Tax me, I'm a Canadian

Toronto Sun

"Tax me, I'm a Canadian."

It might as well be our national motto.

Average Canadians spent 42% of their income on all forms of taxation last year and didn't start working for themselves, instead of governments, until "Tax Freedom Day" on June 9.

According to the Fraser Institute, the average family earned $77,381 and paid $32,369 in taxes in 2013, 41.8% of its income, compared to 36.1% for food, shelter and clothing combined.

That's right, we spend more on taxes than on the necessities of life.

Canadians who own homes, for example, might think paying off the mortgage is their biggest expense.

But they're wrong.

It's actually paying income taxes, payroll taxes, sales taxes, property taxes, gas taxes, surtaxes and taxes on taxes imposed by federal, provincial and municipal governments.

Since 1961, the average family's total tax bill has increased by 1,832%, dwarfing increases in shelter costs (1,375%), clothing (620%) and food (546%).

Why tourists don’t like Canada

Steven Threndyle/

(Photo: Robert Francis/Flickr)

Canadian Tourism Commission CEO Michele McKenzie announced last month she would be stepping down after a difficult decade at the helm of the national tourism marketing body. Statistics tell the tale: from 2000 to 2010, Canada’s share of global international arrivals decreased from 2.9% to 1.7%. Our share of revenues fell from 2.3% to 1.7%.

A sharp decline in U.S. visitors and flat traveller numbers from overseas have left tourism operators ever more dependent on the domestic market. Canadians themselves accounted for 80% of spending in 2012, up from 68% a decade earlier, a recent Scotiabank report found. The report blamed the Canadian dollar’s appreciation, which eroded price competitiveness, “as well as the rapid growth in emerging markets as a tourist destination.”

That has left Canada with a wide and growing tourism deficit. Though the sector accounts for only 2% of the economy, it employs almost 600,000 people. And in the eyes of critics, it is getting even less competitive. “The cost of the product we’re selling continues to rise. Our airports, for instance, are used as a cost centre rather than as an economic engine,” laments John Winter, CEO of the B.C. Chamber of Commerce.

Keep reading on Canadian Business >>

Mortgage rates: How low can they go in canada?

canadianbusiness

By Tim Shufelt

When the Bank of Montreal dropped its key mortgage rate below the 3% threshold in March, Paula Roberts started to get calls from her clients. They wanted to know if they should break their mortgages and refinance at BMO’s limited-time, bargain-basement 2.99% rate—the lowest rate ever officially offered by a Canadian bank for a five-year, fixed-rate mortgage. The sudden surge in interest baffled the Toronto mortgage broker. After all, these were clients who were already locked into mortgages with even lower rates and better terms than BMO’s. “All of our lenders were at lower than 2.99% at that point,” Roberts said.

It’s an open secret that Canadian homebuyers can secure mortgages on the cheap these days. BMO simply advertised the kind of lending practices that were already widespread. But stating the obvious got the bank plenty of attention—from media, from Canadian borrowers and from the federal government.

Finance Minister Jim Flaherty also picked up the phone, calling BMO to register his disapproval of the rate reduction. “My expectation is that banks will engage in prudent lending—not the type of ‘race to the bottom’ practices that led to a mortgage crisis in the United States.” He thanked the country’s other big banks for not following BMO’s lead. Manulife Bank apparently missed the subtext of that message, subsequently announcing a 2.89% mortgage offering. Flaherty blasted the promotion, calling it “unacceptable.”

After “consulting with the Department of Finance,” Manulife withdrew the offer the next day. BMO let its promotion expire at the end of March. Thus was restored the don’t-ask-don’t-tell practice of supplying discount mortgages without making too much of a fuss about it. “I bet if you went out today to any bank, if you have the right credit score and the down payment, you’d get a 2.89% mortgage,” says Peter Routledge, an analyst at National Bank Financial.

In reprimanding the financial sector, Flaherty again warned of risky household debt accumulation. But he also objected to the optics of the mortgage fire sale, adding: “It’s also symbolic.” In the midst of the effort to avert a housing crash and convince Canadians to stop borrowing, here were BMO and Manulife publicizing cut-rate housing debt with all the discretion of used-car salesmen. But you can hardly blame them. Fewer homes are being sold in Canada, reducing the demand for new mortgages. It’s simple economics: when demand falls, so do prices. To vie for the patronage of the dwindling ranks of borrowers, banks have to sweeten the terms of their mortgages.

Banks can afford to slash rates because money has never been cheaper in Canada. While the federal government appeals for restraint in debt accumulation, the Bank of Canada’s interest rate policy encourages just the opposite. And since policy rates aren’t likely to budge for at least another year, Flaherty is left to glower at banks from up on high while mortgage rates continue to drop. Just how low they go will be limited only by the banks’ profit margins and the government’s persuasiveness in discouraging loose borrowing and lending. “I really can’t see them going any lower. But I said that before,” Roberts says. “Who would have thought they would have gone this low?” There’s never been a better time to get a mortgage than right now. But there soon could be.

 

Having saved up enough money for a down payment while living with his parents in Toronto, Lucas Shearer decided to make his first foray into the real estate market in January. He quickly found the right place—a $344,000 condo in the Yonge and Eglinton neighbourhood—after qualifying for a 2.89% five-year fixed-rate mortgage. “At a higher rate, it definitely would not be as attractive,” he says. “I probably would have just stayed at home, saved more money and assessed it in a year from now.” Compared to the average discounted rate on five-year mortgages over the past five years, which according to ratehub.ca is about 4.25%, Shearer will have saved about $18,000 in interest and owe $6,000 less by the time his mortgage expires. Compared to the 6% peak five-year rate over the past five years, Shearer will save more than $50,000.

While Shearer wasn’t compelled to buy real estate by low mortgage rates alone, they were an added incentive that made the market more attractive to him. This runs counter to the government’s deliberate attempt to contain housing activity. Bank of Canada governor Mark Carney warned of a “brutal reckoning” when rates eventually climb and expose the finances of many households as unsustainable. There are those homeowners who can afford a $700,000 home today, but could only afford a $500,000 home at 6.5%, which is where rates could conceivably sit in five years when new mortgages expire, says John Andrew, a real estate professor at Queen’s University.

More on canadianbusiness >>

The Cyprus model for Canada’s big banks

Lilley’s Pad

theeconomiccollapseblog.com

Brian Lilley 

I started asking on Monday, and again on Tuesday, whether the confiscation of money from private bank accounts could happen in Canada the way it has happened in Cyprus. My argument was that yes it could, especially given that Cyprus is a modern European nation and that the decision to dip into accounts was made by finance ministers and officials from countries such as Germany, France and Italy.

This was not a Robert Mugabe theft of cash. If it can happen there then it can happen here.

Little did I know that the answer was already in the budget on page 145 (155 of the PDF).

• The Government proposes to implement a “bail-in” regime for systemically important banks. This regime will be designed to ensure that,in the unlikely event that a systemically important bank depletes its capital, the bank can be recapitalized and returned to viability through the very rapid conversion of certain bank liabilities into regulatory capital. This will reduce risks for taxpayers. The Government will consult stakeholders on how best to implement a bail-in regime in Canada. Implementation timelines will allow for a smooth transition for affected institutions, investors and other market participants.

• Systemically important banks will continue to be subject to existing risk management requirements, including enhanced supervision and recovery and resolution plans.

This risk management framework will limit the unfair advantage that could be gained by Canada’s systemically important banks through the mistaken belief by investors and other market participants that these institutions are “too big to fail.”

“Bail-in” is exactly how Eurozone officials described what happened in Cyprus (details here and here). In order for the country to get the bail-out from the EU, the banks needed to get a bail-in from their depositors. At first this meant every depositor and then just those with deposits over €100,000.
I asked officials from Finance Minister Jim Flaherty’s for comment on what this section means to them, here is the response from Flaherty’s Director of Communications Dan Miles.

“Bail-in arrangements are NOT ‘bail-out’ arrangements∙
Under a ‘bail-out’ arrangements, taxpayers money has to be used to save a failing financial institution∙
Under a ‘bail-in’ arrangements, a failing financial institution has to tap into their own special reserves or assets (which they have been forced to put aside) to keep their operations going∙
This keeps the financial institution in tract, without risking taxpayer money. This is what Canada is doing, in line with recent international agreements.”

No denial in there that depositors will be asked to pay up if Canadian banks fail. Some think that is a probability that will never happen but obviously the Finance Department thinks it could happen or it would not devise rules. The Big Six Banks were also recently told to up their capital requirements to prevent failure.

So unless Miles is not telling me something, the new regime in Canada is that deposits up to $100,000 will be insured through the Canada Deposit Insurance Corporation and anything else that you hold with a single bank will be up for grabs if that bank fails.

On one level it makes sense to say those who invested in the bank should be the ones who bail it out and not taxpayers. No one wants taxpayers to fund the bail out of big banks.

But is this what most people expect from their bank?

And what exactly would be up for grabs? Would a bank account with $150,00 in life savings see a good part of it seized? What about an RRSP I’ve built up through my bank for retirement? Having more than $100,000 in an RRSP is not out of order for a good saver or a self-employed person who needs to look after their retirement needs on their own.

And what about business accounts at that point, accounts that need to meet payroll?

As Jonathon Chevreau from Moneysense told me on Tuesday, diversify, diversify, diversify.

Canada has a new regime for possible bank failure and it looks exactly like Cyprus. One of our major banks failing may be unlikely but that doesn’t mean it is impossible.

Canada Revenue Agency struggling to put a lid on tax fraud

The Globe and Mail

KATHRYN BLAZE CARLSON 

It is a simple scheme that netted a Brampton, Ont., man’s clients thousands of dollars, all on the backs of law-abiding Canadians.

His crime was this: As a tax preparer from 2005 to 2010, Adegboyega Adenekanad Adebukunola filed $858,897 in fake donations on 129 returns, reducing his clients’ tax bill by a total of $245,602.

The case represents a tiny fraction of the revenue lost to false receipting, but it offers a fresh glimpse into a fraudulent enterprise that has cost Ottawa hundreds of millions of dollars over a decade. Because of people like Mr. Adebukunola and his clients, millions of Canadians filing returns next month will shoulder an unfair tax burden and suffer from fewer dollars flowing into federally funded programs and social services.

The Harper government has sought to boost revenues without raising taxes since 2006, introducing dozens of tax-fairness measures expected to bring in more than $2-billion by 2015. Last week’s budget was no exception – its fiscal outlook relies on raking in billions by closing loopholes and pursuing cheats more aggressively. Still, Finance Minister Jim Flaherty’s plan sent mixed signals to the Canada Revenue Agency: It will get $13-million annually to track international financial transfers and pursue fraudsters scamming its R&D tax credit program, but it is also the target of fresh cuts, taking a hit of $60-million annually on top of previous cutbacks.

And while the CRA is getting sharper teeth, its new-found authority will be limited. If the agency suspects people failed to pay their due taxes, it can now collect half of the disputed amount while the case is tied up in court. But that new deterrent applies only to charitable-donation tax shelters and it remains to be seen whether it will some day extend to unpaid taxes tied to fake receipts.

In charity lawyer Mark Blumberg’s view, one bright light from the latest budget is what was missing: Though it introduced a new first-time donor’s “super credit” that will increase the value of a receipt by 25 per cent (once per couple, and only up to $1,000), there are no other donation incentives. And that means there are no new financial incentives to file fake receipts.

After Mr. Adebukunola’s arrest in the United States on an international warrant, he pleaded guilty to tax fraud this month and was sentenced to house arrest. There are other cases: In October, 2012, for example, Penelope Donick was sentenced to one year in jail and a $200,000 fine after the CRA discovered she had filed $4-million in falsified receipts across 269 fraudulent returns; before her, there was Ambrose Danso-Dapaah and his estimated $39-million in fake charity receipts.

“Anyone with a computer and a printer at home could do this,” Mr. Blumberg said. “Anyone can, in about 15 minutes, create an official donation receipt for income tax purposes for any charity.”

Canada’s 86,000 charities issued $13-billion in receipts for the 2011 tax year. Ever since 2007, the CRA has focused on combatting charity-gifting tax arrangements and tackling this other lesser, but far simpler, scheme involving fraudulent donation receipts. In a newsletter last year, the CRA listed fake receipting as among Canada’s top-five tax scams.

Keep reading on  The Globe and Mail >>

Canada’s economy: On thinning ice | The Economist

The Economist

WHEN the world financial system collapsed in 2007, triggering a global recession, Canada recovered faster than any of the other members of the G7 group of large developed countries. Its banks remained solid, while low interest rates encouraged consumers to borrow and spend. But five years on, consumers are showing signs of flagging. The economy is set to expand by a paltry 1.6% this year. So the authorities are casting around for another source of growth. The trouble is they cannot seem to find one.

Government, both federal and provincial, is trying to curb deficits swollen by stimulus spending. Companies are restrained by uncertainty prompted by Europe’s woes and the stand-off over fiscal policy in the United States, Canada’s main trading partner. Exports have still not returned to their pre-recession peak.

As for consumers, after 11 consecutive years in which household spending has exceeded disposable income, they are deeply in hock. Just over a year ago, Craig Alexander, chief economist at Toronto-Dominion Bank, predicted the debt build-up “is going to end in tears”. The ratio of household debt to disposable income has continued to edge up (see chart 1). An increase in unemployment (from 7% at the moment) or a rise in interest rates could push some households into bankruptcy and puncture a housing bubble inflating in several Canadian cities.

Jim Flaherty, Canada’s finance minister, has repeatedly warned of the threat household debt poses to the economy. He has made it harder for risky borrowers to get mortgages; he publicly upbraided two banks that recently dropped their rate for five-year, fixed mortgages below 3%.

Yet in his budget on March 21st, Mr Flaherty did little to encourage business investment or exports to take the place of consumers in supporting growth. Rather, his focus was on eliminating the federal budget deficit—currently at 1.4% of GDP, low compared with most G7 economies—before the next general election in 2015. His plan, which relies on spending restraint and unusually high revenue growth, is seen by many as wishful thinking.

Mark Carney, the outgoing governor of the Bank of Canada, has also been ringing the alarm on household debt. Yet the bank has kept its benchmark rate at just 1% since September 2010. This month it signalled that the rate is likely to remain there.

House prices are still rising everywhere except Vancouver, but housing sales and housing starts have dropped. Analysts are divided on whether this signals the beginning of a crash, or just a pause before a new burst of activity in the coming months, which are traditionally the housing market’s busiest.

Rather than a housing bubble, what is needed is a rebound in business investment and an increase in exports. Neither is taking shape. Canadian firms have been piling up cash faster even than their counterparts south of the border. Investment is expected to rise by just 1.7% this year. When Mr Carney and Mr Flaherty tried to jawbone businesses into investing some of this money last year—Mr Carney called it dead money—they were met with angry retorts. The budget extended a scheme letting manufacturers write off purchases of machinery and equipment more quickly. But this might not have much impact until the world economy looks more settled.

The disappointing export performance owes more to problems of Canada’s own making. They will take time to fix. The United States took 73% of the country’s exports (and provided 62% of its imports) last year; Canada sells relatively little to faster-growing markets in Asia and Latin America (see chart 2). The government is trying to redress this with several sets of trade talks. But the deal closest to fruition is one with the hardly booming European Union.

Sales of oil and gas, Canada’s biggest single export, are especially tied to the United States. Frantic lobbying by Canadian politicians of the Obama administration in the lead-up to a decision on whether to allow Keystone XL, a cross-border pipeline, is testament to this dependency. Building pipelines to the west coast, to carry exports to Asia, or to the east to supply consumers in Ontario and Quebec (home to 62% of Canada’s 35m people) will take years, even if planning battles are won. Meanwhile, Canadian energy exporters face falling prices because of the boom in shale gas and oil in the American Midwest.

So the Canadian consumer remains the main hope for the economy. It is an odd situation where both government and business have decided to be excessively prudent in their spending, but are hoping that consumers will not follow suit just yet.

Is Canada the next Cyprus?

Judi McLeod

It’s Good Friday and a government holiday in Ottawa.

No point trying to reach Canadian Finance Minister Jim Flaherty today.  So rather than wait until Monday, Canada Free Press (CFP) is posing this cliff-hanger question:

“Is that a Cyprus-style “Bail In” proposed in the newly-minted 2013 budget?”

That’s what economic gunslingers on both sides of the border and dozens of letters to the editor are charging.

What began as a rumble is growing into an ear-splitting cacophony—and the Canadian government should post a truthful, detailed and in-plain-English explanation on its website.

If Canada is going the same direction as Cyprus and the European Union, we need to know as soon as possible.

The concept of a Canada taking money from unknowing bank depositors is not just within the realm of hysteria and hype.

Not when Page 144 of the 2013 Canadian budget states: “The Government also recognizes the need to manage the risks associated with systemically important banks—those banks whose distress or failure could cause a disruption to the financial system and, in turn, negative impacts on the economy.  This requires strong prudential oversight and a robust set of options for resolving these institutions without the use of taxpayer funds, in the unlikely event that one becomes non-viable.

Keep reading on  canadafreepress >>

Does Canada have an unsustainable housing bubble and is it headed for a major 30% price correction like the US?

aei-ideas.org

Mark J. Perry 

 

Does Canada have an unsustainable housing bubble that might be about to burst? You would sure think so looking at the graph above, which compares monthly home prices in the US (measured by the Case-Shiller Composite-20 Index through November 2012) and home prices in Canada (measured by the Teranet National Bank House Price Index through December 2012) since 2000 (both indexes equal 100 in January 2000).  US home prices doubled between 2000 and 2006, when the housing bubble started to burst, leading to a 30% correction in home prices by 2008.  Home prices in Canada doubled between 2000 and 2010, and have increased by more than 10% over the last two years, and by 3% over the last year.

Megan McArdle offered some commentary several weeks ago on this issue:

So the mystery remains: why no bubble in Canada?  Why no banking crisis?  My best working theory was that their banking system was run by Canadians, who are a very sensible people.  Yes, I admit that this theory is a little hard to test, but I can offer some supporting evidence: they also sat out the Great Depression, and the Panic of 1907.
Over the last year or so, however, another possibility has been emerging: they didn’t avoid the crisis.  They’re just getting it on tape delay.
The Canadian media have started asking the same questions.  People are now openly arguing over whether there’s a bubble, though that argument hasn’t attracted much notice on this side of the border.  Last summer, the finance minister put new mortgage rules into place in an attempt to engineer a slowdown.  Sure enough, house prices are falling.

But many observers expect the setback to be temporary.  As long as interest rates are low, they say, Canadians will continue to load up on debt, and the things that get bought with debt.
How this shakes out will matter a lot.  It will tell us a lot about the causes of housing bubbles: are they rooted in poor bank regulation, or other fundamentals?  And also about how much bank regulation can do to stop them.  If the tighter rules do engineer a soft landing, that’s evidence that prudent bank regulators can prevent crises.  If, on the other hand, Canada gets its own housing crash, and banking woes, despite the finance minister’s best efforts, that will suggest that there are real limits to how much even the most prudent regulator can accomplish.

MP: So there’s a great experiment underway in Canada’s real estate market, and we’ll know in the next few years whether Canada’s housing bubble leads to a major price correction like in the US or whether a more moderate price correction will cool off Canada’s home price appreciation. As Megan points out, Canada’s sound and stable financial, mortgage, and banking systems were relatively unaffected by all of the major financial and banking crises over the last 100 years that devastated the US. While our historically fragile banking system lead to 9,000 bank failures during the Great Depression, about 3,000 bank failures during the S&L crisis, and 427 bank failures from 2008-2011 from the “Great Recession,” Canada experienced almost no bank failures during any of those financial and banking crises. Somehow Canada’s long history of surviving unscathed from America’s financial crises, despite the close integration of the two economies, makes me think that Canada once again will out-perform the US when it comes to the housing bubble and price correction. Look for a moderate home price correction in Canada over the next few years, but nothing close to the 30% home price crash in the US.

Canadian oil woes

GlobalToronto 

Economists say budgeting on unpredictable resource revenue is a dangerous gamble for Canada's economy.

How Big is Canada's Oil Subsidy to the U.S.?

Jeffrey Rubin

huffingtonpost.ca

Consider the tale of Suncor and Canadian Natural Resources, two of the largest oil sands producers in Alberta. Outwardly, they may appear quite similar. Each produces hundreds of thousands of barrels a day from the oil sands. And most of that oil eventually ends up in the same place -- gas tanks across the continent. The path it takes to get there, however, is another story. The difference is a microcosm of the predicament Canada's energy industry currently faces.

Over the last few years, Suncor's emphasis has shifted from exponential production growth to milking the full value of what it digs out of the ground. Fortunately for Suncor, it processes nearly all of the bitumen it pulls from the oil sands in its own refineries.

On the other hand, CNRL, like most oil sands producers, exports raw bitumen to the United States. In so doing, however, the company also transfers an enormous amount of wealth from its Canadian operations to American refiners in the Midwest.

In the refining business, the difference between what a refinery pays for its inputs (like crude or bitumen) and the price it gets for finished products (like gasoline or diesel) is known as a crack spread. The glut of oil coming from Canadian producers means Midwest refineries are enjoying crack spreads up to five times larger than those seen by American coastal refineries, which pay world prices for their feedstock.

Investors have certainly noticed what such large crack spreads mean for the bottom line. CNRL, which lacks its own refineries, is forced to sell its raw product at a heavy discount, thereby missing out on those juicy refining margins. Suncor, on the other hand, is able to capture the huge crack spreads through its downstream refining operations. In 2012, CNRL's stock fell more than 20 percent, while Suncor's gained more than 10 percent.

The issue is writ large in the price differential between West Texas Intermediate (WTI) and Brent crude. Although WTI is often quoted in North America as the price of oil, Brent is actually the global benchmark for crude. Unfortunately for Canadian producers, lately the spot price of Brent has been as much as $25 a barrel higher than that of WTI.

While Canadian oil sands producers are the main victims of this price gap, they're also, somewhat ironically, its principal cause. Without more pipeline infrastructure to offload oil to other markets, oil sands crude, as well as shale oil from the Bakken play in North Dakota, has no where else to go. More production from these places only boosts supply, further lowering the price of WTI.

Aside from a few hundred thousand barrels a day from wells offshore Newfoundland that get Brent prices, virtually all of Canada's 2.4 million barrels a day are priced off WTI.

More >>

Is the Canadian economy in trouble?

By Kevin Press, BrighterLife.ca

Bank of Canada Governor Mark Carney [l] & Finance Minister Jim Flaherty

“Conditions in the international financial system are fragile.” That is how the Bank of Canada chose to begin its latest Financial System Review, released on June 14. The report goes on to note that our domestic financial system “continues to be robust.” But that good news comes despite a host of risks to the system and to the Canadian economy, including the eurozone sovereign debt crisis, a slowdown in other advanced economies and potential trouble in the Canadian residential real estate market. Consistent with December’s report, the Bank says the risks facing the Canadian financial system are “high.”

I was in to see Sadiq Adatia, chief investment officer of Sun Life Global Investments, last week so I asked him what he thinks about the outlook for Canada. He wasn’t optimistic. After talking about his confidence in the U.S. recovery, he told me: “Canada is turning a corner too, but in the opposite direction.” We may not see gross domestic product growth above 2% this year.

Adatia sees five problems:

• Household debt. “We’ve had a great run in our markets, fuelled by consumer spending,” Adatia told me. “Consumers have added a ton of debt to their balance sheets.” Indeed, we learned on June 15 that Canada’s household credit market debt (consumer credit, mortgage and loan debt), measured as a percentage of personal disposable income reached 152% in the first quarter of this year. That’s a new record. Actual borrowing has slowed, but income has too. According to the Bank of Montreal (BMO), the percentage of Canadian households with debt-service ratios above 40% of income – a level considered to be vulnerable by lenders – has risen over 6%. That’s “slightly above the past decade norm,” reports BMO.

• Housing prices. Adatia thinks a double-digit drop in prices is possible. “We think there’s going to be a pullback across the board,” he said. “Some regions may be hit harder than others, but I think a 5%-to-15% drop is definitely in the cards.” That may be a conservative call. Across Canada, home prices are up 12% relative to where they were before the most recent recession.

• Global factors. No surprise here: There’s trouble in Europe, a slowdown in China and the U.S. recovery (while it gives Adatia reason for optimism) remains vulnerable to global economic factors. These are all potential threats to Canada. By the way, Adatia does not believe there will be a hard landing in China.

• Rising interest rates (eventually). Adatia doesn’t expect the Bank of Canada to move on rates this year, but they may start to come up in 2013: “Until we see a better resolution in the eurozone and a stronger U.S. economy, the Bank of Canada is not going to jump out too far ahead, particularly given that the U.S. Federal Reserve has already said it’s not going to raise rates until 2014.” When it happens, higher rates will dampen spending by a lot of highly indebted households.

• Unemployment. “We’re probably going to see unemployment move up,” said Adatia. “I’m not convinced the employment picture is really as strong as it looks right now.” The four points listed above could each contribute to job losses.

Are we headed down a path similar to the one Americans took toward the end of the last decade? “These are the same things that were going on in the U.S. economy before it faltered,” Adatia told me. “We’re probably where the U.S. was a few years back.” Meanwhile, the U.S. housing market is showing signs of stabilization and according to the Federal Reserve Bank of New York, Americans have slashed their debt by about $100 billion since the fourth quarter of 2011.

Canada’s housing market: Bubble burst?

--Ottawa backstops riskiest mortgages

--Watchdogs urge scrutiny of risk to public finances

--Canadian household debt-to-income rises to 153%

TORONTO (Dow Jones)--For years, Canadian bankers have argued that government backing of the country's riskiest mortgages makes a U.S.-style housing and banking crisis here unlikely.

But as Canadian personal and mortgage borrowing continues to climb, international watchdogs have called on the government to better assess the risk that the high debt load now poses--not to the country's banking system--but to government coffers.

Mortgage lenders in Canada are required to have default insurance on any mortgage with less than a 20% down payment. ... More Wall Street Journal >>

Also 

IN FEW corners of the world would a car park squeezed between two arms of an elevated highway be seen as prime real estate. In Toronto, however, a 75-storey condominium is planned for such an awkward site, near the waterfront. The car park next door will become a pair of 70-storey towers too. In total, 173 sky-scrapers are being built in Toronto, the most in North America. New York is second with 96.

When the United States saw a vast housing bubble inflate and burst during the 2000s, many Canadians felt smug about the purported prudence of their financial and property markets. During the crash, Canadian house prices fell by just 8%, compared with more than 30% in America. They hit new record highs by 2010. “Canada was not a part of the problem,” Stephen Harper, the prime minister, boasted in 2010.

Today the consensus is growing on Bay Street, Toronto’s answer to Wall Street, that Mr Harper may have to eat his words. In response to America’s slow economic recovery and uncertainty in Europe, the Bank of Canada has kept interest rates at record lows. Five-year fixed-rate mortgages now charge interest of just 2.99%. In response, Canadians have sought ever-bigger loans for ever-costlier homes. The country’s house prices have doubled since 2002.

Speculators are pouring into the property markets in Toronto and Vancouver. “We have foreign investors who are purchasing two, three, four, five properties,” says Michael Thompson, who heads Toronto’s economic-development committee. Last month a modest Toronto home put on the market for C$380,000 ($381,500) sold for C$570,000, following a bidding war among 31 prospective buyers. According to Demographia, a consultancy, Vancouver’s ratio of home prices to incomes is the highest in the English-speaking world.

Bankers are becoming alarmed. Mark Carney, the governor of the central bank, has been warning for years that Canadians are consuming beyond their means. The bosses of banks with big mortgage businesses, including CIBC, Royal Bank of Canada and the Bank of Montreal, have all said the housing market is at or near its peak. Canada’s ratio of household debt to disposable income has risen by 40% in the past decade, recently surpassing America’s (see chart). And its ratio of house prices to income is now 30% above its historical average—less than, say, Ireland’s excesses (which reached 70%), but high enough to expect a drop. A recent report from Bank of America said Canada was “showing many of the signs of a classic bubble”.  More  The Economist >>

Canada's East-West economic divide deepens

Globe and Mail/

Saskatoon will lead the country's economic growth this year, along with the other resource-rich cities of Calgary, Edmonton and Regina.

The Conference Board of Canada's annual metropolitan outlook of 27 cities also sees a deepening economic divide between the West and the rest. Growth in factory-heavy central Canada will be tepid and St. John's, which had led the country's growth in the prior two years, will tumble to the bottom of its economic growth ranking. More >>