"Fake Chinese income" mortgages fuel Toronto real estate bubble: HSBC bank leaks
thebureau.news
thebureau.news
> “I am going to reveal potential mortgage fraud at HSBC Bank Canada and possibly some employees benefited from the fraud, financially pocketing thousands of dollars, which I call the proceeds of crime.”
> FINTRAC’s study doesn’t say that Canadian banks knowingly issued fake-income mortgages to Chinese diaspora buyers in Toronto. But in an interview, D.M. said banking staff are trained to guard against fraud, and the loan application packages he reviewed in Aurora beggared belief.
> The Bureau’s review of HSBC Canada emails and D.M.’s text messages, shows he came to believe numerous employees at the Aurora branch had direct knowledge of faked Chinese income mortgages, and a veteran manager with oversight of more than 10 Greater Toronto branches knew about broad and questionable mortgage lending for Chinese diaspora clients.
> Pointing to specific examples, D.M. claimed that another branch colleague had admitted processing numerous loan applications without meeting his clients, because a branch manager delivered her subordinates foreign income client applications so “they did not have to get sales themselves.”
> “She said yes, she knows specially in Mainland China there is a team who would even answer emails and phone calls verifying [Chinese income] but it’s a sophisticated and well organised scam,” D.M. 's email to HSBC Canada managers says. [...] “When I asked for such a serious issue if she raised a HSBC confidential [complaint] or not she evaded my question,” D.M. wrote. “Now we all love numbers, but I don't think the bank will like these kinds of numbers achieved through this way.”
Sounds like that branch is compromised
The USA Federal system of mortgage loan gurantees has been gamed seriously, over and over since the 80s. It is a whack-a-mole for enforcement. All the parties close to the transactions have exactly the wrong incentives, most of the time. One of the defendants in a recent "pay cash to get your kid into elite school via fake sports" scandal was a mortgage broker in San Diego County. The Judge after reviewing evidence, reportedly told the man on the record "you are a thief." etc
American financial regulators are much more comfortable letting banks fail than their Canadian or European counterparts. (In part this is because of the sheer diversity of banks we have.) Being fined out of existence is a real possibility for an American bank. That shapes behavior.
1. It is very common in Canada for a person with wealth acquired outside the country to apply for a home loan. At the time I was approved as a guarantor for a home loan for over half a million CAD, I had only been in the country for 2 years, and had no credit history with any Canadian institution (out of laziness I just was added to my wife's accounts as a signer and cardholder when I moved). They accepted copies of my American credit history and bank statements, but had no real way to verify their truth. In the US, I don't think that (relatively) wealthy immigrants wanting a home loan are nearly as common. Richmond, BC is a great example of this: avg home price is 1.5mm and 60% of the residents are immigrants.
2. Canadian mortgages are refinanced every five years, traditionally (it is possible to get a longer term, but very uncommon). Combine this with the fact that Canadian real estate has ALWAYS gone up (until now), and financing a home really wasn't a risky thing. If a bank didn't like a customer, they could refuse to refinance after 5 years. If a bank foreclosed, they were basically guaranteed to be made whole.
I'm skeptical here, given how closely the US and Canada work together, both US and Canadian banks share an incredible amount of info with each other and not solely because of cross-border commerce. There is also a non-trivial number of US citizens living and working in Canada so there are services available to them given their special tax requirements.
In the 3 banks I've worked with in Canada, all were completely unable to access my American credit history.
The governments do share tax data, but AFAIK the banks have no way to link "John Smith SSN:123-45-6789" to "John Smith SIN:098-76-54321". They even have my US SSN number since Canadian banks report to the IRS.
Edit: here's experian explaining it: https://www.experian.com/blogs/ask-experian/u-s-credit-histo...
What language do these Chinese tech workers speak at their jobs?
It’s probably the biggest purchase in your life so it makes sense you want to know all details.
It definitely isn't Richmond though.
Have always gone up expect for when they haven't. Nationally, real estate prices dropped precipitously in the early 1980s. And the Toronto housing crash of 1989 was a complete meltdown. It took until the 2010s for prices to finally return to where they were in 1989!
I guess a more accurate way to put it is that there is almost no one working in banking or any mortgages currently written where a major correction has happened. Canada wasn't whacked in 2008 nearly as bad as the US, and the early 1990s property corrections were much more regionally focused (Toronto got the worst of it), in Edmonton, 1989 and 1990 prices increased more than 20%. Basically there is no one with first hand experience in managing an upside-down housing portfolio.
Basically, for most property markets in Canada, plowing your money into property has been a historically better bet than the TSX.
Granted, the market had ramped up so quickly, and then crashed so fast, that the number of underwater mortgages was likely small – and probably haven't come up for renewal yet. So, you're right that there isn't much management experience, and may never be.
If you cherry pick the localized data, even the worst off suburbs of Toronto you see a dip of just over 22% with a pretty quick reversion to the mean. If you look at metro areas, none of the cities in Canada saw greater than 10% drops from 2022 peaks, and they have all recovered from the bottom.
If you break it out into type of home, it shows that the average price drop is about ~10% for any given market. This shows that consumers in 2022 shifted buying preferences from expensive home types to cheaper home types. This makes a lot of sense given the push for multi family housing and rising interest rates.
The value of individual housing didn't change 30%, it was mostly just a market shift towards cheaper housing. If people shift from buying Mercedes to buying Kia, the average transaction price for a car will fall a lot, but that doesn't mean that Mercedes is on sale for cheap.
I don't know if it's a legal requirement, but I sure know I had to hand over all of _our_tax information to the bank to validate income when getting a mortgage in the US. You have to sign a form saying the bank is allowed to pul your data from the IRS; you're not just handing over paperwork and promising that it's legit.
The irony is the US talks a lot about financial transparency for other countries, but the US itself is the preferred place if you're looking to launder money.
"Since 2015, the whistleblower concluded, more than 10 Toronto-area HSBC branches had issued at least $500-million"
It's not a branch. It's the whole bank. And you can safely infer it's not the only bank.
If 10 people bid for a house, it's the guy in China lying about their income setting the house price when they win, by what HSBC is doing. This will have an outsized effect on the market.
hail free market.
Sure thing bud.
The real people harmed were the Canadians trying to start a family who got outbid on the house.
Laws like "you must live in the house for 1 year before selling" meant they just sent a relative to live there free before selling for higher price.
Like investors and companies chasing ever higher profits, there's a bunch of people that think the house they own should be worth 100000% more by the time they sell it.
Even had a gen x friend be like "Well I pay rates (council services fees) while I own the property so it should be worth more!"
Bruh, getting your rubbish taken away while you live there doesn't add value to the fucking house. Otherwise I could claim paying my electricity bill while I live there does too.
We found a random mortgage specialist (a Chinese lady) at RBC. Without knowing the full picture of my brother's income situation, she immediately suggested that she could get the mortgage approved regardless, just needed to fake some documents.
It was astonishing how she went straight to the point so quickly to someone she met the first time.
She also said a lot of people has non-taxed income and needed a way to get a mortgage before the real estate price becomes out of reach.
So definitely not just HSBC.
it's not like they're claiming these people are unable to pay.
By all accounts it seems the whole country is.
Like mentioned in the article, often times the material is very obviously suspicious and banks probably know this and still turn a blind eye to it because these borrowers are low risk and much less sensitive to the high/rising interest rates of today...
American banks learned to be much better at it after 2008. And given 2008 and the MBS balance sheets at central banks and the municipal budgets propped up by property values and national mortgage programs intended to encourage homeownership, this is by no means just a matter between the bank and its clients, even if you put aside the money laundering angle. Mortgage fraud destabilizes economies.
Eventually this behavior goes overboard and everything crashes. In the meantime, law-abiding people are screwed by the bubble. Then they are made to pay for the clean up.
Fraud is costly, and rationalizing it contributes to the problem.
Maybe... but you need to keep in mind most of these people are not really building a bubble. Unlike the subprime mortgage crisis, where things were built on inflated valuations, many borrowers in this "scheme" do have more than enough funds to cover the entire mortgage. It's just that their capital is relatively illiquid. This is also why the high interest rates have not significantly affected this.
The effects on housing cost is because of natural market merging where chinese properties are "overvalued" domestically. This is actually not new, and happened with Japan at some point as well.
That being said, the main risk for this is actually geopolitical... Should capital controls tighten (or, like, if war were to occur etc.) then there is a much bigger risk, but many are banking on the fact that, at least given the signs today, that is still unlikely.
No, I'd don't need to keep anything of the sort in mind. I've lived through multiple real-estate and speculation bubbles and crashes now. The arguments you make are the same sort heard before each one, and I can easily anticipate the rationales and excuses that will be offered after the next one.
You don't know how widespread this is. You don't know how many other banks are leaning on this latest house of cards, or how much of this is going on in the US and Europe as well. As far as the banks are concerned it's just one big world of suckers and they play these games everywhere, simultaneously.
And there is no "should." Capital controls will tighten. Wars will happen. Eventually, inevitably, the overhang destabilizes and this heinous crap will blow up.
Again.
These aren't purely private transactions. If HSBC Canada fails, Ottawa is on the hook. The defrauded party here is the public. (And possibly the bank's lenders and shareholders.)
I think what many people are imagining is the subprime mortgage situation of yore. But in this case, a lot of the "fraud" is the result of knock on effects from capital controls in the PRC. Many (new and aspiring immigrants) have capital from sales of their property in China, but due to capital controls, cannot get it out quickly. They have to do it in $50k/year chunks.
Usually a loan or mortgage is the solution for this, but those depend on _income_ rather than _wealth_, so normally these people can't take out as much as they need to, even though they could easily back actual value of the mortgage. So there's a little collusion between banks and mortgage brokers to get in on this market gap (probably more so now that interest rates are high, which these borrowers are much less sensitive to).
Of course, there are risks, but those risks are tied to more geopolitical circumstances and less market-driven, and apparently banks are more willing to take their chances on that.
You don't know. The paperwork's fraudulent.
> Many (new and aspiring immigrants) have capital from sales of their property in China, but due to capital controls, cannot get it out quickly
The Chinese property market is in freefall. And capital controls can get tightened. Either condition will result in default.
They don't offer these services to anyone. Because the paperwork is fraudulent, a lot of people involved are/will be personally implicated (could easily lose their job and/or face legal challenges on top) in the scheme. It's not like banks are not monitoring delinquency/default rates already, and if the stats are start indicating problems they will certainly investigate...
So while outside observers can't verify anything, those perpetrating the scheme do have to balance their own personal risk and many will in exchange request invasive details around the clients' assets in China to cover their own ass. Not admissible evidence to the bank, of course, but they're not handing these out like candy.
> The Chinese property market is in freefall.
Realistically, people involved have already sold so this doesn't affect them. At least in the Vancouver area, the brokers (who are the usual point-of-contact to the clients) won't even proceed unless you've already sold and have the cash.
> And capital controls can get tightened.
This is the main real risk that those in the scheme look out for, but it's a geopolitical risk rather than a market-based one. Which makes more sense when rates are high, like now. When rates were low, this didn't happen as much since there are plenty of clients to go around.
---
Also, in the grand scheme of things, even if the bubble bursts, the broader economy is still not worse off. Each cent paid into these mortgages is real "new money" being introduced into the economy. This is not the subprime mortgage days where at the end it became just a transfer of wealth to the banking industry. For the most part "the public" is not the one being defrauded, it's China...
Everyone in every corrupt scheme says this. The rule of law wins, in the long run, because these structures aren’t robust. They get perverted and subverted, and while it’s nice to imagine a bunch of competent crooks keeping up their shop, the reality is we have rules for a reason.
> it's a geopolitical risk rather than a market-based one
Capital controls aren’t geopolitical. Neither is an offshore property market bursting.
The borrowers are borrowing against an doubly-illiquid asset. Buy long, borrow short—this has been a widowmaker since antiquity.
> even if the bubble bursts, the broader economy is still not worse off
Canadian banking would collapse. You’d see the equivalent of America’s 2008 crisis, except while the rest of the world has high rates. If allowed to fester, or if it already has, that’s a generation’s quality-of-life gains going down the tube.
---
The last one I don't agree with. This is different from the 2008 crisis in that the 2008 crisis was primarily "internal" and for the most part zero sum --- some people gained, some people lost (kind of loosely like a long-horizon pump-and-dump scheme), and at the end things revert to the original non-inflated value.
This situation is more of an encouragement of external injection _into_ the economy. Rising prices are due to external capital flowing in (and the anticipation of more to come). Even if it were to pop, things would be no worse than a hypothetical alternative timeline where there was no bubble. And that's assuming no external capital actually flowed in, that not a single person wired money into the country. Clearly this is not true, and the money coming in is still net positive. So _in aggregate_, the economy is still improved due to the injection. Again, these gains are not spread evenly, and it may be the case again that some individuals will be hurt while others reap large returns.
> a generation’s quality-of-life gains going down the tube
If anything, that just means the previous quality-of-life gains were achieved by overdrawing against the future... nothing new here.
If BC property is being fraudulently leveraged against Chinese real estate, opaque decisions by the ccp can dramatically impact default rate for Canadian loans.
No market actor would expect that in a non-fraud based market. Instead a transparent pricing of Chinese assets would show them as much less valuable on a risk adjusted basis than their book wealth value. Especially compared to western income or equivalent wealth.
I'm not surprised that some Chinese (or any) immigrants in Canada try to take advantage of the linguistic barrier to obtain credit. And since important Canadian documents are often less standardized than in other countries, one can surely employ a bit of artistic creativity with a stamp here and a stamp there to put through a false document.
I've personally dealt with fraudulent credit applications, submitted and approved, because the bank employee (Canadian, no relation to the client) wanted to improve his numbers. At least when I was involved in credit, because of the workflow, the middle office made decisions first based on the numbers provided to them by the front office. Of course they were supposed to control all supporting documents but they weren't exactly zealous and if you knew their work habits, you could probably deduce the best time and language for the submission of a questionable application.
If new construction wasn't so aggressively blocked in some major cities (San Francisco, Boston, all of Canada it seems), then the rents would not be nearly as high as they are.
Wealthy property owners are behaving a lot like a cartel in many places.
This is why trade with known tax havens should be banned, because no tax havens have large markets to capitalise. It's such a racket.
Out of curiosity, why? China's stock market is melting down in the midst of persistent deflation. A lot of people who thought they had liquidity may not anymore. Beijing could open the taps, but then that puts pressure on the currency.
The whole point of the money laundering operation is to get the money out of the country. China going to pot only accelerates it.
You have to have money to launder it. Also, if the currency keeps getting hammered, Beijing will crack down on the exit channels.
Most investment is in real estate, which has remained fairly stable in Tier 1 cities (which is where most of the post-2008 Chinese Canadians are from)
To get more than the $50k limit out, people would use a hawala type system where you'd use assets in China as collateral and get guaranteed cash from a broker abroad.
Most Chinese aren’t buying British Columbian property.
> accredited investor qualification is much harder to get than in the US
On a relative basis, right? In absolute terms, it’s still very low. Similar to the practical requirements for opening an American brokerage account.
> Most investment is in real estate, which has remained fairly stable in Tier 1 cities
Do you have data for this? My impression was sales are being discouraged.
Yep. They don't buy Chinese stocks either. They would invest in property within China.
The kind of Chinese moving to Canada (and Australia) after 2008 aren't "most Chinese".
They tend to be from much more affluent and connected backgrounds. Think businesspeople, large property owners, or middle level party members.
Upwardly mobile Chinese (eg. Those in the tech industry or finance) will target the US or Singapore if they emigrate because they can keep their careers - something which Canada absolutely sucks at (eg. Most foreign degrees aren't recognized, white collar salaries have largely stagnated since the 2000s, blue collar work like oil drilling pays much more)
Blue collar/middle class Chinese tend to target Malaysia, Thailand, or Singapore because it's easy for Chinese to emigrate and average salaries are higher and they can blend in as the Chinese diaspora is massive in all those countries
> On a relative basis, right? In absolute terms, it’s still very low. Similar to the practical requirements for opening an American brokerage account
But faith in it is low for most Chinese. The 2015-16 market crash was extremely volatile.
Also, stock investing is a new concept for a lot of Chinese - stock markets started unofficially in the 1987-1991 period, didn't formalize until 1997, and most companies preferred listing in Hong Kong or Singapore until the 2010s.
Also, if you have a finite amount of cash, you would be chasing the highest stable returns, and for most of the post-Mao era, that was in real estate.
> Do you have data for this
I'm using Shanghai as my example, but it's the same story for Shenzhen, Beijing, and Guangzhou - the Tier 1 cities.
The real estate bust happened in cities outside of those, but specifically, in property located outside the "Inner Ring"
Chinese cities are planned with 3 rings - an Inner Ring with all the businesses, government offices, and residential property of people working for both, a middle ring that would often be industrial but increasingly converted into residential, and an outer ring that was farmland until 10-15 years ago when it was converted to residential.
It's that expansion of outer ring construction in all cities across China that caused the property bust.
Inner Ring residential property is basically VIP. Those are the kinds of people buying property in Canada.
From 1995-2021 [0] From 2022 [1]
[0] - https://www.statista.com/statistics/1325915/china-average-pr...
[1] - https://www.statista.com/statistics/243404/sale-price-of-res...
This is a "heads, I win", "tails, you lose" type of scam. The mortgage holders are all judgement proof. They have no income or assets to go after. So if the housing market crashes, the banks have no recourse.
It's the same as taking out a mortgage and instead of buying a house, you go to the casino and bet double or nothing. Sure, the intention to pay back is there. But it is contingent on the investment performing, and the bank is taking on unknown risks.
The housing market must first crash before the problem is tangible, and there's no sign of that happening.
The OP is right, the income isn't real. It's right there in the article: "Aurora branch had direct knowledge of faked Chinese income mortgages"
You assumed that the OP assumed something. Then you assumed that the OP's (non)assumption was motivated by jingoism.
Comments like yours are the worst.
This is HN's vaunted grace?
From what I responded to:
> You can't meaningfully garnish the wages of a part time casino dealer.
It is entirely plausible that there are oodles of untaxed income getting funneled over there from hasty emigrés.
No need to get vituperative, good grief.
If Canadian banks agree with this risk assessment, they have little incentive to actually verify income in these cases.
In Australia this became pervasive across all banks for the last 25 years. It got to the point where, around 5-10 years ago, new national rules were mandated that foreign income could only be assessed at some minor percentage of its evidenced volume under the epithet "loan serviceability criteria". At the face of it, these rules appear to have the public's best interests at heart. But in reality, they simply lock out anyone that isn't a locally registered card-carrying commuter wageslave (eg. cross-border entrepreneurs, immigrants, etc.).
So the new scam - from multiple independent sources - is apparently people from Singapore taking out loans in Chinese Yuan Reminbi denominations for Australian property against Singapore or Hong Kong banks, then coming to the Australian banks and having them "transferred" (internationally, and across currencies!) which allegedly sidesteps the local restrictions. The fact that I know this simply from talking to bank staff as a stranger shows how extremely pervasive these sorts of things are.
WRT your other foreign income/asset comments its much less nefarious. The local banks are focused on AU income and assets because it is directly tied to serviceability and recovery. You can do loans based on foreign income/assets but youll pay a few percentage points for the risk and conversion problems. The international loan outfits are usually smaller, though HSBC is a big one IIRC.
I only recognize the HSBC name from scandals in the news: https://en.wikipedia.org/wiki/HSBC#Controversies
There are no good guys there, that's not why the business was set up and corresponding folks were/are hired. If you want more controls, enforce more regulations, they do work if well defined.
Money laundering does seem to be their choice in poisons.
Banks don't benefit from their customer laundering money just like landlords don't benefit from drug trafficking in their building: it's a hindrance and it costs a lot to do anything about it.
Source: I work on AML in a global bank.
By what metric? I’d argue the driving factor is their proximity to dirty money. Same with Russian banks. Then other people notice you’re used to looking the other way and you get word-of-mouth network effects. With money launderers.
They do, but it's nothing compared to what they make loaning money, which is their (and any banks) core business.
I agree there are no good guys here, but there are shades.
What do you mean by this? Maybe some examples would help to clarify.
If you want to read more about this: https://philebersole.com/2013/02/15/hsbcs-history-and-the-or...
1. Fraudulent applicants come to the bank with crazy stories to ask for enormous loans/mortgages toward a Toronto house, allegedly to turn hyper-suspicious big piles of cash into a more reputable-looking asset.
2. HSBC goes along with that because they want to suckle on the sweet regular payments of suspicious cash, even though they ought to damn well know that these customers are just a front for an organized crime ring.
3. As a bonus, this locally-concentrated money-laundering/speculative-investment thing screws up the property market for Torontonians. The local multimillionaire babysitter is willing to buy at almost any price because their secret financial goals are very different than yours.
While looking for other articles, I notice it's been ~16 months after the end of HSBC 10-year tangle with US regulators over their business with Mexican and Columbian drug cartels. [0]
[0] https://www.reuters.com/business/finance/us-fed-terminates-e...
If the borrowers are making the mortgage via rent/Airbnb of the properties... then they are somehow keeping it secret within Canada and also sending it on an international round-trip, which seems like a strange stretch for any small-time "lie on the loan application" crook.
They could be making round trips with Chinese banks but I don’t see why. You can transfer funds from China into your account before your monthly mortgage was due, the mortgage provider would never know. You can also put dollars into a Chinese bank account and do wires in demand, since it isn’t R!B there are no controls on it.
I remember some years ago I saw a comment somewhere that, for real estate purchases "proceeds from a certain country were subject to AML regulations... but not from China"
Really. I can imagine a Canadian banker saying that with a straight face.
1. They come with some money, enough for whatever minimum down payment is required (but notably, the issuing bank will also lower down payment requirements for clients with high income or assets, which are faked anyway)
2. HSBC is incentivized to issue mortgages, yes, that's their business. But the actual fraud here sounds more like cash kickbacks from the fraud buyer to the issuing agent themselves.
3. Home prices are made on the marginal sale, so a small amount of this activity can have a large upward pressure on prices. This leads to typical bubble scenarios, and you can keep rolling over or refinancing mortgages as prices keep rising (or even just sell). To get a sense of this, over the past few years, the average Canadian house gained in price something like double the average Canadian income.
So in summary, a lot of this could be explain by plain fraud, enabling foreign buyers to both perpetuate, and participate, in a giant housing bubble. If that's true, and it all comes crashing down, then god help us all.
There are so many Canadians waiting on the sidelines with their down payment ready to be deployed and are out competed year after year.
The pent up demand for housing is enormous. Even with the high interest rates.
Hell, with the rumors of interest rates going down, there is a frenzy to BUY now, suck up the high interest and get a relief in a few years, because people are afraid that if the rates go down, more people will qualify for a mortgage and it will bring more pressure, so better to buy now if you can.
I am convinced it will not go down in my life time ever. Too much demand, not enough supply.
Smh...
The stereotyping is lumping the parent post with this group on the basis of North American racial categories ("Asian" as a group, as if that's a thing.)
As long as real estate prices continue to rise, you won't see large scale missed payments because they will be able to sell the assets, refinance the loan, or even successfully rent it out.
We've seen this dynamic in 2008 and in the S&L crisis before. Bad loans drive the bubble, the expanding bubble hides the bad loans, but when the bubble stops, there is a massive large scale loan failure.
Someone wants to get $large_sum out of China. They can't do this without raising lots of flags in both countries. So they set up an army of fake borrowers, have them take out fraudulent mortgages on real properties in Canada, pay down the mortgages, and sell the property to obtain clean money on the other end.
All the better if the property rises in value in the meantime due to enormous fraud.
The article explicitly says that the purpose is laundering via professional operators -- see the flowchart diagram toward the bottom of the piece.
Not really. Lying about the source of cashflow doesn't mean the cashflow isn't real.
The end objective for a lot of these frauds isn't to sink the bank with fake loans. It's to launder money.
Have other mules or partners purchase crappy properties at a low price. "Flip" the properties, having another mule purchase at a greatly increased price and service the mortgage with more laundered money.
So you get the capital gains immediately, and they are apparently completely clean. If the crappy house continues to appreciate naturally, that's also a bonus, but if not, you can eventually default the mortgage or short-sale.
Canadians are certainly paying for social services used by folks who earn income abroad and pay little to no income tax in Canada, and folks who want to buy their first house are harmed by inflated housing prices.
My currently overseas landlord for some reason needed to travel to Canada to give birth, and was very eager to get their health card / banking documents sent to our rental despite it being rented out for several years prior to us arriving...
Not trying to point fingers on whether the branch workers were in on the whole thing, but maybe it was easier to perpetuate the fraud because of cultural familiarity?
"and possibly some employees benefited from the fraud, financially pocketing thousands of dollars, which I call the proceeds of crime."
Deutsche Bank fires pretty high on the fraud meter as well.
I hadn't thought of this possibility when the exit was announced.
Not so risk-free unfortunately
> A June 2023 email from the bank’s personnel department says “we hereby demand that you [the whistleblower] immediately and permanently delete any and all HSBC information on any personal email accounts.”
> “If you do not comply with these obligations,” the email warns, “HSBC also reserves the right to bring this matter to the attention of relevant law enforcement agencies.”
The impulse to enlist the government to regulate private property and investments is not productive and results in endless encroachment of individual liberties and rights to governments.
The Power of Pricing is a thing that exists whether you want it to or not. Smart policy uses it to great advantage. Dumb policy redirects this to hurt those it intends to help. Rent control, restrictions on production, byzantine zoning and construction rules... all contribute to distorting the market in ways that push back on the original (or at least, stated) intentions.
You want housing to be cheaper? Increase supply. That's it. You don't want foreign investment in your properties? Don't make them so damn attractive as pure investment vehicles. How? Increase supply.
There's always a boogeyman to be blamed when markets are so broken like this.
The USA (and maybe Canada) has large stocks of government land. In my country, most land is privately-owned; interfering with landowners' property rights is seriously destabilising. Property law is the basis of most law.
Maybe the USA and Canada could do something similar? I find it ironic that it’s primarily Chinese investors who want us to keep our property markets open.
There are loads of cheap houses in the USA. They're just in places where most people don't want to live.
Here's a cheap house:
https://www.zillow.com/homedetails/420-Tyler-St-Gary-IN-4640...
The commute to Southern California is pretty killer though.
Drastic? Well, then: kill NIMBYism. Just off with its head. We know the 18th century in England as the "Gin Craze", future generations will look at our period as the "NIMBY Craze".
Large-scale construction is absolutely possible. There were periods of massive construction booms all around the globe, especially after wars (when a lot of housing had to be rebuilt immediately). You can absolutely build a lot of comfortable middle-class housing in a fairly short time. Most German cities were rubble in 1945 and fine again in 1960.
But you need density and straightforward approval processes. No artificial scarcity caused by one-family home zoning and endless environmental reviews that are abused to stall developments for decades.
AirB&B has been a terrible experience, so many people buying up houses just to lease them out for a weekend has definitely contributed to rising housing costs and over-all cost of living
Raise that fence too high and you turn landlords into the community's gatekeepers. (How else could a non-resident become a resident?)
But that's the problem, isn't it? The basic necessities of life shouldn't become a vehicle for speculation.
FTR, all of my wealth is in two homes.
I live beside the river Thames, which private "investment" has transformed into a sewer. My access to food has shrunk; I used to have access to butchers, greengrocers and so on. Now all my food comes from supermarkets. The health system I depend on has been gradually privatized, and it is now at breaking point.
> the lessons of history
History is squishy stuff; we mould it to support the conclusions we want to draw.
[Edit] I'm interested that you didn't challenge my equating of investment with speculation, because I didn't mention investment. Obviously, without capital investment, you don't get capital assets like houses. But my neighbourhood is blighted by absentee landlords; one neighbour is an AirBnB, the other has been empty for 5 years. Both are owned by absentee landlords, one living 2,000Km away. That's not investment; that's speculation.
Lamenting the rise of supermarkets as a death knell for local butchers and greengrocers is a misplaced nostalgia that ignores consumer choice and market efficiency. Supermarkets thrive because they offer what consumers demand: variety, convenience, and affordability. To decry this as a market failure is to advocate for a return to less efficient, more costly ways of living, under the guise of preserving tradition. It’s an affront to consumer sovereignty and a free market that naturally evolves to meet changing societal needs. Yearning for a past that restricts choice and elevates prices is a backward step, not progress.
Criticizing absentee landlords as mere speculators ignores the benefits they bring: paying property taxes and injecting capital into the economy. This isn’t about speculation; it’s about fulfilling market demand and facilitating economic activity. The real issue lies in state-imposed barriers that prevent adequate housing supply, not in the actions of individual investors. Blaming investors for taking advantage of market opportunities is misguided and diverts attention from necessary reforms to increase housing availability and affordability.
The collectivist dismissal of history as "squishy" is a deliberate evasion of undeniable truths. History is replete with the failures of socialism and the triumphs of capitalism. To mold it to fit a narrative that justifies state control and collectivism is intellectually dishonest and dangerously naive. The empirical evidence is clear: wherever socialism has been tried, it has led to economic stagnation, misery, and the erosion of freedoms. Capitalism has lifted billions out of poverty and spurred innovation and prosperity unmatched by any collectivist scheme. Ignoring these facts is not just an error in judgment; it's a willful blindness to the lessons that history has painstakingly taught us about the superiority of market freedom over state control.
Whenever the cry of "market failure" echoes, a closer inspection often reveals the true culprit: state failure. "If someone considers that there is a market failure, I would suggest that they check to see if there is state intervention involved. And if they find that that’s not the case, I would suggest that they check again, because obviously there’s a mistake." This wisdom holds true across the spectrum of economic grievances. Time and again, what is hastily labeled as a failure of capitalism turns out to be the unintended consequences of excessive regulation, misguided policies, or government overreach. The path to prosperity is not paved by increasing state control but by unleashing the creative and productive powers of the free market.
> The real issue is the collectivist delusion that more state control is the solution
My head hurts.
> The collectivist dismissal of history as "squishy"
Firstly, I am not a collectivist. Secondly, I don't dismiss history; I think it's very important and illuminating. Thirdly, Karl Marx, the arch-collectivist, hardly dismissed history; his entire theory was based on historical analysis. History is not a list of facts; what real historians do is largely interpretation. History is almost completely unlike maths. Expressions like "history tells us that ..." are rather stultifying; history tends to tell us what we want to hear.
Your comment seems to be a catalogue of free-marketeer articles of faith, expressed as bald assertions, as if only a fool could fail to see their obvious truth. Well, we've had free-marketeers in charge here for 15 years now; everyone knows that things have got worse.
Free markets are great, until they start incentivizing weird behaviors (NIMBYism, bubbles) instead of investments (construction, renovations) and efficient allocation.
Successful cities have walked the balance successfully and stepped in (only) when necessary.
> Vienna and Singapore are outliers [...]
A model that has to explain away two historically, culturally, and geographically distinct cities as outliers is not very compelling to me.
Again, I'm not proposing that more regulation is always good, but as soon as e.g. long-term residents are massively getting priced out by outside investors or homeowners start opposing new construction exclusively because of the impact on their property value due to an increase in supply (rather than for actual decreased quality of life), the incentives of the free market start drifting apart from those of the people actually living there.
Foreign-owned homes are a problem for asset acquirers. Vacant homes are a problem for anyone who needs housing. The former seems to get a lot of visibilty when concerns around the latter get raised.
But they pay taxes without demanding any services and the seller assessed they had better use of the capital, they could buy or build a more suitable home.
If I lived in a location with 50% vacant homes all paying property taxes then wouldn’t my schools and streets and all local government services be extremely well funded?
If the polity is smart, yes.
It looks like British Columbia gets about 15% of its revenue from property taxes and transfers [1]. So you'd need adjustments to make up for the personal, corporate, sales, fuel, carbon, tobacco and insurance premium (?) revenues the vacant homeowner isn't paying.
[1] https://www2.gov.bc.ca/assets/gov/british-columbians-our-gov... Table 2.3
Austrian economics teaches us that restricting foreign investment misinterprets how markets work. Vacant homes signal opportunities for builders, not losses for workers. Investment flows where it’s valued, stimulating demand and construction, not stifling growth. Misallocating housing due to artificial constraints only distorts the market, harming those you aim to help. Let’s not forget, economic growth comes from creating value, not redistributing scarcity.
Sure, property taxes are paid on the house.
But unoccupied homes don't buy groceries and clothes, don't go to restaurants in the local economy.
So they do harm the economy, in the sense that they don't contribute as much to the economy as an occupied home.
Government intervention to forcibly lower property values or curb vacant properties is misguided and would likely diminish overall prosperity. Instead, efforts should concentrate on dismantling barriers like excessive zoning restrictions and streamlining building permits to encourage development and increase housing supply.
Viewing luxury or seaside properties remaining vacant as a problem ignores the unseen advantages these transactions provide. Sellers receive capital, presumably to be allocated more efficiently, while buyers secure a safe investment, indirectly contributing to the economy’s health. High housing prices signal a need for market adjustments, not for envy-driven policies that would only stifle growth and innovation. The sentiment of envy, while potentially motivating in small-scale societies, can lead to destructive policies in complex modern economies, detracting from the foundational principles that drive progress and prosperity.
You: "row upon row of vacant luxury properties represent significant capital inflow!"
Real world: vacant luxury houses can cause blight and other problems just as much as low-income housing.
Also, the value of the vacant property does not decrease because it is occupied. Unless your claim is that the local burden of people existing in a community is larger than the combination of their property and other contributions.
So an occupied property represents significant capital inflows AND enhances economic well-being on a per capita basis, AND does so moreso than the vacant, because there's the capital inflow AND the local spending.
Otherwise you end up with the absurdist trope of talking about public budgets as "homes and communities are worth more if no-one lives in them".
"Assume a spherical cow..." "Assume a row of oceanfront villas that have roads and sewage and utilities that require less maintenance because they're all vacant."
Phrasing it, as you repeatedly do, as "envy-driven" and "anti-free market" and libertarian ideology is sophistry. "You just don't get economics" - no, people understand that housing isn't a purely economic construct.
The idea that homes might be ‘worth more if nobody lives in them’ reflects a misunderstanding of market dynamics in exclusive areas. These properties offer significant economic benefits by providing substantial tax revenues and maintaining high property values, which support public budgets and infrastructure with minimal physical wear and tear. This scenario underscores the often-overlooked reality that absentee ownership can contribute positively to a community’s economic and physical landscape.
Furthermore, dismissing the economic construct of housing ignores the foundational principles of supply and demand that govern real estate markets. All aspects of housing, from affordability to availability, are indeed shaped by economic forces. Acknowledging this doesn’t detract from the importance of community and social well-being; rather, it provides a basis for understanding and addressing housing challenges in a manner grounded in reality, not ideology.
Per capita!
> “This guidance reminds lenders that denying someone access to credit based solely on their actual or perceived immigrant status may violate federal law.”
Ref: https://www.justice.gov/opa/pr/justice-department-and-consum...
From many points of view, having foreign investors buy property without immigrating is a best case scenario for governments.
So if I buy a place there and move, it's win/win for everyone!
Also, strategically, having powerful people own expensive real estate influences them to visit and maybe not bomb it... at least, it's better than them never having stepped foot there. The famous example is Kyoto not being nuked because an American leader had seen it firsthand[1]. The Nazis spared Paris was apparently spared for similar reasons[2].
The counterexample is NYC which everybody loves to crap on (Gerald Ford "drop dead", 1993 bombing, 9/11, and lots of failed terrorist attacks since), presumably as a symbol of American greed and excess, but also as a symbol of urban chaos, rot and violence.
https://www.investopedia.com/stock-analysis/2013/investing-n...
I thought it meant kidnap, specifically to kidnap a sailor in port and make him work aboard ship; as in "press gang", "pressed man".
Much Lol.
Canada is one of the largest countries on the planet.
Why can’t Canada build more homes?
Also why can’t we ban foreigners from owning homes?
Same issue applies to US as well.
So is the USA but it's still very expensive to live in NYC or SF. This isn't a Canada problem, it's a Toronto/Vancouver/Montreal problem (and their wider metropolitan areas), which together account for more than a third of the country's population.
> Why can’t Canada build more homes?
Partly due to idiotic zoning laws, partly due to the "missing middle" layer of the housing market, but mostly due to "investment properties" that sit empty and may as well not have been built at all.
> why can’t we ban foreigners from owning homes?
We sure could! Or just tax the hell out of it. But it wouldn't sit well with real estate developers and the politicians they've purchased.
It isn't just a Toronto/Vancover/Montreal problem. People in Halifax have seen rents and property prices soar.
I mean it's real Chinese income backed by fake paperwork. There's PRC capital controls, rich PRC national who buy RE abroad are going to do it via laundering services and has been for decade+. Banks are fine with this and have dedicated branches in diasphora area to handle because the money is good and reliable. Sometimes rich Chinese immigrants also do odd jobs to fill time, bored aunties with multi million dollar mansions in Richmond working shifts at River Rock Casino. It's a bizarre world.
I highlighted the original quote where branch is mostly Chinese-Canadian for context. Aurora is 20% Chinese, it's a big diasphora neighbourhood. There isn't some big "fake chinese income" conspiracy, it's the entire (proven) business plan (money laundering) with occasional fraud. I think pretty much everyone knew Chinese are buying million+ propertiers with laundered money, and it fuels the bubble as much as any other foreign buyer.
I’m not really sure what is happening among the rich, but among the middle class, it isn’t so much money laundering but having lots of savings with no good investment options, or just wanting to make money while someone else takes on the risk. They don’t have access to money that needs laundering.
So as an observer of this, you will see money coming out of one place, spread to many accounts, wired overseas to different recipients, then re-aggregated...
What do you think that looks like...? Surely not money laundering?
Of course, as is rational in capitalism, this just makes it even more urgent to skirt the capital control, lest you be caught with the burden of the bust. This was also why crypto was even an option for doing this, for a short while at least.
They used to try to overbuy milk powder in NZ, ignoring supermarket limits imposed bc NZ mothers couldn't find enough formula for their kids. Chinese buyers would sell it back to China to make a tidy profit, after their baby formula scandal drove demand for foreign baby formula (which still exists today). Worked at a supermarket at start of uni, got so fucking sick of being screamed at in mandarin bc I refuse to sell them 30 tins when the limit was 2. Over and over, every damn shift.
Source that isn't me: https://www.nzherald.co.nz/nz/china-buys-up-big-in-nz-baby-m...
Are those profits returning to China? If they wanted profit they would invest in Chine RE which (until recently) was much more profitable and speculative than western RE. Western RE investment was for capital flight to bring wealth abroad. Very few want to bring money INTO PRC.
Baby formula actually great example, at least from what I know in AU market. Yeah you had the occasional tourists bringing back a few cans to savec money, but the sellers getting 30 tins and doing weekly shippments to regular customers in PRC were getting paid in AUD. $60 per tin into AU economy flipping milk powder. It's a good gig, it's no real estate money though. You can argue it's net bad for society because some gain at society loss, but that's how it be in capitalism. Some interests profit at the cost of others. And the interests who profit from PRC money, arguably the establishment, wants to keep profitting.
In my experience, middle class aren't buying million+ RE, they pool together savings to send kids abroad, and maybe put a down payment on a condo that the kid pays off once they get decent job in west. And by middle class we really mean upper flat out highincome top %5-10 relative to all PRC house holds who are middle class tier1/2 regions.
But agreed, domestic non gov investment ecosystem pretty trash, hard to beat investing in your kid(s) and saving for retirement until a mature system develops. Which IMO hard goal since focus isn't to further wide wealth disparity by giving that 5-10% more consumption/investment abilities but to bring up the next quantiles of households - the actual middle class. This is where my assessment departs from most, I think "common prosperity" for PRC is getting more households richer, but at PRC development levels, that diminishes the households with enough savings to retire and surplus to invest. And this has all sorts of implications on inflation/FX rate.
Try buying a house with 50k a year... This is exactly what the "scheme" solves. You have new immigrants who have (in many cases) legitimate money (e.g. by selling property back in china) but cannot move it out of the country quickly due to capital controls on the chinese side.
Since mortgages are meant to spread out costs over time, it's the perfect solution. However, banks (understandably) care about income rather than existing capital. So you have a lot of "safe" customers who are unlikely to default and less sensitive to interest rates (compared to the local borrower pool), and banks looking for customers amidst high interest rates... You can see how something like this can easily arise from these conditions...
> you don’t need money laundering to get money out of china into the USA
I cannot comment on what your situation was (maybe through a business?), but AFAIK it is very hard to move capital out for regular individuals. Your realistic options to wire out capital are just "education" and "tourism". While technically you can claim "investment", it will almost always not be approved and cause a watch to be put on all your accounts.
That being said, usually documentation of the funds outside of china is completely legitimate and above board. There is no need to fake this. The only paperwork magic that needs to happen is towards the chines government... However, it still _looks_ like money laundering because you can only wire $50k a year, so many need to resort to wiring from accounts of different individuals (friends and family) to different individuals, despite the funds already being fully documented and reported outside china.
I used my wife’s $50k allocation once because I was held up by some paper work (you need a lot of paper work, notarized, etc…). They didn’t ask any questions about what it would be used for, but this was 2016, and they changed the rules a few months later.
Also, things have changed _considerably_ since 2016 (as these things tend to do). Indeed, nobody --- foreign or domestic --- needed to document use as long as you stayed within the $50k (you would be asked to if you went above that). Later it became a mandatory question, but wasn't enforced. These days it is enforced rather strictly. If you claim education, you need to provide statements of tuition and housing etc. For tourism there's similar requirements, and usually they limit discretionary spending budgets to ~$10k.
Try 25 years. Started right after the Hong Kong transition from under the British rule.
Still, fraud is fraud. Stopping it won't fix Canada's housing problems, but that's not a reason to stand idly by.
Sapping demand for the crime is the most effective enforcement! (Like Semaglutide is probably the best silver bullet yet to "win the drug war"...)
What’s the point of working hard and playing by the rules…
Is that even possible with Chinese bank accounts?
Anyway, the presence of Chinese Funny Money in property has been known about for years, not just in Canada either.
Hang on, what... I want to hear more about the Chinese underground casino stuff.
Reading stuff like this is demoralizing.
pesky acronyms.
The bankers must be made whole -- nothing else matters.
If I had to guess they are heavily involved with spooks and foreign assets operating in China (and if so, why not use them for non-Chinese intelligence-financial shenanigans?) and a lot of their “illegal” activity is unofficially blessed by foreign intelligence.
They wouldn't do it again and again because they don't earn $880 million when accepting $880 million in dirty money - remember that bank deposits are liabilities to the bank - they only earn money from interest on that -- and it cost them billions in fines to do so...
Hardly just Canadians; I first started hearing tales of huge HSBC corruption 20 years ago.
FTR: I bank with First Direct, which is an online banking service of HSBC in the UK.
It seems pretty clear that putting people who commit crimes in jail definitely reduces their chances of commuting crime at least while they're in jail.
White collar crime is the root of all evil in our society and we should be putting white collar criminals in jail.
So who would you jail in this case? The bank tellers interfacing with cartel? They're in Mexico anyway. Some overworked compliance manager in the US who ignored the suspicious transactions? Some C-Level exec person who didn't know about the suspicious origin of a billion dollars into a bank with something like 2.5 trillion in assets?
What specific crime do you think they committed?
Nobody likes these global banks, they're run by absolute psychopaths but remember, the optimal amount of fraud is non-zero. All of the mirror image complaints about banks not wanting to touch Crypto or proceeds from gambling/porn sites is downstream from settlements like these.
https://www.bitsaboutmoney.com/archive/optimal-amount-of-fra...
Will Canadians let them fail?
Agree so, there shoupd have been a bunch of jail sentences for laundering cartel money. But then financial crimes at that scale rarely get punished.
The whole country is a gigantic house of cards propped up by real estate, with horrible service quality, terrible healthcare, no jobs, ZERO innovation, risk taking and entrepreneurship.
Having lived and travelled extensively, most Canadians want a house somewhere in the woods instead of doing something meaningful with their lives or try and innovate to build something.
All of this is propped up by rampant levels of immigration from China and India. Where US got the best talent from India, Canada got the worst, the ones who scam their way here and take the lowest level jobs.
Now all of this is coming home to roost. The next decade will be Canada's worst and if they do not learn that risk taking and entrepreneurship is the only way out of the mess they find themselves in, they will become a third world country in another decade.
That’s quite the statement, I assume you have quite the source for it.
The price-to-rent ratio isn’t that far off from the US, for example.
it's funny to see dozens of examples of european castles (buildings with tens of rooms and bathrooms, plus huge gardens) whose cost is in the same ballpark as 2 or 3 bedroom houses in random (but well [sub]urbanized) parts of Canada
Castles are a bit of a scam. The old aristocratic families that still own them, e.g. in Germany, tend to have a state subsidy for maintainance. If you didn't have the luck of being born into those families, you get all of the joys of Medieval engineering twinned to modern historic preservation bureuacracy.
the canadian properties are in some cases less than 100 square meters, getting compared with land properties of square kilometer scales!
the discrepancies in land value are artificial and are part of the global inequality crisis
but on the global scale the inequality is not between individuals, but between cities and states (and countries)
I'd love to see the numbers that back this up that also don't include SF, LA, NYC, Miami, or Seattle.
to be fair most Canadians were promised this as part of their countries stratospheric growth under neoliberalist policies. that they are not capable of it is no fault of their own. that they want this is at all is not a bane.
> Where US got the best talent from India, Canada got the worst, the ones who scam their way here and take the lowest level jobs.
dividing immigrants into "good ones" and "bad ones" is pretty vile, but as an american i must acquiesce we've played that game for a long time. before hispanics it was asians, before asians it was europeans (the irish particularly.) turns out blaming immigration is a fools errand to distract from domestic class warfare.
the real question for Canada now is not "how do we punish the immigrant" but what do elected leaders in the political class do to affect meaningful restitution and corrective action in the face of what is a national crisis. Either they see clearly and will reform their own cash cow, or they will blindly ride it off a cliff in the hopes that through their own profit they can weather the coming storm.
Isn't that the case everywhere where immigration is restricted?
TBF that's the inherent insinuation in points / skill based immigration. The goal of immigration driven growth to is to maximize return potential via brain drain and wealth drain from other countries who foot the bill for talent development, or to extract wealth via foreign elites who accumulated wealth in host countries. When crisis reach critcal levels when it obviously becomes a class warfare issue, the solution is going to be punish the immigrants, before them become PRs or citizens. It's not the immigrants fault for policy failures, but until they get right to vote they are escape goats for bad politics.
our post-hart-cellar immigration policy is a tool of class warfare via wage suppression. real wages have remained flat while productivity gains have steadily persisted, due to several systemic changes since the crisis of 1973, among them flinging the doors open to dilute the cost of american labor; this and outsourcing and globalizing supply chains also go hand-in-hand with breaking union power
In India when we graduated our professors would say - you are really good, you should go to the usa. you are quite mediocre, go try your luck in canada. and you, you are a C student, even canada won't take you in. go get married to some indian lady, get a nice fat dowry, raise two kids and send them to college here, maybe they will get better grades than you.
It was perhaps said in jest, but like everything else, there was an element of truth to it. For quite a while, the word canada itself became a pejorative. Many south indian films have a scene where the hero returns after studying abroad & wants to get married, & the heroine's father generally wants to make sure he is a good student & not a scamster from canada.
That sounds hilarious, do you have some example films that I can check out?
This is just an entirely incorrect reading of what the grandparent comment said.
They are not saying that immigrants from some places are good, and immigrants from some other places are bad (or immigrants of one ethnicity vs. another). Regardless of whether you agree with them or not (which is a very valid thing to disagree with, if that’s how you feel), they explicitly said that the US gets “good” immigrants from those groups, while Canada gets more “mediocre” immigrants from those exact same groups.
There is no classification or separation by nationality/ethnicity going on in the grandparent comment, despite you treating it like there is.
New Zealanders definitely hate entrepreneurship - one political party wanted to introduce a wealth tax if you had more than $1 million equity. Median house price in Auckland is just over $1 million! Auckland has about 30% of the population, and house affordability (price compared to income) is similar as bad as Sydney or San Francisco.
I have done okay for myself founding a software business and I notice the tall poppy syndrome from friends. Plus the relentless attack on my hard earned savings by a grifter government. And shit support for businesses to start-up or function (government incentives are mostly negative, and the positive incentives are incredibly badly run).
Fortunately we are building more houses in New Zealand (low single digit percentage growth) but unfortunately immigration is exceeding supply. We need the immigrants because we aren't breeding enough New Zealanders.
My experience of our government healthcare system is mostly positive.
I don't understand it: we should want people to save for their retirement but all the incentives to save are negative. The main taxation incentive is to gear up and borrow money for property. Then that blows up of course.
Even our right leaning government seems to want to consider a capital-gains-tax. The existing taxes screw any reason to invest in the stock market.
I'm whinging: I think it is a good place to live but I feel a comfortable retirement is becoming an unacheivable dream.
> The wealth tax contemplated by New Zealand Labour would have required couples to pay an annual levy of 1.5% on any assets they held over a $10m threshold. The estimated $3.8bn in revenue would have funded income-tax cuts for the vast majority of Kiwis. Labour’s potential coalition partners, the Greens and the indigenous-led Te Pāti Māori, ran on similar platforms.
> Plus the relentless attack on my hard earned savings by a grifter government.
$150,000 a year if you own $20 million, $0 if they somehow attacked you all the way to a pitiful $10 million, and in return tax cuts for those doing worse than you, and they did not get elected.
I’m not seeing the problem.
You've never had a bill you couldn't pay? Major assets are usually tied up in long term investments with breaking costs due to illiquidity or taxation (e.g. sell a house before the bright-line period is up and you may pay a lot extra tax). You are showing your ignorance of the issues. Have you saved enough for your retirement or are you going to live off the backs of other New Zealanders? Good luck to you.
Paying the tax bill can mean selling an investment at a loss or borrowing. Not much different from someone poorer pawning what they own or selling their car because they need the money. It costs me 8.8% at present to borrow on my mortgage - (due to bank conditions I can't borrow cheaper). The same thing can easily occur to wealthy people (managing investment risks sucks).
Many people have already paid tax - their savings are what they have left over after tax. A wealth tax can be a double taxation - another taxes on top of money that was already taxed. Plus the wealthy still often get to pay income tax on any dividends or other gains.
There's a lot of people out there that blow all their money on shit and then put their hand out to the government. I watch friends on low incomes absolutely waste money and don't give a shit about saving. Not all of them, but enough. I've seen friends get big ACC payouts - and a few weeks later its all burnt on nothing. Or inheritances and lose it all. Luckily they live in New Zealand where they can get money from family or get some living expenses from other NZers (the government). Certainly not flash living, but better than most places in the world. Some of those millions come from my tough job earning export income. I get fuck all of the money I bring into the country (after expenses, salaries risk and taxes).
I bet if we met you would have a lot of complaints about how hard done you have been with taxation. It's the same issue.
So why argue this passionately against a non-existent tax that failed at the ballot box on A. assets that doesn't kick in until above $10 million by citing B. an income of near enough $0?
> You've never had a bill you couldn't pay? [...] Have you saved enough for your retirement or are you going to live off the backs of other New Zealanders?
I'm pretty sure that in either of those scenarios, there is no practical difference between having twenty million and twenty million minus $150,000 a year, reducing to zero by ten million, in assets.
> I've seen friends get big ACC payouts - and a few weeks later its all burnt on nothing.
Hmmm, sounds like they irresponsibly spent it somewhere in the economy. My guess is that they might have enriched people who have invested in medium to large businesses in the consumer discretionary sector, the sort of people who would have a net wealth north of $10 million. But since they were provided with, and I quote, "nothing" goods, the owners of the businesses providing those goods should have relatively no problem dealing with high taxation.
If you feel this doesn't apply to you, you might want to revisit your investments before complaining about hypothetical tax policy.
The problem is what is the incentive to keep working once you've earned a house and bach? Why bother save for retirement if your savings are to be taken from you at a significant percentage per year? A few percent is a huge penalty (see index funds versus mutual funds), and the wealth tax is on top of taxation of salary and dividends.
assets over $1m - a threshold the party thought would hit the wealthiest 6 per cent of New Zealanders. The higher [$2m] threshold means only the wealthiest 0.7 per cent of households will be targeted. The $2m threshold is a net figure, meaning people with mortgages and other debts would need $2m of equity before they began paying the tax.
And incentive is to borrow money on property which is whacko, and then next thing CGT will also be added.
Houses should be for living in, not financial instruments.
The incentive is it’s still a fuckton more money. You’re not taxed at 100% and in turn you live in a country with better services. The amount of money wasted by the rich is hilarious when combined with this take.
1 in 10 businesses survive. Why bother starting one if you don't get your 10x return? If you've got one, why bother trying to be a serial entrepreneur if it's all gonna be taxed? Do you think New Zealand should leave the entrepreneurship to the USA and we can just buy what we need from US multinationals?
> The incentive is it’s still a fuckton more money.
It just isn't. The people I know earning way more than I don't have anything significantly better. Mostly a nice house and a nice car and if they're lucky a bach.
Marginal incentives matter. Over 50% of my personal income goes on taxes including GST.
My life is similar to most any professional worker. I have never owned a new car. I know solo-mums that didn't work for over a decade with more equity in their home than me. My biggest expense is tax, my second biggest is my mortgage.
> The amount of money wasted by the rich
Just the rich eh? Everybody else is so much more careful! Watch out with your stereotypes - I'm guessing you don't like them applied to yourself?
no: - I'm using the numbers in the quote in my comment, and from the link I gave you.
Taxation rules create incentives and disincentives. If you earn a salary you are usually ignorant of those incentives because you don't experience them. From what I see the attitude is "fuck everyone who is better off than me".
Our rules need to encourage people to make NZ better off. Not have the incentive to stop once you have gotten a $20m home: https://www.trademe.co.nz/a/property/residential/lifestyle-p...
Anyone that owns businesses worth $20m is already taxed on income. Giving a big middle finger to people that build businesses is silly.
Disclosure: I am not anywhere near the big salary or wealth numbers we've mentioned.
No wait, that wasn't the argument here, your argument is that they wouldn't want to accumulate even more wealth.
> Not have the incentive to stop once you have gotten a $20m home
Minor point, that's not a home, that's two homes in the same listing. I'd argue that accumulating property wealth beyond a house seems like it ought to be disincentivized at least a little bit, but evidently you're under the impression that either poor people don't deserve the opportunity or that land is in infinite supply.
You're repeating bullshit - The majority of spending in New Zealand is not by the wealthy but by the rest of the majority of kiwis[1].
If people earning less than $100k waste 5% of their income, and people earning more than $300k waste 50% of their income, then the people earning less than $100k are wasting more.
We're not in the USA with Jeff Bezos, so your point just makes no sense.
The majority of earners I know blow more than single digit percentages on unnecessary crap and luxury. For example my working class friends that spend more than 10% per week on booze and drugs - plenty of people spending more than $150 with a weekly income <$1500.
Look around you and there are obviously not a lot of superyacht stores. Plenty of booze shops doing a roaring trade and it isn't the $300k+ earners in them.
The wealthy people I know invest. If those investments are bringing foreign income into New Zealand, we already tax that and all New Zealanders win!
The government needs to get rid of the bad property investment incentives - those are where the wealthy are fucking over the non-wealthy. We have enough land and resources in New Zealand for everyone to have their own home.
Don't discourage people from investing in things that make New Zealand better off. Our taxation system discourages founding internationally competitive businesses, and it discourages owning more than $50k in overseas shares. And the majority of New Zealanders don't give a shit because the majority don't begin such businesses and they are ignorant about where their income to buy imports ultimately comes from.
Negative incentives matter, probably more than positive incentives. We all want to slowly tax the well off until they leave or until they are no longer well off.
[1] Data based on: https://www.ird.govt.nz/about-us/tax-statistics/revenue-refu...
That sounds like a terrible thing the government is doing to you.
> No, not the government.
That sounds like a terrible thing the opposition might do to you.
> No, not the opposition.
OK… did you at least accurately describe what was happening originally?
> Well, there’s these asterisks. But I am oppressed.
The stereotypical poor American working menial jobs into their senior years without affordable healthcare doesn’t sound much better…
It’s easy to spot when people speak of healthcare in general without being specific.
As opposed to most Americans, at least those that have been in the industry for a decade or more, who would rather be as far from tech as possible, in whatever direction.
See also: https://imgur.com/vbFNbON
This could be true of any country that's accepting immigrants. Inviting countries must be selecive of whom the let in, what they bring with them, and whether and how well the inbound population assimilate, thus retaining the essence of its extant values. When a country has no control of its immigration (whether by choice or otherwise), or is lax about it, all kinds of birds come home to roost. Some birds lay eggs; others just poop.
People are definitely less risk-taking, workaholics, despite having a social safety net, or maybe because of it. It's just maybe less in our culture to "go big or go home". Having a cabin in the woods and free time to live your life is nice.
Maybe because I live in Quebec, and language is definitely a barrier (requires immigrants to be trilingual), but I haven't met many shady people from China or India, on the contrary. My ancestors came here by accident from different countries, taking a random boat in a port, worked hard and made it. I hope we can give that opportunity to others too.
You're also a politically stable energy and resource exporter bang next to a global economic superpower and security guarantor. Oh, and access to two oceans and soon a third.
Canada has plenty of problems. But it's also tremendously blessed.
I suppose "stable" and "stagnant" are two sides of the same coin.
China is constantly threatening to invade the Russian far east and retake haishenwai
I would argue Russia's nuclear arsenal is a far more reliable guarantor of their security then China would ever be.
The US and Canada, if nothing else, are both in NATO.
Luckily, Canada is a lot better than your description.
Every developed country is running into immigration and housing issues. Canada isn't alone and isn't even the worst case.
They've already announced measures to reduce student visas which were uncapped previously.
https://www.ft.com/content/085cda38-9060-4da1-8532-1a3af9cd7...
Still. This isn't going to solve the issue. They need to build far more than they currently are doing. They need to strip local government of its veto over housing. They need to definancialize real estate.
We have people renting a single bed in the same room for 600$/mo in Toronto.
I suppose that however if you are an immigrant from a war torn country or a developing country, Canada would look like heaven.
Housing: Large cities like Toronto and Vancouver are unaffordable, but so are other large cities like London, New York etc. Just like most other countries, if you want to pay less for housing, go to a smaller city
Quality of life: how are you measuring this? By most measures (life expectancy, crime etc) Canada is well ahead of the US.
Innovation and salaries: Innovation is a bit hard to define, but salaries are definitely lower than the US. But here the US is also an outlier (at least for high earners) compared to most other countries. Tech salaries in Canada for example aren't lower than most European countries.
We were an incredible country before Trudeau took office. His aggressive immigration policy, no economic policy or plan, and creation of infighting on social issues, not tackling any of the core issues we face as a country, until absolutely forced to do so (in this case unlikely re-election).
We need to stop fighting over social issues and start being productive towards a stronger, healthier, and happier Canada. Social issues can't fixed if people can't afford shelter and food.
Canada has generally had a more conservative financial industry, which is a large part of why they were able to escape the 2008 mortgage crisis, and that, in turn, has lead to a stronger real estate market. Additionally, the recent post COVID-19 influx of immigrants has driven up demand for housing like crazy. There's not a lot of question that the real estate market is hot. But...
...I'd point out that considering it's population, Canada has had an impressive number of innovative companies just in the tech sector over the years. Alias & Softimage in 3D rendering. Shopify in e-commerce. Research in Motion in mobile phones. Ecobee in the smart homes/IOT space. Certicom in cryptography. Going farther back, Corel was a software giant. There's relative newcomers to with Hopper, Imagia, etc. I don't think it's fair to say there's no innovation, risk taking, or entrepreneurship.
> All of this is propped up by rampant levels of immigration from China and India. Where US got the best talent from India, Canada got the worst, the ones who scam their way here and take the lowest level jobs.
I'm not sure where you get that from. Canada's immigration policies have historically been more oriented towards merit/highly skilled immigrants than the US.
> Now all of this is coming home to roost. The next decade will be Canada's worst and if they do not learn that risk taking and entrepreneurship is the only way out of the mess they find themselves in, they will become a third world country in another decade.
I'm not sure what is fueling your perspective, but there is a lot of concern about Canada's economic policy coming out of COVID-19, in particular, the big deficits and explosive immigration are putting a strain on the economy. However, there's a very credible possibility that these will prove to be effective "investments" that pay off in the long run. Ironically, given your criticisms, Canada is taking on a lot of risk!
But as leveraged as Canada is, Canada is well below the average for debt-to-GDP ratio of the G7 (admittedly skewed by Japan's monster debt, but still well below US debt). https://www.visualcapitalist.com/government-debt-by-country-...
That and lack of venture capital/funding and, I've heard, increased government barriers compared to the USA, reduce the number of local tech companies.
The one bright spot in the past decade are the AI hubs in Toronto and Montreal - but they seem to be mainly satellite offices for USA companies.
[1] https://sexxis.github.io/classprofile/ , 2021 UWaterloo SWEng profile
[2] https://uw-se-2020-class-profile.github.io/profile.pdf , 2020 UWaterloo SWEng profile
[3] https://krishn.me/syde-2018-profile.pdf, 2018 UWaterloo SysDesEng profile
[4] https://joeyloi.com/SYDE2017classprofile.pdf, 2017 UWaterloo SysDesEng profile
Yes, you are correct that the USA is bigger and has more money than Canada. If you think about it globally (as one should), but it's worth noting that they're not so much moving to the USA as they are specifically the Seattle & Bay Area, and they're doing so at lower rates than for comparable Americans living outside those areas. Also worth noting, for the most part, they aren't founding companies in the US. The pattern is to go to the US, work for large tech companies, and about half return to Canada within 5-10 years, which is when they're more likely to engage in entrepreneurial pursuits.
Just looking at the financial might of Seattle & the Bay Area, it's amazing that 90% of Canada's innovators and entrepreneurs aren't in the US. It suggests that the country is perhaps more supportive of innovation than this narrative being presented.
> That and lack of venture capital/funding and, I've heard, increased government barriers compared to the USA, reduce the number of local tech companies.
The conservative financial system and comparative size of Canada does mean there is much less "free money" flowing around, though as demonstrated from the examples I provided, companies do procure foreign investment, particularly from the US, with comparative ease.
...and while you'll always here entrepreneurs complain about government barriers, having started up companies on both sides of the border, I can tell you that in many ways Canada has comparatively smaller government barriers. In particular, the universal health care and generally more significant social safety net also means that it's a lot easier for prospective entrepreneurs to leave jobs at stable businesses and take on greater risk. It's just one of many ways that while it is harder to get capital in Canada, you don't need as much to get going. This is probably part of the reason that a larger percentage of Canada's labour force (67.7%) [1] is employed by small businesses than the US (46.4%). [2]
AI hubs in Toronto & Montreal are more than just satellite offices for USA companies. You may recall that Geoffrey Hinton, "Godfather of AI", was in Toronto, teaching at U of T, when Google bought the startup he founded with Alex Krizhevsky & Ilya Sutskever... in Toronto. The modern AI revolution traces back to innovative work in... Toronto!
1. https://ised-isde.canada.ca/site/sme-research-statistics/en/...
2. https://advocacy.sba.gov/2023/03/07/frequently-asked-questio....
This is so true it hurts.
And while there's some numbers that outsiders can look at and gasp[0] at how absurd it's become, there's a whole lot that isn't being tracked or documented. Official immigration numbers are ~0.5mn for 2023, but (and I've seen it elsewhere, but I can't find it right now) if you use a common sense definition that includes all inflow (e.g. asylum seekers, tfw, foreign students, etc) then it's 1mn+. It's insane for a country of <40mn, with highly socialized services.
The quality of life in Canada is horrid in a way that's not comparable to anywhere else other than maybe australia. Everything is silly expensive, with low salaries, and it's not like in europe where you can travel 3 hours to go somwehere with cheaper services. It's crazy. Or what about crime, the right wing, tough on crime party leader yesterday said that if someone has 3 convictions for car theft that it should mean 3 years. It's no wonder that I know some crazy personal stories about people getting their cars stolen and the police doing nothing.
Anyways, I don't want to rant even more, all I can hope is that for younger people in Canada to realize that the best thing they can do is hop to the US or something.
[0] https://www.financialsamurai.com/what-if-the-u-s-housing-mar...
Your description is unfair.
that's funny because they sure love to rub their free healthcare in Americans' faces often
Source?
I haven't heard this claim before.
The left has done many nice things to ensure human rights and hedonism (not saying that negatively) but in the process all the values and traditions they deemed unimportant in the name of progress are catching up with them and I only seeing this intensify over time unless blue states and Canada have a serious come to Jesus moment. The current reality of blue states is they can ONLY exist in a world where places even more regressive than the red states exist and supply them with a constant supply of population to burn through and oddly nobody on the left seems to be all that concerned with this even though it will collapse blue state values and economics in less than a century as global population plateaus.
The American red states don’t strike me as a paragon of morality but they do strike me as one of the most relatively sustainable and affluent and “normal” cultures in the developed world, and affluent goes a long way.
If you’re expecting Canada to be a refuge from a conservative wave you’re likely to be disappointed because it and the blue states have much of the same systemic problems and it will be pressured to reform in much the same way.
Do you ever think about what you're writing and think "I'm an ass hole"?
Edit: looks like we had to ask you exactly this before: https://news.ycombinator.com/item?id=34844518, about exactly the same topic. Can you please not do this on HN? It's not what this site is for, and destroys what it is for.
These loans are fraudulent probably, but they are safer than most other mortgage loans.