even more expensive.

The Federal Government of Canada continues to grow in size while the housing market grows in size and to show you how bad the housing situation is in Canada, most politicians own property in Canada, and some of those politicians are LANDLORDS, so there is NO incentive for a lot of politicians in any political party to pop the housing market bubble.

 

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So the numbers are out, and the value of Canada’s housing market is rising; however, a lot of Canadians are, for example, missing auto loans or credit card payments to pay their MORTGAGES. Making matters worse, if these homeowners, many of whom have SEVERAL properties they’re looking to rent out, can’t pay their mortgages, what does this mean exactly? I like to point out that most of these mortgages are NOT CMHC insured; however, if the housing market DELFATES, people tend to forget the value of the CMHC will deflate along with it.

If you’re finding it difficult to follow me here, is what I’ve been hinting at for a very long time is that until a politician is brave enough to implement MASSIVE austerity measures on Canada’s PUBLIC SECTORS, which also includes getting rid of a lot of cushy work for home federal jobs, Canada will have some SERIOUS financial problems not a decade from now, I’m talking 5 years from now.

When I initially wrote about the systematic problems CMHC would cause, I said it was about ten years, well, those ten years away are approaching rapidly, and Justin Trudeau’s cabinet appears hell-bent on making their CLimate Change agreement their crowning achievement.

When the Canadian economy does crash and the Canadian market starts getting flooded with bankruptcies, I expect a similar response from the Federal Government to what we got when Covid-19 first struck.

When Covid-19 hit, people tend to forget that a WAVE of Canadians actually defaulted on their mortgages and RENTS, and Trudeau bailed out the housing market. This often goes overlooked because most people felt as though Trudeau had to do that, but I remind you that Canadians DEFAULTED on their debt obligations.

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So Canadians defaulting on their debt obligations is now nothing new. In fact, in Montreal, RENTERS want to stage a rent holiday; I’m reading that some Montrealers to make a POLITICAL point want to stop paying their rent.

Quebec is what we call in Canada a “Have Not” province, meaning that Quebec’s PUBLIC sector, without constant bailouts from Canada’s Federal government, would be BANKRUPT. So, if this type of rent PROTEST becomes popular all over Quebec and possibly the rest of Canada, who knows what could happen next? One of the best features of Canada’s banking system is that Canadians historically SERVICED their debt obligations.

What I’m getting at here is that this could be coming to an end, as Justin Trudeau’s war on fossil fuels is fueling higher costs for EVERYTHING! I have to also point out that what the Canadian dollar does in the Forex markets differs from what happens domestically.

As people know, in China, there is the Yuan and there’s the DOMESTIC Renminbi; I think it’s smarter to look at Fiat currency this way. Even though China separates the Yuan and Renminbi for capital controls, the truth of the matter is that the strength of a fiat currency in the forex markets is not always tied to fiscal policies.

Most people trading forex aren’t paying attention to Canada’s fiscal situation; they’re looking to move around currency for PROFIT. Where problems for the Canadian dollar would become serious is if Canada DEFAULTs on its debt obligations, and I contest that the Canadian government CAN’T let that happen and that it would be more likely that the Canadian government make life even more expensive for Canadian taxpayers rather than allow the Canadian dollar to be destroyed in the forex markets.

 

Because in case people aren’t paying attention, Canada has become EXTREMELY reliant on IMPORTS over the years, as they threw away their manufacturing sectors in exchange for Public and Service sector jobs. What this equates to is extreme reliance on their STRONG CURRENCY to import things into Canada.

In Venezuela as an example, it’s very difficult for any local to purchase anything that needs to be imported because in order to import anything to Venezuela, one must have access to U.S. dollars because the seller of STUFF, doesn’t want the RISKS associated with the Venezuelan bolivar.

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If I accept bolivars to sell you a motorbike, I will have to find someone dumb enough to exchange their reserved currency for Bolivars. If I go to a money changer, most of them do not want small bills, so imagine going to a money changer with bolivars.

I say this to bring home the point of how bad a shape the Canadian economy is and with all the levers of government in place, to protect Canada’s standing in the world that things are likely to get even worse in the future.

Interesting times ahead!