Bank of Canada warns of possible mass home foreclosures

http://calsun.canoe.ca/Business/2008/12/11/7709671.html

OTTAWA — The Bank of Canada is warning of severe economic turmoil, including the risk of many Canadians losing their homes, if the financial-market crisis worsens.

The central bank’s December financial systems review says the “most likely outcome” is for markets and credit conditions in Canada to gradually improve as extraordinary measures by central banks and governments take hold.

But that outcome is by no means certain, it warns, saying uncertainties remain about how long it will take for credit markets to return to normal.

And if global financial conditions deteriorate, the bank warns the repercussions for Canada could be serious, including a deep and prolonged recession, slow income growth and severe trouble for Canadians already carrying heavy debt loads.

“With household balance sheets under pressure from weak equity markets, softening house prices, slowing income growth, and record-high debt-to-income ratios, a severe economic downturn could result in a substantial increase in default rates on household debt,” the review states. ................

With Layoffs picking up, Banks writing downs debts picking up and global economic condition worsening and stock markets conitue to move south, BOC warning of possible debt, mortgage defaults clearly speaks that it will a take long time in bottoming of RE estate prices. Quite agree with Rahul.


Bank of America to cut up to 35,000 jobs

http://ca.news.finance.yahoo.com/s/11122008/24/f-afp-bank-america-cut-35-000-jobs.html

Layoffs for December 2008 at America's 500 largest public companies: over 50000 jobs including Procter & Gamble

http://www.forbes.com/leadership/2008/12/04/december-layoffs-fires-lead-cx_kk_1204december08layoffs.html

Layoff Announcements Pick Up Speed
http://blogs.wsj.com/economics/2008/12/04/layoff-announcements-pick-up-speed/


U.S. Bancorp, one of the largest U.S. banks, said on Thursday it may incur $1 billion of credit costs and writedowns in the fourth quarter as the recession deepens and credit markets remain tight.


http://www.cnbc.com/id/28175594

JPMorgan Chase Is Having A 'Terrible' Quarter:

http://www.cnbc.com/id/28180212

Goldman Sachs and Morgan Stanley brace for another bad quarter following abysmal performances across their various businesses.

http://money.cnn.com/2008/12/03/news/companies/goldman_morgan/index.htm?cnn=yes

Even economies thought to be immune, like China or Australia, are impacted. Even investments said to be safe, like corporate bonds, municipal bonds, certain money markets and large government-sponsored companies, are sinking.

Leaders worldover themselves are sounding the alarm. Unless they act swiftly, they say, the world as we know it today will fall apart. Thus, to avert what they fear could be the ultimate disaster, the governments of the richest countries have embarked on the most expensive financial rescue operations of all time. The U.S. government alone has spent, lent, committed or guaranteed $7.8 trillion, fourteen times its biggest-ever federal deficit. European governments have jumped in with another $2 trillion; China, $586 billion.

They’re bailing out bankrupt banks, broken brokerage firms, insolvent insurers and any company they deem essential to the economy. They’re pumping resources into mortgage markets, consumer credit markets and stock markets. They’re prodding lenders to lend, consumers to consume and investors to invest. They’re doing everything in their power to prevent a Second Great Depression.

They’re still trying to bail out nearly every major institution and market on the planet. Again, the big question: Will they succeed?

The quick answer: Yes, for a while, perhaps. They can kick the can down the road. They can buy time and postpone the day of reckoning.

Will they succeed in this endeavor remains to be seen?

Keep well,

Cheers!

Must Read..

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http://www.greaterfool.ca/2008/12/12/ooops/#comments


............But real estate sales have fallen as much as 70% in major cities, and average prices have plunged up to $175,000 in Vancouver, $56,000 in Calgary and $45,000 in Toronto. Buyers are staying home as sellers flood the market, ensuring more price drops.



Well, I may not be sympathetic to the current government for many reasons, but I’d say this fits a pattern:

* Bring in zero down payments and 40-year mortgages at the wrong time, turning a good housing market into an unsustainable bubble.
* Cut the GST, rather than income tax, in order to encourage consumer spending, despite rapidly rising debt and a national savings rate of nothing.
* Run a federal election campaign on purpose before the economy falters badly, then lie to voters about what to expect.
* Take $75 billion in ultra-safe government securities which were backing our currency and use that to buy high-ratio mortgages from the banks, without disclosing this to Parliament.
* Bring in an economic statement that cuts spending when every other government in the world is scrambling to try and prevent deflation and a collapse.
* Shut Parliament.

Cavalier, out-of-touch, uncaring, dishonest. It underscores one reality: You’re on your own.

This economy’s in very bad shape and there’s worse to come. Doing nothing is a choice you no longer have....................