A new report from TD bank suggests that Canadians are upgrading their homes- more quickly and more often then they intended.

The TD Canada Trust Repeat Home Buyers Report found that seven-in-ten Canadian repeat buyers were moving before they had planned (42%) or had no stated plans of moving are now looking (27%).  Further, the number of people  that said that they plan to  buy a home that is not their first in the next two years went up by  nearly ten percentage points over 2010 (74% versus 65% in 2010).

“Our research indicates that Canadians don’t stay in one home too long,” says Farhaneh Haque, Director, Mortgage Advice, TD Canada Trust. “Before making the decision to move, explore all your options and ensure that your new home will suit your changing needs and lifestyle.  It might be more affordable to renovate and make your current home work for you.”

Looking at features and amenities, many Canadians have learned from experience apparently, and are not willing to negotiate on some items this time around.

The report says, “The top five features that Canadians felt they compromised on when they purchased their previous home that they are not willing to budge on this time are price (34%), layout of home (33%), features of home (31%), garage or sheltered parking (30%) and number of bedrooms (28%).”

They suggest too, that moving is not always the best solution for people to get the homes that they want. Renovation is a good, often less expensive option.

Canadians too, according to the survey, believe that the time is right in the market right now- both to buy and to sell. Many of those selling feel that they will get asking price- or even more.

 Haque points out though, that if properties are likely to sell above asking price- then buyer will likely have to pay top dollar to get the property they want: “Buyers should keep in mind that if they are expecting to sell above asking price, it’s likely they will need to also buy at above asking price. A home is, obviously, a very big purchase – especially if you will not be selling your previous home to put towards the cost. A mortgage expert at your bank can walk you through your financing options and show you strategies and products that may save you money and provide flexibility over the course of your mortgage.”

Calm and caution were the key messages delivered by Mark Carney and Jim Flaherty to Parliament in response to the recent turmoil in world markets.

To combat swirling rumours of a looming recession, the two men together addressed Parliament.  Neither man expects to see a global contraction.

In terms of financial stimulus as well, both men are employing a “wait and see” approach, although they are not ruling out intervention altogether. Most economists have predicted a 35% chance that there will be a recession.

Carney said,” Recent events serve as a reminder that in a world awash with debt, repairing the balance sheets of banks, households and countries will take years. As a consequence, the pace, pattern and variability of global economic growth is changing, and Canada must adapt.”

“In short, the considerable external headwinds that the Bank has long identified are now blowing harder. For Canadian producers, the persistent strength of the Canadian dollar is compounding the sluggishness of U.S. demand. Largely reflecting such external factors, recent Canadian data has been consistent with minimal to slightly negative growth in the second quarter. At the same time, labour market developments and business investment intentions suggest continued strength in our domestic economy.”

“The Bank continues to expect that growth will accelerate in the second half of the year, led by business investment and household expenditures.”

He expects to see economic growth resume in the second half of this year.

Flaherty too, is confident in the relative strength of Canada’s economy. “Canada is the only G-7 country to have regained all the output and jobs lost in the global recession. Canada’s net debt burden is markedly lower than that in most other major industrialized countries, and our fiscal fundamentals are sound and sustainable over the long term,” Minister Flaherty said.

“We have a low-tax plan for jobs and growth and the resolve to stay the course. The Next Phase of Canada’s Economic Action Plan will preserve this country’s advantage in the global economy; strengthen the financial security of Canadian workers, seniors and families; and provide the stability necessary to secure our recovery in an uncertain world.”

Flaherty still contends that the plan to return to balance by 2014-2015 is on track. Flaherty insists too, that part of economic stability is staying strong during troubling times: ““In a very uncertain global economic situation, one of the best strategic contributions that the Government can make to bolster confidence and growth in Canada is to maintain our strong fiscal position.”

After summer holidays are over and the heat and humidity subsides, it’s a good time to start home renovation and preparation projects before the cold weather sets in. Flower beds can be cut down, lawns fertilized for the last time and windows washed. Here are five projects that are perfect for cool fall days.

Winterize the Deck
Decks get a lot of use during long summer days. By the time fall comes around, they can look worn out and old. Once the deck is cleaned off and all summer chairs and tables are stored away, power-wash the deck with a high-velocity pressure washer. This will dislodge any dirt that is stuck in the wood grain and will take away the gray color that decks fade to over time. Fall is also a good time to reseal the deck if you use a sealant or stain. Choose a warm day that has no chance of rain and start the process in the morning so that the deck has several hours of drying time before nightfall.

Insulate Exposed Plumbing
Uninsulated plumbing lines in unheated spaces are a major cause of power use, as the water heater must work extra hard to heat water. It can also cause pipes to freeze and burst if you live in an area that dips below the freezing mark in the winter. Check all of your plumbing lines to identify those that are outside or underneath the house, or are in an unheated basement or attic. Foam wrap can be purchased at any home improvement store. Wrap all exposed pipes to save on energy when the days start getting colder.

Roof Work
Once all the autumn leaves have fallen, cleaning out the roof gutters will save you from building up ice dams that can damage the roof in the winter. Blow out the gutters with a leaf blower or wash them out with a hose. Check for any holes or other damage to the gutters and repair them before heavy snow makes them worse. It’s also a good time to take a look at the roof itself and fix any shingles that are curling or any flashing around chimneys that has come loose. If your roof is in bad shape, bring in a roofing contractor to assess whether the roof needs to be replaced before winter or can wait until the spring.

Upgrade Doors and Windows
If you have old, single-pane windows, you will lose a significant amount of heat in the wintertime. Replacing old windows with energy-efficient, double-paned upgrades can pay for itself quickly in heat savings. Check all exterior doors to ensure that they are insulated and that there are no gaps or cracks between the doors and the frames that could let heat out. If you have weatherstripping around doors, make sure it is intact and in good shape. If it’s not in good shape, replace it before the cold weather sets in.

Interior Painting
Warm fall days are perfect for indoor painting. Summer is often too humid for paint to dry properly and that can cause walls to look splotchy. In winter, the lack of ventilation can make paint fumes hang around and can lengthen drying times. Open up windows to ensure there is a breeze that will both reduce the paint smell and dry it quickly.

The Bottom Line
Fall is an important transition season for home improvement projects. With the cold of winter coming, getting the house and yard prepared will save you money in the long run. http://ca.finance.yahoo.com/news/Fall-Home-Renovation-Projects-investopedia-3070887345.html

OTTAWA – Construction on new homes should hold steady for the rest of 2011 and into next year, as a robust housing market is expected to remain supported by strong employment and low mortgage rates, Canada Mortgage and Housing Corp. said Wednesday.

The agency forecasts that an average 183,200 units will be built in 2011, with about 183,900 new homes built next year.

“Housing starts have been strong in the last few months, but are forecast to moderate closer in line with demographic fundamentals,” said Mathieu Laberge, deputy chief economist for CMHC.

“Despite recent financial uncertainty, factors such as employment, immigration and mortgage rates remain supportive of the Canadian housing sector.”

Wednesday’s prediction was an upward revision from its second-quarter outlook, which suggested 179,500 housing starts would go up this year, but revised next year’s units lower from the 185,300 originally expected.

The new home market tends to follow trends in the resale market — with about a six-month lag — and the strong demand will help prop up the home building industry.

The revised forecast comes a week after the Canadian Real Estate Association, which tracks the sales of previously-owned homes, revised its forecast for national home resales up for the rest of the year, citing stronger than expected sales and higher prices in the second quarter.

CREA said sales should grow less than one per cent this year to 450,800, up from an earlier forecast that called for a one per cent dip in sales. Housing demand has been more robust than expected as interest rates remain low, enticing more buyers to take on mortgages at historically low carrying costs.

CMHC’s prediction for sales of resale homes Wednesday was slightly lower, forecasting an average of 446,700 homes, essentially the same number as in 2010. In 2012, it believes sales will rise to 458,000 units.

Both organizations say an unexpected increase in sales of high-end homes, especially in the Vancouver area, pushed average prices higher than expected in the first half of the year and expect prices to moderate slightly for the rest of 2011.

Still, both predict that prices will end the year higher than in 2010. But as the existing home market moves into a more balanced territory as the number of new listings increases, growth in the average home price on CREA’s multiple listing service is expected to be more modest in 2012, CMHC said.

Economists have said they expect home prices to fall between five and ten per cent as the real estate market cools off in 2012 once mortgage interest rates rise again.

But CMHC has revised average prices in the hot British Columbia real estate market higher for this year, due to a surge in the sale of multimillion dollar homes in the Vancouver area.

Meanwhile, Ontario will see existing home sales slow before growing modestly next year, due to economic uncertainty. http://ca.finance.yahoo.com/news/Housing-starts-hold-steady-capress-2273077208.html?x=0

(Reuters) – A dovish U.S. Federal Reserve will likely force the Bank of Canada to keep its interest rates lower for longer, but market bets on a Canadian rate cut by year-end are unlikely to pay off.

Analysts said a rate cut would send all the wrong signals for an economy that is growing, albeit slowly, and could hurt the central bank’s credibility.

“In the current situation, a rate cut by the Bank of Canada would mean that you have a second recession in Canada,” said , Charles St-Arnaud, Canadian economist and currency strategist at Nomura Securities International in New York.

“And that’s not something that we see happening.”

Expectations for Canadian interest rates have swung wildly in recent weeks. As recently as July 19 traders priced in higher expectations of a rate increase this year, following unexpectedly hawkish language from the Bank of Canada.

A July 20 survey of primary dealers showed most saw a rate hike in September or October.

But tightening expectations fell sharply as the U.S. debt ceiling debate and the downgrading of the U.S. credit rating by Standard & Poor’s fueled fears of a recession there, triggering some of the worst stock market selloffs since the collapse of Lehman Brothers in 2008.

Canadian overnight index swaps, which trade based on expectations for the Bank of Canada’s key policy rate, and short-dated government debt began to show expectations of a rate cut rather than an increase.

The Canadian dollar also fell more than a nickel against the greenback as the outlook for monetary policy moved from tightening to easing.

Rate cut expectations were reinforced by the U.S. Federal Reserve ‘s unprecedented announcement on Tuesday that it would likely keep rates near zero for another two years.

Analysts said the Bank of Canada is likely to keep interest rates lower for longer than previously expected because of the Fed move. One issue is that widening the rate differential between the two countries could cause an unwelcome appreciation in the Canadian dollar.

But they caution that swap markets, which are pricing in a quarter-point rate cut before year end, have it wrong.

Analysts said a cut is not needed because the Canadian economy, though highly dependent on the big U.S. market, is still growing. The central bank’s key policy rate, currently at 1.0 percent, is also seen as still being very accommodative. The rate was cut to a record low of 0.25 percent after the financial crisis.

HOUSING, RISK TO CONFIDENCE FACTORS

Those emergency rates provided conditions for the domestic housing market to surge to bubble-like proportions in some parts of the country, and allowed Canadians to take on massive personal debt loads.

Analysts said a rate cut could reignite these two segments of the economy, risks that have already been flagged by the central bank.

“The bank is going to need a lot more evidence that the downside risks are going to stick with us before they totally rewrite their script from the last statement and move toward outright easing,” said Derek Holt, an economist at Scotia Capital, noting that dovish language would inevitably have to accompany a decrease in the central bank’s key rate.

“That would be a blow to business and consumer confidence in the country as opposed to the more supportive role, which would be essentially to just stay off on the sidelines and not do anything on rates for a long time yet.”

Holt is already the most bearish among Canada’s 12 primary dealers — institutions that deal directly with the central bank as it carries out monetary policy — and is comfortable with his call that the next rate hike will be in the second quarter next year.

If anything, it could be later, “if the Fed is true to its word in terms of maintaining stimulative policy all of next year and into 2013,” he said.

Analysts said the risk of a rate cut is now more likely than an increase, given Canada’s trading ties to the United States and the risk that a recession there would also pull Canada’s economy lower.

“It is probably appropriate to price in some risk of the next move by the BoC being more a cut than a hike, just at this stage,” said Michael Gregory, senior economist at BMO Capital Markets.

“But I think that fades within six months and you start to believe that is going to skew to the next risk being a hike rather than a cut.” http://ca.finance.yahoo.com/news/Analysis-Canada-rates-seen-reuters-1938074017.html

The upside in a global stock market rout may ironically be a healthier housing market – at least in the short term, say economists.

“The housing market has nine lives. Every time interest rates are supposed to go down, something happens and it helps to keep the market going,” said Benjamin Tal, senior economist at CIBC World Markets.

Interest rates were supposed to be headed up before the crisis of terrorist attacks in New York on 9/11, and the last crash in 2008. But that didn’t happen. And it looks like rates will be staying down for a while, says Tal.

The market is already betting that Bank of Canada Governor Mark Carney’s plans to hike interest rates as soon as September will have to be put off until the end of next year.

South of the border, the Federal Reserve said Tuesday that it expects “exceptionally low levels of the federal funds rate at least through mid-2013.”

And ironically, while the U.S. has experienced a downgrade in its credit rating from Standard & Poors, investors have continued to pile into the Treasuries market.

The U.S. dollar remains the global reserve currency as investors head for shelter as they find few safe haven options out there.

The demand for treasuries means that yields have gone even lower. Which means there is downward pressure on longer-term interest rates. Long-fixed term rates are affected by a variety of factors such as competition for funds in financial markets and to prices in the bond market. Short-term rates are more affected by the key overnight central bank rate.

“The interest rate environment will continue to be very attractive for homebuyers for both short term and longer term borrowing costs. With the safety of U.S. bonds that’s keeping longer term rates low,” said Scotiabank economist Adrienne Warren.

Industry groups are warning, meanwhile, that during an already tough recovery, any sudden move upward in rates could have dire consequences on real estate sales.

“The very recent global economic news demonstrates the Bank of Canada needs to consider any future rate hikes with extreme caution, as the recovery may be more fragile than believed,” said Ontario Home Builders’ Association President Bob Finnigan.

Some investors may also be looking at real estate assets for a place to park their money because of the volatile stock market, said Tal.

Lance Dore, a member of the U.S.-based Royal Institution of Chartered Surveyors, says investment in real estate may be a beneficiary from those looking for safe haven.

“The sell-off of stocks is a clear signal that people are not confident in the future and want safety now.  What has also happened in the past declines in the stock market is a flight to quality,” said Dore. “Real estate tends to be the recipient as part of this flight. Real estate values are at all-time lows with returns at all-time highs.  The convergence of excess cash due to stock sell-off and corporations flush with cash for investment will push these excess funds into the inevitable diversification to real estate.”

While the future for the stock market looks shaky, the real estate sector is improving due to improving fundamentals based on increasing rents, absorption of distressed supply and increased interest for diversification, said Dore.

However, if the stock market continues on a downward path, housing will not escape unscathed. While lower interest rates are a huge mitigating factor, the losses on the market may eventually translate into job losses.

For one thing, it takes confidence to plunk down that down payment for a home. It usually means that you’ve got a job, some savings, and hope for the future.

But confidence is not in abundance in global stock markets this week as concerns over sovereign debt have panicked investors. Without confidence, the housing market – the biggest ticket item on the consumer checklist will suffer no matter how low rates go, say economists.

In the United States, where more than a quarter of borrowers have negative equity – meaning they owe more than their homes are worth – this could mean another setback for the already beleaguered market.

In Canada, where markets have been stable, and have been forecast to cool down next year, this could mean that sales and valuations may come down to earth quicker than expected.

“Assuming the volatility and uncertainty continues in the markets it will have negative implications for both potential home buyers and for builders,” said Scotiabank economist Warren. “There is still a big difference between Canada and the U.S. But it certainly reinforces our view that growth in Canada and internationally will be on the soft side.”

So far, economists have not changed their outlook on the Canadian housing market. Most expect the market to flatline or correct slightly by next year. But that could change if the rout continues.

“If this is the precipitation of a larger more protracted slowdown for the economy it will certainly affect housing,” said Peter Norman, chief economist real estate consultancy Altus Group.” If we get into a soft patch with slower employment growth then we will see slower home sales. For investors who are speculating on future events this adds another layer of uncertainty in the market. So this would cause them to sit on the sidelines.”

In separate reports on Tuesday, Canadian housing starts surprised by rising unexpectedly in July, climbing to a 15 month high, up 4.3 per cent to 205,100 units according to the Canada Mortgage and Housing Corporation. And U.S. home values actually had the smallest drop in four years in the second quarter according to figures released by Zillow Inc.

But this was before the impact of the stock market drop which will affect confidence as consumers suffer from a declining wealth effect. During a recession, the high end of the market, of purely discretionary purchases such as cottages and luxury condos might be the first to feel the impact. But a lack of confidence will affect all sectors of the market.

“We continue to hold that new home construction will start to cool in the second half of the year, but this may come more slowly than anticipated as rates remain low for longer,” said Arlene Kish, principal economist for IHS Global Insight. “On the other hand, if the recent slide in financial markets remains persistent, consumers will become less optimistic and will likely stay away from home purchases.”

How to put this politely? While not a deadbeat, the U.S. is no longer among the world’s most creditworthy nations. America now has a lower credit rating than Liechtenstein. And the Toronto-Dominion Bank.

Mind you, that’s a matter of opinion.

On Friday, U.S. credit rating agency Standard & Poor’s for the first time in 70 years stripped the world’s largest economy of its top, triple-A rating on America’s $14.3 trillion in government debt. S&P dropped its rating a notch, to AA-plus.

But the two other members of the U.S. ratings oligopoly, Moody’s Investors Service and Fitch Ratings, earlier in the week reconfirmed their top rating on U.S. debt.

Just 16 of the 126 nations whose debt is rated by S&P earn its coveted triple-A rating, Canada among them.

For S&P, last week’s panicky, acrimonious budget-cutting deal that narrowly averted a first-ever default by Washington was a factor in its U.S. debt downgrade.

“(S&P’s) conclusion was pretty much motivated by all of the debate about the raising of the debt ceiling,” John Chambers, chairman of S&P’s sovereign ratings committee, told The Wall Street Journal Friday.

“It involved a level of brinkmanship greater than what we had expected.”

A furious Obama administration pleaded with S&P to hold off on its announcement for a few weeks of further assessment, arguing that such a historic decision should be free of political considerations. But S&P was having none of that.

In S&P’s view, the intransigence of hard-right U.S. deficit hawks, notably the so-called Tea Partiers, is highly relevant in determining a nation’s ability or willingness to honour its debt obligations.

“The kind of debate we’ve seen over the debt ceiling has made us think the United States is no longer in the top echelon on its political settings.” That’s Chambers’ gentle way of saying that America’s political class can no longer be relied upon to expertly manage the nation’s finances.

China’s central banker, Zhou Xiaochuan, was a little blunter, depicting the Americans as a threat to the world economy. “Big fluctuations and uncertainty in the U.S. Treasury market will influence the stability of international monetary and financial systems, thus hurting the global economic recovery,” the chief of the People’s Bank of China said last week.

China, the world’s largest creditor nation, holds about $2 trillion worth of U.S.-denominated securities.

For years, the U.S. has been hectoring Beijing on everything from its allegedly overvalued currency to human rights abuses to intellectual property theft.

You can sense Zhou relishing this moment to return fire: “We hope that the U.S. government and the Congress will take concrete and responsible policy measures . . . to properly deal with its debt issues, so as to ensure smooth operation of the Treasury market and investor safety.”

Stop playing with matches, is Beijing’s humiliating admonition to the U.S. And really, there’s no snappy comeback to that, although the state Xinhua News Agency was piling it on in labelling the recent Washington budget debate a “madcap farce” (we know, we know) and U.S. debt a “ticking bomb.”

Typically, a lower debt rating means steeper borrowing costs, for consumers, business and government. Debt issuers must offer a higher rate of interest to attract buyers of higher-risk securities.

But hold on.

As noted, S&P is an “outlier” in banishing the U.S. from the triple-A club. Also, the U.S. owes most of its debt to itself. Less than one-third of U.S. government debt is held by foreigners, while most of crisis-stricken Greece’s debt is owed to offshore lenders. And U.S. Treasurys are still unmatched as a safe store of value for investors worldwide.

Yet for many economic observers, S&P’s move is overdue.

Across a range of factors — including anemic GDP growth, still-declining house values, a 9.1 per cent jobless rate, stagnant middle-class incomes and recent inflation in food, gasoline and apparel prices — the U.S. economy has been underperforming for years. Layering unmanageable debt atop that plethora of sickly leading indicators made a U.S. debt downgrade inevitable.

Felix Salmon, the top economics analyst who blogs at Reuters, expects the U.S. has lost its triple-A rating forever. “If we came that close to defaulting,” Salmon writes, “there’s no way that our securities can be risk-free.” The downgrade, he says, is “merely a late-to-the-party recognition of that fact.”

I don’t know about forever. But it will take a lot of convincing for S&P to restore America’s membership in the triple-A fraternity. We should know. S&P downgraded Canada in 1992, when we seemed blasé about a record $43 billion deficit.

Not until Canada was well into its 11-year run of consecutive budget surpluses — unmatched by any G8 nation — did S&P deign to restore our triple-A status, in 2002.

Elapsed time: nine years and nine months. http://www.thestar.com/news/world/article/1035722–olive-u-s-will-take-a-long-time-to-dig-out-of-this-hole

WASHINGTON (Reuters) – The United States stepped back from the brink of default on Tuesday but congressional approval of a last-ditch deficit-cutting plan failed to dispel fears of a credit downgrade and future tax and spending feuds.

President Barack Obama and lawmakers from across the political divide expressed relief over the hard-won compromise to raise the country’s borrowing authority after weeks of rancorous partisan battles.

Nevertheless, U.S. stocks tumbled, turning negative for the year, as investors shifted their attention to the increasingly grim state of the U.S. economy and the potential for a downgrade of America’s gold-plated debt rating.

That risk grew when one of the three major ratings agencies said it was affirming the U.S. government’s AAA-rated sovereign debt but slapping it with a negative outlook.

The announcement by Moody’s Investors Service after U.S. markets closed could lead to a downgrade within 12 to 18 months. That could raise borrowing costs for U.S. companies and consumers as the economy risks slipping back into recession.

The Senate’s approval by 74-26 votes of the $2.1 trillion deficit-reduction plan warded off the immediate specter of a catastrophic U.S. debt default. The bill passed the Republican-controlled House of Representatives on Monday.

Obama immediately signed it into law, lifting the $14.3 trillion debt ceiling with just hours to spare before the government was due to run out of money to pay all its bills.

The bitter feud between Democrats and Republicans has bruised Obama as he heads into a campaign to win a second term in 2012.

The $2.1 trillion deficit-reduction plan fell well short of a $4 trillion ‘grand bargain’ that was nearly agreed last month between the White House and congressional leaders.

Another ratings agency, Standard & Poor’s has said $4 trillion in deficit-reduction measures would be needed as a “downpayment” to put America’s finances in order.

S&P said in mid-July there was a 50-50 chance it would cut the U.S. rating in the next three months if lawmakers failed to craft a meaningful deficit-cutting plan. Investors are on tenterhooks about the chance of a downgrade by S&P.

The deal leaves political battles ahead over spending cuts and tax reform as the deficit-cutting plan is implemented. Obama and Democratic and Republican leaders said the agreement, while a welcome first step, was not enough on its own.

“We just kicked the can down the road … the agreement doesn’t really do anything about what got us into debt,” Republican Senator Lindsey Graham told Reuters Insider.

“We had a good opportunity, we let it pass so we will keep struggling.”

THREAT OF CHAOS RECEDES

The deal drew a line — for the moment — under months of bitter partisan squabbling over debt and deficit strategy that had threatened chaos in global financial markets and dented America’s stature as the world’s economic superpower.

The law lifts the debt ceiling enough to last beyond the November 2012 elections, calls for $2.1 trillion in deficit savings spread over 10 years and creates a bipartisan joint House and Senate committee to recommend further cuts by late November. It does not yet include any tax increases.

International Monetary Fund chief Christine Lagarde said the deal reduced uncertainty in the markets.

The governor of the central bank of China, the biggest foreign holder of U.S. Treasuries, urged the the United States to responsibly protect investor interests.

Questions lingered about the fragile U.S. economy and whether the bipartisan deficit-cutting compromise could deliver the desired results.

Data on Tuesday showed U.S. consumer spending dropped in June for the first time in nearly two years and incomes barely rose, the latest in a string of gloomy economic indicators.

Moody’s said the deal was a step toward fixing the budget problems but the United States risked a downgrade if fiscal discipline weakened in the coming year, if no further steps were taken in 2013 or if the economy deteriorated.

“We would expect that growth would accelerate in 2012 from the first half of the year,” Steven Hess, Moody’s top U.S. analysts told Reuters in an interview. “But if it doesn’t, that means that the whole process of fiscal consolidation and the plans to achieve lower deficits and lower debt ratios will be made all the more difficult.”

Fitch Ratings did not rule out putting a negative outlook on the U.S. AAA rating when it concludes a review of the country later this month, the agency’s top analyst for the United States told Reuters on Tuesday.

TUSSLE OVER TAXES

Investors said the move by Moody’s on Tuesday was expected and did not ruffle financial markets.

Earlier, Wall Street stocks slumped broadly by more than 2 percent, ending down for a seventh consecutive session as gloom over the economy mounted, marking the longest losing streak since the financial crisis period in October 2008.

“I think that the most troubling aspect we have going on right now is the performance of U.S. equities. The equity market for whatever reason seems to think that this deal is not sufficient,” said Greg Salvaggio, senior vice president at Tempus Consulting in Washington.

U.S. Treasury Secretary Timothy Geithner said in an opinion piece in the Washington Post that the debt deal should allow room for Congress to implement short-term measures to strengthen the economy this fall such as extending a payroll tax cut and funding infrastructure projects.

Obama said the sacrifices required to reduce the deficit needed to be fairly shared, apparently nodding to anger among many Democrats that the deal did not include tax increases and risked hurting social programs.

“We cannot balance the budget on the back of the very people who have borne the brunt of the recession … everyone is going to have to chip in, that’s only fair,” the president said in an address from the White House Rose Garden.

He said he expected tax reform to emerge from deliberations by the new congressional committee, and that a “balanced approach” in which the wealthier pay more taxes was needed.

Only moments after final passage, rival congressional leaders were handing out their political recipes for the way forward — Republicans in favor of more spending cuts, and Democrats looking for tax reform or hikes.

(Additional reporting by Jeff Mason, Thomas Ferraro, Donna Smith, Richard Cowan, Lesley Wroughton, Laura MacInnis, Alister Bull and Steve Holland in Washington and Chris Sanders in New York; Writing by Stuart Grudgings and Pascal Fletcher; Editing by Jackie Frank and Anthony Boadle)

WASHINGTON—America’s dismal debt crisis ended Monday night with an astounding twist — the show-stealing return of Arizona congresswoman Gabrielle Giffords, back on the House floor to cast a heroic vote to save the country from default.

Giffords stunning appearance, her first since being gunned down by a would-be assassin on the streets of Tucson in January, sparked standing ovations, bringing one of the bleakest demonstrations of political paralysis to an unexpectedly heartening close.Her vote counted. But it was hardly essential, as a last-ditch budget deal unloved by all sides flew easily through the House of Representatives, passing 269-161.

Translation: Crisis averted.

The package now will fly through the Senate in the morning, ready for President Barack Obama’s signature well before the government’s midnight Tuesday deadline, allowing the country to borrow anew — and putting global markets at ease, as the calamity of potential default evaporates.

After that, watch for Washington to slink away for its August recess, with politicians of all stripes hoping what remains of the summer will be sufficiently distracting to tamp down public disgust.

The anger is global, as Russian Prime Minister Vladimir Putin made clear Monday when he hurled invective, accusing the United States of “living like parasites off the global economy.

“Thank God that they had enough common sense and responsibility to make a balanced decision,” said Putin, a frequent critic of the U.S. dollar’s status as the world’s default currency.

But it is the American verdict that worries Washington most. A new pulse taking by the Pew Research Center showed the three-week standoff earned the contempt of nearly three-quarters of respondents.

Asked to characterize their leaders’ behaviour in a single word, the Pew/Washington Post survey said the Top 10 responses were: “Ridiculous,” “Disgusting,” “Stupid,” “Frustrating,” “Poor,” “Terrible,” “Disappointing,” “Childish,” “Messy” and “Joke.”

As the U.S. commentariat worked through the fine print of an austerity bill to slice some $2.4 trillion from the U.S. deficit over 10 years, more fury still — much of it directed at Obama and the Democrats for what one New York Times columnist called “an abject surrender” to the unbending hawks of the Republican Tea Party movement.

With Republicans preening and Democrats aghast, the rhetoric on Capitol Hill was approaching viral. House Minority Leader Nancy Pelosi, who on Sunday said hinted the devil would be in the details, declared the package a “Satan sandwich with a side of Satan fries.” But she ate it anyway, voting for the bill because there were no other viable options.

New York Rep. Charles Rangel was among more than 90 House Democrats to vote no, citing the total absence of any language likely to improve the tepid U.S. employment picture.

“If the Republicans would have had to hold the President hostage, I wish they would have held him hostage on the things my constituents wake up every morning thinking — how can I get a job, how can I get back my dignity?”

But Monday’s House vote also forced the hands of a dozens of Tea Party-aligned conservatives, who stepped up to help pass the compromise bill, opening themselves up to primary challenges from ultra-conservatives in their home districts. The threat of primary challenge, first delivered in a thinly veiled Facebook posting last week by former Alaska governor Sarah Palin, was a constant throughout each act of this agonizing bout of political theatre.

It is difficult to envision what this leaves Obama to celebrate on Thursday, when he turns 50. The ever-changing White House bottom line — which began with insistence that America’s wealthiest pay their part in the austerity to come — ended with Team Obama not having to worry about the debt ceiling issue until after the 2012 presidential election.

Yet it is abundantly clear the budget brinksmanship will erupt anew at least twice before the year is done — at the end of September, when a continuing resolution to fund the government is due to expire, and again, later in the fall, when the bipartisan debt commission created by this bill is due to produce recommendations on what precisely this plan will actually cut.

This is merely an intermission. Enjoy it while you can.

By The Canadian Press

TORONTO – Moody’s Investor Services is renewing Canada’s debt rating at triple-A, the highest possible.

The firm said the AAA rating was warranted due to the country’s high degree of economic resiliency, efforts by Ottawa and the provinces to deal with their debt ratios over the coming years and other factors.

Moody’s says the state of Canada’s housing market and Quebec’s sovereignty issues do pose some risk, but the risks are low.

The housing market also poses some risk because many mortgages are insured by a federal Crown corporation.

But Moody’s says it considers a major downturn of the housing market as unlikely and, even in an extreme case, Ottawa’s extra costs would be relatively small.

Similarly, Quebec’s sovereignty movement doesn’t seem to pose a significant risk since the issue doesn’t appear high on the political agenda.