I read a couple of things worth reading over at Garth Turner's blog, which I have redacted below. (some of the commentary is good too - if you can get past the masturbation)
Whatever one might think of Turner the politician, he does know a fair bit about finances.
In any case, don’t let the media fool you. Stock market stories are not about stocks. They’re about the economy. Markets, you see, are harbingers. People who trade on them spend a lot of time betting heavily on what comes next. Right now, they’re worried.This was worth quoting too;
The world economy, dragged down by the States, is slowing. America has never been so in debt, or so long at war, or with such a weak currency. And on a day when realtors in Canada were trumpeting the greatest sales volume ever for residential homes...far too many buyers here could be in as much trouble as a couple of million of Americans who losing their houses. We...categorize the subprime mess as giving loans to people who did not deserve them. But...we are busy selling $400,000 homes to young couples with between 1.5%... and 5% down, and with 40-year mortgages that turn a $300,000 debt into one of $884,000 at current rates.
This is unwise. It’s gambling. Canadian banks have been handing out mortgage loans like candy... offering a zero-down option, asking them to come in with enough money only for closing costs.
No wonder Bay Street’s worried. Nobody in the world of financial securities would extend 98.5% leverage, and yet we are soothing your homebuyers into precisely that. Should the US slowdown affect our economy, which it will, buying an expensive house with no money might not look like such a great idea.
Like the North Star, we are a bright light for others to follow. Canada has emerged as a shining example in an economic universe of rapid change and uncertainty. We are leading the way with our tax cuts, our debt reduction and our focused and responsible spending. Our fundamentals are strong and we are well positioned to weather any sudden economic storms.The "experts don't know WTF is going on. You and I know better than the Federal Finance Minister. That's what freaks me out...
- Jim Flaherty, budget speech, October 30, 2007
“There’s reason for continuing concern about the weakening in the U.S. economy. The subprime reality … continues,” he said. “It’s broader and deeper than originally predicted and it’s reason for caution as we look forward.”
- Jim Flaherty, interviewed in National Post, January 2, 2008
In the sixty-odd days between those two comments, what happened?