Wednesday, May 10, 2017

Canada's Lehman Moment Approaches

"Greed, greed, and more fucking greed. And cheap money..."

Post-2008 Globalized hubris runs high in Canada, a country that escaped relatively unscathed from the U.S. property bust, owing largely to China's historically unprecedented mega stimulus. Another burst of China stimulus in 2016 catapulted Vancouver and Toronto real estate up another ~30% respectively, mirroring the action in China's major cities. Now unfortunately, China is slamming the brakes on their latest bubble, which is not only imploding commodities, but appears to have started the dominoes falling in Canada's mega housing bubble. 

Canadian dollar with Oil:


First off, kudos to the B.C. "Liberal" party for last night trading in their majority government for a tenuous minority  - the balance of which is held by the diametrically opposed Green party. I give it about two weeks, plus or minus two weeks. The ultra corrupt pseudo-"Liberal" government - to the right of Genghis Khan - is responsible for the importation of untold billions in offshore capital laundered through Vancouver real estate - generating a bubble in prices, an affordability crisis, a rental crisis, a homeless crisis, and an opioid epidemic fuelled by imported Chinese fentanyl across the homeless community. 

If it's any country that could have learned from 2008 and had the lesson stick it's Canada since the once-staid Canadian banks eschewed all of the American loose lending practices right up until 2008, and thereafter inexplicably embraced them with wild abandon. It was misplaced hubris on a colossal scale, and now the dominoes are falling.

This week, Canada's largest banks worked to bail out subprime lender Home Capital Group, and for their efforts they were today downgraded by Moody's:

In other words, this:

Is accompanied by this:

But let's not get too cocky in this part of the world either:

Toronto Dominion with S&P 500:

An Idiocracy doesn't learn. That's what makes it an Idiocracy...

Greed, greed, and more fucking greed. And cheap money. Check.
A stupid fucking government. Check.
A regulator asleep at the wheel. Check.
Conniving and corrupt developers. Check.
And above all, wanking fucking bankers...