" Think there is no credit bubble in Canada?"

Doesn't the credit bubble disaster in the US have more to do with the lending practices of the banks? I don't know maybe the inability of the debtor to repay the lender has something to do with the financial meltdown world wide.

The real story is the differential between the adjusted value of inflation and disposable income. Disposable income is lagging inflation if I read that right and infer from the slope differential.

The main difference in indebtedness is home ownership. This is only a credit bubble if the mortgages are unaffordable at a higher interest rate or lower housing price. The rules are tighter in Canada so the impact of higher rates and/or lower prices would be far less than the US where they gave credit to anyone with a pulse whether they had ID or not (a job wasn't even asked in some cases.)

It could have some impact but we aren't talking bank failures here. Our default rate is less than 1%.

Can't be me, no credit for 10 years.

'a gentler time when couples played duets
and it was considered immoral to be in debt
i shall continue to the day i die
to pay in cash for the things i buy'

best i can do from memory dear Wystan....and i shall faithfully continue the good sense you rhymed...

To see what many mortgage holders will experience if the rate rise to say 5%-7% run some what-ifs using this site :

http://www.bretwhissel.net/cgi-bin/amortize

Good on ya, Simeon. All we have it mortgage debt, but debt it is nonetheless.

Wow; the first two comments are variants on the phrase, "It's different here." How many Americans told themselves that in 2006 or 2007?

It's only different here until it's not.

The original source of those charts is a great blog to read about the Canadian economy, and the truly massive expansion of credit at all levels in the last decade. We are setting ourselves up for a world of hurt, just as the Americans did.

http://americacanada.blogspot.com/2010/03/country-of-fiscal-prudence.html

Credit is just too easy to get. My daughter has a $10,000 line of credit. She is a student with no income except her parents. I have taken two loans in my life and do not have a line of credit. My daughter's Visa has a higher limit than mine. Makes no sense to me unless you are in the bankruptcy business.

Credit is a wonderful tool for people who understand money but it is so dangerous to stupid people.

Speedy at March 17, 2010 3:47 PM

"bankruptcy business"

Credit is the bars in the business of the banks, the bigger the bars the more secure the jail!

speaking of bubbles . . . after 400+ days and two $Trillion more debt . . .

Pop goes Barry's weasel.

http://www.gallup.com/poll/113980/Gallup-Daily-Obama-Job-Approval.aspx

The credit card companies hate me because I pay in full my credit card debt every month. Apparently they have upcoming plans to deal with people like me. When I bought my condo, I paid 50% of it as a down payment and paid off the rest in three years. I have never bought a new car. I only buy 5 year old cars at less than 30% of the new cost, keep them well-maintained and run them for 15 years before buying another.

The credit card companies hate me because I pay in full my credit card debt every month. Apparently they have upcoming plans to deal with people like me. When I bought my condo, I paid 50% of it as a down payment and paid off the rest in three years. I have never bought a new car. I only buy 5 year old cars at less than 30% of the new cost, keep them well-maintained and run them for 15 years before buying another. Maybe if more people were like me the credit bubble problem would not occur.

I buy a ton of stuff on credit. I don't apologize for it either.

The self righteous albertaclipper types think we should all be like him. Thanks but no thanks.

I make money the old fashioned way. I use someone elses.

I have credit cards but at the end of the month, their balance is zero. I have a line of credit but the balance is zero. My humble house is mortgage free. Being old fashioned, I have a savings account. Credit bubble? As far as I'm concerned, its a pretty flat bubble. I do have a car loan, but, guess what, its at zero percent interest and I could pay it off tomorrow if I wanted to.
Do I sleep well at night? You bet.

Credit is a wonderful tool for people who understand money but it is so dangerous to stupid people.

Posted by: Fred

HAH! that explains the geniuses at Lehman, FMAC, etc....

Self righteous??? All albertaclipper is saying John is he pays off his debts on time. He's using other peoples money as well but he wisely decides to not pay the ridiculous interest. Sound advice to me.

It goes against the grain to say this because I have believed that living within my means and staying out of debt were good qualities. But in a world where more people are mired in debt I can see that eventually, the only way to balance the books is to take from those who have to bail out those who don't.

See that tiny little dent on the graph? No, you don't? Of course you don't! That's me, saving pennies for 10 years to pay off the mortgage. Should have spent like a drunk sailor instead.

I am with albertaclipper, i.e. terrible for the economy AKA "tax and spend government".

Remember my rants about outsourcing killing North America? You bashed me for 'not understanding simple things'. Take Ontario insurance rate hike this year. Mine went up 25% for no reason. Or maybe there is a reason?

Of course there is! It's the loss of industrial insurance income, evaporation of the manufacturing sector. The insurance industry is compensating by hiking rates on the individuals. Keep buying made in China, you'll see more of that. And the cash now comes only from the printer on Ottawa.

Our educational system should be teaching our young what compound interest means. Baby sister was only 16 and got a credit card and maxed in out and had no idea that her monthly payments didn't cover the debt just the interest encrued. They get them young and it becomes a lifetime bad habit, me I refuse to pay credit card companies interest they make no money off me.

Rose,

If the babysiter was 16 when she got the card it's the banks problem and she doesn't have to pay it back. She's too young to sign a contract. So long as her intention wasn't to defraud when she racked it up, she can walk away.

Why do I have a hard time believing what these guys are peddling?
Theirs a lot of people who are trash talking the economy for their own interests. Kind of like how the media trash talks the Conservatives.

If we’re all so doomed, you’d think that it’d of already of happened!
Sounds to me like someone’s yelling up at us, screaming “JUMP!”

Well Kate, I did as you suggested and I “Thought Again”, but the thought that popped into my head is to never trust a smooth writer with lots of fancy graphs and a agenda.
Didn’t the Global Warming debacle teach us that?

While i definatley agree with not carring debt ..we need not forget that mortgages are now becoming lines of credit you know ING'S unmortgage or manulifes manulife one ,so on and so forth ...also there are alot of people doing the smith manover in witch you never pay off your line of credit but turn it into a deductable for your taxes by continuously investing your principal payment ...so there is a switch and credit card debt and self entitlment so yes ....debt is rising ...but that is one reason it may be making a difference ...

Paul in calgary

Correct me if I’m wrong.
55 Billion of credit card debt, divided by 33 million Canadians, equals $ 1666.66 each.
Not quite the big scary number now eh!
I know lots of people who use their credit cards for practically everything, but pay it off every month, on time and interest free. They do this because they’re collecting air miles.
The more I “Think Again”, the less scared I become.

Now, about the next graph that tells us that Canadians “Line of Credit” has risen all the way up to the “Ohhh the Humanity!” level of a whopping 205 Billion dollars.
Lines of credit are given to people who have an asset that is used as collateral, usually the equity in your house or your investments. Most Lines of Credit are used by people for investments, not consumption.
Again, they’re not risk free, but they’re nothing to be shaking in your boots about either.

Hey Bootsy, when ole albertaclipper says people should be like him, I say thats self righteous not financial counsel.

Well, John, if you want to give a large part of your income to the banks, go ahead. In the past 12 months I have gone on three cruises, to Alaska, South America and the Bahamas, as well as taking a holiday in Florida, and spending a month traveling around western Canada, all paid for with the money that I saved by not paying interest on a credit card balance. To each his own.

Hey Blame Crash, see that line near the bottom saying 'income'? When the other line goes up way faster than that line, it's a bubble. Brought to you by the Bank of Canada and the rest of the government.
@Aaron: So your plan is to restore our wealth by making stuff more expensive to buy? Brilliant, then my debt gets me even less stuff.

> your plan is to restore our wealth by making stuff more expensive to buy

Another 'short-termer'. I just coined a word!

And you still have no argument. Keep your word and I'll take my victory.