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How Did Canada Become a Debt Sinkhole? Video!

Canada is not the only debt sinkhole, of course. Many nations are, including the United States. But the point in tracking the worst ones is that they are about to create a toxic environment for the others. We cannot take much comfort in being slightly better off than another nation because we are all part of one house of paper money. Once one nation’s debt problem falls, the whole house falls.

In January, I posted on how Canada might be a North American “Greece,” focusing on the Atlantic Provinces and public sector debt. Now Zero Hedge reports on another problem: collapsing oil prices have left many Canadian households within sight of defaulting on bills. In fact, in a recent survey one fourth claimed to be unable to pay all their bills. Furthermore, half of Canadian households claimed to be within $200 a month of defaulting on bills.

The currency’s decline has driven up prices for things like fresh fruits and vegetables, 75% of which Canada imports. That puts an extra burden on households that are already laboring under record debt.

As we showed three weeks ago, household debt relative to disposable income is sitting at 171% in Canada meaning that for every $100 in disposable income, households have debt obligations of $171. That’s the highest figure for any G7 country.

Here’s their chart of the G7 nations comparing where they are now to where they were in 2000:

CanadaDebt2

None of the countries are in good shape but our neighbor to the north is winning the race to the bottom.

Here is CBC News reporting on the same facts. The key quotation for the future of Canada is found at about 1:48. We are told, “The financial vulnerability of the average household would rise to levels beyond historical experience.”

Again, there is no way we can have a debt sinkhole to our north without being pulled into it ourselves. Even without the economic effects of a Canadian collapse, we have plenty of debt sinkholes of our own.

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Joe Scudder

Joe Scudder is the "nom de plume" (or "nom de guerre") of a fifty-ish-year-old writer and stroke survivor. He lives in St Louis with his wife and still-at-home children. He has been a freelance writer and occasional political activist since the early nineties. He describes his politics as Tolkienesque.

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