Six Canadian Banks Have Been Downgraded

Moody's Investment Services have downgraded Canada's six largest banks due to expanding debt risk. With the record high consumer debt levels in Canada exceeding 167% of disposable income and the ever growing real estate bubble Moody's has deemed it necessary to reflect this increased risk though market down grades of these banks.


 "Expanding levels of private-sector debt could weaken quality in the future," said David Beattie, a Moody's senior vice president in a statement.
National Post

The creation and expansion of this debt bubble is the result of excessive periods of very low interest rates. You would think central banks would eventually learn this very simple lesson. Cheap/free credit always leads to excessive borrowing (this is their goal) and eventually high levels of speculation (always ignored). The combination of excessive borrowing and speculation will result in market bubbles if allowed to occur unchecked.

Eventually all speculative bubbles pop, because the actual real economy can not support certain asset prices backed by price manipulation by central banks. Now these Canadian banks are caught deep inside a massive debt bubble and there is no way out without a wide spread market correction of not just housing prices, but the debt market in general. Rates need to return to a normal level to balance off excessive borrowing and speculative activities. The central banks created these debt bubbles and soon it will be the time to pay the price for their brutal scheme to boost asset prices. When it is all said and done these same central bankers will say it was impossible to see these bubbles before they popped. I guess they can mark me down as one of the people who can do the impossible. Yes they will try to avoid the blame for their reckless actions, but the truth is we are living in a debt bubble.



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