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Bank of Canada Governor Mark Carney speaks during a news conference upon the release of the Monetary Policy Report in Ottawa January 18, 2012.

CHRIS WATTIE/Reuters/CHRIS WATTIE/Reuters

It's hard to imagine life could get any better for Mark Carney.

The Bank of Canada governor is everyone's favourite central banker these days, his star as lofty as the loonie.

He already chairs the Financial Stability Board, tasked with reforming global financial institutions. He's whispered as a candidate to head the Bank of England. Wherever he goes, people laud him for saving the country from the worst of the global financial crisis. On Tuesday, the Canadian Club honours him as "Canadian of the Year."

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Another central banker once enjoyed this kind of halo.

Remember Alan Greenspan? The Maestro. There was a time when he, too, could do no wrong.

When Mr. Greenspan retired from the U.S. Federal Reserve in 2006, he looked like a genius. He had steered the world's largest economy through the dot-com bust, 9/11 and a recession. Life was good as the economy roared ahead.

Two years later, with the U.S. housing bubble bursting and the financial crisis raging, Mr. Greenspan's reputation was substantially diminished. His failure to see the mortgage lending bubble – and do anything about it – is now etched in his legacy. A rattled Mr. Greenspan later admitted his faith in the financial system was shaken.

Events, and time, can alter perceptions.

What would we all think of Mr. Carney if Canada's housing market crashed, rattling financial institutions and consumers?

It's an interesting proposition. Mr. Carney has kept the pedal to the metal for years now with ultra-low interest rates, flooding the financial system with easy money. That has kept Canadians buying homes while markets elsewhere in the world faltered.

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Conventional wisdom is that low rates are a risk worth taking, given the weakness in the non-housing side of the economy.

It's also possible that Canada's housing crash wasn't avoided, but merely postponed.

Finance Minister Jim Flaherty has repeatedly tried to cool Canadians' appetite for debt – by tightening mortgage rules (three times) and by regularly scolding Canadians for dipping too deeply into their inflated home equity to borrow more. Mr. Carney, too, has sounded the alarm about the overheated condo market and rising debt levels.

"Canadian households as a whole are being overstretched, which creates risk for the economy," the governor warned earlier this month, as he again left the bank's key interest rate unchanged.

There are worrying signs of speculation and overheating, particularly in Toronto and Vancouver. The average price of a home in Canada's largest city hit a record $504,000 in March, and prices are still climbing. In Vancouver, frenzied activity has at least temporarily paused, but at an average price-point most Canadians could not afford – $761,000 – according to Canadian Real Estate Association figures.

These lofty prices influence values everywhere because Toronto and Vancouver are such a large part of the national economy.

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Fading affordability should make people cringe. The average house price in Canada is now nearly five times average income – well above the historical norm.

Canadians have never been as indebted as they are now. The Bank of Canada expects debt levels to eventually reach near 160 per cent of disposable income – the same level reached by Americans just prior to the crash.

These debt warnings have been a constant in Mr. Carney's public pronouncements over the past few years – just not in his actions.

And nothing speaks louder than easy money. Low mortgage rates make larger and pricier homes accessible to more people, pushing home prices higher in a vicious cycle that may not end well.

Of course, it's not all about the intensely image-conscious Mr. Carney.

Mr. Flaherty and the Conservative government share responsibility for the borrowing binge. Last week, the government tabled a bill to put federal bank regulators in charge of Canada Mortgage and Housing Corp. and its fast-growing mortgage insurance business. But the move comes after allowing a near-doubling of the agency's insurance cap to its current level of $600-billion since 2007. CMHC is now on the hook for half of the $1.1-trillion worth of home mortgages in the country.

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And there are the banks. Lending standards are arguably looser than they've ever been, allowing more people to reach further on borrowed money.

If the bubble bursts, Canadians will surely want to know why Mr. Carney and Mr. Flaherty didn't do more, sooner.

Saying "I told you so" might not cut it.

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