Now this must be investigate journalism. The Globe dug up a presentation to the BoC's top officials, obtained under the Access to Information laws. Job all done, right?
Not quite. Most of the article is regurgitating the central bank's propaganda rather than a real investigation of who or what is responsible for consumer debt. According to the Globe it is either,
a) Competition among banks (as supported by the BoC's documents.... does anyone actually believe that the Big Five compete against each other?)
b) Finance Minister Jim Flaherty.
"But while the government can change the rules, it can do little to affect longer-term mortgage rates. A year ago, fierce competition for customers caused some major banks to begin offering five-year mortgages at 2.99 per cent, triggering a price war in the sector.... “You should be cautious about your lending practices, because this is the type of practice that led to a mortgage crisis in the United States several years ago,” [Flaherty] said... “So my expectation is that you will not compete to the bottom on interest rates, which is the direction they were going.”
Close, but no cigar. I'll add a third option, although the Globe's analysis stops there.
c) "The 24-page presentation, which was given to the bank’s management forum on July 22, was partly redacted... A number of slides have been cut from the presentation."
There we go. I'm willing to bet these redacted slides had to do with the BoC's own role in creating this unsustainable boom. Thank God for internet comments. Not only do random internet users end up conveying more information than Tara Perkins 800-word article, but they do so in a few words or less. Here are some examples:
Kotter49 says: "Perhaps if interest rates were not so obscenely low people would be discouraged from borrowing and those of us who try to save would get some positive feedback for doing so."
JOE_M says: "The interest rates are being held artificially low around the world because of the huge debts governments hold. Meanwhile actual savers get punished with low interest rates because of other peoples and governments reckless misspending."
Joel Banks says: "For the Carney BoC, the fault for unsustainable and unhealthy Canadian consumer debt is anything but its loose money 'copy Bernanke' monetary policy."
Second Sound says: "Why don't journalists do their job and challenge these institutions instead of just spreading their propaganda?
I can't believe the headline. It's the Bank of Canada and its ultra low interest rate policy that's causing this massive run-up in debt and yet this newspaper lets them completely off the hook.
G&M please do your job and ask some tough questions."
Hate to disagree with Second Sound, but the Globe are doing their job. They are mouthpieces for the establishment. The point of this article is to lead people away from the idea that the cause of the economic mess we're in is the Bank of Canada's low interest rates. Reading some of the comments, it's apparent that the dinosaur-media is failing.