Former Bank of Canada governor David Dodge disagrees with successor Mark Carney on debt, housing bubble

Mark Carney is used to having the last word in all matters related to the national economy. But the Bank of Canada governor took some criticism yesterday from none other than his predecessor, David Dodge.

Dodge, who headed the Bank from 2001 to 2007, disagreed with Carney’s vision that rising consumer debt is the biggest threat facing the Canadian economy.

From the Globe:

“I don’t think it’s in trouble,” [Dodge] said, noting most consumers aren’t overexposed. In areas where employment levels remain high (such as Alberta, which Statistics Canada reports has Canada’s highest per-capita consumer debt level), debt loads are “probably not such a big deal.” And so long as interest rates don’t rise past historically average levels, it would be “a bit of a squeeze, but that’s kind of manageable.”

Dodge also took on Carney’s vision that hot housing prices in Vancouver and Toronto are signs of an overheating Canadian housing market.

From the Financial Post:

High house prices are not a serious problem in much of Canada due to low carrying costs but in Toronto and Vancouver where values have soared in the last few years it’s “a different issue,” said [Dodge].

That’s because foreign investment is a much bigger factor in these cities, something “we know much less about and we know much less about how stable that is likely to be,” Mr. Dodge said.