Raise mortgage rates enough to inhibit home ownership, but keep credit card interest as high as possible. Is that the way to fiscal restraint?
I read an article recently about Finance Minister Joe Oliver watching the housing market closely after the Bank of Montreal lowered its mortgage interest rate. What is the issue? Is he really concerned that Canadians will become too far in debt by owning a home?
“Our government has taken action in the past to reduce consumer indebtedness and the government’s exposure to the housing market,” Oliver said in a statement to CTV News …
Surely, curtailing the ability to own a home doesn’t benefit the average citizen. Interfering raises the cost of home ownership, thus causing further indebtedness for those fortunate enough to be able to pass through the government imposed hurdles. Furthermore, it ensures that a large percentage of Canadians will not be able to purchase their own home.
Those people are left at the mercy of landlords, some of whom are excellent, but many who simply provide the minimum amount of repairs, maintenance and upkeep for the maximum amount of rent the market will tolerate.
These costs then impact on the middle-class and lower wage earners forcing them to use credit to make other purchases such as cars, furniture and appliances. Our society has become dependent on credit in order to function. The exorbitant interest rates on these purchases further impede the Canadian people’s ability for home ownership.
I don’t claim to be an expert on high finance. However, what I’ve witnessed indicates that very little in the way of decision-making in this area actually benefits the individual. We hear about “the economy,” that elusive, misunderstood, constantly changing entity that is the agreed-upon imaginary world we choose to live in. Ministers and financiers make decisions affecting everything from the cost of housing to the value of the dollar. What is the effect of those decisions?
The recent, intentional, devaluing of the Canadian dollar was supposed to help our exporters and tourist trade. But at what cost and who bears the burden? As the dollar plummets, the cost of everything we purchase goes up.
We have been convinced that we must be big players in the world economic market; again an imaginary world that exists only because we agree it does. Because of this, Canada can no longer feed itself so all the imported food gets more expensive. Our raw material is shipped out, now at a lower price because our dollar down, and we buy back products manufactured from it at higher rates; again because our dollar is low.
Who is paying the price? The average consumer. The middle-class. The lower socio-economic segment of society. That is who is bearing the economic burden so the upper-class can benefit from increased trade.
We have learned that too much debt versus the value of the assets covering it will eventually lead to economic ruin. However, it is interesting that the methods used to mitigate this circumstance impact negatively on the average citizen, but still benefit the 1%.
While the stated intent may be to keep Canadians from becoming too far in debt, it certainly isn’t improving their quality of life.