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Monday, June 28, 2010

G20 lack of results good for homebuyers

34 political leaders (including 20 leaders from the biggest economies in the world) converged in Toronto this past weekend. The economy was the main point of discussion, but there was a lack of consensus on what to do about it.

United States President Barack Obama wants to do more stimulus spending until America's economy is fully recovered, worried about a "double dip" if they don't finish the job properly. He is however in favour of a bank tax, so banks can repay the public for trillions of dollars in bank bailouts (and to punish bankers for using a lot of that bailout money to buy themselves yachts and new cars).

In Canada Stephen Harper favours no bank tax and wants to maintain Canada's status quo. (We didn't have a bank bailout, so a tax seems unnecessary for Canadians.)

The various countries agreed to disagree and the G20 meeting was basically a flop. The individual countries couldn't agree to any targets, deadlines or anything for financial recovery but instead will go on doing what they usually do. The G20 leaders failed to accomplish anything.

This is good news for homebuyers. In the USA it means the mortgage and housing industry will continue to get back on its feet, planting itself more firmly. Housing prices should stabilize and rebound slowly enough that people buying a home in the USA will get some nice deals. (I've seen the prices south of the border and they're so cheap its ridiculous!)

In Canada housing prices won't be moving much. The CIBC and TD Bank have postulated prices might dip 10% in the next year or two, but the good news is that the Bank of Canada will be keeping interest rates pretty stable for the next while which means people looking to buy a house in Canada will be able to lock in some super low interest rates for their mortgages.

What is upsetting however is that our idiotic government spent $1.1 billion on G20 security and all that happened was a few smashed windows and a couple police cars burnt because apparently Toronto police are too incompetent to guard their parked cars.

For $1.1 billion Toronto could have built 11,000 small houses or condos (at $100,000 each) and solved Toronto's homeless problem permanently. Then the activists (who are mostly upset about poverty in Canada) would have very little to complain about. Plus that $1.1 billion would have boosted the local economy immensely by creating construction jobs, reducing unemployment in the GTA instead of hurting it by shutting down the city's downtown core for a week.

You catch more flies with honey than vinegar.

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