Flaherty joins Carney with more interest rate/debt warnings

Yesterday we posted yet another warning from Bank of Canada Governor Mark Carney about debt and interest rates.

Well it wasn't only Carney issuing warnings in the Land of the Maple Leaf. Finance Minister Jim Flaherty also chimed in his concerns.

• "We have very low interest rates in Canada. We need to remind Canadians that historically low interest rates will not be there forever, that interest rates really only have one way to go and that’s up. So Canadians in terms of their most important – their largest debts, residential mortgages, need to be aware that their monthly payments are going to go up when interest rates go up."

These guys are starting to sound like regular bloggers with all their doom and gloom, aren't they?

What is most interesting is that a survey by the Certified General Accountants Association suggests 58% of indebted respondents are taking on more debt just to pay for daily living expenses like food, housing and transportation.

And if consumers are taking on more debt just to pay for daily living expenses, it deprives them of resources for other purchases, like cars, TVs, appliances, clothes slowing economic activity.

Which means the economy doesn't grow.  Which means income doesn't grow. Throw in rising interest rates and the problems compound.

Can you see it? There is a growing perfect storm here.  And when it breaks, the fallout is going to be wicked.

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