The Decline of the Canadian and Australian Currencies
The US dollar has gotten extremely bullish and everything else is being dumped, including Canadian and Australian currencies.
I am Canadian so these are things that I know about Canada. We paid back about $100 billion of debt during this world bull market, I think one of the very few governments that actually tackled debt. I am concerned at how quickly those numbers are turning around, but because of choices over the past 25 years, Canada is a much stronger country. Canada's debt peaked at $563 billion and bottomed at $458, (deficit this year...)
Our population is about 33 million.
Doing a search the best I could find is that that Australia's debt is about $600 billion. Their population is about 21 million. So, they have 1/3rd more debt with 2/3rds the population, or twice the debt problem of Canada.
I looked previously at Australia's housing bubble. Their housing affordability and their lending practices may have been worse than the US. When I did a search for mortgages I got a number of sites offering up to 105% financing. The affordability survey shows that they have a much higher percent of their population affected by housing bubble prices. The US and Canada have significant parts of our economies that have affordable housing.
Canada got really stupid about lending as well, but not anywhere to the degree the US and Australia did. And something that is fundamentally different about our banking system that will make it stronger long term is that they do not take on the risk of 30 year mortgages. Generally the maximum term before refinancing is 5 years, so our rates adjust every 5 years. This is enormously significant. Our banking system has a turnover of mortgages every year that risk can be repriced.
In this respect the US is screwed.
These are really important fundamental differences that I think even though there's a world of hurting right now, Canada will come out stronger.
Well, if I'm right, 2-3 years from now I'm going on a cheap Australian vacation as the Australian currency devalues relative to Canadian, and quite possibly the US dollar. On the surface it looks to me that they potentially have double the rate of bubbled mortgages compared to the US.