Gabriel, As far as housing policy is concerned, Australia is pretty much mimicking the tax policies in the US - for example, interest of housing is tax deductible. The bottom line is that people in much of Australia cannot afford their home as an even larger portion of their incomes are going towards housing than during the worst excesses in the US. In fact, amongst the nations of the industrialized west, Australia has the worst home cost: income ratio.
----- Original Message ---- From: Gabriel de Figueiredo <[email protected]> That's what they said last year too, when the US had a sneeze. So far, the housing prices are rising, the building industry is still in boom, but the infrastructure, under a useless "talk-only no walk" labour govt, is about to collapse. ----- Original Message ---- From: Mervyn Lobo <[email protected]> Marlon, The current govt in Canada is a minority conservative one. You know what that means. The conservatives, as usual, are running huge budget deficits. This follows huge budget surpluses left by the last socialist govt. Regardless, Canada remains a socialist country. Its banking regulations are now the envy of the world. I need not remind you what happened in the unregulated banking environment of the US or what happened to their shareholders. I do, however, feel a little pity for those who found out that their retirement money was invested in those financial institutions. What is Citibank trading at? 10% of what it traded a year ago? As far as housing prices in Canada are concerned, the Bank of Canada is actively warning people that they have all the necessary regulations in place to halt the rising cost of purchasing property. In case you are not aware of it, in Canada, housing loans are 'with recourse.' This means that if you default on a loan, the bank will come after all other assets that you own. Residents in Canada have to think much more seriously than those in, say, the USA where, because house loans are 'non-recourse' when you default on a house loan, all that the financial institution can hope to recover is the house itself. This exposes the financial institutions to horrendous risks, which they are now displaying on their balance sheets. --- But how can you explain the totally skewed home price to income ratio in places like Vancouver and even Toronto? Canada does not have the implicit subsidy via interest tax deductions, which means that this ratio should be lower in Canada than in the US. Yet, it is way, way off historical values. It seems to me that banks are lending regardless of market fundamentals. It is good that the loans are recourse, so that the banks can go after the individuals assets. As you correctly state, in the US most of the loans were non recourse which left the banks holding the poop - which in the end had to be paid for (and continue to be paid for ) by the tax payers. In my opinion most of those who defaulted on their loans should be put in slave camps to pay off their debts, instead of having the tax payer pay for it :) ----- Original Message ---- From: Mervyn Lobo <[email protected]> China is already years ahead of the west in renewable energy technology. Take a look at the share prices of their renewable energy companies. If those number do not convince you, nothing will. Just a few days ago, Canada paid a South Korean firm BILLIONS of dollars to bring their technology to, and manufacture it in Canada. --- China is ahead in production, but they are way, way behind in technology, which for now does not mean very much. Their high production rates are being driven by overly aggressive/generous government policy, but this could backfire on them by leaving them saddled with overcapacity of outdated technology. Like many aspects of the Chinese bubble stock market and economy in general, most of these Chinese companies are actually losing money and are dumping their products at or even below cost prices at the moment. The government's aim of course is to encourage local technological development and it is possible that they may succeed in the long run. On the other hand, their attempts to jump start their semiconductor industry this way failed in the last decade. Regarding Ontario's clean energy project with Samsung, one should say that Samsung is for now a relatively new and very small player in this space, with no significant track record. The probably won (on pun intended) on price and on promises to invest in the domestic economy. But are they a leader in clean tech? Definitely not. However, in the long run, I would not put anything past Samsung as demonstrated by their ability to usurp technological leadership from the Japanese in consumer electronics and semi conductors (memory). Marlon
