Oct 25, 10.....I was speaking to a neighbour yesterday. This young couple is in their 20's and they're now going to be moving out of the North East of Calgary to a more desirable neighbourhood in search of better schooling for their gifted child. They bought their place here at the top of the market and have seen a 28 per cent drop in the value of their property. They'll be staying at the in-laws until their new house in their new community is built but they don't want to take the loss on their old place so they'll rent it out. The gentleman of the household has been in his new high paying job in the oil patch for less than a year but the bank has qualified him to take on the new house. This couple is going to be looking at two mortgages in excess of half a million dollars with the prospect of collecting rent from the old place. I suspect that a few underwater mortgagees in Nevada, California, Florida, and the Carolinas would have some advice for this young couple.
So many folks are beholden to their employer because of size of their mortgage. With property valuations on the decline, employers increase their stranglehold on the employee whom lacks any entrerpeneurial capacity to escape the rigors of punching a time clock. Canada is blessed with natural resources but lacks the entrepreneurial resolve to fund large scale projects without foreign help. The Canadian culture has become conservative to the point of stagnation. Certainly a conservative posture by the Canadian banking system has served us well in the context of this financial crisis of 2008. However; the young couple aforementioned is potentially stymied from aspiring independently within the capitalist system when hogtied by the need to service gigantic debt.
I suggest that the creative economic decision making powers of our youth are being compromised by a short sighted compulsion to have now and pay later. The bondage of debt is having the effect of tempering the fluidity of commerce.
The Kondratieff Wave was presented to me by Ian Gordon at a conference a few years back. It's a worthy supplment to my post.
http://kondratieffwinter.com/blog/
