Mish has a long, interesting article on the subject. I recommend reading the whole thing, but to nutshell it:
Canada, faced with the global recession, has gone on a spending binge and has massively inflated its housing market. While Canada’s banks are technically in good shape, this is only because the toxic assets have all been shoved off to the government…which will have to either massively increase taxes or cut spending to make ends meet. Guess which way liberal Canada is heading? Towards higher taxes, of course.
But the fundamental problem is that the government has created a housing bubble in Canada and not only will it collapse, it must collapse. The only question is, when? And the problem for us is that Canada is a major purchaser of American goods and services – our best customer might be heading for the poor house for a while, and that means our already battered economy will take another big hit.
Exit question: which will cause the “double dip” recession to hit – the collapse of China’s real estate bubble, or Canada’s?
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