Sub-Prime Credit Crisis 2.0 Is Here

The Great Canadian Credit Crisis is upon us.

During the Great Recession, consumer debt in Canada soared. Governments of the world have learned nothing; the debt-driven fiscal policy remains in place, generating privatized profit off public misery.

This year, consumer debt in Canada hit a new height: 1.81 trillion. That is, One trillion. Eight hundred. And ten. Billion. Household debt is 170% - for every dollar in income, $1.70 is owed to creditors.

It’s obscene. Absurd. And crashing very soon.

In the rush to ever expand profits, credit companies are extending credit to people who simply cannot afford it. The Working Stiffs - Canada’s underpaid, overworked service workers - now recieve credit, result in boondoggles where they owe thousands while still barely making rent.

Then again, money is a lie. (Cash is only, like, 2% 10% of all “money”, the rest existing as debt.)

Demand socialism now.


Accorsing to the Bank of England (oh, hi Mark!), “Of the two types of broad money, bank deposits make up the vast majority — 97% of the amount currently in circulation.”

Mind-boggling, yeh?

Fun fact! Six OECD countries do not have a reserve requirement, essentially giving banks an unlimited license to print money:

The six countries consist of Australia, Canada, Denmark, New Zealand, Norway, and Sweden. The central banks of these six countries make interbank payment settlement accounts available to depository institutions subject to certain rules. They provide standing facilities with interest charges and the lending interest rate sets an upper bound on the market interest rate. These central banks also pay interest on end-of-day account surpluses, and that interest rate forms a lower bound on the market rate Thus, lending and deposit rates form a corridor for the target overnight interest rate.
(US Federal Reserve, 2007 report on OECD banking practices


So with a population of 36 million, that’s half a million dollars in debt for every single person – man, woman, and child – in Canada.


If that’s counting secured debt (e.g. mortgages, car loans, anything with collateral against it), then that doesn’t sound too unreasonable. My mortgage is within an order of magnitude of that.

If that’s all unsecured debt (credit card debt, lines of credit, payday loans, etc.), then whoof. That’s ridiculous.


At a low 4.5% interest (mortgage rates rather than credit card rates), the monthly interest would be more than the payment so it could never be paid off unless you paid at least $1900/month for almost 100 years or, more realistically, over $2500/month for 30 years. If you’re spending a reasonable 20% of your after-tax pay on paying down debt, that would require after-tax salary of over $152,000 (a nominal salary around $230,000). So as long as every man, woman, and child makes at least $230,000/year and can be expected to do so for at least 30 years, it sounds sustainable. If not, there could be some problems in the future.