Celebrate the conservative lending practices at the country's banks??

reportonbusiness.com: globeinvestor.com - Canada resale home price index rises in October

Canada's housing sector avoided the crash seen in the United States and other Western countries, partly because of the conservative lending practices at the country's banks, which are often considered to be among the world's soundest.

I wish such nonsense would stop being spread. I'm not sure how one would measure quantifying "sound lending practices", but I am sure that the globe didn't go through the exercise.

What it does seem like is that Canadian banks do not really have any lending standards at all. If they did, then it wouldn't be possible for someone with a down payment < 20% to have the same interest rates as someone with a >20% down payment as is the case right now.

The reason the Canadian banks have been so successful thus far is because they have a willing accomplice in the Canadian Government (through the CMHC) and a Central bank that defines reason by lowering interest rates to near zero (despite Australia, a similar economy, raising rates).
(I know Central bank apologists will say they are only following the US, but I respond that if you see the Titanic going into an iceberg, you find a different route)

If anything, ineptness and the lack of competition and innovation in Canada helped the banks because they didn't need to create innovative financial products to be profitable, their profits are all but assured by Canada's foreign ownership laws. Again, some will argue that Canadian banks had the foresight not to enter the US subprime market, but I would argue it wasn't foresight, but blindness about what is happening outside the Canadian borders because the getting was so good.

Caution urged on mortgage rules

CIBC senior economist Benjamin Tal said in an interview.

“The main risk here is overshooting, over-responding and basically shutting down or slowing down significantly the housing market, That is a risk they have to take into account, because the housing market is a major, major contributor to overall economic growth and we are still in a very fragile state of the recovery."

Let me translate this.

“The main risk here is overshooting, over-responding and basically shutting down or slowing down significantly the housing market and significantly reducing our government subsidies profit., That is a risk they have to take into account, because the housing market is a major, major contributor to our profit and we are still in a very fragile state of the recovery."

Basically, the banks know that this housing market will eventually bust because interest rates will not remain at these lows, and they want as many people to take out mortgages (mortgages that they will likely not be able to afford when rates go up) as long as the government insures them.

They know that if the government increases the down payment amount or reduces the amort period, then this bubble will burst, and this free money that the gov't has been gifting them will stop.

I will post soon about my position on banks commenting on housing reports, but my advise to everyone is to take it with a grain of salt, they want to give out as many mortgages to as many people as long as they have a government insuring them, and they want to extend it for as long as possible.

reportonbusiness.com: globeinvestor.com - Caution urged on mortgage rules

Greece to revamp tax system - bad idea!!

Hmmm, seems something is missing here, and you have investments in Euros, you should take notice.

The first thing missing is that there is no mention of cutting government spending. When you know you have the European Central Bank there to get you out of this mess, I don't think I'd be very serious about cutting spending either.

The other major problem of course is that this is a tax increase, and by the looks of it, a tax increase on the wealthiest people in the country. Greece's tax rate is already close to 40%, so lack of tax revenue is not likely the problem. And increasing taxes will just hurt consumption and hurt businesses.

"Markets so have reacted skeptically to Greece's recovery plan."
Well obviously markets will react skeptically, because their plan will destroy their economy, and their ability to pay their debt, and possibly the Euro and the Union along with it.

Greece wants to raise taxes to solve it's problem

reportonbusiness.com: globeinvestor.com - Greece to revamp tax system

Central bank warns on rising debt

Canada's central bank has warned that the biggest risk to the country's financial system is the increasing amount of debt.

Hmmm, what can be causing the amount of debt to increase?? Maybe people have just become more greedy or irrational lately?? Or maybe more people believe the world is going to end soon, so they want to live it up in a big house with a new car before it's too late?

Or maybe it's because of this insane policy we have that is keeping interest rates at near zero.

This is really hypocracy at its worst. It's like punishing the kids for getting drunk when you spiked the punch bowl.

The bank did an excersize where it raised the interest rate to 3.2 and 4.5 from its current .25%. What does that translate to? Hmm, if you raise interest rates by 3 percent, that will translate into about a $700 incraese for the average family per month. If you raise it by 4%, that translates into about a $900 increase (assuming an average mortgage rate of 400K and a 35 year amort rate). How many people do you know who can afford such an increase?

This is negligence pure and simple. Why is it that the Bank of Australia is raising itnerest rates, while Canada is doing nothing? Because Australia's housing market already crashed. The BOC is desperately trying to keep Canada's housing bubble inflated. But as the rest of the world has already seen, this isn't possible.

If the BOC were a private entity, I believe you'd have a good case against them for fraud.