Yes, it’s crazy times in our topsy-turvy global financial world given the United States recently had its credit rating down-graded. Gasp!
As the financial markets reel, everyone is wondering what the implications are for our housing market.
Today, PropertyWire.ca asked urbaneer.com for an opinion.
Read on below for our thoughts, and urbaneer.com’s latest press!
US Debt Crisis Continues to Churn
Heather Wright, Real Estate Trade Journalist
Published on Propertywire.ca, a resource for Real Estate and Mortgage Professionals, August 8, 2011.
There is madness and mayhem on the world markets today on heels of the drop in the US credit rating, feeding fears that another recession is looming.
While the run of selling off in markets may be more reactionary than recessionary, there is no denying that several economies around the world may be losing their tenuous grip on economic recovery because of mounting debts.
When the TSX opened this morning, it tumbled by a staggering 400 points, cutting more deeply into losses seen in the market last week.
There is no question though, that there is a clear call to action for the affected regions, as such the Finance Ministers and Central Bank Governors of the G20 nations have united to tackle this head on.
In a joint statement, the G20 members pledged to be in close contact over the coming weeks, and are set to support sustainable growth through the G20 Framework for Growth, and will take action to do so.
The G7 countries held a conference call for its’ countries’ Bank Governors and Finance Ministers, in which Jim Flaherty and Mark Carney took part.
Despite the bleeding on the markets, Flaherty remains confident that steps are being taken in the right direction to curb the tide.”We are confident that the appropriate actions have been agreed to in order to ensure ongoing global financial stability and growth,” Flaherty said. The question remains too, is this latest market tumble showing shades of the last crash that spurred the recent recession, or is this just another bumpy ride through the highs and lows of the stock market?
Steven Fudge, Sales Representative, Bosley R.E. Ltd (www.urbaneer.com) told Propertywire.ca that we all best fasten our seatbelts.”The current US credit-rating downgrade and the subsequent slide in financial markets are signalling the global economic crisis is far from over.“ And as Fudge suggests, you reap what you sow- especially in matters of global economics: “Despite substantial economic stimulus packages introduced by governments over the past three years, our intertwined and increasingly fragile global financial and real estate markets have continued to erode. What began with easy credit to consumers, unsustainable high yields to investors, the growth of a manipulative shadow banking system, and inappropriate government regulation, has resulted in a global capitalist system mired in debt and precariously over-extended on every level of the money-chain.“
And, as Fudge says, despite best efforts to prop up the economy, Canada is not immune- both because of proximity, and because of the interconnectedness of global markets: “The downgrade of the United States credit rating reflects that nation’s unwillingness to tackle the ginormity of its financial circumstance. While other countries tighten their fiscal belts responsibly, the quagmire that is the American political system has frozen its ability to effectively address their reality. With the U.S. arguably embodying capitalism at its best and worst, the current economic unravelling is sparking substantial fear by all markets. This is the fallout currently underway.”
“The magnitude of this fallout is yet to be measured but interest rate increases are inevitable, as well as a tightening in available credit. These two critical factors will impact our housing market, as consumers will feel the pinch in higher borrowing costs and stricter lending criteria. Canada will fare better than most every other country, but it will still shift the dynamics of our market-to what extent remains to be seen.”
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