Canadian Trends: The Flip Side of Fear
So, seriously, do these economists actually believe that if Flaherty hadn't done that final "tightening" that housing prices would have just continued to rise even though no one really has the money to purchase them? Do they believe that the growing portion of GDP which is being funded by leveraging magical money tree houses to support consumer spending would have continued?
Economists continue to call this situation "better" than a flash crash. Yes, a slow flush down the western economic toilet bowl where there is a self-perpetuating and reinforcing decline between housing values and GDP is a ton better! Oh yea. Iiiiiiittttttssss aaa sssssllllloooowwww mmmmmoooootttiiiooonn ccccrrraaassshhhhhh and that's good - says the economists who predicted rising interest rates, growing GDP, bubbles, rainbows, and lollipops.
If you're new to my blog, being perhaps randomly linked here off Twitter or another site: I'd like you to go back and read my posts, everything I've been talking about up until this point is playing out right now. There is no pot-of-gold at the end of the these rainbows kiddies. We are in a long-term perpetual decline. Our media and "leaders" both simultaneously admit and deny this fact. It's admitted, but coated in a fuzzy-warm array of irrelevant facts like we're the economic leader of the G7, etc. Yes, in the land of the blind the one eyed man is king and Canada loves to boast this concept to the world and it's own citizens.
Canadian Trends: Canada's 'October Surprise'
The myth of the effects of Flaherty's super-tights are to have you all believe "everything is under control". Don't worry, relax, everything is O.K. "It was a tough decision, but the right decision". Who buys this crap, seriously? Mainstream media is doing most people a favour with their paywalls.
The Canadian Crash
No, we're not going to have a U.S. styled housing crash. Why would we? We're not the U.S. and our revenue streams are fundamentally quite different from the U.S. Canada's crash will, of course, be in the style of 'Canada'.
Understanding Canada's economic predicament makes it easy to understand exactly what a "Canadian style" crash is going to look like. It all begins with how our housing costs got so high in the first place. Our housing prices are still running off the fumes of the pre-2008 "boom". Because a large amount of our revenue came from the U.S. and they were "booming" (or as we now know "frauding"), this caused our own economic outlook to become artificially inflated. With large amounts of revenue coming in from the U.S. the amount of available capital in Canada was significantly higher than normal.
Now however, all of the revenue we were getting from the U.S. is disappearing fast, and it's not because of the so-called "shale-gas" revolution or whatever (the oilsands aren't profitable anyway). This is happening because the U.S. is a massive indebted empire which is in decline and before you say: "but their job reports are up", I will point you in the direction of the Bernanke and $40B USD (soon to be $85B USD) per month, forever, in easing. Jobs are not really going to help the situation as those jobs simply represent the means for the slaves to pay their debt. This loss in revenue from the U.S. has slowly been countered by Canadians by increasing their debt loads which are primarily being leveraged on housing.
The resulting consumer spending of the debt has up until now contributed largely to our GDP, which itself provides confidence in economic growth providing for "upwards" economic forecasts which increase confidence which then allow the banks to make riskier bets, providing yet more credit to further fuel consumer spending, and so on and so on. How much of our economy is real? Well, that's what we're going to find out when this whole thing unravels.
Our housing collapse is going to continue to happen in slow motion, and I actually figure that GDP will completely collapse before housing does. Our GDP and consumer spending is the actual bubble, housing is a component in this bubble - but the core problem rests in that we have artificially kept pumping up our GDP with debt after the artificial pumping from the U.S. stopped. Having realized this, our "leaders" have completely reversed course on the whole "ethical oil" thing; now it's "compromise-oil". We need to compromise with these countries in which we disagree with their inhumane and tyrannical practices - for the economy, of course. Do you think it is a coincidence that the usual suspects in Canadian propaganda all stopped referring to the ethical oil meme at the same time? I don't, we've got a new brand name now: "open for business or exploitation".
Flaherty's tights are a cover to convince Canadians that the people who have fucked up everything until now actually have this situation under control. They don't, but coming up with new stories is easy while the people continue to believe and repeat the "experts" being sold. Be mindful and vigilant as a propaganda offensive is being waged, and it's targeted at you.
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Richard Fantin is a self-taught software developer who has mostly throughout his career focused on financial applications and high frequency trading.