OTTAWA — OTTAWA - The Bank of Canada raised its policy interest rate by 25 basis points to 2.5 per cent. It’s the first hike since July 2023. The central bank wants to control inflation by reducing the risk that high fuel prices could spill over and seep into the overall economy.
We’re fucked. WE’RE FUCKED!
Hello Canadians! Australian here. Our shit is also fucked.
Its those fucking seppos.
I’m so glad that your nation has carried on the proud tradition of Cockney Rhyming Slang. Canada hasn’t so much, so I had to look it up on Urban Dictionary.
- Separatist
- Yank => Septic Tank => Seppo
Almost any European, Asian, African or South American country, this would fuel a surge in left wing interest, left wing ideology, revolutionary thinking.
Here in the United States of Canada, we think that blowing billions on foreign military contracts, foreign owned pollution pipelines and taxpayer subsidized foreign owned data centers, untouchable property acquisition corps are great!
Keep cranking up the inflation, spending and interest rates!
Elbow’s up!!!
ElbowsAnkles up!!!FTFY
Our left wing fucking suck.
This Avi guy might turn things around. Who knows.
Left-wing isn’t getting votes just because they claim to be left wing.
This Avi guy might turn things around. Who knows.
They guy who hasn’t been elected yet?
Yea, him.
It’s a “maybe”, not a confident claim.
I’d be an NDP partisan fanboy if I believed he’s our messiah.
I mean… the ECB already raised at least once this year (September), and it’s looking like there could be a second in December. Where’s the revolution?
Of course, right as I’m shopping for a mortgage.
Just bought a place on variable two months ago. Off to a good start!
FWIW, I think variable was the right choice for you. My term is up soon, and we’re going variable.
Over investment in AI is unsustainable. There’s no path to profitability for the industry. There is going to be a major market correction soon—and it must be soon because the increasing costs of investment are burning through capital at an unsustainable rate.
This will directly put downward pressure on rates, as liquidity rapidly contracts as the circular investments in AI suddenly collapse.
And also indirectly, as a major driver of BoC rates is inflation, and one driver of inflation is chip prices exploding due to AI.
And also indirectly from stock market wealth losses: when investment valuations collapse, that reduces wealth, which in turn puts downward pressure on the housing/construction/materials markets (b/c affordability drops) and, hence, inflationary pressure from those industries.
And then, even more indirectly, the US will be in a politically untenable situation wrt their very expensive war of aggression triggering energy price spikes during a crash and recession. They will be forced to back down, which should stabilize energy prices.
So, I think you’ll do very well on variable, even if it rises a bit in the short term.
Is the AI bubble anything like the housing bubble? Because I’ve been waiting for that to pop for 20 years.
No, it’s not. Housing doesn’t require much to sustain value, while AI valuations require the market to continue to believe it is a “growth industry”, which means it will have explosive, exponential profit growth in the future. That is not possible, and the longer the market remains irrational, the more expensive it becomes.
Housing is, literally, unique. Every home is brought to market independently, and homeowners are unwilling to accept a lower price, so they sit on inventory.
There is also a lot of political pressure from homeowners to sustain valuations, especially from aging homeowners who are depending on the home valuations to fund retirement. And this is the demographic that votes.
vs. AI: in the coming months, when OpenAI, Anthropic, or any other smaller player needs to pay $billions to a supplier or default, and they can’t raise more capital, they instantly go bankrupt. Then the whole house of cards comes tumbling down.
in the coming months, when OpenAI, Anthropic, or any other smaller player needs to pay $billions to a supplier or default, and they can’t raise more capital, they instantly go bankrupt.
and those companies have no assets. They are worthless.
I do admire your optimism, but a couple knits to pick.
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Real estate in Canada has been a growth industry since we decided that 0 or near-0 interest rates were the way of the land. That’s why we’ve been in a housing crisis for 20 years.
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Assume you’re right and Anthropic and OpenAI both go bankrupt. Microsoft has its own AI. Nvidia has its own. Canada’s government just bought into Cohere. Google has its own. Apple will have its own if it doesn’t already. Amazon has its own. Assuming the AI bubble pops, maybe one or two of the big boys fail. What more than likely happens instead or also is the survivors get a lot bigger than they are.
I didn’t address your point about housing. You’re right that low interest rates have exacerbated the problem, but the bigger upstream causes are more that:
- It’s political suicide to run on a platform of reducing housing prices. People who vote are, disproportionately, homeowners who don’t want numbers to go down.
- The missing middle. We’re building the wrong kind of housing, and zoning bylaws are preventing unit densification where people want to live.
- The lack of non-market-rate housing options. Affordable housing options have a disproportionate effect on housing costs. Canada hasn’t invested in, basically, any affordable housing since the 70s, and we have some of the lowest non-market-housing rates in the developed world.
- Housing being held as investments first, and housing second.
To be affordable, housing needs to drop 50%. Interest rates being low contribute, on the margin, but don’t account for that big of a difference. You’ll notice that housing prices barely dropped at all, and even continued to rise in some areas, when rates skyrocketed 4 years ago.
It’s political suicide to run on a platform of reducing housing prices. People who vote are, disproportionately, homeowners who don’t want numbers to go down.
It’s never actually been done, so we don’t know that. Even Singh didn’t run on reducing housing prices last year.
The missing middle. We’re building the wrong kind of housing, and zoning bylaws are preventing unit densification where people want to live.
Speaking as someone who currently rents an apartment, if I can ever get to a point where I can own something, I sure as hell don’t want to own one. The only thing worse than renting your individual unit is owning your individual unit and fighting with the other individual owners about maintaining the common areas.
The lack of non-market-rate housing options. Affordable housing options have a disproportionate effect on housing costs. Canada hasn’t invested in, basically, any affordable housing since the 70s, and we have some of the lowest non-market-housing rates in the developed world.
And the non-market housing that does exist is in such disrepair that you couldn’t pay me to live in it. Because in this country, non-market housing means controlled by the government, and that’s a political football.
Housing being held as investments first, and housing second.
Which is why I said it’s a growth industry. They bought low. They’re not about to sell lower.
To be affordable, housing needs to drop 50%. Interest rates being low contribute, on the margin, but don’t account for that big of a difference. You’ll notice that housing prices barely dropped at all, and even continued to rise in some areas, when rates skyrocketed 4 years ago.
Canada’s population also skyrocketed 4 years ago, and only stopped skyrocketting (at least, as much) in the last year or so. There were two different demand levers being pulled. BoC pulled theirs to reduce, GoC pulled theirs to increase.
What more than likely happens instead or also is the survivors get a lot bigger than they are.
No. No, they won’t. They’re all losing money hand-over-fist. And they’re all circularly invested with each other. Microsoft owns OpenAI, and OpenAI uses Microsoft compute which they pay for with ownership. Microsoft valuation is inflated because of OpenAI, and when the bubble bursts, they’re going to lose a lot of money.
If you’re interested in economics/finance, I suggest reading about the circular cashflows and investment in the AI space.
To make it even worse, they’re effectively lying in their accounting, claiming the compute they’re giving away as a “marketing expense” instead of operating costs, while booking the value as revenue. The profit : cost ratio is even worse than headline numbers suggest. They are burning through multiples of all of their revenue on operating costs, before they even start to pay for expansion.
In other words, it’s fucked.
Sure, AI is here to stay—small to midsize models are already trained and cheap to run. But it’s also not going to make significant profit for anyone.
Like I said. I admire your optimism. But I think you need to fact-check yourself. Microsoft owns at most 27% of OpenAI. And Microsoft is currently working on its own internal AI (MAI). Even in the unlikely event that OpenAI goes bankrupt, Microsoft and its own AI products will be just fine.
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Better you than me. I’m busy trying to afford rent.
Higher rates make layoffs more likely which hits them, you and me. Assuming you both work for an employer. :D
Between interest rates, the US, and everyone in a panic about AI, I just assume my job’s a goner. And if it’s gonna be a goner anyway, crank 'em.
Removed by mod
Stop eating the green potatoes.
They don’t sell those in my country
I just had to renew mine. Literally just before it was going up thankfully.
I’m 2 months til renewal 💀💀💀
Should’ve gone the Pleb route like half the population.
Mortgage rates don’t affect you if you can’t even afford to become a part of “homeowner” class.
We’ll own nothing and serve the oligarchs that own and control Canada:)
did you lock in a rate yet?
I’m renewing in six months and I’m getting fixed for 3 years.
I wouldn’t do that, if you care. See my comment above for my reasoning. Variable is the right choice right now, imho.
Hopefully the principle should go down a bit, but it’ll be negligible as people only go by the monthly payment
So are rate hikes good or bad? I need someone to make sense of this! Where’s Jarule?
All the spending growth in the economy is coming from the whales, the top 20%, of earners.
You can charge 2k for an iPhone and they pay it without blinking an eye.
If taxes were raised on the top 20% of earners it would slow their spending and tame inflation.
The chance of this happening is close to 0% so expect more interest rate hikes as it will be the Poor’s who are made to pay.
Raising the Poor’s taxes would do little as they are all buying necessities only at this point. And many are making hard choices about which necessities to go without.
In other words, this is the inevitable outcome of decades of “taxes are bad” religion in politics.
Fuck you, Most Feminist Prime Minister™ in Canadian history.
Fuck your Katy Perry and biological children with a diseased flange from a septic tank.
What does the PM and former PM (and his gf and kids) have anything to do with the independent Bank of Canada?
They do have levers. Several in fact, while the BOC simply monitors one number and responds with the other.
For just one option, the largest effect on monetary supply is taxes, not interest rates.
It’s easier to blame someone in power who you don’t agree with for everything than it is to have a more nuanced view and recognize that complicated issues never have simple solutions. This isnt to say that some of those problems don’t land at Carney’s, or previously Trudeau’s, feet, but not so much this one. And the solution isn’t so simple as to be encapsulated by a catch phrase like “Axe the Tax”.
My PM’s solution is to hand over more assets and control over the the billionaire Epstein class.
Fk Pierre. I’m happy he’s not in power.
The ones in power aren’t looking any better either.
That has been a pretty common trend for both the conservatives, regardless of the party name, and the Liberals for the last 30 or 40 years, if not longer. I can’t recall if Mulroney did or not, but I would be unsurprised. But I slexpect the gender or preference of partner in Carney’s kid doesn’t have any bearing on that situation.
I’m not going to shill for his kids or be their vanguard.
They shove my loved ones and I into the grinder without a thought. Therefore, I start wishing and hoping the worst for their’s.
I don’t worship a plus sign. I’m never “turning the other cheek”.
Do I want christian nationalism or sharia? No, of course not. Will I gladly pick it as a last resort to destroy the peace for the oligarchs in my country? 💯 yes.
These two situations are orthogonal. You not seeing that is your problem, not theirs.
I never claimed to play by their rules.
They destroy mine. I return the favour every which way possible.
They threw mine into the grinder without any thought.
I’m returning the favour
They threw your gf and kids into a grinder? Geeze, sounds like you should be filing a police report, not posting on an obscure social media platform
Ok.
Wut?
🐔 butt
Trudeau kept the inflation under control very well compared to what almost every other country saw in the same time period.
I liked his election reforms.
uh…The Bank of Canada sets interest rates, not the PM.
The Prime Minster of Canada is Mark Carney, since 2025. Update your flags.
I’m well aware.
I believe in the freedom and our right to burn flags.
I’m not with the flag shaggers.
Maybe read your comments before posting.
I don’t know how to read or write english.
