Canadian Exceptionalism Summary

Like all previous cycles of booms and busts, the seeds of the subprime meltdown were sown during unusual times. As the global financial crisis (GFC) of 2008 erupted, the worst recession since the 1930s elicited unprecedented action from nations and their central banks. However, through the chaos, Canada appeared to have weathered the storm unscathed. In his work, Canada’s Housing Bubble Story: Mortgage Securitization, the State, and the Global Financial Crisis, Alan Walks describes Canada’s experiences during and after the financial crisis. To do so, Walks outlines four broad objectives: cross-examine Canadian policy history, challenge Canadian exceptionalism propagated by mainstream media, evaluate the policies pursued by the Canadian government, and finally deduce the implications on Canada’s mortgage market and rising household debt. The purpose of this paper is to discuss the above-mentioned objectives. Policy History: According to the text, Canada’s experience is characterized by a rapid rise in housing prices over the 2000s, determined by easy access to mortgage credit. State policy shared responsibility for generating a housing bubble by subsidizing mortgage securitization and by compromising lending standards in the years before …show more content…
In short, the myth that they did not require a ‘bailout’ in response to the GFC was disproved. Walks explained it is because the Canadian state was successfully able to direct a crown corporation (the CMHC) to absorb securitized mortgage assets, which were issued under subprime lending standards. Although it was not as extensive as the bailouts and nationalizations employed in the United States or United Kingdom, the Canadian experience exposes a degree of intervention similar to that implemented