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Kalenn Istarion posted:I'm sorry, but contribution holidays literally don't exist in DC plans. They can't run 'deficits' because they don't provide guaranteed income (unlike a DB plan) and so have no contractually defined compensation level to 'fall short' of. The company literally does not give a poo poo what the investments do because the investments are explicitly the responsibility of the employee once the contribution is made. While that's technically true the Supreme Court of Canada has ruled that unless a plan specifically prohibits contribution holidays, employers can take contribution holidays, especially in those weird DB-plans-but-with-DC-components. See: Nolan v. Kerry (Canada) Inc. (2009)
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Jun 11, 2014 13:30
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Kalenn Istarion posted:No, being Canadian means you have a pension. We all have one. It is a defined benefit plan. You also probably get some sort of matching in either an explicitly named DC plan or some other similar form from your employer, and the 95% of people who are too lazy to invest it themselves all own balanced funds. Kalenn, I'm no dummy. Other than an ESOP which offers me no financial benefits other than Lifetime Capital Gains exemption (which does not offset the risk of investing in the place I draw my income from), I have no employer match/pension to speak of. I do make a good income which I manage, save and invest for my retirement. That's the pro/con of my situation. There are loads of people in a similar postion in Canada who don't have the income and/or savvy to do so. I would also submit that while it is technically correct CPP and OAS are pensions, I do the taxes of many people in my family who receive these payments and they are not enough for anyone to sustain themselves today on anything other than breadline and they won't be any better 25 years from now when I'm collecting them either. It's a loving pittance. They've only just recently set back the eligibility for OAS because of constraints, and that is a sign of things to come as boomers start to stress a much smaller contributing workforce. It's pretty disingenuous to say "we all have a pension!" when CPP/OAS is poverty line and what we're really discussing is the fantastic pensions of people who are involved in HOOP, OTPP or OMERS, as an example. I'm not even going to get started on politician pensions - you ever looked at those? Anyhow, enough of that. Back to houses. Saltin fucked around with this message at 16:04 on Jun 11, 2014 |
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Jun 11, 2014 15:54
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Check out @BenRabidoux's Tweet: https://twitter.com/BenRabidoux/status/476747285758357504quote:"I don't think it's the role of govt to set interest rates or rates for mortgages" -Joe Oliver. Just how far do you want to take that, Joe? This is quite possibly one of the dumbest things I've ever heard a Canadian politician say.
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Jun 11, 2014 16:35
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Cultural Imperial posted:Check out @BenRabidoux's Tweet: https://twitter.com/BenRabidoux/status/476747285758357504 joe oliver is not only incompetent and stupid, he's now in a position to gently caress things up in a very extreme way
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Jun 11, 2014 16:48
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Cultural Imperial posted:Check out @BenRabidoux's Tweet: https://twitter.com/BenRabidoux/status/476747285758357504 But he's... right, isn't he? Assuming central bank independence (possibly a big assumption these days) and given that banks finance mortgages from the bond market - the 'government' - that is, the Dept of Finance, doesn't set interest rates or rates for mortgages. What am I missing?
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Jun 11, 2014 16:49
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Lexicon posted:But he's... right, isn't he? Assuming central bank independence (possibly a big assumption these days) and given that banks finance mortgages from the bond market - the 'government' - that is, the Dept of Finance, doesn't set interest rates or rates for mortgages. Do you want me to sit down and catalogue every single time the government has directly interfered with interest rates? Right off the top of my head: Flaherty telling banks that if they kept their sub-3% mortgage rates, he'd poo poo in their mouths.
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Jun 11, 2014 16:52
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Lexicon posted:But he's... right, isn't he? Assuming central bank independence (possibly a big assumption these days) and given that banks finance mortgages from the bond market - the 'government' - that is, the Dept of Finance, doesn't set interest rates or rates for mortgages. the bank of canada is a part of the government
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Jun 11, 2014 16:54
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It's tweets like that, that make my nihilism about it so enjoyable. Yes, Joe. Wash your hands of responsibility for it and just walk away. Good... Lexicon posted:But he's... right, isn't he? Assuming central bank independence (possibly a big assumption these days) and given that banks finance mortgages from the bond market - the 'government' - that is, the Dept of Finance, doesn't set interest rates or rates for mortgages. Even if you accept that the government doesn't, or shouldn't be, controlling the banks rate they set for a mortgage, they directly control every other lever in the transaction. CMHC insurance on the mortgage... check What is the criteria for being able to take out a mortgage... check What are the lending terms and conditions... check Free market right?
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Jun 11, 2014 17:08
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ocrumsprug posted:Even if you accept that the government doesn't, or shouldn't be, controlling the banks rate they set for a mortgage, they directly control every other lever in the transaction. Nothing in my comment should suggest I dispute any of this. RBC posted:the bank of canada is a part of the government excellent insight thanks
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Jun 11, 2014 17:25
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Given enough time and political will, the government can control and regulate pretty much anything it wants. (Assuming it takes place within its borders and, realistically, the control isn't prohibited by the constitution.)
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Jun 11, 2014 17:31
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Thought experiment: you wake up tomorrow and find out that you're the Finance Minister. Assuming you had the intention and ability (i.e. no overt PMO influence - a fantasy, I know) to act in good faith and competence to unwind this absurd housing bubble in as least destructive a manner as possible - what would you even do? Disband the CMHC? All new mortgages at 10% or higher? Remove capital gains exemption?
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Jun 11, 2014 17:32
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raise interest rates
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Jun 11, 2014 17:42
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The government can't and shouldn't manipulate interest rates. That's the boc's job. It can however, manipulate mortgage lending rates and standards. Re lexicon's thought experiment, tax the poo poo out of non primary housing through higher LTV tax. Abolish primary housing capital gains exemption. Increase down payment requirements to 50% for banks lending at less than 3.5% for mortgages. 50% might be too high but I'm just poo poo posting.
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Jun 11, 2014 17:51
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Thought experiment: Set out a scheduled tapering of CMHC coverage level, and lowering of CMHC eligibility to a much more modest amounts. Pre-2000 levels probably. Disallow, or heavily tax teaser mortgage rates.Lexicon posted:Nothing in my comment should suggest I dispute any of this. I felt that perhaps there was a hint of sarcasm. ~ I actually feel that the BoC, or Ministry of Finance do not need to directly control the mortgage rates. However. That statement from Joe Oliver though shows an amazing lack of understanding of what the role the ministry he is charge of, actually is. Or more horribly, this is actually a correct understanding. ocrumsprug fucked around with this message at 18:05 on Jun 11, 2014 |
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Jun 11, 2014 17:53
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Lexicon posted:excellent insight thanks More useful than yours, for sure. Cultural Imperial posted:The government can't and shouldn't manipulate interest rates. That's the boc's job. It can however, manipulate mortgage lending rates and standards. The BoC is a crown corporation controlled by the government. I don't know why this is even being debated.
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Jun 11, 2014 17:55
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eXXon posted:I don't know why this is even being debated. Because the thread contains dolts such as your good self who've never heard of central bank independence.
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Jun 11, 2014 18:04
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It's sort of like how the minister of health can't barge into a hospital and start prescribing treatments. Yes the it's a government hospital and he's the minister of health but there's certain levels of independence and a "chain of command" that doesn't really see or allow this level of micro-management. I believe the BoC is the same way. Yes it's a government institution but it's supposed to be left alone so the "experts" there can do their jobs. Of course just like a health minister can't barge into a hospital and start demanding the doctors replace insulin with homeopathic sugar memory water, he could over time press enough of his own "levers" within the ministry of health that saw that result. But of course there'd be huge push-back from the doctors and hospitals which would most likely destroy the career of and unseat that minister. Once again, from what I understand, a finance minister has even less direct control over the BoC and if he was to demand something extreme or insane there would be significant pushback, but if the minister/government wants to see something happen within the BoC they absolutely do have the power to bot officially and unofficially push things in the direction they want. \/ All I know is that we can't get rid of our "mortgage subsidies" because then none of our working class could live in houses they'd all have to live in tenements and the next thing you know harper has to spend a fortune building huge stone machine gun towers all over the country. Baronjutter fucked around with this message at 18:15 on Jun 11, 2014 |
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Jun 11, 2014 18:11
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Thought experiment: What effect would minimum terms for mortgages have? E.g, the mortgage you get when you buy a house must be at a fixed rate for 10 years. Or 5, whatever.
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Jun 11, 2014 18:12
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Baronjutter posted:It's sort of like how the minister of health can't barge into a hospital and start prescribing treatments. Yes the it's a government hospital and he's the minister of health but there's certain levels of independence and a "chain of command" that doesn't really see or allow this level of micro-management. I believe the BoC is the same way. Yes it's a government institution but it's supposed to be left alone so the "experts" there can do their jobs. Of course just like a health minister can't barge into a hospital and start demanding the doctors replace insulin with homeopathic sugar memory water, he could over time press enough of his own "levers" within the ministry of health that saw that result. But of course there'd be huge push-back from the doctors and hospitals which would most likely destroy the career of and unseat that minister. Once again, from what I understand, a finance minister has even less direct control over the BoC and if he was to demand something extreme or insane there would be significant pushback, but if the minister/government wants to see something happen within the BoC they absolutely do have the power to bot officially and unofficially push things in the direction they want. It's really not the same as the minister of health and their relationship with hospitals at all. Economic policy is not the same as medical science. Any minister of finance saying the government shouldn't be dictating fiscal policy is useless and should lose his job, because that's what his job is.
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Jun 11, 2014 19:20
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RBC posted:It's really not the same as the minister of health and their relationship with hospitals at all. Economic policy is not the same as medical science. Any minister of finance saying the government shouldn't be dictating fiscal policy is useless and should lose his job, because that's what his job is. Except this would be monetary policy, not fiscal.
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Jun 11, 2014 19:26
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A better analogy would be if the Minister of Health was annoyed at a lack of a certain drug, and said that he would consider legislating an early end to that company's patent and kickstarting generic production if they didn't start producing drugs ASAP. It's called the bully pulpit, it's a real thing, and its the main reason you don't see the Big 5 offering 2.5% mortgages. Just because central bank rates are out of the government's hands doesn't mean consumer rates are too.
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Jun 11, 2014 19:29
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Lexicon posted:Except this would be monetary policy, not fiscal. whatever I really don't care if you guys are libertarians and sincerely believe the government shouldn't interfere with the market. But I hope you actually realize this is what you are arguing for.
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Jun 11, 2014 19:34
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What the gently caress man. This isn't how anything works in real life. Why don't you go protest against the IMF and globalisation and the world bank and the UN you bright spark of leftism.
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Jun 11, 2014 20:01
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e: ^^^^ Don't mind if i do!! As RBC has pointed out, this idea of "central bank independence" is pure nonsense and all around horrible idea. Per usual i'll go to my main man Michael Hudson to cover why: quote:The resulting conflict is pitting financial interests against national self-determination. The idea of an independent central bank being “the hallmark of democracy” is a euphemism for relinquishing the most important policy decision – the ability to create money and credit – to the financial sector. Rather than leaving the policy choice to popular referendums, the rescue of banks organized by the EU and ECB now represents the largest category of rising national debt. The private bank debts taken onto government balance sheets in Ireland and Greece have been turned into taxpayer obligations. The same is true for America’s $13 trillion added since September 2008 (including $5.3 trillion in Fannie Mae and Freddie Mac bad mortgages taken onto the government’s balance sheet, and $2 trillion of Federal Reserve “cash-for-trash” swaps). Hope this helps. I know this might sound like complete madness to a lot of you but i think its time to realize we're not in kansas anymore boyos.
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Jun 11, 2014 20:02
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Lexicon posted:Because the thread contains dolts such as your good self who've never heard of central bank independence. It's still part of the government, shithead. Which, you know, is the exact opposite of what Joe Oliver said. And if you're going to push the ridiculous notion that the Bank of Canada is completely independent of the ruling party's control, how about you take 5 seconds to look up who is responsible for appointing the governor in the first place?
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Jun 11, 2014 20:02
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This argument is super duper loving stupid because central bank rates are not the same as mortgage rates, and the federal government absolutely does have a lot of control over mortgage rates. Do I even need to get into how much ink has been spilled on the topic of how the Feds are trying to limit the impact of low central bank rates (which are aimed at corporate balance sheets) on consumer spending? That was the topic of like 90% of Department of Finance jawboning the last few years. This is a housing thread, for gently caress's sake. Saying the feds have influence over housing rates is perfectly valid. Edit: What Oliver said about the government not setting mortgage rates is diametrically opposed to what Flaherty was doing the past three years. Period, full stop.
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Jun 11, 2014 20:06
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eXXon posted:And if you're going to push the ridiculous notion that the Bank of Canada is completely independent of the ruling party's control, how about you take 5 seconds to look up who is responsible for appointing the governor in the first place? If its similar to how it works in the US, its not so much who gets to appoint the governor but if the financial sector has veto power over the decision. Does something like this apply to the Canadian Central Bank? quote:Contrary to most of European central banks the Federal Reserve is quite autonomous and has some private aspects. Doesn’t it give too much power to this financial structure? Or maybe this power is part of the checks and balances within the American political system? If yes, what is its precise role and place? I do think this relates to the housing bubble thread because if the financial sector has too much influence over policy decisions we might (just might!) get policy that is good for the financial sector but very bad for society.
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Jun 11, 2014 20:58
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OK thanks for trolling. Just ignore him guys.
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Jun 11, 2014 21:02
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Is there some "Canadian housing bubble for dummies" guide? I'm getting all mixed up with everyone giving me differing opinions.
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Jun 11, 2014 21:08
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triplexpac posted:Is there some "Canadian housing bubble for dummies" guide? I'm getting all mixed up with everyone giving me differing opinions. Check the op. Failing that, what's your question?
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Jun 11, 2014 21:19
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Did the bubble pop yet? No? Damnit, back to eating poo poo then
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Jun 11, 2014 21:21
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it's kind of in the process of popping it seems like, in smaller markets like Halifax and Montreal. I guess one would have to define how to know when a bubble has "popped"
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Jun 11, 2014 21:23
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Cultural Imperial posted:Check the op. Failing that, what's your question? I checked out the OP, but really I'm just wondering about really basic homebuying poo poo. Like, what (in theory) could happen if it all goes down and this bubble bursts or deflates? Say right now you buy a house for $500k, what would the benefit be to people who waited until after the burst? I'm basically looking for the broad stroke explanation on how we're screwed, before I get down to the nitty gritty of these scary charts.
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Jun 11, 2014 21:26
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triplexpac posted:Say right now you buy a house for $500k, what would the benefit be to people who waited until after the burst? Basically, a thing is worth whatever its purchaser will pay for it. Right now, someone is willing to pay 500k for that house, because that person in all likelihood assumes that it's going to keep going up uP UP in price. And they're going up in price because there's always somebody else willing to pay more for the house, because that other guy also assumes that he's going to be able to sell it for more money later. Buy a house NOW, because the prices are going to keep going up! It's a big snowball. Now say for whatever reason the price of houses stop going up. Probably because people stopped buying them, because they're no longer affordable. Either people's income has dropped, or the banks are no longer extending credit as freely. People are no longer willing to buy your 500k house for 750k. But you need liquidity for whatever reason. Maybe you lost your job, you need to move, or you can't keep up with the mortgage anymore because interest rates went up. Whatever. Someone's willing to take your house of your hands for 450k though! That guy just saved 50k on the same house, compared to the price you bought it at. Meanwhile, developers aren't building anymore because people aren't buying houses at crazy prices anymore. Construction workers are unemployed; they stop buying houses too, or try to sell the ones they have. But they're having a really hard time, because nobody's buying houses because prices just keep dropping, so you might as well wait and get them at a discount. Suddenly the banks realize "Hey, this guy owes us 500k with a house as a security that's only worth 200k. I don't like that kind of exposure, let's call his loan." And now poo poo gets really funny.
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Jun 11, 2014 21:35
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triplexpac posted:Say right now you buy a house for $500k, what would the benefit be to people who waited until after the burst? FrozenVent posted:Suddenly the banks realize "Hey, this guy owes us 500k with a house as a security that's only worth 200k. I don't like that kind of exposure, let's call his loan." LemonDrizzle fucked around with this message at 21:39 on Jun 11, 2014 |
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Jun 11, 2014 21:36
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I think frozenvent is taking about the mortgage renewal gap. In Canada all mortgages are no longer than 5 years.
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Jun 11, 2014 21:48
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I'm not overly familiar with real estate mortgages, but I was under the impression the lender could step in and do something if the debt to asset ratio became too scary. Plus the whole renewal thing, of course.
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Jun 11, 2014 21:55
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Cultural Imperial posted:I think frozenvent is taking about the mortgage renewal gap. In Canada all mortgages are no longer than 5 years. All is a bit strong. There are 10-year and longer mortgages out here but the rates are awful, especially versus what you might get over a similar term in the US for example.
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Jun 11, 2014 21:56
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FrozenVent posted:I'm not overly familiar with real estate mortgages, but I was under the impression the lender could step in and do something if the debt to asset ratio became too scary. Plus the whole renewal thing, of course. I'd have to pull mine out to check but afaik as long as you make your payments they can't do anything until renewal. At that point they have the right to appraise and might reduce the amount they're willing to lend if the appraised value has gone down materially.
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Jun 11, 2014 21:58
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Huh. There are a few different types of mortgage here in the UK, but the most common are hybrid fixed rate/ARM deals where the interest rate is frozen for the first 2-5 years and then moves to a variable rate set by the lender with reference to the central bank rate; the borrower can refinance whenever, but if they do so before the initial fixed period expires, there will normally be a small penalty fee. It seems very hard to credit that you could take out a 25- or 30-year mortgage that would allow the lender to demand immediate repayment of the balance after only five years.
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Jun 11, 2014 22:10
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