One Comment

  1. Ted Mills,; JD, MBA, CFA

    Cathy,
    First, I want to say I subscribed to your post following your post on the question of equal pay which I thought was one of the best.

    Re: this post, it should be noted that Canada is not the first nor the last to experience unwelcome housing bubbles. Australia is in the midst of one also right now – at least as of my last reading on the issue. At the turn of the century (i.e., starting around 2000) many European nations also experienced severe housing bubbles that lagged the U.S. bubble by about 2 years.

    I am currently struggling to finish a book, :”How Bill Clinton and the Federal Reserve Caused the Housing Crisis and Great Recession.” The overarching theme is that “the housing crisis and Great Recession were separate events that merged at a moment in history and that neither can be understood outside of history.”

    What you find is that the low interest rate policies of various Central Banks incite a tsunami wave of funds into mortgages in a desperate “reach for yield!”

    Housing is also affected by land use and other housing policies. In addition, certain areas are affected by location. California has benefitted from globalization in that its ports are a critical point of entry for imports and |Silicon Valley benefits from cheap imports of electronic components. In addition, Federal Reserve policy has inflated the value of financial assets, creating a booming economy for New York’s, Chicago’s and California’s financial markets – thereby inflating real estate values and promoting gentrification.

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