I'm a bit of a bear. I wouldn't say I'm a perma-bear, but I see considerable risks on the horizon that are likely to limit economic growth in Canada for the foreseeable future. I don't really see things turning around until 2011, and even then I think things are likely to be weak.
One of my main reasons for being bearish are:
Massively huge debt loads among consumers. People have been racking up personal debt at an astounding rate in Canada without thinking about the consequences. And the thing about debt is, it must at some point be repaid with interest. Instead of paying down their existing debt while interest rates were low, they have been racking it up. They have been getting bigger houses and taking out home equitly lines of credit like there is no tomorrow. And the thing about the interest rate, is that it's not going to get lower, so as it rises, folks will be scurrying to try to repair the damage. For many the damage will be too great and the only recourse will be bankruptcy. Unfortunately, I can't see growth resuming until households manage to get their debtloads under control, and that is not going to happen anytime soon.
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