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Old 10-24-2016, 04:39 PM   #1
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Default 36 Million People In Canada Owe 4.4 Trillion Dollars

Canada's Record Household Debt Is Threatening Its Financial Stability
Nation of 36 million owes $4.4 trillion, triple economy’s size
Households alone carry highest debt burden in Group of Seven
By Maciej Onoszko
October 24, 2016
http://www.bloomberg.com/news/articl...-future-growth

World Debt : 152 Trillion Dollars
https://www.ft.com/content/6f561ae2-...7-e7ada1d123b1

Infographic:

What Does A Trillion Dollars Look Like?

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Old 10-25-2016, 12:52 PM   #2
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I've brought this point up here before, but I'll do it again. A large percentage of "household debt" in Canada includes small business debt. It is excruciatingly painful, and often impossible, to get business loans in Canada for small businesses or the self-employed from our banks. As a result, Canadians usually take on personal debt (loans, HELOCs) instead of business loans.

It has been this way for a long time. In the mid 80s, my father and his co-worker/friend started an industrial/commercial electrical construction contracting business in their field. They worked from the friend's home, using a spare bedroom as the office that my mother worked in, using the garage as their warehouse. Within a few months they had several very large contracts, had to hire more electricians, and it was clear they could no longer work from home.

They found a relatively inexpensive commercially-zoned building with warehouse space and parking, and split into two "retail" spaces. This allowed for rental income from the second storefront, which would cover the mortgage on the building. Despite this income, the banks wanted both my father and his partner to supply their personal homes as collateral. Despite having already sunk all of their savings into the business, despite the sizable commercial and industrial construction contracts they were engaged in, the banks ALSO wanted them to take on more partners to supply more cash. Unfortunately, they did so.

The company was thriving for many years, however the banks' requirements left the company less flexible than it would have been. Had they been able to tap personal equity (eg. HELOCs) back in the 80s, they could have funded the business without the requirements of the banks. Those requirements ultimately led to a slow demise of the business. Fortunately my father and his original partner got out early, when the writing was on the wall.

Things have not changed much. We spoke with banks back around 2002, investigating loan opportunities for our maple syrup business. The banks turned us down because DH and I did not own a house at the time, and DB was a self-employed logger. DB's personal credit was maxed out due to equipment purchases for logging. (He had been denied a business loan for the logging equipment because he was self-employed.). We had already invested in a building, some equipment, etc., provided the paid land (sugar bush) but wanted a small amount to increase equipment enough to produce enough for export...where the money was. Federal export licence had specific building and bottling requirements we couldn't meet with existing equipment. Banks said no.

As a result, we stayed small and domestic, never made enough profit when banging against the Quebec cartel, couldn't come up with the personal cash to expand enough to sell to large players domestically, and folded a few years later. Having lost about $10,000 each. (Like Trump, I carry a sizeable capital gains loss to eventually use on future taxes.)

Canadian banks hamstring small businesses and entrepreneurs. And that's why a good part of Canadian household debt is high, and GDP sucks when oil drops.

Last edited by rb.; 10-25-2016 at 12:59 PM.
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Old 10-25-2016, 01:15 PM   #3
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After typing all of that, I should add the following:

DH and I are now one of those Canadian couples up to our eyeballs in debt...5 times personal income. All related to real estate...4 houses. While the banks all but refuse to supply business loans, they are more than happy to provide mortgages when you plop down 20% for rental properties. Get that first one, and they take into account that income, and allow you to buy another. And another. And another.

If the banks, and fed government (through business tax policy) would allow us to hold this debt as business debt (which it truly is), our personal debt would be about 10% of personal income. Instead, the banks deny, and government punishes us with a personal tax of 43% for DH, and 20% for me, on that business income, instead of maybe the 15% rate. And that happens to a lot of small businesses and self-employed in Canada. It is f'd up.
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Old 10-25-2016, 01:16 PM   #4
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Canadian DOUBLE payday loan usage.

http://business.financialpost.com/pe...ags-about-debt
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Old 10-25-2016, 01:31 PM   #5
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Yeah, doubles from 2% of households to 4%. They don't supply those numbers, though. People that get payday loans are pretty much the lowest of the low income, with no other credit, or a very low level of credit already maxed out.

I don't know the payday loan companies' policies, but these numbers may also include people living on fixed income, such as welfare and disability payments. Those people in Ontario have been especially hard hit with excessive electricity bills of late. There have been a series stories in the Toronto Sun this past week attempting to affect Ontario's bankrupting green energy policy, and the whole situation may cause a change in government at the next election.
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Old 10-25-2016, 07:02 PM   #6
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5.5% here.

Watch out, soon Canada will be like the US.

http://www.pewtrusts.org/en/research...borrow-and-why
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Old 10-28-2016, 09:14 PM   #7
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rb is right - both with the business loan data & the use of payday loans. I know a number of small business people who had to go the HELOC route for financing
on't get me started on the pay day loan companies & yes, the most common users of them are those on welfare & disability. And with the fees they get away with charging, once you're sucked in... they own you.
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Old 12-07-2016, 09:20 PM   #8
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Default The Most Recent Consumer Debt Numbers...

These numbers are consumer debt only - no mortgages included. Scary numbers - I find them scary anyway. I know that as mentioned, a lot of Canadians carry no debt at all. I was disappointed not to find a hard number or estimate for those not carrying non-mortgage debt. Overall, it seems those with debt are working hard to decrease the amounts owed - a good thing.

A scary trend though - more people are glomming on to installment loans with nauseatingly high interest rates. Those aren't new in Canada but many new companies have sprung up & a lot more consumers are turning to them:


***Canadians' average debt load now up to $22,081, 3.6% rise since last year


The average Canadian now owes $22,081 in consumer debt, a figure that doesn't include any mortgages, debt monitoring firm Equifax says.

In a report released Wednesday, Equifax says the debt figure increased by 3.6 per cent in the third quarter of 2016 compared to the same period a year ago. All in all, consumer debt now stands at more than $1.7 trillion.

But while the average is rising, that figure belies an interesting paradox: Many people have little or no consumer debt, but those who do are borrowing more and more.

"The majority of consumers are actually decreasing their debt," said Equifax's senior director, Regina Malina, "but those who are still increasing it are adding larger amounts on average and by enough to increase the total levels.

"The fact is people who can afford to do so are buying more cars, spending more on housing and borrowing more," she added.

So far at least, they're managing to keep their heads above water. Equifax considers a loan to have gone delinquent when a borrower has not made a payment in more than three months. By that standard, the delinquency rate is still low — 1.14 per cent in the third quarter. That's up from 1.05 per cent at the same time last year, but still low in overall terms.

Much of the surge in delinquencies has come from oil-dependent provinces in Western Canada and Newfoundland and Labrador, Equifax said.

The good news is it appears that on the whole, affected people in those provinces have at least stopped digging themselves into deeper holes.

"What we are seeing in Western Canada and Newfoundland would be of more concern if people in the two regions hit hard by the oil bust were also piling on a lot more debt and they are not, especially in Alberta and Saskatchewan," Malina said.

"On average, Canadians across the country are managing their debt wisely, with the majority paying off their credit cards in full every month and few making only the minimum payments. We encourage them to continue to be budget-conscious heading into the holiday shopping period."...***

More at link:


http://www.cbc.ca/news/business/equi...oads-1.3884993
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Old 12-07-2016, 11:13 PM   #9
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It seems to me that they are pushing money onto people.

They are not selling cars .... they are practically giving cars away.

I don't owe a single solitary dime to anybody with exception to my mortgage.

And just yesterday, I got a mail notice from the bank that my credit card limit has increased from 7 thousand to 13 thousand and encouraged me to enjoy myself.

The ex-Bank of Canada chairman just today is suggesting that every central bank in the world should immediately agree to an increase in interest rates and to do so together in order to prevent any single country from experiencing a value increase of its currency.

A two percent increase in interest rates will crush millions of people.

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Old 12-07-2016, 11:42 PM   #10
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If I owed money, especially on a variable loan, I'd be inclined to pay down as quickly as possible in order to avoid being crushed by a rate rise. Hell, I'd be doing my best to pay extra on any mortgage I had in order to avoid a major hike in payments at renewal time.

We owe a grand total of $40 right now - which will be down to zero tomorrow.
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Old 12-08-2016, 12:22 AM   #11
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I'd love to be paying crap down right now...instead we are of those increasing it. Kinda' what happens when you rebuild a house.

Fortunately, it *appears* we already have two of DD#2's friends/classmates that want to move in here when they are booted from res at the university in April after exams. Crossing fingers that holds, otherwise I may be ready to sell this house to get rid of some debt. Five years ago we only owed our mortgage, not even a car payment, but we only had one house, not four.
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Old 12-08-2016, 08:28 AM   #12
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Two prospects already? Excellent.
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