本文发表在 rolia.net 枫下论坛one thing is true that the liquidity crench surprised lot of economist including Feb because the mainstream thinking is: there is over-liquidity issue in American market, not the opposite and for exactly this reason and inflation concern, Feb refused to drop key lending rate even when US growth slowed down dramatically at the beginning of the year.
Bernake kept aloft to this problem becoz he believed that subprime thing can be contained and not spread to other field of economic sector... it is partly ture though... there is no obvious sign that it has bee spread to other sectors but it is not contained.. it is become a much larger woe to the financial market. Recent both ISM reading show that US is still growing but at a slower speed. there is no instant risk of recession.
I personally don't believe the same thing will happen to Canadian housing market for several reason.. first, for the house/apartment sold in Canada, new family formation ratio is 70%--around 70% of the unit sold to end user (forming new family), only 30% buyers are second house buyers or investors.. therefore market is less frothy than US's. Although as house price go up sharply, house become less affordable but still reasonably priced considering the debt service ratio. house price might slow down but won't experience severe correct like the one we see in state.
However, subprime thing will spread to other sectors in the end, people who default on mortgage will default on credit card, car loan or other house appliance purchase loan etc and other industrial will feel the pinch in the end. it will slow US's economy finally and canada, as the largest trading partner of us (80% total trade with US) will feel the pain in the end.
Canada has its own problem.. it is that its economy is running above potential capacity and generate inflation, and central bank has to decide whether to raise rate to fight the inflation. obviously it will have a hard time making decision-- fight inflation first or inject liquidity.. .???
without further data to support how big a problem in canada in term of subprime loan.. or liar loan as dubbed in US, I can't give comment on the likelihood of such crisis happening in canada, most major banks in canada had strict guidance as to income confirmation, personally I don't believe same thing will happen in canada but canada will negatively impacted by the crisis from south of border..更多精彩文章及讨论，请光临枫下论坛 rolia.net
Bernake kept aloft to this problem becoz he believed that subprime thing can be contained and not spread to other field of economic sector... it is partly ture though... there is no obvious sign that it has bee spread to other sectors but it is not contained.. it is become a much larger woe to the financial market. Recent both ISM reading show that US is still growing but at a slower speed. there is no instant risk of recession.
I personally don't believe the same thing will happen to Canadian housing market for several reason.. first, for the house/apartment sold in Canada, new family formation ratio is 70%--around 70% of the unit sold to end user (forming new family), only 30% buyers are second house buyers or investors.. therefore market is less frothy than US's. Although as house price go up sharply, house become less affordable but still reasonably priced considering the debt service ratio. house price might slow down but won't experience severe correct like the one we see in state.
However, subprime thing will spread to other sectors in the end, people who default on mortgage will default on credit card, car loan or other house appliance purchase loan etc and other industrial will feel the pinch in the end. it will slow US's economy finally and canada, as the largest trading partner of us (80% total trade with US) will feel the pain in the end.
Canada has its own problem.. it is that its economy is running above potential capacity and generate inflation, and central bank has to decide whether to raise rate to fight the inflation. obviously it will have a hard time making decision-- fight inflation first or inject liquidity.. .???
without further data to support how big a problem in canada in term of subprime loan.. or liar loan as dubbed in US, I can't give comment on the likelihood of such crisis happening in canada, most major banks in canada had strict guidance as to income confirmation, personally I don't believe same thing will happen in canada but canada will negatively impacted by the crisis from south of border..更多精彩文章及讨论，请光临枫下论坛 rolia.net