Paris November 13, Réflexion

Here is an ensemble of recently published reflections on the Paris attacks by notable thinkers.

Slavoj Zizek writes:

There should be no “deeper understanding” of the ISIS terrorists (in the sense of “their deplorable acts are nonetheless reactions to European brutal interventions”); they should be characterized as what they are: the Islamo-Fascist counterpart of the European anti-immigrant racists—the two are the two sides of the same coin.

Etienne Balibar writes:

So what can we do? At all costs, firstly, we must reflect together and must resist all fear, amalgams, and impulses for vengeance. Clearly, we must take all necessary measures for civil and military protection, for intelligence and for security, in order to prevent terrorist actions or to counteract them, and if possible to judge and punish the perpetrators and accomplices involved. But, in doing so, we must demand the most complete vigilance on the part of  ‘democratic’ states with regard to acts of hatred towards those nationals and residents who, as a result of their origins, beliefs, or ways of life, are singled out as ‘the interior enemy’ by self-proclaimed patriots. And further: require that the same states – when reinforcing their security devices – respect individual and collective rights which are the foundation of their own legitimacy. The examples of the ‘Patriot Act’ and of Guantanamo show us that this is not so easy.

Bruno Latour writes:

But what makes the current situation so much more dismaying is that the crimes committed on 13 November have occurred within a few days of another event about to take place that involves tragedies of a different kind, ones that will require that we come with very different answers to wholly different threats that have nothing to do with ISIS/Daech. I am referring, of course, to the World Climate Change Conference in Paris, the COP21, which we are now liable to deem less serious, less urgent than the police response to the bloody escapades of those machine gun-toting lunatics.

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Reconciling the Politics of Homelessness

Over the last two decades, the politics of homelessness in North America has undergone a significant metamorphosis. Towards the end of the 1990s, as compassion fatigue set in and homelessness worsened a new field of policy experimentation opened up. Out of this policy field emerged two models that proved incredibly mobile: the 10-year plan to end homelessness and the housing first approach. Presented as evidence-based ‘best practices,’ these models have since become the norm in cities across North America. In a recently published chapter I attempt to critically engage with the discursive spaces that gave birth to this policy field. I do so to deepen understanding of the democratic stakes involved.

The volume the chapter appears in can be accessed here and the chapter can be downloaded here.

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The Seemingly Impossible Challenge of Social Housing

The release of a Government of Alberta report on the state of social housing in the province is attracting some controversy today (see CBC report here). The government report purportedly shows (I have not yet acquired a copy) that no provincial money has been invested in the construction of new social housing since 2011. This revelation is controversial because it is out of step with the province’s ambitious plan to end homelessness by 2019. This goal was set in 2008 by then premier Ed Stelmach and it was accompanied by a commitment to spend 3.3 billion dollars on housing and homeless services. It seems what money was spent on ending homelessness has not found its way into ‘bricks and mortar’ projects.

This is particularly troubling for a city like Edmonton where I currently live. In 2011, just as provincial dollars for social housing were purportedly disappearing, the Edmonton Area Community Plan on Housing and Supports 2011 – 2015 was completed and released. This plan was formulated to guide community efforts in addressing housing needs in the Edmonton area over a five year period. One of the focus areas of this plan was housing supply. Among the goals was increasing the supply of market and non-market rental units that are suitable, adequate, accessible, and affordable.

In 2011, the need for affordable housing was clear. The plan estimated the gap in non-market affordable housing to be 19,000 units and it forecasted that this gap would grow to 22,000 units by 2015. The significance of this gap was clear to the stakeholders who were consulted and the committee that prepared the report who wrote,

The shortage of non-market and market affordable housing in the community was the greatest need brought forward in the consultations. Affordable housing is needed by a broad range of lower-income residents across a range of demographics, including some seniors, single parent families, newcomers, Aboriginal households, young families and those who are working at low income jobs (p. 42).

So it seems that just as the provincial funding tap was diverted or worse turned off cities such as Edmonton were identifying affordable housing an immediate need. Edmonton Homeward Trust’s 2014 Annual Report identifies two social housing projects underway and a handful of renovations to existing social housing projects. But these appear to be units of supportive housing rather than private subsidized units. It remains to be seen how deep the need for affordable housing has grown in the last five years. The release of the provincial government report and the revelations it contains also begs the perennial question, why is it so difficult to see non-market affordable housing manifest on the ground when the demand for it grows every year and politicians commit to investing in it?

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Whither the public university?

Athabasca University has received much press as of late, most of it negative (see here and here). This media attention stems from concerns regarding the future financial situation of the university. For those who may be unfamiliar with Athabasca University, it is an open university dedicated to the removal of barriers to post-secondary learning through distance education. This social mission makes Athabasca University unique in Canada. This is what makes the current situation newsworthy. It is not just another university in financial trouble. Athabasca University embodies a set of social values of fundamental importance in Canadian society and its financial uncertainty says a lot about the commitment of the previous provincial government to these values. Hence it is important to put this negative press in the proper political context to adequately understand causes and effects as well as what is at stake.

Athabasca University, like a majority of post-secondary institutions in Canada, is a publicly-funded university. The public-university system exists to make post-secondary education affordable and accessible. It is ‘public’ in the sense that universities receive a public subsidy to offset the cost of operating the university allowing tuition rates to remain artificially low. This approach is rooted in a commitment to equality and the belief that society is best served by an educated population. The public-university system is also ‘public’ in the sense that universities are overseen by a publicly appointed board of governors which are supposed to ensure accountability.

Over the past twenty-years public funding for post-secondary education has precipitously declined in Canada from 80% to a national average of approximately 53%. The reasons for this decline vary by province but an underlying storyline is a neoliberal tale characterized by antipathy towards taxation and unhealthy obsession with austerity. Not surprisingly, tuition fees have crept up to cover the hole in university budgets. But tuition caps in many provinces, including Alberta, have limited the ability of universities to cover the reductions in public funding sending many institutions that lack the endowments or other revenue sources into a financial tailspin.

Looking more closely at funding levels among research universities in Alberta offers more clarity with regard to the situation faced by Athabasca University. Using enrollment numbers from 2014 and provincial operating grant forecasts for 2014-2015 a disparity in provincial support is evident when it comes to funding for full-time students:

University of Alberta: $19,355/student

University of Calgary: $19,154/student

University of Lethbridge: $13,928/student

Athabasca University: $4,640/student

The nature of the public university system and the historic underfunding of this system by the province of Alberta is important context for understanding the dilemmas and challenges that Athabasca University currently faces not least of which is how to stay true to our social mission of lowering the barriers that otherwise inhibit university education and lifelong learning in the midst of a funding regime that exerts upward pressure on tuition rates and top-down pressure to contain costs through lay-offs and hiring freezes. Athabasca is left between a rock and hard place: offloading costs to students (that is in itself a barrier), or gutting the university of the value embodied in its highly qualified and dedicated staff.

What is at stake here is more than Athabasca University. At risk are the values upon which our public university system rests. Failure to address these systemic problems will shift our post-secondary system evermore closer to a private, user-fee based system, a system at odds with the values Canadians share.


Mike Lewis, executive director of the Canadian Centre for Community Renewal, and I wrote this piece to draw attention to the promise and potential of mutual home ownership models and community land trusts in particular. More writings on this topic can be found here.


Housing is the bedrock of urban life. It is foundational to personal development, social and economic wellbeing and to overall standards of living and quality of life. Housing is also a commodity. An overwhelming majority of the 13.3 million households in Canada obtain housing through the private market. It is generally agreed that Canada’s housing system is, in practice, market-driven and primarily orientated around private homeownership.

But this ‘ownership model’ is not without its problems, especially when it comes to issues related to social equity. Today, housing affordability problems are rife in many urban and high amenity communities in Canada. Vancouver is perhaps the extreme case. An average three bedroom bungalow built in the post-war early 50s cost $14,500 in the west end Kerrisdale neighborhood – 3.5 years of a carpenter wage. The same house went for $1.6 million just 60 years later – 33 times the annual wage of a carpenter.

How does this happen? True, wages have been relatively flat for a large part of the population for the last 4 decades. Fewer and fewer people can fit within the conventional ‘affordable housing’ target; 30% of gross household income. In 2011 this number was over 3.3 million households (Statistics Canada 2013).

Wages, while obviously important, cannot hold a candle to a much more powerful influence; the dynamic embedded in the private property market, where 69% of Canadian households (or 9.2 million homeowners) participate in its ups and its downs. The problem for high amenity communities is the prices just keep going up. The causes can be diverse – population increase, rapid economic growth and uplift in the housing market that come from public and private investments that increase the attractiveness of a particular place.

Most of us know how it works. If one qualifies for a mortgage and is prone to thinking of housing not only as a home, but also an investment, homework is done to position oneself in a location that may be able to ride the uplift of other’s investments. The profits can be enormous for householders and other real estate owners.

Consider the £3.5 billion public investment in the Jubilee subway line in London, England. The private property within 1000 yards of each station increased in ‘value’ by £13 billion, a windfall that went mostly to corporate landlords. Not surprisingly rents soared; a fine example of public investment accruing to private pockets and ordinary renters paying the price.

But what if the value created by public and other private investment could be captured so it goes onto the community balance sheet rather than as unearned income into private pockets? The answer to this question is hugely important because if it is possible, progress on affordability is conceivable.

The Community Land Trust (CLT) is one housing model providing such answers.

The Community Land Trust: A Proven Model

The CLT model is organized as a non-profit, multi-stakeholder organization committed to acquiring, stewarding and managing land in ways that keep the owner occupied or rental housing upon it affordable in perpetuity.

The CLT tenure does this by separating the ownership of the land from the ownership of the buildings on it. The land is retained forever in trust by the CLT for community benefit. In short, it effectively and permanently removes the land from the market. By contrast, buildings on the CLT’s land can be owned by a variety of entities – a single family household, a co-operative, a non-profit, even a small business.

CLT land is never sold to the inhabitants; it is leased. Written into the lease are clauses that restrict the owner occupant from pocketing the profit from an upswing in the market, unlike the normal private property owner. The lease has a resale formula that may share some of the equity upswing but the greatest portion of the unearned profit stays on the community balance sheet. The CLT exercises this power through a pre-emptive right to buy housing units when they are resold. The departing owner has the contractual obligation to sell their housing back to the CLT at a price set by the resale formula.

And it works. There are over 260 CLTs in the U.S. extending from rural villages to initiatives that cover entire cities or counties. The Champlain Housing Land Trust in Burlington, Vermont is one of the best known examples. Between 1984 and 2009 the CLT had built and otherwise acquired over 2500 units of owner occupied houses and rental units. Burlington is a high amenity community that started the CLT because of upward pressure on house prices. Astoundingly, their housing stock has increased in affordability by 20% over the last 20 years (Lewis and Conaty 2012).

Such results had already begun to attract municipalities who in the U.S. are important players in affordable housing. After the housing meltdown they became even more interested in the robustness of the CLT land stewardship model. Across the U.S. CLTs radically out performed sub-prime and conventional mortgages in terms of both delinquencies and foreclosures (Thaden 2010). In both categories CLT housing proved itself much more stable. Losses hardly registered whereas they were high in conventional mortgages and soared in sub-prime.

Stemming the tide of urban social inequity: Scaling up CLTs

The potential of CLTs for addressing social inequities in Canada’s housing landscape is substantial. First, CLTs lock in affordability. The rising cost of housing has put incredible strain on household finances and has made housing itself out of reach for some. These affordability problems are most acute among low-income groups such as lone-parents who experience enormous difficulty finding housing they can afford. While social housing exists in principal to address these affordability problems government subsidies have precipitously shrunk over the last 25 years resulting in inadequate supply (Gaetz et al. 2014).

Second, CLTs can help alleviate housing related indebtedness. The rising cost of housing is driving the accumulation of record levels of household debt (Walks 2013). Households in Canada’s large, metro regions are, generally speaking, the most indebted. Household indebtedness is greatest in the suburban fringes and in gentrifying inner city neighborhoods where young families, immigrants to Canada, single parents, and low-income households are disproportionately affected (Walks 2013).

Third, CLTs can help preserve neighborhood diversity. Rapid increases in house prices have deleterious consequences for social equity at the neighborhood level. The gentrification process tends to decrease levels of social mix and increase income inequality; in other words, neighborhoods that rapidly appreciated in terms of their land values often see reductions in their share of immigrants, visible minorities and low-income households, becoming ‘whiter and wealthier’ in the process (Walks and Maaranen 2011).

Alternatives to Canada’s traditional ‘ownership model’ are badly needed to address these fundamental problems, alternatives that transcend rigid dichotomies –privately owned vs. publically owned, market-driven vs. collectively controlled, owners vs. renters – that have structured tenure norms in Canada’s housing system. CLTs are one such alternative.


Gaetz, S., Gulliver, T., and Richter, T. 2014. The State of Homelessness in Canada 2014. Homelessness Hub Press: Toronto, ON

Lewis, M. and Conaty, P. 2012. The Resilience Imperative: Cooperative Transitions to a Steady-State Economy. New Society Publishers: Gabriola Island, B.C.

Statistics Canada. 2013. Homeownership and Shelter Costs in Canada. Statistics Canada: Ottawa, ON.

Thaden, E. 2010. Outperforming the market: Making sense of the low rates of delinquencies and foreclosures in community land trusts. National Community Land Trust Network: Portland, OR.

Walks, A. 2013. Mapping the Debtscape: The Geography of Household Debt in Canadian Cities, Urban Geography, 34(2), 153-187

Walks, A. and Maaranen, R. 2008. Gentrification, Social Mix, and Social Polarization: Testing the Linkages in Large Canadian Cities. Urban Geography, 29(4), 293-326

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Riding the Orange Wave to a Moral Economy?

Yesterday was an historic day in the province of Alberta. After 44 years in power, the Progressive Conservative (PC) party was unseated by the New Democratic Party (NDP). Most people I know feel like they have just witnessed the impossible. Some have downplayed the NDP’s historic win as more a reflection of dissatisfaction with the PCs than affiliation with the NDP. In light of all of this, I couldn’t help but think about Karl Polanyi’s (1957) classic thesis regarding the ‘double-movement’ of capitalism.  Polanyi argued that, try as they might, free market advocates can never completely disembed markets from society. Markets are always embedded in society in one way or another. For example, markets depend upon families and schools for the social reproduction of labor power. They also depend upon welfare programs that support surplus labor during economic downturns. This emdeddedness is the site of a constant struggle between the movement towards the liberalization of markets from outside interference and a counter-movement seeking to regulate and constrain market forces to respect and protect human life and communities. What we see reflected in our politics is a constant tension between classical economists’ dream of a pure self-regulating market and the social desire for a moral and humane economy. In ways I think we witnessed the counter-movement to Alberta’s decades-long experiment in resource-dependent liberal economics. The social fabric was fraying. I think people could feel this. The NDP represented a social democratic alternative to the social conservatism of the PC party and the Wildrose Party. The question remains, will Alberta ride the orange wave to a moral economy?

“This place has given me a reason to care”: Understanding ‘managed alcohol programs’ as enabling places in Canada

I recently published a paper in the journal Health & Place that examines recovery experiences in a managed alcohol program. Recovery is not something that is generally associated with harm reduction. The model tends to be described in terms of reducing risks associated with substance use. What we aimed to do in this paper is show that harm reduction programs such as this one can furnish the resources associated with the mental health recovery process. The article is available for free download for the next month. Below is the abstract and a link.

For several decades, the emphasis on abstinence within homeless support systems has presented significant barriers to care for those who continue to use alcohol or drugs further marginalizing them in terms of housing and health/social services. In response, health care specialists and policymakers have recommended the integration of harm reduction philosophies and interventions into system-level responses to end homelessness. Managed alcohol programs (MAPs) have been developed to this end and have demonstrated positive results. While recent studies of MAPs have focused attention on reductions in alcohol related harms few have examined their meaning from the perspective of clients or the role of place. In this paper, we utilize the ‘enabling places’ frameworks to identify the place-bound properties that make a difference in the recovery journeys of clients. Drawing on in-depth interviews with clients from one program we develop a description of MAPs as enabling places that afford the elemental resources for personal recovery.

Link to article:

Affordability, Supply and the Rental Market

Awhile back I was asked what policies cities should be pursuing to ensure an adequate supply of rental units. Here is what first came to mind.

Context is important. Five things stand out.

First, housing is a social determinant of health and wellbeing in society. Affordable housing is a contributor to better population health. A population that is adequately housed is healthier than a population that is inadequately housed or precariously housed. For instance, affordability is an important indicator of the risk of homelessness. Cities with affordability problems generally experience a higher incidence of homelessness. Homelessness is terrible for your health.

Second, when we talk about housing it is more constructive to refer to the housing system rather than the housing market. When we talk in terms of the housing system we acknowledge that both market and non-market mechanisms are used to allocate housing. In Canada, a vast majority of us obtain housing through the private market by buying housing but a significant number of us rent. Non-market housing tends to be the source of housing for low-income groups who cannot purchase or rent housing at market rates. The important thing to recognize is that this Canadian system is one kind of housing system. In other parts of the world, Europe in particular, there are much higher proportions of renters and a greater diversity of non-market forms of housing.

Third, housing affordability is shaped by wider economic and social trends. Population growth, household formation (how many singles versus families are seeking housing), and migration all affect the demand for housing. When demand rises quickly, too quickly for developers and home-builders, prices rise. This is exacerbated in regions and cities with high incomes. The cost of land, labor and construction materials can also cause prices to rise.

Fourth, housing affordability is affected by government regulation and policy. Governments at all three levels – Federal, Provincial and Municipal – play a role in the housing system. The Federal government influences lending rates and securitizes mortgages, the provincial government operates housing programs, and the municipal government oversees urban development and home-building.

Fifth, when it comes to analyzing housing affordability it is crucial to settle on a clear and measurable definition of ‘affordable housing.’ What kind of affordability measure is best suited? A common definition of affordable housing is housing that costs a household no more than 30% of their income. This is the definition used by Statistics Canada. It is also measurable (albeit recent changes to the census aren’t helping work in this area!).

But to your question…the private, rental market is a vital part of the housing system when it comes to affordable housing. Unfortunately, two trends have shrunk the supply of affordable rental units in the private rental market.  First, inadequate government policy in the area of rent control (or lack thereof) have made it too easy for rental property owners to raise rental rates during periods of high demand and low vacancy. Second, the high demand for housing coupled with high incomes and cheap, easy credit from banks has fueled the conversion of rental units into privately rented condos removing a significant proportion from the private rental market. This was particularly pronounced in Edmonton beginning in 2007.

In the meantime there is a significant population who need to rent in the private market to stay housed. What to do?

There are a range of policy options available but unfortunately no magic bullet solution. In practice, a combination of different approaches involving private and public stakeholders and all three levels of government is required.

One traditional approach has been to build social housing consisting of units that are subsidized at below market rates. But this form of housing brings with it a whole host of issues not least of which is stigmatization of tenants and, relatedly, their overconcentration within inner city neighborhoods (as they generally receive stiff resistance in wealthier suburban neighborhoods).

A more recent approach has been inclusionary zoning. In this approach a municipality mandates that a developer allocate a certain percentage of units in a development to be not only rental units but also made available at affordable rates. This generally requires not only the buy-in of developers but also governments and in some cases charitable organizations who must step-forward to subsidize these units so they can be offered at below-market rates. In most cases it is a matter of finding the right incentives. It is also a matter of carefully considering neighborhood location and context.

Third, there are some recent urban planning approaches that encourage creative forms of infill housing. Here I am thinking about ‘granny suites’ (secondary suites) above garages or separate dwellings at the back of lots. Some cities offer homeowners incentives (in some cases it has been cash) to develop these suites with the understanding that they would be rented at below market rates for a set period of time.

Finally, there is the more classic welfarist approach that involves giving low-income individuals and families a stipend (or voucher as they are called in the U.S.) to purchase rental housing in the private market. The challenge in places like Alberta is that there are examples of working individuals and families who are not low-income but nonetheless cannot afford rent in the average apartment (especially single parents with children who require multi-room dwellings). Another challenge is that when vacancy rates are near zero a housing voucher does not do a family much good.

Now, I’ve only outlined a few, there are many, many more. And I’ve really only captured the more conventional approaches. There are some very interesting and important models being developed in the cooperative sector (co-op housing) aimed at meeting the housing needs of a diverse range of people. I think approaches such as those being developed in the cooperative sector are really important to profile because in many regards it is there where ‘new ground’ is being broken.

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Mapping the political in medical and health geography: The terra incognita of biopolitics

For a sub-field organized around health and wellbeing, medical and health geography has had little to say about life and its many forms. At the moment, this is a theoretical gap that is being addressed by geographers operating outside the sub-disicplinary boundaries of medical and health geography. With this in mind, some colleagues (Heather Castleden and Jeff Masuda) and I set out to articulate why and how medical and geographers should engage with this growing literature on the politics of life. Our attempt (below) represents a first intervention and as such is a working draft. The aim is to ‘finish’ this draft by further articulating what is different about engaging with ‘life’ versus ‘health’ and refining some ideas about affirmative biopolitics. 

Abstract: Medical and health geographers are united by a dual interest in the politics of health evidenced by overlapping engagements with public policies, most notably those related to health disparities and accessibility to health services. In this literature review we explore the relevance of ‘biopolitics’ as a theoretical framework for critically engaging with the politics of health. Biopolitics directs attention to the powers that organize life itself. We begin by reviewing Michel Foucault’s writings noting what is unique about his perspective and how it helps us see the politics of life in a new way. We then map two contemporary manifestations of the politics of life: molecular politics and geopolitics. We conclude by reflecting upon the ways that biopolitics helps us better understand political investments in life and their stakes while opening doors to a life-affirming domain of praxis.

The Terra Incognita of Biopolitics_DRAFT

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Why there is nothing good about Canada’s housing bubbles


Canada has been receiving attention as of late for its overheated housing markets. I recently read, with interest, Don Pittis’ latest editorial entitled, “Why a housing bubble is good (but may be bad for you).” Pittis argues that when viewed in ‘the long term’ through ‘rose-colored glasses’ housing bubbles are good because when they pop the economy, in its most general terms, benefits. As Pittis explains:

During bubbles, a country grows its housing stock, over-investing in the construction of new properties so that the supply is more than sufficient, allowing prices to fall relative to income. At the end of a bubble, finally and for quite a while afterwards, there is enough to go around.

Essentially, Pittis understands a ‘housing bubble’ as “just a rising market driven by rising demand.” In his estimation it is the undersupply of housing that causes price increases which in turn spur building frenzies that eventually result in oversupply which at a certain point cause the bubble to pop resulting in a significant, downward correction in housing prices. Pittis suggests that in this scenario the individual pain suffered by some is outweighed by the societal benefits of an adequately stocked housing system. A simplified, utilitarian argument.

I think the significance of this editorial lies not in the actual argument as in the story it tells (or does not tell) about housing bubbles, housing systems, and Canadian political decisions leading up to and in the wake of the U.S. housing crisis. In his over-simplistic portrayal of housing bubbles as ‘demand driven’ and in his utilitarian logic the real causes and social consequences are completely overlooked by Pittis.

The editorial reminded me of the important work of Alan Walks, a geographer at the University of Toronto. In a paper entitled, “Canada’s housing bubble story: Mortgage securitization, the state, and the global financial crisis” Walks offers a deeper analysis of the Canadian case. He traces the growth of Canada’s housing bubble to the securitization of mortgages in Canada and the accessible, cheap mortgage credit this securitization engendered.

In Walks’ analysis the demand creating Canada’s housing bubbles has been made possible by the availability, for buyers and banks, of state guaranteed credit. In other words, the central character in the whole story is the state, but not for the reasons generally repeated in the mainstream media. Walks’ analysis shatters many commonly held myths, not only about housing bubbles in general but also myths about the soundness of Canada’s banking sector and the prudence of recent government policies.

Walks shows how Canada is in many respects more similar to the United States then portrayals of Canadian exceptionalism might have us believe. First, in the early 1980s the Government of Canada began building a secondary mortgage market similar to the United States. This began with the Mortgage-Backed Securities program which allowed government-insured mortgages to be packaged together and traded on the open market by financial institutions. Later, in 2001, the Government of Canada started the Canada Mortgage Bond program in an effort to stimulate the growth of this secondary mortgage market. They used the money acquired through selling these bonds to buy Mortgage-Backed Securities from Canadian banks. Now that banks no longer had these Mortgaged-Backed Securities on their books they were free to provide more mortgages to buyers. Moreover, they could package these mortgages and sell them back to the Government of Canada.

Second, in the years immediately prior to the U.S. financial crisis the Government of Canada was doing its best to emulate the U.S. mortgage market. In 2006, the National Housing Act was changed to allow foreign firms into Canada’s mortgage insurance market (prior to 2006, only the Canadian Housing and Mortgage Corporation and private insurer Genworth operated in Canada). The Government of Canada offered a 90% state guarantee of mortgages to private insurers willing to come to Canada. The Government of Canada also extended mortgage terms to 40 years, reduced the minimum downpayment eligible for Federal insurance from 5% to 0%, and began insuring interest-only mortgages.

In this context of expanding, easy credit housing prices ballooned, household indebtedness increased, and the Government of Canada’s liability in terms of its insured mortgages and securities exploded. Moreover, as Walks (2012, 10) explains:

the financial institutions now had even less of an incentive to worry about borrowers’ ability to pay back loans, since they were not planning on holding the notes. With the federal government providing guarantees of both principal and interest, the lenders that originated new mortgages and packaged them into NHA mortgage-backed securities were able to secure guaranteed cash flows, risk free, from the Canadian state, merely by signing up new homebuyers.

Walks provides the following numbers. From the end of 2005 until the beginning of 2008 outstanding mortgage credit grew by roughly 33% from $628 billion to $838 billion. Record bank profits were made and house prices shot skyward. And then the U.S. housing bubble burst.

This is where Walks’ story gets interesting and Pittis’ story falls apart. Contrary to popular belief Canada’s banks were as precarious as U.S. banks. Furthermore, the Government of Canada did, like the U.S., bail out its banks. Walks reports the ratio of tangible assets held by banks to their tangible common equity (where a higher ratio indicates greater exposure to changes in asset values). According to this measure, Walks finds that the top 5 Canadian banks, with ratios of 32:1 in 2007, 37:1 in 2008, and 31:1 in 2008 were more highly leveraged than the top 10 U.S. banks (26:1 in 2007, 35:1 in 2008, 20:1 in 2009). Thus the drop in Canadian house prices during the global financial crises significantly impacted the tangible assets of Canadian banks and the lax lending standards introduced in 2006 raised concerns about the quality of their mortgage assets.

To avoid a credit crunch the Bank of Canada responded by sending over $44 billion dollars to the banks. In addition, the Canadian Pension Plan purchased $4 billion worth of mortgages from Canadian banks. As the U.S. crisis intensified in 2008, the Canadian Mortgage and Housing Corporation was authorized to purchase $137.55 billion worth of mortgages from Canadian banks. This corporate welfare continued in spurts over the following two years. As Walks (2012, 16) details:

All told, approximately $510 billion of liquidity, stimulus, bailouts and guarantees had been summoned up for potential injection into Canada’s banking system by the end of 2009 representing roughly 33% of Canada’s annual GDP (with about $280 billion eventually drawn upon). Even at its most restricted definition (excluding the US Fed TAF loans, and the CMB program, and funds not drawn upon), the minimum total Canadian ’emergency’ bailout comes to $179 billion, or 11.6% of Canada’s 2009 GDP, not dissimilar to the combined costs of the direct federal bailout/stimulus programs in the US.

This contradicts the widely held perception that Canadian banks were resilient going into the crisis and were able to weather the storm on their own. In fact, if it were not for government intervention the Canadian banking system could have crumbled.

Setting the political consequences aside for a moment, it is also important, as Walks explains, to consider the social consequences of Canada’s housing and mortgage markets. State orchestrated mortgage markets enticed new, young buyers into the housing market garnering enormous profits for banks in the run-up to the global financial crisis. This buying frenzy had social consequences – wealth inequality. Rising house prices place enormous burdens on the middle class. Walks cites evidence showing that young families and immigrant families have the highest debt levels and household debt is disproportionately concentrated among low-income families. Thus housing bubbles are accompanied by massive growth in household indebtedness, a point Pittis ignores. Moreover, as Canadian society ages, ‘boomers’ retire and the age-dependency ratio shifts the burden on younger generations will only increase. Walks rightly points out that in the wake of these bubbles we should expect generational conflicts at a time when solidarity and resilience is needed.

Returning to the political consequences, one of the most poignant facets of Walks’ story is that the securitization of mortgage markets in Canada and the bailout of Canadian banks has shifted the private risks and liabilities of banks onto the shoulders of ordinary Canadian citizens, all while bank profits and executive bonuses reach record levels. In addition, the costs of the bailout to government balance sheets has yet to be addressed. Given the aversion to tax increases among conservative governments the austerity agenda – cuts to government services – becomes the vehicle for balancing the books. To make matters worse, as Walks explains, bubbles have the perverse effect of shifting capital away from productive investments into the speculative housing market hampering long term economic growth. Housing bubbles, therefore, have deleterious effects to everyone insofar as they thrive upon moral hazard, incur the socialization of private risk, intensify government austerity, and misdirect investment capital.

Pittis cites Stanley Kubrick’s film “Dr. Strangelove (how I learned to stop worrying and love the bomb)” as inspiration for his editorial. Perhaps he has forgotten that Kubrick’s film is not only a cutting satire of cold war politics but a tragedy. In the end everyone gets blown up.


Walks, A. 2012. ‘Canada’s Housing Bubble Story: Mortgage Securitization, the State, and the Global Financial Crisis.’ International Journal of Urban and Regional Research. 1-30. DOI 10.1111/j.1468-2427.2012.01184.x