Northern Exposure

With the warmth of spring, it is safe to consider trekking north to enjoy the virtues of the great frontier that is known as Canada. When you have newspaper articles like the following from the Feb. 8 WSJ, you know that a peak is close at hand...
"Mr. Gray, the Toronto concierge whose home deal fell through at the end of 2008, is looking again for a condo, although he's had to increase his budget to around C$350,000, from C$250,000. Ms. Girard, the housewife in Red Deer, says she hopes to buy a seventh unit in a few months—after she pays down enough of her credit-card debt to qualify for another mortgage."
Cheap mortgages have helped to blow this bubble, as there are a high number of adjustable mortgages currently in the 2-4% range, which will reset in the next 3 years. With a 0.25% short term rate, money is cheap in Canada. But for how long. The Canadian Dollar shows an eerie resemblance to US stocks. Could it be that the commodity economy of Canada is highly dependent upon US growth? It makes sense. And how would a double-dip in the US affect Canada? Negatively. As would a slowing Chinese economy. Oh! By the way, did I mention that the Shanghai Index looks toppy? Slowing Chinese economy, lackluster real growth in the US... Not good news for commodities and countries that depend on exporting them, like Canada. Maybe the next real estate bust we should be worried about is not the one in our own borders. But the one above our northern border.