Thought for the weekend

Home Capital Group’s financial problems clearly raise questions about the state of the Canadian property market and also in a broader sense about financial stability in Canada and it is hard not to see the similarities with the US subprime crisis. However, as with the subprime crisis – which turned into the Great Recession – we would argue that this is less about a property market bubble bursting than about monetary conditions becoming too tight…The most obvious thing to do would be to announce an open-ended quantitative easing program with the aim of keeping nominal demand on a stable path. Continue reading: Thought for the weekend