The horizon is not so far as we can see, but as far as we can imagine

Canadian Housing Market Craziness

So, the CBC is the the national broadcaster in Canada, similar to the BBC in Europe. They’re pretty stodgy, they run good radio programs and they are wary of the government, as you’d expect.

They just wrote a really good article in problems in the housing market.

The two graphs that really matter are:

But here’s what I find interesting. Quotes like this:

“What started happening in B.C. and spread throughout the country is that we weren’t just satisfied with paying off our mortgage to build equity. We’re like: ‘You know what? I want this home price to double, triple, quadruple.'”

When existing homeowners want prices to rise faster than earnings in the local economy “is the moment you want a wealth windfall for those who are owners now that will come, by definition mathematically, at the expense of affordability for those who follow,” Kershaw said.

“That’s the trouble we’ve gotten ourselves into. And if we cannot have that conversation, we will never solve the crisis of housing affordability.”

If housing is an investment; a way to get rich, then by definition it’s going to get expensive faster than most people’s income. This is common sense. It’s acknowledged in Japan, for example, but in North America we’re addicted to our free riches, and since most people are locked out of the other sources of unearned wealth, real-estate prices are politically off-limits, they’re supposed to go up faster than inflation and wages forever, and the government colludes to make it happen, including by guaranteeing mortgages and stepping in 2008 to limit the price crash.

Homeowners and home investors, after all, vote and donate to political parties.

Anyway, CBC is stodgy and politically wary, for it to allow an article saying that home owners aren’t saints and perhaps housing prices shouldn’t be allowed to float into the stratosphere is very interesting.

The technical solutions to fixing rent and housing prices are well known: if Japan, with way less land, fewer resources and far more people can keep housing affordable, obviously Canada can do it.

But we can’t do it political parties want housing prices to keep rising and rising because it make an important chunk of voters happy.

And lack of housing (aka. homelessness) and increased food prices are going to lead to political unrest if something isn’t done.

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French Troops Have Been Forced To Withdraw From Three African Sahel Countries In the Last Two Years


Open Thread


  1. Jefferson Hamilton

    Japan has a famously shrinking population and a citizenship requirement to own real estate. Plenty of houses, even some right in Tokyo, are abandoned and rotting. I don’t think Canada and Japan can fruitfully be compared.

  2. Ian Welsh

    Canada’s very quick population increase is entirely a matter of choice, based on massive immigration.

  3. GlassHammer


    The home delivered what 401ks could not, a way to obtain enough wealth to retire and live independently. That is the real reason no one wants to sell their home at anything close to a reasonable price.

    And if we look at other countries well…. they accept multi-generational homes as a norm, the kids have to house the grandparents, the grandparents must subsidize and participate in childcare, and any generational wealth is transferred down the line never to be held by the grandparents.

    The West will not accept that sort of living arrangement because we its Anathema to our current culture.

  4. Capitalists no longer focus on selling goods in markets. They’re focused on extracting wealth from assets. They no longer try to increase production or utility. They actually dislike increased production and utility because it reduces profits. That is the reason products don’t last like they used to. Capitalists make more money selling shittier products at larger volumes. That is the reason houses aren’t built, and sit empty. Producing homeless people by increasing house prices makes some people very rich.

    It’s doubtful any of this will improve because as a social entity we are barred from blaming the capitalists and their economic system let alone squashing their power and changing it.
    Addressing the actual cause of decreasing living standards, and sky rocketing chronic illness is off the table. All that’s left is the new distraction and scapegoat of the day. Be it immigration, the proper pro-noun to use, Ukraine, China, whatever.
    And that’s the way your rulers want it.

  5. Ian Welsh

    Decent government pensions and wages rising faster than real inflation are all that is needed to deal with the 401K issue. Houses were entirely affordable in the post-war period.

    Housing prices rising so fast was a bribe to the GI/Silent/Boomers and to a lesser extent GenX to get them to vote for and stick with neoliberalism.

    This is in even more obvious in Britain, where Thatcher let people buy their council housing for below market prices and thus destroyed the basis for a prosperous middle and working class.

    “Fuck the future, let me loot” is often very popular.

  6. NR

    The bigger story to me is that fully 25% of homes are being bought by investors. That’s an outrageous number. I was curious if it’s the same in the U.S. so I looked it up and found this:

    It looks like the overall percentage might be slightly lower, but for low-priced homes it’s the same. So it’s likely a case of either renting them out (lower-income people are more likely to rent) or marking them up and reselling them. Or a combination of both–rent them out for a while and then resell in a few years for a profit.

    I’ve said it before and I’ll say it again–this kind of thing should be illegal. Housing is (or should be) a basic human right. The fact that we’ve allowed it to become just another commodity is one of the great failures of our capitalist system.

  7. different clue


    I was thinking about this too. At least in America, banks have been permitted to retain control of the several million houses they acquired during the 2008 Financial Crash. Many of those houses were acquired by obvious fraudclosure and the banking sector was immunized and impunified by various levels of the Court System and then by President Obama also. Meanwhile, Pirate Equity has bought several million houses to keep them off the market and exploit them as rent mines.

    I don’t know if Canada has this banker and Pirate Equity problem layered on top of the problems which Ian Welsh writes about.

  8. Jan Wiklund

    There are two factors that count.

    First, there is not enough building activity. There are many reasons for that. One is that when the prices have begun to rise, it is more profitable and easy, if you are in the housing market, to let them do that than to build. Building is tricky to administrate, letting prices go up isn’t. The other reason may be that the upper middle class has bought into the market and are death frightened that the value of their homes will drop below the loan.

    Second, there are the banks that have only one way to make a profit, and that is to lend. So they will lend as much as possible (this has been described by Hyman Minsky). And most of the lending is for homes. So there is much money out to buy homes. So the prices will go up, socalled asset inflation (there is more money than homes, so to say).

    The two are mutually inforcing. The less housing there are the more desperate people will be to buy, to any price.

    The solution is twofold. 1. Build, and 2. Take away the power of banks to lend money they don’t have.

  9. bruce wilder

    If housing is an investment; a way to get rich, then by definition it’s going to get expensive faster than most people’s income.

    As we all presumably know, the “bubble” was originally bootstrapped by a secular decline in interest rates — “the Great Moderation” as it was termed by right-wing economists — initiating an expectation of asset inflation. When that ran out (or rather into a cyclical crash), a policy of “quantitative easing” alongside a policy of legal immunity for fraudsters was initiated, flooding “free money” to the very, very rich, which they’ve been using to literally buy everything. (In the U.S., it is astonishing how much of corporate business a few money management funds control, not to mention the now rapidly burgeoning national debt.)

    Ultimately, assets are only worth the income that flows thru them to their owners. A massive shift in income distribution has followed, to solidify the windfall of a decline in interest rates.

    The correspondence between assets — legal and financial fictions tied loosely to sources of income — and actual resources, such as houses or capital equipment or the economic “monopoly power” of business corporations or the financial (usury) power of insurance and banking or the fiscal capacity of the state to extract tax revenue without depressing economic activity — stands behind this (re)distribution of income.

    If we could objectively calculate the “physical capital” invested and compared to the financial capital of assets, we might discover some anomalies. Houses, at least, have gotten bigger (though apartments have gotten smaller) and more elaborately fitted out as a generalization. Tools and production equipment and accumulated skills and know-how? I wonder if those have not been shrinking subtly even as more money is squeezed out as political power substitutes for economic capability..

    I mention all of this hard truth as a preface to simply observing the liberal pablum to which the CBC reduces “the problem” of a massive forcible shift in income distribution. It is not that the whole political economy has been re-structured massively to make large numbers poorer to make a very few richer, with a big bribe in effect thrown to numerous but ephemeral corruptible classes to make it all politically impossible to reverse. The horror is reduced to: “the expense of affordability for those who follow” and to address it, we have to “have that conversation” like parents or gym teachers have to inform a pimply teenager about sex. (Think a lecture from Hillary Clinton in her best school ‘marm voice about how those jobs are just never coming back, you deplorables, you! We need financial literacy training in the schools so minimum wage workers will know how to survive on ramen.)

    There are no “technical” solutions on offer for this kind of problem — none that would be politically feasible absent a miracle of “compensation” for some group giving up a sizeable claim on the national income. If some calamity, like war or revolution, has destroyed those claims anyway, then maybe. And, if an incoming tide of general growth is lifting all boats, then maybe there’s an opportunity for a “gradual” reform to work its magic without actually taking anything away from anyone. This is why societies often have had to face collapse or violent revolution — or at least the credible threat of collapse or revolution — before any reasonable reform can be implemented.

    And unreasonable, scandalously unjust reforms are often accepted because they avoid massive violence.

    It is a nice hole that was dug for us, one from which there will be no digging out. But, there will be pious handwringing and euphemism aplenty, which will do more to prevent clarity.

  10. Troy

    The problems in Canadian housing probably start with fraud and end in money laundering.

    Canadian housing was run up by speculation and won’t drop because there is too much desperation keeping it skyward. Governments are two years too late in trying to solve problems that were apparent when Harper was in power, but dragged their feet in offering solutions that would work. And the federal government is still hesitant to do anything that would deflate the housing bubble, offering solutions that go around the problem.

    The provinces, if they have any interest in doing so, have to pick up the rest of the slack, and even provincial governments have little interest in doing either one of two things that will work: rent control; public housing.

  11. The West will not accept that sort of living arrangement (multi generational household) because its Anathema to our current culture.
    Perhaps this cultural artifact rather then being the cause is an effect.
    In America in last 45 years:
    Autism rates have increased from 1 in 10,000 to 1 in 25
    ADHD rates have increased from 1 in 25 to 1 in 8
    Chronic Illnesses have increased from 7% to 60%
    Suicide rates in the last 20 years have increased by over 40%
    That is only the most extreme harms at the far end of the bell curve. Think about the implications of that. Everyone who hasn’t been given Autism/ADHD/etc. has still had their nervous system and bodies harmed.

    Multigeneration households aren’t anathema to our culture. They are anathema to a society 50+ years into a mass poisoning event that is so severe over half the population is now chronically ill because of it.
    Imagine if the trend continues for another 50 years.

  12. different clue


    Add to the mass poisoning a mass malnutrition experiment also. Most mainstream food produced in America is low-nutrient trashfood. Some sidestream food and some homegrown food ( homegrown by those with extensive soil mineral nutrient balancing) in America is treasurefood.

    So combine the mainstream trashfood diet with the mainstream stealth-forced exposure to low level poisoning and noise pollution and electrosmog pollution and you get millions of Americans with one or more chronic diseases, including brain-mind-mood diseases.

  13. Troy

    This is purely anecdotal. I am currently searching for a place in Vancouver, and have found prices sliding downward on Craigslist as May 1st approaches, which is when BC’s new short-term rental rules begins (or rather, AirBnB partial ban).

    My desired price range isn’t low at all, but my search results have been growing day after day. I have a feeling the AirBnB ban may shake out a lot of small time wannabe investors, who got suckered into the risky business of landlordism and are finding out the hard way that being a landlord is super-risky unless you already own the second/third so-on property in full.

  14. capelin

    CBC is “wary of the government” ? That’s comedy gold! Yeah, there’s some good bits for sure – but overall they are the propaganda arm of the Canadian state. Exibit A being the water they are carrying for Israel.

    @ Oakchair

    Interesting angle – “we’re been made so sick we’d drive each other crazy if we lived together”.

    My sense of it is that that’s a factor; but that the larger drivers are more in line with Ian’s point – “our society has been made so sick we think we’re crazy if we live together”.

    The one that has caught my eye for years is the messaging around retirement planning – seniors dressed in white capri pants kicking up their heels in the surf, me me me. Just out to sea, the late-stage capitalism whirlpool builds.

    The PTB lopped off the demographic that had done ok when it was in the PTB’s interest to build them up; socially and operationally lopped them and their assetts off from the decendants, now drowning right on plan.

    Really, a forward projection of the american working class mid-seventies-on financial decline, housing as a lagging asset.

    As a sort of aside, I first really noticed “age stratification” when I moved to the city in the ’80’s. In hindsight I wonder how much was geography and how much was the times.

  15. Carborundum

    I really wish that it was an issue that government decided to consciously let housing prices appreciate. If you want to understand how we got into this mess, internalize – I mean really believe with every fibre of your being – the notion that these guys (regardless of which party forms the government of the day) are incompetent enough for this to have happened as an unintended consequence.

    I deal with these guys on a weekly basis. They are *absolutely* this dumb and they and everyone that works for them has been pretty well insulated from the negatives (MP / MPP pay and government pay scales will do that). Now, having manufactured this shit show and having had it get to be a big enough deal that a critical mass of pols are updating their resumés and putting out feelers for soft-looking places to land, they are engaging in half-assed attempts to buy off the youngs (who, although they don’t appear to recognize the tried and true “Re-elect me to solve a problem I own” gambit, are actually quite engagingly pissed off).

    Here’s the central joy of a Federal system with three layers of government: every layer makes problems that the other two layers block the solutions to. The only new thing that we’ve seen recently is that the Feds have attempted to turn their spectacular (and I mean *epic*) inability to execute into an asset by deliberately inciting resistance.

  16. someofparts

    Listening to some economists this afternoon. They noted that much study has been done on the ways hegemonic economic powers inevitably decline. Then someone added that no one even thought to investigate why a hegemonic power would commit suicide.

    Nice to know we are breaking new historical ground.

  17. Ian Welsh

    They follow economic orthodoxy created by people far smarter than them. If you believe in neoliberal economic orthodoxy, you can’t control prices. It’s that simple.

    ““Practical men who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back” ”


  18. Carborundum

    I would not say the pols do not believe they can control prices. They believe that controlling prices is not the best way of dealing with things until such time as those prices are a dire threat to their position. Then they believe that you can absolutely control prices by fiat and are always entirely surprised by interactions they did not foresee (but are nearly always mentioned in the briefing note, safely hidden from ATIP by Cabinet privilege).

  19. Ian Welsh

    It’s always about either doing it yourself, or making it so that a profit can’t be made doing it the way you don’t want it done but can be made if people and companies play ball. It’d require a fair bit of stepping on municipalities and provinces, of course, but the Feds have the levers if they want to use them.

    But these are the morons who couldn’t even figure out how pandemic growth increases worked and thus shut down too late every time, causing shutdowns to be longer, less effective and more aggravating, causing loss of public support. They leave every problem till it’s a crisis, at which point the drastic solutions are required when getting on it at the start of the growth curve would have been easy. (This goes far beyond pandemic response, of course.)

    We’re finally getting around to dealing with AirBnB and co, for example, when it was obviously a problem years ago. But until it became a crisis, no one would bother.

    And their own immigration policies are causing a huge crisis at the bottom end. “If we’re going to increase the population, deliberately, this fast, we know that will cause real-estate issues and should do something at the same time to alleviate that.” (And there are a few specific places where most immigrants go, so even if it’s bad politics to help Toronto, that’s what you need to do.)

    Still, they also don’t believe in the sort of policies required in general terms: high marginal tax rates. Not allowing stock buybacks. Control of executive salaries. Forcing companies to reinvest rather than cash out and rewarding non-capital gains. Actual capitalism, not rentierism.

    It’s also not that hard to tax away capital gains on property and to limit rent increases to inflation numbers (and if inflation is understated, which it is, well, that will put pressure on StatsCan to measure it differently.) If the provinces won’t cooperate, there are ways to deal with excess rent increases federally thru the tax system.

    The general belief that the market usually knows best and that one shouldn’t interfere till it’s a crisis is very real. Likewise the reluctance to tax high earners and corporations at anything near historical norms for the post-war period.

    Contrary to misunderstandings of the Wealth of Nations, Smith sure as hell didn’t believe that markets never get it wrong, or that they can’t do great harm. He was absolutely scathing about landlords and property owners, in particular and one-hundred percent believed that businessmen constantly conspire against the public.

    Markets only work for the public weal when regulated properly. This is especially true if you want the benefits of relatively free markets, since the conditions for free markets are strenuous, hard to create and harder to maintain.

  20. someofparts

    Immersing myself in Turkish television dramas, as I have lately, has exposed me to a culture where households are multi-generational. All the anecdotal exposure I have had to this cultural practice make it look very hard indeed on women. OTOH, it is not hard to see how such households could protect us if declining public services make the care of children and elders unavailable to people of normal means.

    I would just add the caveat that if we ever started to live in such households, I would hope to see robust feminism mainstreamed in such communities. Minus extreme male dominance, such arrangements might be a reasonable response to a nation that eschews providing public services to the citizenry.

  21. Carborundum

    I think we are largely in raging agreement – where my views differ are, I think, in two main areas:

    1) Not a fan of policy absolutes. For instance, there are times where share buy-backs make a lot of sense – sometimes there really is nothing better for a company to do with its free cash flow than buy more of itself. The issue is that they have become massively over-used by sclerotic corporate leadership and represent an end run around taxation that I don’t think was envisioned by the Carter Commission (certainly not at this scale). Similarly, the capital gains exemption for principal residences is complexly and closely tied to household economic prosperity (I’m working from memory, but I think the ratio of average net worth between home owners and renters is currently something like 8:1, with the dominant fraction of that being non-financial assets). One makes ideology-driven changes involving that type of distribution in the midst of an epochal interest rate reset at one’s peril (or, more correctly given public sector / elected official benefits packages, at everybody else’s peril). Bottom line, policy absolutes are a bad idea. Taking potentially useful levers off the board is the antithesis of good strategy, particularly when those absolutes look to increasingly being deployed coercively as a means of electioneering.

    2) Faith in government as a capable implementer. We are a long way from the time when the best and brightest went into public administration and built the foundations of our modern state. If there is one thing that the last three plus decades of centralization of power in PMO / Provincial Cabinet Offices has demonstrated, it is that the central competency of government is writing cheques. It was, for a time, writing cheques and setting policy / regulation, but the latter capacity has atrophied significantly. Major policy, particularly economic policy, seems increasingly to be developed by political staffers, apparently on the backs of used napkins at whatever bar within stumbling distance of East Block / Whitney Block is currently favoured by the governing party of the day, driven primarily by internal polling and without consulting actual adults in the real economy.

  22. Ian Welsh

    I did say that capital gains changes for primary residences had to be made at the same time as other changes, otherwise there’d be a revolt (and a lot of pain.)

    Stock buy backs were illegal for a long time (at least in the US) and that period was a good period. I don’t dispute there are some cases where they make sense, but I think those cases are enough of a minority that making it illegal won’t do a great deal of harm.

    I agree about the decline in government capability. I think private isn’t as much better as people say, however, and in many cases worse. The end of the period where the best and brightest went into government and indeed looked down on this who went into private service, because they considered that public service was about helping the greater good is gone.

    I would like to see a return to civil service exams, as a start. I’m old enough to remember when it was still around and I knew some truly brilliant people who got in thru it.

    The word reform has become tainted, reforms usually mean something that makes the government worse, but “reform” is needed, and a new source and method of staffing the government. And, of course, we need to figure out a solution for incompetent politicians.

    The main thing though is that government isn’t innately incompetent. Parts of the Chinese government operate VERY well, and within living history we had a competent civil service, though admittedly you have to be pretty old to remember it. It’s useful to read the history, as well. I know more about the US than Canada as an oddity of the fact that Americans pay most of my bills, but reading about the New Deal and how FDR and co. made things work is very instructive.

  23. Jan Wiklund

    One way to control prices is to build as much as you can afford. That was the principle behind the municipal housing companies – as early as the 1920s.

    Building much increases supply, which drives down prices. It is as simple as that.

    But the political class of today is institutionally stupid, and they don’t get the idea.

  24. mago

    Real estate in desirable locales, like say Boulder, Colorado or Tamarindo, Costa Rica are often purchased with international drug and gun money. Gotta do the laundry somehow somewhere.
    Hard to compete with the shadow side of stuff wherever and however it occurs.

  25. bruce wilder

    Hard to compete with the shadow side of stuff wherever and however it occurs.


    when I was a newly minted civil servant, a lot of what I did as a regulator of business was not adversarial. Our role in government was to cooperate with enlightened elements in business, who wanted to keep the “bad guys out” of their sector. There was an understanding the cheaters prosper if you let them, but then no one else does.

    my father was a whistleblower. in the Michigan State Police around 1940 when he was still a young Trooper. every one of his superiors in the chain of command except the founding head of the State Police himself went to prison. the crusading governor was probably assassinated — never proven. my father was never promoted above corporal in 35 years. he would say, “the fish rots from the head.” he thought police corruption was always a top-down affair.

    i think corruption in U.S. business and finance has been very much a top-down affair, created by means of centralization and common strategic coordination of business enterprises that were built to subsume what ought to be competing (and therefore opposed) businesses. I see that on a large-scale in Hollywood where massive companies coordinate every aspect and means of communication and entertainment, squeezing out any possibility of talent or integrity being rewarded for good performance, or being recognized in any way. i think it is what happened in banking and finance. the source of corruption is the power assembled at the center for the purpose of making the power possible.

  26. Failed Scholar

    Stupid? Evil? Both?

    I have a friend who used to work for CMHC (Canadian Mortgage Housing Corporation – basically a Crown bank focused on housing), and in 2022 she sent a detailed letter to basically every MP in Ottawa explaining the shit-show we can expect on the housing file, as well as some quick and dirty things the Feds could start doing, today, through the CMHC to get construction going and to get more affordable housing built. You know how much interest was shown, at that time, by our ‘leaders’??? Zero. And this is from someone whos job was working on this file for over 10 years. Just a complete level of jaw-dropping indifference. They just don’t care.

    Supposedly ‘they’ care now. Colour me skeptical.

    As another example, we can look at the immigration file. Our ‘leaders’ said “hey, you know what’s a GREAT plan? Let’s turbo-charge immigration to 1+ million/year! We’ll fudge every category imaginable – ‘temporary’ foreign workers, foregin ‘students’ diploma mill scammers, etc, to jam as many people through the door as we can”. One would have to literally have less than 2 brain cells to NOT see how that would fuck the housing market sideways, especially the rental market. They didn’t care and pushed it through anyway. Immigration is good for GROAF, don’t ya know? GDP go up.

    And of course, my favourite cope from the CBC stenographers, they claim that the government has seen the problem and that numbers will come down and ‘stabilize’ at 500 000/year. Gee, that’s so much lower than a million/year isn’t it? Amazing progress – just don’t ask what a ‘normal’ year of population growth looked like 10 years ago. Or ask why T.F. do we need 500 000 new people a year? Don’t worry, the clowns at the CBC won’t ever be asking those questions.

  27. SocalJimObjects

    Just a correction to the first poster, Japan does allow foreigners to own real estate without citizenship. There’s plenty of 1 dollar akiyas (abandoned real estate in rural Japan) for sale should one is interested in owning one.

    The real estate market in Japan has its own peculiarities that make it somewhat hard to compare with markets in other countries, for example: most of the value of owning a real estate comes from the land, and not from the house.

    Last but not least, Japan went through its own massive real estate bust last century, when the grounds of the Imperial Palace in Tokyo, whose area is roughly 3.4 sq kilometers in size was valued higher than the entire state of California,

    There’s nothing unique in the end about people wanting to get rich quick. A fool and his money are soon parted as they say.

  28. Matty

    The issue with Canadian housing is investors who speculate on RE. It’s not a supply and demand problem:

    Investor speculation on RE has been identified as a main driver of the housing bubble in the run up to the GFC :

    A quote from the above study article:

    “Optimistic investors—speculators—used low-down-payment, nonprime credit to place highly leveraged bets on the housing market, perhaps facilitated for some by reporting an intention to live in the house. Because they didn’t have to put much money at risk, these investors were able to continue to buy housing even as prices rose further. All of these developments were especially noticeable in Arizona, California, Florida, and Nevada. Longstanding tradition in the mortgage lending business and the predictions of economic models hold that investors will quickly default if prices begin a persistent fall. This is what happened starting in 2006…

    We conclude that investors were much more important in the housing boom and bust during the 2000s than previously thought. The availability of low- and no-down-payment mortgages in the nonprime sector enabled investors to make these bets. This may have allowed the bubble to inflate further, which caused millions of owner-occupants to pay more if they wanted to buy a home for their family. In the end, even the value of the 20 percent down-payments made by responsible, prime borrowers was wiped out—leaving the housing market, and the economy, in the vulnerable state we find them in today.”

    This is where Canada is headed. Interest rates are killing the mom and pop speculators that own 2+ homes/ condos. A few defaults will snowball and the market will crash.

  29. Kouros

    “BBC in Europe”. You mean BBC in UK as national voice. BBC is not the national voice of Europe. That is a lot of infatuation and hubris and so much more. Like that old joke: “Fog on the Channel, Europe is lost…”

  30. different clue


    All this speculation was made possible by making it legal for the original bank or other lender to sell the loan to other buyers of loans. Those other buyers were then permitted to sell vast amounts of these loans to vast loan-aggregators who then sold esoteric Loan Backed Securities of different kinds based on allegedly secure interest payment streams harvestable from those loans.

    That’s my purely layman’s understanding. If I am wrong about that I suppose someone will correct me. Naked Capitalism wrote quite a bit about this at the height and pre-height of this carefully permission-engineered frenzy.

    Ideally speaking, going forward, the selling of any loan by any originator to any second buyer for any purpose should be very illegal. “Very” illegal means many years of hard time in America’s worst prisons. All the non-violent drug offenders should be released from prison to make room for all the hundreds of thousands of people who actually deserve to be in hard-time prisons. People like those who would sell an originated loan and those who would buy it. Which we could do if we made buying and selling a loan very illegal. Any loan . . . real estate, car, credit card, etc.

  31. SocalJimObjects

    Even the Canadian Mountain Police are aware that the nation might implode, just read the following :

  32. Carborundum

    I don’t believe reselling mortgages is having a significant effect in Canada (or certainly not as significant an effect as it has in the US). I’m not 100% sure, but I believe Canadian mortgage originators continue to hold large majorities of the debt – having a system that defaults to 5-year terms makes the dynamics of the system quite different.

    As I recall, (the StatCan numbers are incomplete and last I checked they had only generated estimates for some provinces), something on the order of 20% of Ontario property owners were what they termed investment owners. This is a somewhat inflated number (in that it included everyone who owned a vacation property), but given that latter number has generally hovered around seven of eight percent of properties, that’s a significant proportion of the property-owning population. The really crazy thing is that when you talk to these folks, many of them say the rents they are receiving are not actually covering the carrying costs of the property.

    This is, as they say, an issue.

  33. eg

    With apologies to Keynes, when the housing provision of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done.

    I see the current housing crisis (which is indivisible from the accompanying homelessness crisis) as an inevitable outcome of neoliberalism having fully eaten the brains of policymakers 35+ years ago. This fostered the idea that government, being incapable of doing anything competently, ought never to build housing — this despite generations of experience to the contrary that “the market” will NEVER build sufficient low income housing. No doubt recent immigration levels have exacerbated the problem in an acute way, but the problem of not building sufficient low income housing has been building now for decades — throw in the follies of allowing short-term rentals to metastasize (I’m looking at you, Airbnb) and you have an explosive mixture, solutions for which will now take at least a decade to implement provided our elected representatives have the sense to grasp them, and I have precisely zero confidence in that happening given the prevailing think-tank environment which is a hive of neoliberal inanity.

    The solutions are there for all to see in Singapore and Vienna if we would but look.

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