Get a grip

"The folks who are worrying about an early rise in interest rates should get a grip. Please."

That's the way a scolding story in the Financial Post started off (Let's relax on interest rates - December 8th)

The Financial Post wants you to know that, despite fears in the US that the job market might be strengthening, there is every indication that the Federal Reserve will keep interest rates low for at least the next six months, if not for a couple of years.

The real question, says the FP, "is whether or not the Fed's policy of low, low interest rates will encourage matching rates in Canada and promote a housing bubble in this country."

Promote a housing bubble? Sigh.

At least the article contains a nugget or two of accurate assesment. Noting the "dire condition of the U.S. economy", the Post says "our [Canadian] economy has not been hit as hard as that of the U.S. The single most notable difference is that Canadian home prices have remained stable and, in some cities, have even gone up."

Exactly. The only reason Canada is different right now is because of the irrational housing bubble. There are no strong fundamentals, there is no emerging manufacturing base building a foundation for down the road. All we have are stable home prices that have not collapsed... yet.

But with the brewing storm in Europe over Dubai, Greece and UK debt combined with an American economy that is in 'dire' straights, the requiste immaculate recovery is still a long ways off.

We've managed to juggle this charade and keep all the balls in the air awaiting a strong recovery to fill the void.

How much longer can we continue to do that?

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