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The Canadian Housing Bubble Has Begun To Burst
The Canadian Housing Bubble Has Begun To Burst
Don’t look now but slumping crude prices are hitting the Canadian housing market like a freight train. Energy accounts for 10% of Canadian GDP and around 25% of exports and the swift fall in oil prices is having a profound effect in the nation’s oil producing regions. Take Calgary for instance, where single-family home sales fell 34% last month. As the following chart shows, Alberta derives some 30% of its provincial revenues from energy royalties and as one TD analyst quoted by the Calgary Herald recently noted, “the effects of significantly lower oil prices had already turned up in resale activity, with sales in Calgary and Edmonton down more than 40 per cent and 30 per cent respectively, from October to January [and] as resale activity slows, prices usually follow.”
Depressed crude prices will create a $7 billion annual revenue shortfall for the province while GDP growth, which had been running at around 4%, is expected be just under half that this year, withsome analysts predicting the economy will contract. Here’s CIBC’s outlook for instance:
The Alberta government’s own assessment of the economic situation is deteriorating rapidly.
From the Alberta fiscal update:
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The Tried-and-True Blueprint for Raising Taxes
The Tried-and-True Blueprint for Raising Taxes
As the global economy slides into recession and the U.S. economy catches a cold, the blueprint for raising taxes will be dusted off in every state.
The blueprint for raising taxes in the modern era was first established in 1913 when the federal government instituted permanent income taxes. Prior to 1913, income taxes were viewed as wartime emergency measures to raise money for the immensely costly prosecution of war.
Here’s the blueprint for raising taxes:
1. Declare the tax is an emergency measure.
2. Start the tax out at a low rate to minimize resistance.
3. Levy the tax only on the wealthy to play the “it’s only fair” card.
4. During some late-night session when the public isn’t looking, make the tax permanent by burying the provision deep inside some popular and/or complicated legislation.
5. Raise the tax rate in response to deficits, i.e. “we need more money.”
6. Gradually expand the base by reducing the qualification level from “wealthy” to “well-off” and eventually to everyone.
7. Gradually reduce deductions and exemptions to pittances.
8. Auction off exemptions for the super-wealthy via campaign contributions.
You can watch the blueprint in action in any number of locales–for example, Rhode Island, where the governor is proposing a first-ever statewide property tax on second-homes worth more than $1 million. The proposed levy has been dubbed the Taylor Swift Tax in honor of Swift’s $17 million mansion on the Rhode Island coast.
According to the data presented in these links, Rhode Island property taxes are in the top 20% of the nation. Depending on how the tax is reckoned (as a percentage of median home value, for example), Rhode Island scores in the top 10 of the 50 states.
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Debt As Wealth; The Caution of Unfit Past Experience
Debt As Wealth; The Caution of Unfit Past Experience
With the G-20 recoiling itself back into the same kinds of mistakes made in the 1960’s, leading directly to the Great Inflation, we will have to take into account the other end of that, namely other forms of “stimulus.” With the global economy sinking, and worries about it beginning to resound beyond just inconvenient bears, there is growing official consensus on central banks taking a clearer approach but also that governments need to face up to “austerity.”
Paul Krugman has been leading the critique against what he sees is a disastrous and ignorant deformation against debt. In times like these, which he “predicted” based on too little government spending, Krugman derides fiscal sense as “cold-hearted.”
This misplaced focus said a lot about our political culture, in particular about how disconnected Congress is from the suffering of ordinary Americans. But it also revealed something else: when people in D.C. talk about deficits and debt, by and large they have no idea what they’re talking about — and the people who talk the most understand the least…
People who get their economic analysis from the likes of the Heritage Foundation have been waiting ever since President Obama took office for budget deficits to send interest rates soaring. Any day now!
The above quoted passage was taken from a column he wrote back on New Year’s Day 2012. While it has aged three years, given the global slowdown that was about to take place and the ineffectiveness of monetarism alone to dispel it, his words are being taken increasingly as both prescient and prescriptive. However, the logic behind his anti-austerity agenda is more of a sleight of hand than actual argument.
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