Thursday, February 04, 2010

Awash in a sea of debt - - February 2, 2010

Oblivious to the risks, Canadians are piling on record debt loads

When it comes to housing bubbles, the people who usually worry the most are those in the market for a home, or those who have recently bought one. Yet there’s mounting evidence that we should all be concerned about the serious problems brewing inside household finances. Not only are there scary similarities to America’s doomed housing bubble of a few years ago. We’re also starting to look like Americans in the way we’re wilfully ignoring the dangers of carrying too much debt. And that could pose a serious threat to any middle class recovery, and to the entire economy, as we try to crawl out of this recession. “If interest rates go up just two or four per cent we could see a crisis,” says Ian Lee, director of the MBA program at Carleton University’s Sprott School of Business, and a former mortgage banker. “This thing could blow up and drive us back into a recession.”

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