Tuesday, February 16, 2010

Without Debt Where Would We Be?

Is Our Economy Really Recovering
Or Just Living On More BORROWED Time?

Household debt in Canada rose to record levels in 2009, with almost two thirds of families reporting that they would be in financial trouble if their pay cheques were just one week late, according to a report by the Vanier Institute of the Family.

The institute said average household debt rose to $96,100, creating a debt to family income ratio of 145%, the highest ever. That level may climb to 160% by 2012, it said.

Levels of personal debt are also becoming a problem, with a 50% increase mortgage payments running in arrears of more than 90 days compared with the previous year, it said. The number of credit card holders three months behind in payments jumped 40%.

The institute also added its voice to the growing chorus of concern that Canada’s housing market has entered bubble territory. Low interest rates have encouraged buyers to take on more debt than they can afford and that may lead to problems once rates start rising.

Over the past 20 years, housing prices have averaged 3.7 times household earnings. Now, that level is closer to 5 times with real estate making up 48% of the net worth of Canadian households, it said.

To read the complete report simply click on the above graphic to download a PDF version.

Editor's Comment: It is realities like this which local government seems to just ignore as they continue on their quest to keep spending, spending, spending.

Without debt where would our economy really be? The Federal government is running at least a $60 billion deficit, the Provincial government is running a several billion dollar deficit (the real amount is unknown as they are incapable of reliable calculation it seems) and the city government, while not running a deficit, continues to raise taxes year after year.

How much longer we can keep spending money we don't have to support the illusion of prosperity is a question someone will have to deal with sooner or later.


allvoices

No comments:

Post a Comment

Your comment will appear after moderation before publishing,

Thank you for your comments.Any comment that could be considered slanderous or includes unacceptable language will be removed.

Thank you for participating and making your opinions known.