519-646-2222Doom and gloom – economic predictions
We hear them all the time, doom and gloom – economic predictions. The media reports consumer debt is at an all time, every year it’s the same story. They also tell us that Canadians are liquidating RSPs and other pension type savings vehicles to pay bills. Incomes are going down year over year while taxes and living costs are increasing. Our one saving grace seems to be escalating house prices, as we pay down our mortgages and see the value of our properties increase we can access the equity to consolidate debt.
But where does the gravy train end? That’s a question plaguing economists, bankers and statisticians. Almost all indicators suggest a plateauing of the overheated housing market and the doom and gloom bringing our economy to its knees. So soon many Canadians forget the hundreds of billions of dollars in taxpayers’ funds that were used to bail out Canadian banks during the 2007/8 banking crisis. What if it happened again?
It could and the Trudeau government has passed a “bail in” bill that will allow Canadian banks to convert your assets to shares should they find themselves in the same kind of pickle in the future. For the time being banks are looking for more innovative ways to keep extending the credit market from easy loans for new immigrant populations to more lenient collection protocols and holding the line on mortgage rate increases. Don’t misunderstand this move on variable rates, keeping you in a variable allows for adjustments in the future, fixed rates don’t.