Although Willem Buiter works for Citigroup, he is close to retirement and more apt to call things as he measures them rather than simply spew the usual sell-side swill. His base case is that the world is heading into the next global recession as he explains in this interview. Here is a direct video link.
With Canadian home ownership rates already the highest in the world (69% in the latest Stat’s Can survey from 2011), politicians/brokers/financiers continue to plot how best to get even more Canadians buying real estate at record low rates and record high prices. This new OECD chart highlights the extraordinary price risk in British and Canadian home prices today as compared with the other G7 countries. To ‘afford’ the boom in Canadian consumption since 2008, Canadians have been borrowing $1.65 for every $1.00 of income.
A new survey from th
e Bank of Montreal meanwhile suggests that nearly one in six (16%) Canadians would not be able to handle a $500 increase in their monthly mortgage payments. 27% said they would need to review their budget, and a further 26% said they would be concerned, but could probably handle it. See: Nearly one in six Canadians could not handle a $500 increase in mortgage payments.
Now through the late commodities Supercycle and started into our next cyclical recession, the financial resilience of Canadian families today is at record lows.
Wind power is now the cheapest electricity to produce in both Germany and the U.K., even without government subsidies, according to a new analysis by Bloomberg New Energy Finance (BNEF)–the first time that threshold has been crossed by a G7 economy. But that’s less interesting than what just happened in the U.S…
For the first time, widespread adoption of renewables is effectively lowering the capacity factor for fossil fuels. That’s because once a solar or wind project is built, the marginal cost of the electricity it produces is pretty much zero—free electricity—while coal and gas plants require more fuel for every new watt produced. If you’re a power company with a choice, you choose the free stuff every time.
It’s a self-reinforcing cycle. As more renewables are installed, coal and natural gas plants are used less. As coal and gas are used less, the cost of using them to generate electricity goes up. As the cost of coal and gas power rises, more renewables will be installed. See: Solar & wind just passed another big turning point.
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