Hugh Hendry: Don’t Bank on the Bailout
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November 2nd, 2008 by AdvisorAnalyst
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Hugh Hendry, the brash, outspoken, and eloquent CIO, Eclectica Asset Management was invited to host Channel 4’s Dispatches, a UK TV program - “Don’t Bank on a Bailout”- a production that aired on October 27, 2008 about the fallout from this years credit debacle which adversely affected the UK and the US. Hendry travels throughout the City Financial District and then Wall Street.
Hendry has been one of the harshest critics of the lack of regulation in credit markets.
The three segments total about 15 mins. Its a must see:
Hugh Hendry, Part 1, Dispatches: Don’t Bank on the Bailout
Hugh Hendry, Part 2, Dispatches: Don’t Bank on the Bailout
Hugh Hendry, Part 3, Dispatches: Don’t Bank on the Bailout
Read more from the author/contributor here.
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Tags: Bailout, Boom And Bust, Borrowers, Critical Role, Dramatic Increase, Federal Reserve, Federal Reserve Bank, Federal Reserve Bank Of Cleveland, Financial Crisis, Housing Market, Low Interest Rates, Macgee, Market Outcomes, Monetary Policy, Mortgage Defaults, Mortgage Payments, Research Associate, Residential Investment, Similarity, University Of Western OntarioPosted in Markets |
December 4th, 2009 at 2:44 pm
Two important factors missed in this otherwise excellent report.
1) Canada does not allow mortgage interest payment deductibility. Thus, there is no tax benefit in having high mortgage payments or a high mortgage for that matter.
Canadians tend to want to pay their mortgages off and eliminate debt while Americans don’t seem to mind mortgage debt as they age.
This tends to make Canadians more conservative (no surprise) about home ownership and creating high debt that goes on and on forever.
2) Canadians cannot walk away from their mortgages by handing in the keys to the house, as Americans can. This makes home buying in Canada a little more thoughtful and planned as to the consequences (positive and negative). Consequently, and because of the tax issue mentioned above as well, Canadians don’t treat their homes as piggy banks to be raided when the paper value goes up by increasing the mortgage. Just not a thing Canadians do in general.
These factors also played a part in the differences in housing crises in each country.
Gary R. Scobie, BSc., CFP
Burlington ON
Canada
December 5th, 2009 at 11:28 am
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