With another poll coming out warning how indebted Canadian are, and the personal and national risks of carrying so much debt, I’m glad that I spent so much time (and money!) last year shedding my consumer debts. I’m not looking forward to increases to student loan carrying costs but they’re manageable and won’t risk my quality of life. But I was in a privileged situation: I really don’t know what society is going to have to do to help people who have accumulated far too much debt, though increasing the borrowing costs might at least disincentivized people from accumulating large quantities of new debt.
Tag: Finances
Recent reforms to mortgage-insurance regulations announced last week by federal Finance Minister Bill Morneau will likely only add fuel to Toronto’s overheated rental market, Mr. Hildebrand said.
He estimates that the typical buyer will need to earn $86,000 a year to afford a condo under stricter mortgage qualification rules that kick in on Monday, a 17 per cent increase from $73,000 under the existing laws. That will push some prospective buyers into the rental market instead.
New regulations effective Nov. 30 will prohibit mortgages on investment properties from being covered by government-backed insurance, which could make financial institutions less willing to lend to condo investors.
Combined, the changes are likely to drive up demand for rental units while shrinking the supply of new rental investors, Mr. Hildebrand said. “It sort of seems to be to be the wrong time to be doing this,” he said. “Even before the changes come into effect, we’re seeing the lowest level of supply in the rental market that we’ve seen in years.”
Now people can be priced out of renting, in addition to owning. A real victory for all city-bound Torontonians.
But Tal says the one place the rule changes will be felt is the Toronto condo market, where sale prices are below $1 million a property and deals often involve first-time buyers with down payments of less than 20 per cent.
“That’s exactly where the target is,” Tal said.
Shaun Hildebrand, senior vice-president of real estate market research firm Urban Nation, agrees with Tal.
“If there is a beneficiary to these policies, it will be the condo market, whether it’s on the for-sale side where buyers are forced into lower price points or on the rental side, as well, as fewer first-time buyers are getting into the marketplace,” Hildebrand said.
While I tend to agree that moving people towards a long-term rental market is important and not an inherently bad thing (in fact, that culture is prevalent in other housing markets), it does demand affordable rental properties. So: will the slowdown in the condo market actually reduce costs of condos due to competition, and lead to a lower rental rate for them on the basis that landlords will not have to recoup the same investment, or will rents remain where they are (and rise) so that wealthy landlords can extract further rents from their tenants?
Tracing the ownership of many of Mr. Trump’s buildings can be a complicated task. Sometimes he owns a building and the land underneath it; sometimes, he holds a partial interest or just the commercial portion of a property.
And in some cases, the identities of his business partners are obscured behind limited liability companies — raising the prospect of a president with unknown business ties.
A revealing analysis of Trump’s actual financial situation.
Hanjin accounts for about 3 percent of shipping containers globally. It’s big enough that U.S. retailers are worried that delays will shorten the busy holiday shopping season as they wait for goods to arrive. And U.S. exporters now anticipate a 50 percent hike in shipping fees, according to Peter Friedmann, executive director of the U.S. Agricultural Transportation Coalition.
There are lots of reasons for the bankruptcy – including lots of extra ships being in the water right now and a slowdown in the global economy – but this should be cause for concern if only because it showcases the magitude of some of the world’s economic issues right now.
‘It feels like theft’: Ontario wineries frustrated by government obstacles:
The LCBO is a major cash cow for the much-indebted Ontario government. Last year, it returned $1.9 billion in dividends to provincial coffers – on top of the approximately $280 million in HST it makes off the sales. It’s not hard to see how it makes that much. When a consumer buys a bottle of alcohol, the LCBO takes:
- 52 per cent of the cost of wine
- 59 per cent of the cost of spirits
- 39 per cent of the cost of beer
An LCBO spokeswoman says those markups fund Ontario’s social programs as well as the LCBO’s operating costs.
I’m not opposed to the LCBO’s existence but that is a lot of markup on a bottle of wine.
Categories
2014.7.14
The tax increase comes as airlines face increased volatility in jet-fuel prices because of the crisis in Iraq, and as they continue to adjust to the decline in the value of the Canadian dollar, which has also hit airlines because the price of fuel is measured in U.S. dollars.
Greg Keenan, “Airlines to fight ‘unbelievably punitive’ Ontario fuel tax”
Setting aside whether it’s even a good idea to raise this particular tax – I have some doubts – if you replaced ‘decline’ with ‘increase’ in the quotation it would mirror previous complaints from airlines about raising taxes in the 90s through to today.
Categories
2014.7.2
[Mark Carney’s] prescription: End through strict regulation and resilience tests the scandal of too-big-to-fail, where “bankers made enormous sums” and “taxpayers picked up the tab for their failures.” Recreate fair and effective markets with real transparency and make every effort — through codes of conduct and even regulatory obligations — to instill a new integrity among traders (even if social capital cannot be contractual). Curtail compensation offering large bonuses for short-term returns; end the overvaluing of the present and the discounting of the future; ensure that “where problems of performance or risk management are pervasive,” bonuses are adjusted “for whole groups of employees.”
Above all, understand that, “The answers start from recognizing that financial capitalism is not an end in itself, but a means to promote investment, innovation, growth and prosperity. Banking is fundamentally about intermediation — connecting borrowers and savers in the real economy. In the run-up to the crisis, banking became about banks not businesses; transactions not relations; counterparties not clients.”
In other words, human beings matter. An age that has seen emergence from poverty on a massive scale in the developing world has been accompanied by the spread of a new poverty (of life and of expectations) in much of the developed world. Global convergence has occurred alongside internal divergence. Interdependence is a reality, but the way it works is skewed. Clinton noted that ants, bees, termites and humans have all survived through an unusual shared characteristic: They are cooperative forms of life. But it is precisely the loss at all levels of community, of social capital, that most threatens the world’s stability and future prosperity.
Roger Cohen, “Capitalism Eating Its Children”
Categories
2014.4.28
Students who acquire large debts putting themselves through school are unlikely to think about changing society. When you trap people in a system of debt, they can’t afford the time to think.
Noam Chomsky (via zeitgeistrama)
Post-secondary education is neither necessary nor sufficient to change society. Those of us with degrees need to stop acting like university uniquely equips us to improve or transform the institutions in which we operate. On average, we’re less indebted and more able to pay off that debt as a share of our income than those without degrees, so I’d suggest their debt loads are more of an urgent problem.
(via jakke)
I think that the problem is less “time to think” than “time to act.” If you believe that highly educated people can bring useful skills to bear on pressing problems, but that there are often minimal financial resources to pay educated workers to bring those skills to bear, then debt loads may preclude spending time focusing on those particular problems. In effect, if you can’t pay people to do the work then the socially-pressing work may not be done by those best suited to do it.
To contextualize: when I finished my degree there was a minimum amount of income I had to make to service my debt loads while simultaneously surviving in whatever city I ended up living in. That minimum income immediately meant that a series of jobs that would have been politically and intellectually engaging had to be set aside on the basis of insufficient monetary remuneration. It’s this kind of issue that Chomsky is getting at.
The government continues to engage in (somewhat) quiet actions to reduce its exposure to a mortgage or more general financial crisis. At this point we’ve seen shifts in EI, routine concern about Canadian debt levels and risk of increased interest rates, and now tightening of the mortgage insurance rules. CMHC’s decision parallel’s former Minister Flaherty’s earlier comments, summarized as:
Former finance minister Jim Flaherty had also expressed concern that CMHC had become too large a player in the market, needlessly exposing Canadian taxpayers to risk should there be a housing crash. The agency currently has about $560 billion in outstanding mortgage insurance on its books.
When/if there is a mortgage crisis in Canada that leads to substantial job loss, I don’t think Canadians are going to be thrilled by how their social infrastructures have been quietly reshaped around them. Or the relative lack of monetary policies that are the result of long-term low interest rates. Let’s hope nothing happens to make Canadians practically realize the implications of the past 3-4 years EI, monetary, and now CMHC changes.
Excited Pixels 