Canadian Government Blows-Up Housing Bubble

Jeff Nielson: Stephen Harper’s Ultimate Crime is almost complete.

His campaign to destroy Canada’s economy began with his relentless, meticulous efforts to duplicate the disastrous U.S. housing bubble in Canada (along with piling up years of record deficits). We can be absolutely certain of Harper’s criminal intent here because he chose to duplicate the U.S. housing bubble in Canada after that market had already collapsed in an orgy of fraud-and-foreclosure.

But creating a bubble he intended to blow-up was only Harper’s first step in this malevolent plan. Step Two was preparing for after he blew-up his own bubble. Canada is the first – and only – Western nation to write “bail-in” provisions into its own, current budget.

For those readers, who were snoozing during the Cyprus Steal (and the details revealed about that crime in its aftermath); let me refresh your memories. The governments of Europe (under the control/direction of the One Bank) staged a carefully-planned “bank robbery” in Cyprus.

Of course it wasn’t the bank which was robbed. It was the bank which was doing the robbing (with the assistance of the Cyprus government), and the innocent depositors who were “held up” – after all the Big Money had been quietly warned to move their wealth out of Cyprus banks.

Immediately after this bank-robbery, we had the Corporate Media, the banking cabal, and the Traitor Politicians all proclaim that “a precedent had been set”; and they all immediately went about setting up their own “bail-in” frameworks, so they could rob their own populations. Some Western nations have done this surreptitiously, but not Stephen Harper.

Not only did Harper plant “bail-in” rules right into Canada’s most-recent budget, he explicitly stated that these rules were “based on” the template written by the One Bank itself, via one of its mouthpiece organizations, the (cynically titled) “Financial Stability Board”. Regular readers are familiar with my analysis of that policy-paper (No Paper Is Safe From A Bail-In: FSB):

6.5 As a last resort…some countries may decide to have a power to…recover any losses incurred by the state from unsecured creditors or, if necessary, the financial system more widely. [emphasis mine]

That’s right. The bail-in rules Stephen Harper planted into Canada’s Budget allow the government to steal any kind of paper out of any kind of account, from any part of the Canadian financial system. As I said at the beginning, “Ultimate Crime.”

So first Stephen Harper created Canada’s housing bubble. Then he (preemptively) put in place rules allowing the bankrupted banks to steal anything-and-everything from the Canadian financial system (i.e. ordinary Canadians).

All that remained for Harper to complete his crime was to detonate the bubble he created. The Corporate Media informs us that Stephen Harper has now done this as well. How? To understand this requires briefly backtracking, in order to explain to readers who didn’t read my original commentary how the Canadian Housing Bubble was manufactured.

The centerpiece to Harper’s plot was/is the Canadian Mortgage and Housing Corporation. The CMHC is an exact clone of the U.S.’s notorious fraud-factory, “Fannie Mae”. It provides virtually unlimited funding for the Big Banks to write-up fraudulent mortgages.

How are these mortgages “fraudulent”? As a result of the fact that every penny of these mortgages are 100% guaranteed by Chump Taxpayers, the loans are either intended to fail (as with all the infamous Liar’s Loans in the U.S. bubble), or else the banks simply don’t care if the mortgages fail – because they aren’t standing behind any of this debt themselves.

How does one make the leap from reckless mortgages to “fraudulent mortgages”? Indeed, no single one of these reckless mortgages could be considered an act of fraud. The act of “fraud” is the deliberate, cumulative act of piling-up $billions, and $billions, and $billions of such reckless mortgages – well past any possible saturation-point in the market.

At the same time that the U.S. government is (reluctantly) putting to death its own fraud-factory(ies), the Harper government allowed the CMHC to swell to a mountain of fraud as large or larger than Fannie Mae at its peak (in proportionate terms). Stephen Harper didn’t simply copy the U.S. housing bubble in style, he copied it in magnitude as well.

This year alone, Canada’s Big Banks (subsidiaries of the One Bank) have piled up another $66 billion of these fraud-mortgages, and the year was barely more than half over (as compared to $75 billion for all of 2012). That’s when Stephen Harper chose to detonate the bubble.

Without public warning, the Conservative government directed the CMHC to choke-off most of the funding to the Canadian housing bubble. After allowing these Big Banks to cumulatively gorge on nearly $10 billion per month of this free money; these credit-addicts have now been told they will be rationed to only $350 million apiece – an (approximate) 75% strangulation of the principal source of funding for Canada’s housing bubble.

Naturally the Corporate Media is characterizing this somewhat differently:

Ottawa is taking new steps to cool the country’s housing market.

Really? A 10 – 15% reduction in the primary source of funding for the housing market could be considered “cooling”. A 25% – 50% slashing of such financing could be thought of (merely) as an effort to stop the market dead in its tracks. A 75% reduction is obviously nothing less than a deliberate attempt to blow-up the market. The only reason the sadistic Conservatives didn’t cut-off all funding entirely is to create a tiny bit of “plausible deniability” that they didn’t destroy the Canadian housing sector on purpose.

The CMHC’s original “mortgage maximum” for the entire year was $85 billion, and it is in the process of coming up with a “formal allocation process” for the remainder of the year. There has been no raising of the overall threshold, meaning these Big Banks will be rationed to under $20 billion in free money for the last 5 months of the year – and likely much less, based on these new rules.

There is no ambiguity here. First the Harper government unleashed a tidal wave of reckless mortgages onto the Canadian housing market, with financial responsibility for the vast majority of this deliberate fraud foisted onto the shoulders of taxpayers. This time-bomb of reckless debt was then deliberately stoked to grossly excessive size, and at an exponential rate.

At the time the Conservative government staged this detonation (in cooperation with the Big Banks), the Big Banks were deliberately gorging on this debt at record rates. Then credit is dramatically reduced from that same market. Just like the drug-addict suddenly faced with a “surprise” reduction of 75% of his “supply”; the reaction of these credit-addicts to having 75% of their own supply cut-off is as obvious as it is inevitable: withdrawal.

What happens when a massive housing bubble experiences “withdrawal”? Déjà vu. We just finished watching this movie in the U.S. (and are about to watch it again south of the border). A total collapse in housing prices. Massive numbers of foreclosures. And fraudulently over-leveraged Big Banks screaming for infinite hand-outs – on the justification that they are Too Big To Fail.

There are only two details separating the scripted bubble-and-collapse in the U.S. housing market from what Stephen Harper has now duplicated in Canada. There is not nearly as much overt fraud and/or “securitization” in the Canadian market, but that only means a tiny cushion in the magnitude of the carnage.

The other difference between the aftermath of the U.S. housing-bubble and the Canadian bubble is the stealing to follow. There were no “bail-in” rules when the U.S. bubble was detonated. Thus all the $15+ trillion in hand-outs, “loans” (at 0% interest), loss-guarantees, and tax write-offs for the bail-out of the Wall Street cabal had to come directly from the public Treasury.

But the One Bank has already cleaned-out all the public Treasuries of Western governments, and so the “bail-in” was born: the Big Banks provide their lists of asset-holders (and precisely what each individual holds), they tell the government which assets they want to steal to bail-out their own fraud, and then the government rubber-stamps the demands of these Too Big To Fail banks.

When I wrote “Stephen Harper’s Cyprus Blueprint For Canada” back in April, I predicted precisely this scenario. It didn’t take long for the Conservative government to live-up to that prediction.

This article is brought to you courtesy of Jeff Nielson From Bullion Bulls Canada.