Mark Carney - "We have debt levels that are unprecedented in this country"

Mark Carney, the soon to be ex-governor of Bank of Canada, is well aware of Canada's housing bubble. He knows that the main reason for the sky rocketing real estate prices was excessive borrowing by Canadians fueled by cheap interest rates of which he is in charge. He knows that if he increases interest rates too fast, many Canadians would not be able to service their debts and tank the housing market. Instead Carney went on a warning spree - urging Canadians against taking on more debt.

December 2009
"Aggregate debt levels have risen sharply relative to income."

"It is the responsibility of households now to ensure that in the future, when the recovery takes hold and extraordinary measures are unwound, they can still service their debts."

September 2010
"We are concerned about the level of continuing household borrowing in Canada, yes." 

November 2010
"And the risk is that Canadians, some Canadians, take on debt on the assumption that interest rates will always be this way."

December 2010
 “We have debt levels that are unprecedented in this country,” Carney said in an interview broadcast today on BNN Television. “We are in uncharted territory.”

"The crisis is not over, but has merely entered a new phase," Governor Carney said, cautioning that "low rates today do not necessarily mean low rates tomorrow. Risk reversals, when they happen, can be fierce: the greater the complacency, the more brutal the reckoning.""Cheap money (via low interest rates) is not a long-term growth strategy," he said. 

June 2011
"Similarly, households will need to be prudent in their borrowing, recognizing that over the life of a mortgage, interest rates will often be much higher."

September 2011
 “The fact is with, exceptionally low rates, Canadians have seen fit to borrow,” Mr. Carney said. “We are concerned about the level of household borrowing in Canada.”

December 2011
"In the run-up to the crisis, Canada’s historically large reliance on foreign financing was also reduced to such an extent that our net external indebtedness was virtually eliminated. Over the same period, Canadian households increased their borrowing significantly. Canadians have now collectively run a net financial deficit for more than a decade, in effect, demanding funds from the rest of the economy, rather than providing them, as had been the case since the Leafs last won the Cup."

March 2012
“Canadian household spending is expected to remain high relative to GDP as households add to their debt burden, which remains the biggest domestic risk,”

April 2012
“Canadian households as a whole are being overstretched, which creates risk for the economy.”

"We have never been as indebted as we are today as individuals," he said. "We've done analysis which shows that about 10 per cent of Canadians are vulnerable if interest rates returned to more normal levels, which will happen."

October 2012
“We do have a domestic risk which bears attention, which is the level of household indebtedness. This is a risk that we and others have been flagging for some time,”

Nov 2012
"We've seen it over and over and over again, most recently in the United States, where people get sucked into a balance sheet analysis that says, 'I'm very wealthy because my assets are worth more than my debts,' " he explained. "But they are illiquid and they can't service their debts because they lose their jobs or interest rates go up or both. And that causes the default."

Did Carney succeed in restraining Canadians from taking on more debt? Maybe a select few listened to him, but Carney's warnings were powerless against the interest rates which made Canadians take on more debt than ever before with each passing quarter.

I think at the end of the day, Carney did more harm than good by keeping interest rates at 1% since the last increase in 2010. If he continued raising interest rates over the past few years, he would have able to stop Canadians from taking more debt as opposed to spreading warnings which did nothing. Yes, that would of sent Canada back into a recession in 2011 and 2012, but instead Canadians now have even more debt, which is going to make things much worse down the road when interest rates start to rise. But when that happens, Carney won't be around.