If a Tsunami Was Coming Our Government Would Warn us Right?

Last month the Australian Broadcasting Corporation released the findings of the International Monetary Fund's study of house prices in developed nations.

They were ranked by affordability based on income. The worst three countries were Belgium, Canada and Australia.

Australia is specifically mentioned by the IMF's deputy managing director Min Zhu - along with Belgium, Canada, Norway and Sweden - as one of the countries where house prices are out of whack with where history suggests they should be.

When countries are ranked on how they are moving in the right direction, Canada is 26th.

We all know what the housing bubble did to the United States, so we should take heed:

The IMF says boom-bust house price patterns have preceded more than two-thirds of the 50 most recent systemic banking crises. And when you have a banking crisis in a modern, debt-fuelled capitalist economy it is almost impossible to escape a recession.

The ABC suggests that Australia faired better during the 2008 economic crisis because none of their banks failed, primarily because of a government bailout. In Canada our banks also survived because of a 114 billion dollar bailout; one that our government kept hidden, to make themselves look good.

The U.S. also engaged in massive bailouts, but faired poorly because of sub-prime mortgages. This brings us to another Canadian government "secret"; the fact they have also infected our once sound mortgage industry with these high risk transactions.

From a special Globe and Mail investigation, How high-risk mortgages crept north.

New mortgage borrowers signed up for an estimated $56-billion of risky 40-year mortgages, more than half of the total new mortgages approved by banks, trust companies and other lenders during that time, according to banking and insurance sources. Those sources estimated that 10 per cent of the mortgages, worth about $10-billion, were taken out with no money down.

The mushrooming of a Canadian version of subprime mortgages has gone largely unnoticed. The Conservative government finally banned the practice last summer, after repeated warnings from frustrated senior officials and bankers that the country's financial system was being exposed to far too much risk as the housing market weakened.

Canadians continue to lead in household debt and while house prices continue to rise, and borrowing on equity escalates, we could be heading toward a financial tsunami.

Stephen Harper, with the help of a complacent media, and millions of dollars in tax-payer funded ads; has painted himself as a strong economic steward, but it's all smoke and mirrors.

Instead of bogus feel good ads and cautious reports, we need to have a serious conversation about the true state of our economy.

With rumours of an early election, are the Conservatives hoping to get it over with before the you know what hits the fan? Remember during the 2008 campaign, Harper claimed that there would be no economic crisis, despite knowing full well that one was imminent.

In fact, he even went so far as to suggest that there would only be a recession if the Liberals won the election.

How much longer can he mislead Canadians? I guess he's hoping at least as long as another election campaign.