The boat payment is always the first to go. Or maybe the snowmobile in Canada.
(From Sprott Money)
Alarm bells are ringing as growing unease settles across the Canadian banking sector. They know that defaults are coming in a massive way. Most people employed in the commodities sector enjoyed large incomes and therefore they splurged on large and expensive toys to go along with their income, as many people do. Unfortunately, this means another thing – large loans, which are becoming more and more unlikely to be repaid.
The Wall Street Journal is now catching up with this reality as well. In a recent article they highlighted that the Canadian banking sector is horribly under-funded in the face of this growing crisis and points out that Canada’s banking regulators are even taking notice.
“Canada’s banking regulator is urging the country’s major banks to review their accounting practices to ensure they have sufficient reserves as the commodity-price collapse takes a toll on the economy.”