Canada's Housing Bubble

May 20, 2010 Jonathan Tonge americacanada.blogspot.com

I came across a post on Naked Capitalism titled German households owe more than Greece's do.

I thought it would be interesting to see how Canada stacks up against the PIIGS in terms of public, company and household debt-to-gdp.

Net Government, Company and Household Debt

net government debt

The above chart uses net government debt rather than gross public debt. Net government debt is total liabilities minus total assets. Assets can mean different things to each country, but usually includes the savings in public pension plans (CPP) and other financial assets. Net debt is a useful perspective when evaluating the solvency of a country, as countries who have accumulated a significant amount of them can liquidate them in the event of default. Net public sector debt can be referred to as the negative net worth of the country.

Gross Government, Company and Household Debt

Gross government debt is the stock of outstanding government liabilities. The above chart shows what is owed, assuming that Canada does not liquidate its assets such as the Canadian Pension Plan.

Results

Canada is marginally in second place to Ireland in terms of total debt-to-gdp. Canada has significantly higher household debt than all other countries. In fact Canadian households owe more than both Greek households and businesses combined.