Some thoughts.
- We're in deep shit in Canada. The housing bubble, finally, looks like it might be ready to tilt.
- There was a large market for depository funds to finance non-bank mortgage lenders. Essentially the "high interest" savings accounts you see advertised are guys seeking equity to lever up into the mortgage market. But like any leverage, if the underlying assets move a bit, then your position moves a lot. If people start pulling their cash (and they are, a lot), then the same psychological phenomenon that creates bubbles works in reverse.
- Canada does not have the policy bullets left to handle a severe mortgage crisis. We either take it on the chin, and allow the correction in Canada to occur fast (ouch), we try to re-flate the bubble with cheap credit (and see CAD go to... 50 cents?), or we see Snowboarder buy up the paper. I think the last is actually quite likely. May god have mercy on our souls.
- Canadians are pretty dumb, on average. But they think they are smart. Which is worse than the average American who probably knows they are dumb.
- Will the shit-show that is the Vancouver and Toronto RE markets kill the other markets, or have we in Calgary already had all the meat flayed from the bones? Probably see a bigger impact than I would like.
- the Canadian banks are going to rip us a new a-hole in the coming years collecting their pound of flesh.
- Home Capital is not the problem, it is a symptom of the problem. Those underlying assets are starting to stank up the joint. But the real problem is the Price to Income ratio for homes in Canada. If the majority of the market can't afford their mortgage payment, then all of the discussion of foreign capital is moot.