Flaherty set to extend mortgage backstop

Peacenik has been talking about the housing bubble in Guelph and Canada for a while and reading about it at www.greaterfool.ca. And Peacenik has been doubtful that Canada's banks are as strong as our leaders and the media have said they are. Now we find out that Flaherty is going to piss away billions more propping up the supposedly strong Canadian banks and the Canadian housing industry. Low downpayments, long amoritization periods, and peak prices for housing are the exact ingredients that led to the U.S. financial collapse.

Why have a financial crisis today if you can delay it till tomorrow.? Peacenik and Peacenik's fellow taxpayers will be only too happy to help out the current crop of house purchasers. Its not their fault they are getting sucked into buying at the peak. Its not their fault income to purchase price ratio is totally out of whack. Its not their fault the economy is a mirage. Yes Peacenik says bail out the banks and the homeowners. That's what taxes are for. Healthcare. Not so much. Education. What dat? Social justice. That's for wimps.

Tara Perkins

Globe and Mail Update Last updated on Thursday, Sep. 24, 2009 08:57AM EDT

Ottawa plans to extend the biggest emergency measure it created to help the banks weather the financial crisis, a sign that the government and the banking industry are not yet prepared to call an end to the economic upheaval.

Finance Minister Jim Flaherty has decided to keep in place the government's $125-billion program to buy mortgages from lenders, a program that had been slated to end next week.

The banking industry has been pressing the Finance Minister to extend the length of the program because they continue to benefit from it and because there is still the possibility that liquidity pressures could re-emerge.

Read on...

End badly

Peacenik is reading more and more articles that suggest the papering over of financial problems isn't working. Long term interest rates are rising. The price of oil is going up. The value of the U.S.dollar is falling, and as it falls the Canadian dollar approaches parity.

The consequences are confusing. Charles Hugh Smith has a nice readable article about interest rates going up and what might happen. Mish has something about the mortgage market freezing up. And Garth Turner's article below adds some local flavour. Peacenik guesses that the price of oil going up might goose the TSE, and strengthen the Canadian dollar. But it is all bad for the economy, which seems to Peacenik to be in some kind of death spiral. Even Canada's forest industry, a backbone of the economy, needs a billion dollar bailout. Is there any private sector economy left?

End Badly

by Garth Turner

Some days ago, I made three predictions. In a year…

* The prime rate will have doubled.
* Oil will be $100 a barrel.
* The dollar will be at par.

Since then, mortgage rates jumped for the second time in as many weeks. A lot, actually. Sixth-tenths of a point in a few days, taking a five-year closed term to 5.85%.

Oil closed Wednesday in excess of $71 US. This means the black stuff has risen 100% in price in the last three months. If these were normal times, that would be shocking and consequential news – especially since gas will again be $1 a litre in a few days.

Read on...