Email From Canada: It’s Different Up Here – It Really Is!

In response to Canada’s Household Debt Reaches Record $42,000 a Person I received an email from Paul Kilby of Canada (city unknown), who thinks it’s different in Canada.

After correcting at least 20 typos and spelling errors
Paul writes …

As a Canadian I take great umbrage at yet another irresponsible bearish article from you.

Reasons:

1)Your type of advice has lost investors a double over the past 15 months
2)You have no understanding of how high ratio mortgages are funded in Canada(hint: Its not the cowboy Fannie, Freddie, package them and sell them as AAA debts etc)
3)Canada’s vast natural resources and tiny population largely insulate us from all but the direst long lasting downturn which we are obviously not having worldwide nor are we likely to
4)Our banks are very solidly capitalized and would require a 25% downturn in real estate values to even begin to dent this solid position as well as vast defaults on other debts. That’s nationwide. We are not, I repeat not, oversupplied in housing in the vast majority of the country.
5) Barring a worldwide collapse that would make 08-early09 look like child’s play what calamity do you have in mind that would knock Canadian RE values for such a loop.

Even you must admit the most likely scenario now is a world muddling through the next 3 to 5 years, hardly the stuff real estate collapses are made of.

Do I think we will have a correction in overheated markets (Van to Calgary. Yes, but nationally this will likely translate into a 10 to 15 % overall decline and likely take 18 months to 2 years to complete.

In case you haven’t noticed, Bernanke, Geithner et al will not permit asset prices to collapse worldwide, the US dollar be damned. As an American this must be very upsetting to you but please don’t pretend to know anything of Canada s economic position as you clearly don’t.

Paul Kilby

Dear Paul…

It is not different in Canada no matter what you think.

However, let’s start at the beginning of your rant. For starters, I did not cost anyone in Canada a dime. Most of my readers believe as I do and were not about to plunge into an overheated market no matter what I said