I was surprised when Harper/Flaherty birthed the 40-year/zero equity mortgage in their 2006 budget. I couldn't understand why they would do that when America was being wracked by a massive housing bubble.
Granted, I might know a bit more about housing bubbles than those guys. I've logged weeks in various courtrooms clearing up the aftermath of housing bubbles right here in British Columbia but none of them compared with the madness that was nearing its inevitable collapse south of the line when Harper took office.
It's not as though there wasn't clear warning of the storm heading for America's burbs. At the time, however, the rightwing power brokers were too busy slagging Paul Krugman as a "looney leftie" to hear his clear and repeated alarms. Greenspan may now claim it took him by surprise but that's because he chose to look the other way. Apparently so did our rightwing ideologues, Harper and Flaherty.
Housing prices are just beginning a plummet that could turn, over the next two to three years, into something of a freefall. There's going to be a lot of carnage along the way and, among the bodies, you're bound to find those who jumped at the bait when Harper's 40/zero timebomb mortgages hit the market.
If you want to see what's coming, look south. It begins with the worst mortgages and then works into a category of once-solid mortgages. As mortgages go into default it leads to forced or distress sales. That's where it spills over to hit those with small, manageable mortgages or no mortgages at all. One or two foreclosure sales on a street might not be a huge problem. Five, six or more is a different story. Property values tank and even those with clear title houses who need to sell - for retirement or job relocation - can't unload their once prized asset.
I'm furious about it and I'm in the least vulnerable category. Imagine others who got caught being fed a dream that turned, in brief months, into their worst nightmare. Imagine those who've been diligently paying down their mortgages for years and thought they had everything in line only to see their balance sheets shredded.
This is not to say that our housing market wouldn't have tumbled but for the Harper/Flaherty chicanery. The market was overheated even without those voodoo mortgages BUT -
1. It was irresponsible to let 40/zero mortgages on the market and, plainly so by 2006. Harper/Flaherty were following their failed ideology leaving them wilfully blinded to the obvious peril.
2. There was a significant volume of 40/zero Harper/Flaherty boondoggle mortgages and they brought people into the market who bought houses they truly couldn't afford. The Harper/Flaherty 40/zero mortgages created the illusion that people could afford houses, Harper bragged that he was extending home ownership to people who otherwise couldn't get into the market. He didn't understand these people shouldn't be in that market because they're far too vulnerable to downturns.
3. Harper and Flaherty have contributed massively to the problems looming throughout the homeowner spectrum. They've made a predictably bad situation much, much worse and we're all going to pay for that one way or the other.
4. Now I'm getting suspicious that Harper's 75-billion dollar bank bailout was a carefully concealed ploy to bring those 40/zero in house by trading Bank of Canada AAA assets for bogus mortgages held by the banks. We'll probably see how true that is in the coming months.
Harper has shown, yet again, that he's totally unfit to govern. He's effective enough in opposition but a dead loss in power. That's because Harper has no sense of Canada, no real vision, just an ugly, already discredited ideology that he simply can't shake.
I think it's time for the progressive brand to reassert itself in the conservative movement. Either that or show them the door.