1. Peter Schiff is not an economist. He's a broker. With a certain world view that's been proven to be more than a little suspect as an investment guide. So, take his prescriptions with a grain of salt.
2. Toronto, and Canada, has been protected from the US meltdown by the relatively more conservative debt ratios the banks held and the much more conservative debt levels of the individual consumer. Even if we have a second wave (the famous 'W' recession), we will probably not have one that's 'even more devastating'. The highly-levered companies and consumers just don't exist.
3. Which brings us to our Khazaki friends -- they were ripe for a fall, given the debt they were levering. That it happened in our fair city just means that someone local (GG, I guess) gets to come in and finish the project and make the money Bazis would have made, if they'd had a more conservative profile.
I'll be happy to see something interesting happen on this site. I like the tower/podium/plaza combo suggested in the G&M RE piece -- I'd go with restos and bars rather than theatres or retail, but that's b/c I'm more of a patio guy than a movie guy.
Peter Schiff may be a stock broker, but he has an excellent understanding of free market economics. What he is saying, and what he has always said, is that interest rates have been far too low for far too long. Cheap, easy money creates malinvestment, which in turn creates unsustainable economic bubbles (real estate, tech, etc). Once the bubbles pop, we get into the type of trouble we are in now. He rightfully believes that we have not gotten out of this mess because the Federal Reserve has reacted by lowering interest rates even further. This makes money even cheaper than before. It creates more malinvestment, and ultimately just reinflates the bubble, which will eventually pop again. And what happens when it pops again? The Federal Reserve used up their magic bullet by lowering interest rates to almost zero at the present time. Are they going to introduce negative interest rates? I don't think so. In reality, they will eventually have no choice but to raise interest rates. When the Federal Reserve expands the money supply, like they are doing now (creating money and credit out of thin air), it will lead to higher prices. The only way to stem the tide is to raise interest rates. Imagine being in a situation where the central bank has to deal with a shrinking economy, and rising prices at the same time? That's what us free market believers call stagflation (something keynesians didn't believe in until 1960).
As for our situation in Canada, we have our challenges as well. Our central bank has also lowered interest rates to a unacceptably low level. They too, have created too much cheap and easy money. We are seeing it now with the rise in home prices once again. The Canadian Government also reported a record defecit for the year, 50 billion dollars. Compare that to the United States which had a 500 billion dollar defecit last year. On a per captia basis, our defecit is the same. As for defecit spending itself, that's money the government doesn't have, and they must get one way or another. They can either print the difference, they can sell bonds, or they can raise taxes. If they print the difference, that is inflation of the money supply. Coupled with all the cheap and easy money we have available, we will also experience a situation where we could have higher prices and a shrinking economy. Not good.
So basically, we are not immune. The economic mistakes are friends to the south have made are also being made up here.
As for us not having highly leveraged companies or consumers, how do you know? Are you so sure that if interest rates go up to 5, 7, 0r 10%, that people that bought homes now will still be able to afford it? And that's the real danger once the effects of inflation are felt (higher prices). The BoC and Fed are trying to fix one crisis, but in the process are creating another. It's as if their attitude is "we'll cross that bridge when we get to it".
Anyway, sorry to go OT. Just my $0.02.
