#BANKS' LEVERED #RISK EXPOSURES #TIGHTENS HOUSING AND RENTAL #MARKETS

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 BANKS' LEVERED RISK EXPOSURES TIGHTENS HOUSING AND RENTAL MARKETS

With Canada’s scorching-hot housing markets getting summarily cooled by the central bank’s efforts to dampen inflation, the Big Six banks will face a crucial test to their resilience, according to a new report from DBRS Morningstar. Drawing on data from Statistics Canada and the Canadian Real Estate Association, the report noted that national home prices have dropped for three straight months, with June representing the steepest monthly drop since 2005.

“Although the magnitude of the impact of monetary policy tightening on the housing market is still unclear, rising rates will continue to erode housing affordability at current price levels, further depressing demand and putting downward pressure on housing prices,” the report said. In all, this leads us to reiterate the global economic concerns/factors we reported a month ago as evidence that the Canadian Banks and the economy are also  being swept under the rug by the terrible economic conditions in global housing, food, energy and interest costs.

 Here is a summary of critical global factors that can be tied to the fact that the planet is reaching its limits to growth. Meaning that we have reached the tipping point that cannot be reversed with local band aid approaches. If we do not address these global factors - then the outlook for global society beyond a few more years is highly speculative, at best. 

 

KEY GLOBAL FACTORS

RAPID DEPLETION OF ENERGY AND RESOURCES,

RISING INTEREST RATES, LEADING TO ASSET VALUE DEPRECIATION, CURRENCY/ECONOMIC COLLAPSES

UNSUSTAINABLE EXPONENTIAL POPULATION GROWTH- DOUBLES IN 50 YEARS?

CLIMATE AND ECOLOGICAL DECLINE, MELTING ARCTIC ICE

GROWING GEO-POLITICAL TENSIONS - POPULATION/RESOURCE IMBALANCE WILL LEAD TO MORE CONFLICTS

As  a consequence of this variable equation, there are 50 countries now facing severe economic difficulties breeding social unrest and shortages of living essentials. As they collapse the interdependent global economy will add more countries to the list as both supply chains and currencies disappear from existence.  Regional conflicts will therefore run the risk of quickly spreading as nations become desperate. to maintain civil order.

The underlying cause for all this economic decline and turmoil relates to the historic teachings of surreal and fictitious Salvadore Dali type economic theories and beliefs espoused by top schools, universities and institutions. Teachings and ideas that  failed to understand that the world economy is a quantitative system with limited absolute physics-based materials and minerals available; powered by depleting finite energy reserves.

                         Now look at the mess we're in!

Executive Committee

December 22,2022

https://financialpost.com/fp-finance/banking/banks-more-vulnerable-to-economic-shocks-due-to-decline-of-government-backed-mortgage-insurance-moodys-finds

Banks more vulnerable to economic shocks due to decline of government-backed mortgage insurance, Moodys finds

Wind-down in government stimulus support expected to result in uptick in mortgage delinquencies

Canada’s big banks have become more vulnerable to losses from economic shocks after increasing exposure to red-hot real estates markets in Vancouver and Toronto at a time when the level of government-backed residential mortgage default insurance was declining, according to a new report from Moody’s Investors Service.

Another contributing factor is the winding down of COVID-19 government support programs such as the Canada Recovery Benefit, which have been keeping households solvent and helping to maintain high overall credit quality, the ratings agency said in the report to be widely released on Wednesday.

TOP ECONOMIST WARNS

' We Are In Debt Trap...'

“Our view is that there will be an uptick in residential mortgage delinquency once all support measures are exhausted,” said the report’s author Jason Mercer. “Mortgage losses will likely rise as stimulus wanes.”

The ratings agency noted that the supports including income supplements put in place to offset the economic impact of COVID-19 pandemic restrictions are disappearing at a time when fewer residential mortgages are insured.

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