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I’m trying to find a way out/ hedge our economy (Canada, similar to U.S. except we can’t print money to get out of it). I have a sinking feeling that either the

by rapind 5y ago

I’m trying to find a way out/ hedge our economy (Canada, similar to U.S. except we can’t print money to get out of it). I have a sinking feeling that either the idiots over leveraging themselves on bubble priced homes will get bailed out or the idiot banks who facilitate them will get bailed out… probably both. Which ironically makes me the idiot for not participating in the idiocy. Maybe I’m just getting old, but when I look around at our economy, housing, the crypto fascination, etc. it all looks like scams, hype, and fomo to me. When the big bailouts happen, I’m gonzo. Just don’t know where to yet. Maybe I’ll live on a sailboat to try and minimize the impact of the insanity.

dghlsakjg 5y ago
As one of those people that bought a bubble priced house (rental stock in the town I live in just doesn’t exist for the type of place I wanted) I’m pretty impressed with how much Canada can bury its head in the sand about the problem. I think in 4-5 years when all these mortgages get refinanced at (presumably) higher rates some weird shit is going to happen. The root issue as far as I can tell is supply is incredibly poorly managed. When I was living in Vancouver, there was a lot next to us that was waiting for permission for 2 years to build a low rise, mixed use building in an area already zoned for it. Don’t get me started on “historic” homes in dense areas.
- jdsully 5y ago
  They are stress tested to up to 5.5% interest, so it will take huge moves to cause insolvency. This isn't like the US subprime issue, these borrowers can afford the higher rates.
  - refurb 5y ago
    Right, but don’t ignore the knock on effects of housing payments sucking up more cash, reducing consumer spending. And it won’t be fun refinancing at a higher rate and finding out your house is worth less than when you bought it.
    - rapind 5y ago
      I don’t think our government will let interest rates go up. It should have happened a decade ago, but they kept lowering them instead (and watched the bubble grow). It’s political suicide at this point to do it in any meaningful amount.
  - rapind 5y ago
    > these borrowers can afford the higher rates. Not at all what I’ve been reading. We have a record high 2.5 trillion in mortgage debt, and a lot of that debt (especially in the last year) is high risk.
    - jdsully 5y ago
      Both banks and credit unions are required to perform the stress test. The biggest source of fraud is likely loans from parents marked as gifts, but it doesn't change the borrowers have to show evidence they can handle 5% interest rates on the mortgage portion.
seoulmetro 5y ago
>I have a sinking feeling that either the idiots over leveraging themselves on bubble priced homes will get bailed out or the idiot banks who facilitate them will get bailed out… probably both. Which ironically makes me the idiot for not participating in the idiocy. This is the case for all forms of money making in the last couple years. It's quite depressing that actually being protective, smart and risk adverse to this idiocy is the worst situation to be in. It's like everyone is playing with fake money and you're standing there saying it's not real, but they keep finding new ways to convince themselves it is. Meanwhile your real money is getting old and dusty.

by rapind 5y ago

dghlsakjg 5y ago

As one of those people that bought a bubble priced house (rental stock in the town I live in just doesn’t exist for the type of place I wanted) I’m pretty impressed with how much Canada can bury its head in the sand about the problem. I think in 4-5 years when all these mortgages get refinanced at (presumably) higher rates some weird shit is going to happen. The root issue as far as I can tell is supply is incredibly poorly managed. When I was living in Vancouver, there was a lot next to us that was waiting for permission for 2 years to build a low rise, mixed use building in an area already zoned for it. Don’t get me started on “historic” homes in dense areas.

jdsully 5y ago
They are stress tested to up to 5.5% interest, so it will take huge moves to cause insolvency. This isn't like the US subprime issue, these borrowers can afford the higher rates.
- refurb 5y ago
  Right, but don’t ignore the knock on effects of housing payments sucking up more cash, reducing consumer spending. And it won’t be fun refinancing at a higher rate and finding out your house is worth less than when you bought it.
  - rapind 5y ago
    I don’t think our government will let interest rates go up. It should have happened a decade ago, but they kept lowering them instead (and watched the bubble grow). It’s political suicide at this point to do it in any meaningful amount.
- rapind 5y ago
  > these borrowers can afford the higher rates. Not at all what I’ve been reading. We have a record high 2.5 trillion in mortgage debt, and a lot of that debt (especially in the last year) is high risk.
  - jdsully 5y ago
    Both banks and credit unions are required to perform the stress test. The biggest source of fraud is likely loans from parents marked as gifts, but it doesn't change the borrowers have to show evidence they can handle 5% interest rates on the mortgage portion.

seoulmetro 5y ago

>I have a sinking feeling that either the idiots over leveraging themselves on bubble priced homes will get bailed out or the idiot banks who facilitate them will get bailed out… probably both. Which ironically makes me the idiot for not participating in the idiocy. This is the case for all forms of money making in the last couple years. It's quite depressing that actually being protective, smart and risk adverse to this idiocy is the worst situation to be in. It's like everyone is playing with fake money and you're standing there saying it's not real, but they keep finding new ways to convince themselves it is. Meanwhile your real money is getting old and dusty.