Bad Timing

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Still Running on Fumes

We are leveraging the lowest priced credit for the most expensive non-productive real estate at the worst possible time in history.

On the 20 plus year commodity boom, we produced a huge positive balance of trade. But now after the crash into the March 2009 pit of gloom and for the last 7+ years, the Canadian export economy is hung at record negative net lows. Monetary policy is busted.

What is working is exporting our cheap capital into offshore markets as evidenced by my new chart of Canadian Household Debt plotted over Foreign Direct Investment, GDP and Canada's Balance of Trade data. 

Canadian companies and international affiliates in Canada are using that cheap credit to invest in offshore markets where labour is more productive (they do more for less reward) and those products and services come back into Canada where the same cheap credit fuels our ability to maintain our lifestyles. We are not trading production skills, we are trading future earnings for depreciating assets at record prices.

If you own a single family detached house that was purchased prior to the early 2000's in Toronto or Vancouver or any other isolated but hot Canadian market, you are sitting on a once in a lifetime winning lottery ticket if you can collect.

"The condo you bought is getting 'crusty: Kevin O'Leary'