President Franklin D. Roosevelt said in his 1933 inaugural address "...the only thing we have to fear is...fear itself — nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance." He was speaking to a nation in the despair of the great depression. He went on to lay blame squarely on the financial industry, address his nation's staggering unemployment, announce the adoption of a good neighbour foreign policy, and the very next day declared a four-day banking holiday to implement immediate financial reform.
On the eve of an election in the economic meltdown of 2008, when $15 trillion vanished from the global economy, when millions of people lost their jobs and their homes, our incumbent PM Stephen Harper offered these words of comfort and hope to his citizens:
"We always know when stock markets go up, people end up buying a lot of things that are overpriced, and when stock markets go down, people end up passing on a lot of things that are under priced. I think there are probably some gains to be made in the stock market. That's my own view."
What a hero to the people. Canada weathered the economic crisis very well, but that credit goes to our heavily regulated banking system. America's banking system was also heavily regulated, starting with Roosevelt to ensure Black Friday never happened again, but those laws were eroded over time.
The siren call of the free market took hold in the early 1980s and with each subsequent administration the old laws were defanged or outright repealed. When the Clintons took office, their national strategy to increase home ownership laid the track for the mortgage meltdown. Bush Jr. picked up their home ownership torch and the race continued. By 2008, the American financial and mortgage industries were free market and full Caligula.
Then new Rome fell.
At home in Canada there were definite losses, but what saved us that the bulk of the greed-driven insanity that occurred in the U.S. markets simply wasn't allowed under Canadian banking regulation.
We were on our way there, though. When the Conservatives took power in 2006 one of their first acts was to double available funds for government-backed mortgage insurance and raise insurable mortgage limits from 25 years to 40*. This doubled the buyers market, which subsequently spiked the housing market.
Then the meltdown happened and the Conservatives slowly brought mortgages back to what they were before they took office. They did so under the guise of being responsible fiscal managers. Really all they did was fix what they broke.
In 2012, the Conservatives cried victory with their keen financial management when within five years the average Canadian net worth exceeded that of the average American for the first time. If there was ever a time when the phrase "undeserved sense of self worth" applied, this was it.
America was still digging its way out of a financial pit of despair and its housing markets were still depressed. In Canada, the data showed the bulk of our net worth lay in real estate, the value of which received a hearty jolt from the Conservatives when they doubled the mortgage pool in 2006, and a booster with each mortgage correction that followed. At the same time, we started carrying more household debt than ever before, largely due to the high cost of real estate. In the six years between 2006 to 2012, the price of houses rose by 50 per cent.
Making changes to the market that inflate the price of real estate so that Canadians incur the highest household debt ever is not something to celebrate. It is especially not something to celebrate when the country we're using as a benchmark is still working its way out of the recovery position.
This is engineered winning. This is manipulated statistics winning.
This is not winning at all.
*Correction. An earlier version stated 35 years.
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