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Bank of Canada studies mortgage relief

A research paper written by Soyoung Lee of the Financial Stability Department of Bank of Canada has conducted a quantitative analysis of the effects of debt relief as a stimulus policy during economic recessions. The research looks on the potential benefits of mortgage principal reduction in stabilizing the economy during downturns.

“I study debt relief as a stimulus policy using a dynamic stochastic general equilibrium model that captures the rich heterogeneity in households’ balance sheets. In this environment, a large- scale mortgage principal reduction can amplify a recovery, support house prices and lower foreclosures,” Lee prefaced in his paper.

One of the primary motivations for exploring the impact of debt relief during recessions is the aftermath of the Great Recession. Many have argued that mitigating the financial distress of underwater borrowers could have mitigated the sharp rise in foreclosures and the subsequent decline in house prices.

You can read more on the matter here.

What’s going on?

• South Korea On Guard Against North Korea After Israel-Hamas War Breaks Out (theDeepDive)

• U.S. Consumer Price Index Rises 0.4% in September (theDeepDive)

• X removes hundreds of Hamas-affiliated accounts since attack, CEO says (Reuters)

• Reminder: EVs Aren’t Cheap to Repair (theDeepDive)

• Not a ‘Skittles ban’: California Sets Precedent with Ban on Four Common Food Additives (theDeepDive)

• Sergio Brown: Ex-NFL player charged with his mother's murder (BBC)

• Fraud-Riddled Ontario Real Estate Developer Defaults On Payments To Fortress Victims (theDeepDive)

• Over 800 Canadians ‘De-Banked’ Since 2018, Including Freedom Convoy Supporters (theDeepDive)

• EU's Breton gives TikTok 24 hrs to set out disinformation action (Reuters)

• George Santos Charged By DOJ With Fraud, False Statements, Identity Theft (theDeepDive)

What’s the latest?

• US CPI Jumps: Consumer prices in the United States increased at a slightly faster pace than expected in September. The consumer price index rose by 0.4% on the month and 3.7% from a year ago, compared to respective estimates of 0.3% and 3.6%. The core CPI, which excludes food and energy, increased by 0.3% on the month and 4.1% on a 12-month basis, in line with expectations.

• Canadians Evacuated: The Canadian government has initiated an evacuation plan to retrieve Canadians stranded in Israel following recent attacks by Hamas and escalating violence in the region. Two Royal Canadian Air Force planes are taking approximately 130 passengers to Athens, from where commercial flights will be used to return Canadians to Canada.

• Ford Targeted: The United Auto Workers union has escalated its strike against Detroit's major automakers by shutting down Ford's largest factory, the Kentucky truck plant in Louisville, affecting approximately 8,700 workers. Union president Shawn Fain hinted at further action against Stellantis and expressed frustration with Ford's bargaining for a fair contract.

• Oil Production Growth: Canada's oil production is set to increase by approximately 10% over the next year, reaching an all-time high for the country's production. The output could climb from 4.8 million barrels per day (bpd) to about 5.3 million bpd by the end of 2024. This growth is primarily driven by Alberta's oilsands, although increases are expected throughout Western Canada and at offshore facilities near Newfoundland and Labrador.

• X Combats Misinformation: Twitter has removed hundreds of Hamas-affiliated accounts and taken action to remove or label tens of thousands of pieces of content following the recent Hamas attack on Israel, according to its CEO, Linda Yaccarino. This action was taken in response to an ultimatum from European Union industry chief Thierry Breton, who gave X 24 hours to address the spread of disinformation on its platform since the attack to comply with new EU online content rules.

Is Neuralink the future?

The stock market and stuff

• Uber Mulls Taking Toronto To Court After City Votes To Cap Ride-Hail Licences (theDeepDive)

• Air Canada Grounds Pilot Who Posted “F*ck You Israel, Burn In Hell” (theDeepDive)

• Highlights Of Caroline Ellison’s Testimony Against Sam Bankman-Fried (theDeepDive)

In the juniors

• Royal Helium Begins Start-Up Of Helium Processing Facility (theDeepDive)

• Sidus Space proposes direct offering to raise up to $2M (SA)

• Canada Nickel Reports After-Tax NPV(8%) Of $2.5 Billion For Crawford Project (theDeepDive)

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