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The fact that Mr. Wolf was the party that last year delivered the dire prediction that Canada's economy was in an unstoppable freefall made things even more interesting. At the time he was with Merrill Lynch Canada. Of course there were questions about this prediction and change of employer, and they were answered, but off the record.
Mark Carney, who is the governor of the Bank of Canada, was concerned that Canadians were taking on too much debt and perhaps buying houses they could not afford. Talk was of increasing mortgage rates and imposing stricter lending rules. Wolf's speech softened that opinion, stating that while the Bank of Canada will keep watch on the situation, that it is perhaps premature to predict a housing bubble.
This contradictory opinion sparked a debate on how much influence over the Canadian economy the Bank of Canada does, and perhaps should, have. The Bank's relationship with the real estate industry, a key factor in the health of the economy, was also discussed. The point that the real estate industry can greatly influence a country's financial health was driven home in 2007 when the economy of the United States was crippled by a sea of bad mortgages.
Canada's lending rules are stricter than in the United States. We require mortgage insurance on any purchase with less than a 20 percent down payment. This kept us from going into the financial freefall that the United States is still trying to climb out of. Yes, we did and still do have our own financial woes, but ours are more like a bunny ski hill, rather than Mt. Everest.
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