Steve's & Flaherty's "Sub Prime" Crisis

From my very admittedly “possibly” weak understanding of the issue he allowed the banks to turn weak mortgages over to CMHC prematurely. If the mortgages had in fact defaulted they would have gone to CMHC in any case. My understanding is that this freed up $75 billion for Cdn banks to lend to Cdn businesses and individuals to help alleviate the credit crunch. So in the end I don’t understand how this is a bank bailout as any mortgage defaults would have gone to the gov’t owned CMHC in any case.

Probably I’m just naive SK boy but it appears this is just another of your many many attempts to get your lib lemmings revved up with false information.

By Doug on 11.28.08 1:42 am

Perhaps this not so naive Sask boy can help you back, Doug.

CMHC approved loans guarantee through insurance, 90% of all CMHC approved mortgages. 75 Billion in mortgage defaults is in reality, a 7.5 Billion dollar bailout for Canada’s banking industry so it is a bailout of sorts but the real bailout is CMHC, Canada’s own crown corporation put at heavy risk by a Harper government who up and decided it was prudent to change CMHC approved mortgage regs from 25 year 10% down regs to 40 year 1.5% down and with the cash back schemes at least two of the chartered banks were offering, it is safe to say a 40 year nothing down mortgage, Canada’s version of sub prime. Flarehty introduced this in July of 2006 and in so doing, flooded the mortgage industry with a whole new set of buyers, buyers that in reality could not afford to buy homes in the first place but that didn’t matter, it was the deal that mattered to everyone, the cut, the commission on the sale.

And since July of 2006, valuations of homes went up by 40% nationwide and in some cities, doubled. This fueled a major boom on an already lucrative housing, residential and commercial real estate market and created hyped new construction starts like no other and the consequences? Overdevelopment (and we can stop right there and ponder what that means as that alone is bad on its own), grossly inflated real estate valuations that breed negative equity for those who buy in late and a market poised for dramatic devaluation which later breeds foreclosures, unemployment and recessions all on their own if bad enough.

So lets consider the consequences of Harper/Flarehty’s version of subprime, a nasty real estate led recession all on its own without the big drop in commodities and think for a moment about why, Doug, you think its wise to attack a messager because you don’t like the message and believe this Harper Con job is worth defending because we now have a major housing, condo and commercial real estate correction, a major stand still in construction and what will be huge layoffs in the construction sector as a result of Flarehty/Harper’s disasterous version of subprime that will end up costing taxpayers 75 Billion bucks before federal deficits begin coming in from what will be a devastated commodity market, gutted manufacturing, busted construction industry spawned by nutter government deregulation.

And Harpers hail mary answer is?…??

Get rid of public election financing in favor of corporate/private payoffs and bribes so that future elections can be bought outright… bring back gender pay inequality… and bust unions.

This is their hail mary.

Doug, if you didn’t at the very least try to feign humility and say “From my very admittedly “possibly” weak understanding of the issue”, I would have been much less than kind. But… if you still wish to defend Harpers policies after reading these words, I would find no reason for remorse or regret in quickly pointing out that people who believe its wise to support governments that waste 75 Billion on policies that breed recessions are quite naive, ignorant or just plain stupid. And since you should now know better, Doug…

By brain on 11.28.08 9:31 pm