Juggling Dynamite

Further to Wilful Blindness, first-quarter GDP data published last week shows that residential ‘investment’ reached nearly 9% of Canada’s GDP while business investment has plunged (both below since 1960).

This is not the stuff of productivity growth.  This is the stuff of heavily indebted households that need to spend less and save more (pay down debt and file for insolvency), with economic weakness for years to come, while they do.  See Postmortem:  Canada is buying too much house:

Australia is often likened to Canada in terms of a small, open, commonwealth economy that also depends heavily on commodity exports.  Government policies, subsidies, loose lending and incoming Asian funds (including illicit) have enabled a residential housing boom in both countries over the past decade.  Australian cities often show up alongside Canada’s bigger urban centres atop lists of the most expensive real estate on the planet.

Still, as shown below in first-quarter GDP figures published for both countries, Canada (pink bars) wins the malinvestment award overall.

Smarter energy solutions drastically reduce the amount of energy wasted in old tech systems.

The Ontario Energy Board just approved the construction of the Sault Smart Grid, the largest project of its kind in North America. The smart grid promises to be more efficient, respond faster to outages, save money, and reduce carbon emission. But is there a downside? Northeastern Ontario Hub journalist Nick Dunne tells us what he’s learned. Here is a direct video link.

This week’s reading assignment is Wilful Blindness by investigative reporter Sam Cooper.  The book reads like a thriller, very engrossing…sadly, it is a true story about Canada and how our epidemics of narcotics, crime, money laundering, casinos and ludicrous real estate prices are all connected–aided and abetted by politicians, regulators and our financial system.  Heavy stuff, but important to understand the linkages here in order to clean up the dung.