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‘The crisis is not over’: Carney

Bank of Canada governor issues warning to Canadians carrying too much debt


 

Bank of Canada Governor Mark Carney warned Canadians on Monday they could feel the pinch when interest rates start rising again, especially those whose debt loads will no longer be affordable. Interest rate hikes will be based on inflation, Carney said, but the Bank of Canada hasn’t ruled out raising them to discourage people from taking on too much debt. “While the bar for further changes remains high,” he said, “the bank has the responsibility to draw the appropriate lessons from the experience of others who, in an environment of price stability, reaped financial disaster.” Debt, Carney argued, represents one of the most daunting challenges to the economic recovery. “The crisis is not over, but has merely entered a new phase,” he said. “In a world awash with debt, repairing the balance sheets of banks, households and countries will take years. As a consequence, the pace, pattern and viability of global economic growth is changing, and Canada must adapt.”

CBC News


 
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‘The crisis is not over’: Carney

  1. Could a perfect financial storm be on its way? Can't raise them rates least alota folks lose their shirts ; Can't keep em down forever least more and more folks join the debtor's queue – but we still need folks to keep on buying the WS tvs. Day by day our economy looks more and more like a gigantic ponzi scheme.

  2. Harper and Flaherty tell us things are wonderful, and to be happy….meanwhile Carney is saying 'take cover'.

    • H & F brought in 0 down 40 yr. mtgs. then changed to 5%/35 to pump up the RE economy. Check out http://americacanada.blogspot.com/2009/07/cmhc-an…. Sure H &, F took credit on the world stage for Canada's banking system in comparison to others, but didn't point out that its we taxpayers are on the hook via CMHC. As well, years ago Harper wanted to loosen the regulations on Canadian banks. At least I have read a few articles by American journalists that have pointed out this hypocrisy. But its extrtemely rare to see anyone in our Cdn. MSM point that out.

      • Yes, H & F are taking credit for a banking system they had nothing to do with. In fact the US housing crash came just in time to prevent H&F from doing the same thing here….because that's what they were pitching.

        The no-money-down, 40 years to pay deal was just the beginning.

        We dodged a bullet there thank gawd.

  3. gigantic ponzi scheme.
    Have you ever got that right.

  4. Debt, Carney argued, represents one of the most daunting challenges to the economic recovery.

    Yoo Hoo!! Mr. Harper!!! Mr. Flaherty!!!

  5. What happened to frugality and pragmatism?

    • They lost their looks.

      • The Tories are spending Canada into a bind to reduce
        the Federal governments' power so that provinces will
        eventually have the upper hand! Wake up people!!!

    • Carney priced them out of the market.

  6. "people have taken on too much debt?" And why is that Mr. Carney? We all saw what happened in the U.S. because low interest rates enabled everyone to go out an borrow and then these loans were sold and then the rates went up and then the market went down and then the homes were lost and they are still being lost.
    The very same thing is happening here though the loans may not be all for homes ($1Trillion in mortagage debt at last count). As a past employee (12 years) of Goldman Sachs, that experience should see the future a little faster that most.
    The great depression was caused from similar banking practices. Low interest rates, lots of money flow and then BOOM, down comes the hammer.
    I keep hearing that interest rates are based on inflation. I always thought that inflation was caused by interest rates and at what figure they sere set at.

  7. Seems a little hypocritical, given one of the reasons for lowering the interest rates was to encourage spending; weren't we SUPPOSED to spend our way out of the recession?

    And when we have a government leading by example and racking up billions of debt, can we really be surprised that everyday Canadians follow suit?

    The reality is, we have become far too fixated on consumerism and the belief that we should have it all NOW and worry about paying for it later. Governments, banks and business have all conspired to create and encourage this behaviour.

    I'm not saving as much as I'd like, but at least I keep MY debt to a minimum…

    • Keeping your debt to a minimum is the mark of a successful man these days.

      • In my early 30's I took out a bill payer loan and paid it off. Have never paid a cent of interest to Visa since then. We are mtg free for the last 15+ years as we paid it off ASAP. Then we started to invest. HGTV and all those Flip this House programs led people to believe that their homes could only rise in value. Just add granite countertops and stainless stell appliances. Canadians are still delusional, thinking that we are different from those who in the US, UK, etc. who've seen their property values decrease in value.

  8. This seems like an attempt to get the impact of raising interest rates on the consumer market with out actually raising them.

  9. Canadians are carrying too much debt, eh? I guess this is a bad time to ask Carney if I can borrow 50 bucks, then. Good to know.

  10. Well, looky looky looky. Warnings over the inevitable sad consequences of HIS BANK'S very own making.

    Nearly-free money everywhere, the hangover is on the horizon, and NOW we're tut-tutting over how everybody got suckered in by you, Mr. Carney?

    Monsieur Bernier, in surprising candor towards an allegedly independent BoC governor, and in opposition to its deal with government to keep 2% inflation in sight no matter what, is bang-on, again:
    http://opinion.financialpost.com/2010/12/14/maxim

    • Excellent link, Mr. look.

    • Check the interest rate in all western countries…Japan's nearly at the stage of paying YOU to take the money.

      It's dirt cheap everywhere, it's not just Carney and Canada

  11. Households–quit spending. Government–spend, spend, spend. No wonder they want the households to quit spending–so they can steal more of our money to fund their addictions. The monies pissed away on 'security' is nothing short of scandulous but I guess that is what you get when you head down the road of a police state.

  12. Am I the only one who hears a ticking sound?

    • The sound I hear is that of a balloon (squeaking like fingernails on the blackboard as it is) stretching to a grotesque girth… you will want to brace yourself for the POP that will come as a surprising shock to everyone the moment it happens, just before everyone lines up to explain how they knew this was coming all along.

    • Nah, couldn't be. Those financial whizzes Harper and Flaherty are in charge.

      The 'Genius Twins' who never saw the recession coming either.

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