A Nation of Shopaholics

The average Canadian's level of household debt is now higher than the average American's.

Admittedly, we at The Mark Newsroom aren’t financial wizards. We prefer to leave the number crunching to the guys down the hall, but there’s a lot of buzz in the op-ed pages today about Canada’s debt, so here goes nothing...

Bank of Canada Governor Mark Carney started a kerfuffle on Monday when he made a speech advising Canadians to rein in their personal debt, which at 148.1 per cent of household income is now slightly greater than the average American's. “But isn’t that a bit like Eliot Spitzer giving a stern warning about public morality?” asks the Financial Post’s Peter Foster. He (along with the Toronto Star editors) argues that the Bank of Canada has encouraged over-borrowing by keeping interest rates artificially low in the wake of the recession. Foster suggests the Bank of Canada stop trying to macromanage the economy so much, writing that “while [Carney] likes to talk as if he is an aspiring coach of Economic Team Canada, his actual job equates neither to coaching nor managing, nor dashing down the ice scoring goals … if [the economy were a game of hockey] Carney would be the Zamboni-driver.” In other words, keep the playing surface level – nothing more.

The Ottawa Citizen’s editors are more sympathetic to Carney, who they say “must walk a very thin line these days. Carney is keeping rates low because the Canadian economy is still feeling the effects of slow growth and tough times … [in] the U.S.” So the Bank of Canada has to encourage spending by keeping interest rates low, at least until things improve south of the border. Rates have to come up eventually, however, and the Citizen says “it's up to Carney to finesse this one. He must raise rates gently, when it becomes necessary, so as to cushion the blow to homeowners.”

This Toronto Star editorial is a little more our speed here in the Newsroom. It has to do with those shiny bits of copper that are littered all over our desks. The Star says Canada should stop making them, which is fine by us.