Canada's Housing Bubble

Jun 24, 2010 Michael Babad Globe and Mail

Rosenberg compares the decades

David Rosenberg, the oft-bearish chief economist of Gluskin Sheff + Associates, mused today on an eerie scenario in a research note titled "Daring to compare today to the 30s." His points:

• Coming off a crash (1929) and rebound (1930).

• Aftermath of an asset deflation credit collapse, banks fail (Bank of New York then, Lehman this time).

• Disasters: the Dust Bowl then, the Gulf of Mexico oil spill now.

• Global policy discord, with Britain then and Germany now.

• Geopolitical threats.

• Interventionist governments.

• Ultra-low interest rates (long bond yields finished the 1930s below 2 per cent).

• Chronic unemployment.

• Competitive devaluations.

• A gold bull market (which doubled in sterling terms in the 1930s).

• Debt defaults.

• "Sputtering" recoveries and rallies.

• The onset of consumer frugality.