Today, July 12, to watch and listen to the media reaction to the quarter point rise in the bank of Canada lending rate, you would have thought the country was just pushed over the brink into financial chaos!
Something akin to the 1929 stock market crash! This is long overdue. It has been seven years or so since rates have risen and many people have been under the impression that all these borrowed funds were just picked free off a tree somewhere and went on a borrowing binge.
Reality will be starting to sink in, with more to come over the next year or two to get back to normal times.
People that have over extended themselves will have to bite the bullet, or rid themselves of some toys, and maybe the family home and start over.
This is not new, as many folks recall the eighties when rates went sky high to like 18 percent or so, as house prices went into the toilet for six years or so, and took another seven to recover to where they started in 1989.
People that did not use their home as an ATM, and spent their equity as home prices had risen will be ok. Some others will walk away and leave the keys behind for the bank.
They will be learning a life lesson, that what goes up will come down and vice versa sometimes, and alter their expectations.
The other reality is that Trudeau has spent us into a much larger deficit federally, and now that interest payment will also rise for us taxpayers to support, taking more money out of circulation in our economy.
Of course he never had to face reality as far as finances go because he was born with a huge trust fund for him to fall back on from his daddy and granddaddy before him, unlike the rest of us mere mortals who now will have to face the music thanks to him.