Crisis Indicators are Returning: Is Canada’s Economy in Danger?

Canadian housing has raised at incredible and uncontrollable speeds in recent years. This spike in housing prices has become problematic for cities like Vancouver, British Columbia, where it is so unaffordable that there are empty houses while tens of thousands are left without a place to live. Not only that, but if the economy declined and prices dropped, it would reek catastrophe for not only homeowners, but for every member of the Canadian economy. How could things escalate so badly? It appears that the problem may be a combination of domestic and foreign problems.

Internationally, people suffer from the inability for raises to match inflation and Canada continues but in a worse way. Canada is a place set for investment with its trade with the United States and international presence, but with a wavering Canadian dollar, housing’s current stability seems to be a safe investment. Unfortunately, Canada followed American practices and lowered interest rates close to zero, which served to save the housing market from a crash like the American one, but it was a foundation built on sand. Results can now be seen today with Vancouver and Toronto being two of the most expensive housing markets on the planet with unbelievable growth rate of 20%. Lenders are tightening credit, making buying a house or even an apartment near impossible for anyone. This is in response to outstanding home equity line of credit reaching record high balances of $211 billion.

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Graphic via The Practical Utopian

The outstanding debts and confidence in the Canadian market has major significance into the catastrophe that has occurred but there may be something more sinister at play. Canada has been notorious for a place where money is stored and laundered through Canadian industries and assets which lead to long-term consequences. Canada’s Government has known this for a while, yet they have yet to move towards stopping such actions of foreign investments.

In February, China seized billions of dollars in Canadian assets from Anbang Insurance. Although it was placed into temporary control, the Chinese government has the power to choose which assets require liquidation. Bentall Centre, Retirement Concepts and HSBC Building are some of the Canadian assets that are incredibly valuable in some of the most valuable markets in Canada. With such influence into the Canadian market, it is impossible for the Canadian government to not have not noticed.

Sidewinder was a classified program where the CSIS and RCMP worked in conjunction to discover whether China would be a threat to the Canadian economy and warned of this outcome over 20 years ago. Due to the controversial statements found in the paper, in 1997, the Liberals ordered destruction of all documents and buried the program.

Wanting good relations with China, Canada allowed for what could possibly have been one of the most destructive things to its country. It highlighted factors that would hurt Canada like how there are 3 or four highly valuable markets (cities) that could be easily infiltrated by foreign entities through legal loopholes. The report described possible alliances with the Beijing government and the espionage services along with Hong Kong tycoons and triads who had goals of:

  • Winning influence with Canadian politicians.
  • Stealing high-tech secrets.
  • Laundering money.
  • Gaining control of Canadian companies in real estate, media and other sectors.

The study served to prove that China proved a threat to Canadian national security.

Canada’s real estate market has been highly inflated by factors of illegal and malicious goals of foreign governments, foreign investment, mortgage defaults and debt along with the Canadian government lowering interest rates needlessly. Regular citizens are unable to buy homes near economic centres, and so they must travel far to reach work, hurting the Canadian environment and productivity.

It is time for Canada to take actions to put the interest of their citizens first and take a protectionist stance against foreign investments into its real estate.

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