National Economy

[kwoldtimer]

The Stellantis extor ... er negotiation has apparently come to a successful, $15B conclusion.

[WarrenC12]

Originally Posted by Truenorth00

Regulators and the bond markets disagree.

https://www.canadianmortgagetrends.c...ong-borrowers/

Loaning money to people who have no intention or ability to pay you back in a lifetime is not a good foundation on which to build capital markets.

That's why I said it falls apart if they lose their jobs. If instead they are strung along making payments, it's easier for everyone.

Banks don't want to foreclose on homes.

[Truenorth00]

Originally Posted by WarrenC12

That's why I said it falls apart if they lose their jobs. If instead they are strung along making payments, it's easier for everyone.

Banks don't want to foreclose on homes.

You're going to be surprised when you find out that banks have no interest in subsidizing homeowners. They'll provide relief to the point that it starts costing them. And it's starting to cost them....

Added bonus. Thanks to CMHC, most of the risk is on the taxpayer. They can make you homeless and the government will still make them whole.

NEW:

The cost for BANKS to lock in a loan for 3 years is now almost 5%.

Then they need to pay the bills + profit + loss provisions.

3 year fixed mortgages are going to 7%, folks.

https://twitter.com/Tablesalt13/stat...762254337?s=19

[WarrenC12]

Originally Posted by Truenorth00

You're going to be surprised when you find out that banks have no interest in subsidizing homeowners. They'll provide relief to the point that it starts costing them. And it's starting to cost them....

Added bonus. Thanks to CMHC, most of the risk is on the taxpayer. They can make you homeless and the government will still make them whole.

The banks would love to string you along on "minimum payments" just like they do with credit cards.

[acottawa]

Originally Posted by kwoldtimer

The Stellantis extor ... er negotiation has apparently come to a successful, $15B conclusion.

This is absolute insanity. They are paying 6 million dollars per job.

[someone123]

Originally Posted by acottawa

This is absolute insanity. They are paying 6 million dollars per job.

I like to contrast the "emotional conjugation" of national media coverage of projects like this (national economic development which may or may not be good value for dollar) with what happens with comparable Atlantic Canada (futile make-work) projects.

The discussion often resolves around dollar figures as well with people not making much distinction between $1 in transfers vs. $1 subsidy vs. $1 spend to purchase a good or service. Including here on SSP. If you "spend $2B" it's the same whether you got a ship or got nothing.

[thewave46]

Originally Posted by WarrenC12

The banks would love to string you along on "minimum payments" just like they do with credit cards.

The stringing along works with credit cards because there’s often no assets backing them to seize. Interest is the majority of the profit. Keeping someone paying interest for as long as possible is more profitable versus forcing someone into bankruptcy, cause you won’t likely get much out of them.

With housing, once the asset piles up enough debt against it, the bank has a problem of what to do with the asset that’s worth less than the underlying bond the bank sold to finance the mortgage.

Someone losing ground every month means the bank should logically cut their losses ASAP. Once the bank get past the hope of breaking even on a foreclosure, the bank eats it. Except in this country, where government CHMC mortgage insurance makes the bank whole, so pushing a bunch of people into foreclosure (remember, 30% of mortgages are losing ground) might risk a big contagion and huge federal payouts.

My bet is that the feds turn heaven and earth to prevent this.

[Truenorth00]

Originally Posted by acottawa

This is absolute insanity. They are paying 6 million dollars per job.

This is only counting direct employment. Not employment involved in construction of the plant, or across the entire supply chain.

These plants are all accruing more economic activity than the subsidies they are receiving. Especially at the rate set ($45/kWh). So ultimately, it's not a net drain.

Sucks that we have to play this game. But blame the US. We're caught in between their reshoring effort against China. The only other alternative I see is slapping export restrictions on our minerals. And I'm not sure how that works with USMCA and WTO rules. Or I guess we accept the end of manufacturing in Ontario and Quebec and bet even harder on housing and resource extraction.

[Truenorth00]

Originally Posted by thewave46

My bet is that the feds turn heaven and earth to prevent this.

That's what human QE (aka immigration) is. They are hoping that keeping demand outrunning supply will keep asset prices up, even as interest rates rise. People hate on lio45 for his talk of 10 Indian students per house. But he's not far from ground truth in many places. And it's kinda hard to believe that the government is unaware of what's happening. Which leads to the logical conclusion that they are just fine with what is happening.

[ssiguy]

Canada should have had a MAJOR housing correction in the last 2 years and especially in all of BC and the GGH. We have the highest household debt levels in the G7 and millions of Canadians are living on the razor's edge so the substantial interest rate increases should have caused mass defaults and/or huge plunge in housing asking prices with skyrocketing inventory levels.

Of course to avoid this, Trudeau decided to surge our immigration levels from 400k to 1.1 million basically overnight to keep the Ponzi-Scheme going. If there is another major threat to our housing market it wouldn't surprise me in the slightest to see that figure rise to 2 million.

How do you prevent a drug addict from suffering from withdrawal?.......either force them to deal with the pain or just give them more drugs and unfortunately Ottawa has chosen the latter.

[acottawa]

Originally Posted by Truenorth00

This is only counting direct employment. Not employment involved in construction of the plant, or across the entire supply chain.

These plants are all accruing more economic activity than the subsidies they are receiving. Especially at the rate set ($45/kWh). So ultimately, it's not a net drain.

Sucks that we have to play this game. But blame the US. We're caught in between their reshoring effort against China. The only other alternative I see is slapping export restrictions on our minerals. And I'm not sure how that works with USMCA and WTO rules. Or I guess we accept the end of manufacturing in Ontario and Quebec and bet even harder on housing and resource extraction.

I am assuming the construction jobs will disappear when the plant opens, so the 6 million jobs will be split between construction and production.

The spin-offs are at best unknown because the terms are mostly confidential.

We should let Biden fill his boots on batteries and put resources into something else with a way lower subsidy cost (pretty much anything.

30 billion is a major infrastructure project like a high speed train or twinning the Trans Canada. It is Silicon Valley levels of venture capital, to get actual new technology in Canada.

[lio45]

Originally Posted by thewave46

Someone losing ground every month means the bank should logically cut their losses ASAP. Once the bank get past the hope of breaking even on a foreclosure, the bank eats it. Except in this country, where government CHMC mortgage insurance makes the bank whole, so pushing a bunch of people into foreclosure (remember, 30% of mortgages are losing ground) might risk a big contagion and huge federal payouts.

My bet is that the feds turn heaven and earth to prevent this.

Agreed, and the “best” way is to further inflate housing prices while also boosting demand — this way, values stay above mortgages and banks don’t foreclose and CHMC doesn’t have a problem.

If pretty much any SFH in urban Canada can be used to house 30 well-paying South Asian students…… then all of a sudden, all problems vanish, because the cap rate for this new “highest and best use” easily covers the existing mortgage even if it’s mind-blowingly high, so, no foreclosures and no CHMC crisis. Disaster averted!

[lio45]

Originally Posted by Truenorth00

That's what human QE (aka immigration) is. They are hoping that keeping demand outrunning supply will keep asset prices up, even as interest rates rise. People hate on lio45 for his talk of 10 Indian students per house. But he's not far from ground truth in many places. And it's kinda hard to believe that the government is unaware of what's happening. Which leads to the logical conclusion that they are just fine with what is happening.

Exactly! It’s kinda what I just said above

Also, don’t hate the messenger! I didn’t invent this — and I didn’t even vote for it! (Unlike others on this forum.)

(Can’t say I have noticed any “hate”, I think most SSPers know I’m not a fan of the Ponzi Scheme at all.)

[Truenorth00]

Originally Posted by acottawa

30 billion is a major infrastructure project like a high speed train or twinning the Trans Canada. It is Silicon Valley levels of venture capital, to get actual new technology in Canada.

Except that it's not $30B the government would have if there were no plants. This basically works out to something like no net increase in tax revenue for the feds. That doesn't imply a net spend of $30B.

I do agree that these deals should have been more tightly tied to the US IRA. Providing subsidies after the IRA ends was definitely too generous.

[lio45]

If anyone who’s in danger of losing their house can instead keep it and rent it to a large group of Indian students who collectively pay >> the (unreasonably huge) monthly amount of the mortgage service that the owners totally couldn’t afford by themselves anymore, then we totally avert the foreclosure/CHMC crisis.

Instead of

- losing your house AND your credit/name AND your equity that you used to have in it AND you have to find a new place to live,

you just

- lose your house (by letting tenants have it), though it’s still yours, and brings positive cash flow now, and you have to find a new place to live BUT you were going to have that problem anyway in the scenario above. (You could also even stay in the house and just take a couple less Indian students.)

Who in their right mind would pick the first scenario over the second?!?

[Nite]

110,000 full time jobs created in June, wages increased by 4.2%

https://www150.statcan.gc.ca/n1/dail...30707a-eng.htm

[LightingGuy]

Originally Posted by Nite

110,000 full time jobs created in June, wages increased by 4.2%

https://www150.statcan.gc.ca/n1/dail...30707a-eng.htm

That 110,000 people are the PSAC workers who were rehired. If you look at the May numbers you'll see there was an equal decrease from when they were on strike.

[Changing City]

Originally Posted by LightingGuy

That 110,000 people are the PSAC workers who were rehired. If you look at the May numbers you'll see there was an equal decrease from when they were on strike.

Have you a link to that? I knew 1,800 call centre workers were laid off - but that was because they were on fixed term contracts and tax filing season ended. I must have missed that the striking 155,000 Treasury Board and Canada Revenue Agency staff had been fired, and then rehired.

[casper]

Originally Posted by Changing City

Have you a link to that? I knew 1,800 call centre workers were laid off - but that was because they were on fixed term contracts and tax filing season ended. I must have missed that the striking 155,000 Treasury Board and Canada Revenue Agency staff had been fired, and then rehired.

Could be wrong, but I though Stats Canada only counted a job loss if someone was out of work for the entire month. So striking workers would not count in the data unless they were off work for the entire calendar month.

[acottawa]

You have to be actively looking for work to count as unemployed.