Somehow Canada has a reputation for fiscal prudence and discipline, but the truth couldn't be any more opposite.
This goes for the Canadian government as well, which has been running huge deficits for years and whose debt is in excess of 100% of GDP.
Debt is a sign things aren't right, that a person or nation isn't able to or willing to live within its means.
In Canada's case, it's both.
Canadian politicians have decided they'd rather be popular than give Canadians the bad news, that they can't afford to fund Canada's near-socialist dream any longer.
In Canada, health care is free, welfare is so lax that fraudsters find ways to collect dozens of cheques every month, and paid retirement is handed out to everyone, even relatively recent immigrants.
History proves that no society can carry on like this, and Canada will be no different.
All it takes is for a pin to prick the delusion bubble, just like Greece, Spain, and Italy, and dozens of nations throughout history.
People find debt irresistible, it's like free money, but logic says that if we need debt to buy something, it's because we can't afford it.
If we can't afford it now, it's unlikely we'll be able to afford it in the future either.
So, we put it on payments, and pay much more for it over time than we could have if we had bought it with cash.
Intuitively, this isn't smart.
Now let's take out our microscope and have a closer look at Canada to see where the worst offenders are.
Doing this will quickly reveal two provinces, B.
C.
and Alberta.
In Alberta, where oil money flows, the people are hooked on toys, boats, skidoos, 5th wheels, motorbikes, you name it.
And they aren't satisfied with just one, you'll find 2,3,4, or more of these toys in almost every garage in Alberta.
These toys aren't cheap, typically running between $10,000 to $50,000 each.
All financed with debt of course.
It used to be that Alberta's real estate was relatively inexpensive, so these toys didn't cause Albertans to go into much debt, but those days are over since the oil boom, now houses in Alberta are as expensive as any province, save B.
C.
In B.
C.
, and Vancouver particularly, real estate is a religion, and everyone has the faith.
Houses are the most expensive in the world, relative to income.
Vancouerites aren't into toys like Albertans, they're just up to their ears in mortgage debt.
So much so, they're forced to dip into their lines of credit and credit cards to get by.
I guess Canadians, and more specifically Albertans and people from Vancouver thought this would go on forever, with no consequences, but already Albertans have hit the wall, with oil revenues crashing.
Jobs are being lost now in Alberta, and suddenly people realize why you don't want to be so indebted.
In Vancouver, it's more of a slow burn at this point, the economy is wilting and jobs are being lost at a slower rate, so it's not as noticeable as in Alberta.
Likely this will change when some event occurs, it always goes that way.
History is rife with examples of people getting into too much debt, then paying dearly for those decisions, yet they never seem to learn from history.
Today is no different, and the results will be no different either, though those caught up in the debt pyramid can't see it yet.
It will take a sudden shock to their world for them to see it, something which drastically changes their circumstances in an instant, like the loss of a job or a financial shock which makes their precarious finances untenable.
This goes for the Canadian government as well, which has been running huge deficits for years and whose debt is in excess of 100% of GDP.
Debt is a sign things aren't right, that a person or nation isn't able to or willing to live within its means.
In Canada's case, it's both.
Canadian politicians have decided they'd rather be popular than give Canadians the bad news, that they can't afford to fund Canada's near-socialist dream any longer.
In Canada, health care is free, welfare is so lax that fraudsters find ways to collect dozens of cheques every month, and paid retirement is handed out to everyone, even relatively recent immigrants.
History proves that no society can carry on like this, and Canada will be no different.
All it takes is for a pin to prick the delusion bubble, just like Greece, Spain, and Italy, and dozens of nations throughout history.
People find debt irresistible, it's like free money, but logic says that if we need debt to buy something, it's because we can't afford it.
If we can't afford it now, it's unlikely we'll be able to afford it in the future either.
So, we put it on payments, and pay much more for it over time than we could have if we had bought it with cash.
Intuitively, this isn't smart.
Now let's take out our microscope and have a closer look at Canada to see where the worst offenders are.
Doing this will quickly reveal two provinces, B.
C.
and Alberta.
In Alberta, where oil money flows, the people are hooked on toys, boats, skidoos, 5th wheels, motorbikes, you name it.
And they aren't satisfied with just one, you'll find 2,3,4, or more of these toys in almost every garage in Alberta.
These toys aren't cheap, typically running between $10,000 to $50,000 each.
All financed with debt of course.
It used to be that Alberta's real estate was relatively inexpensive, so these toys didn't cause Albertans to go into much debt, but those days are over since the oil boom, now houses in Alberta are as expensive as any province, save B.
C.
In B.
C.
, and Vancouver particularly, real estate is a religion, and everyone has the faith.
Houses are the most expensive in the world, relative to income.
Vancouerites aren't into toys like Albertans, they're just up to their ears in mortgage debt.
So much so, they're forced to dip into their lines of credit and credit cards to get by.
I guess Canadians, and more specifically Albertans and people from Vancouver thought this would go on forever, with no consequences, but already Albertans have hit the wall, with oil revenues crashing.
Jobs are being lost now in Alberta, and suddenly people realize why you don't want to be so indebted.
In Vancouver, it's more of a slow burn at this point, the economy is wilting and jobs are being lost at a slower rate, so it's not as noticeable as in Alberta.
Likely this will change when some event occurs, it always goes that way.
History is rife with examples of people getting into too much debt, then paying dearly for those decisions, yet they never seem to learn from history.
Today is no different, and the results will be no different either, though those caught up in the debt pyramid can't see it yet.
It will take a sudden shock to their world for them to see it, something which drastically changes their circumstances in an instant, like the loss of a job or a financial shock which makes their precarious finances untenable.
Source...