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Prime Minister Stephen Harper was visiting an Ottawa spa the day Lehman Brothers Holdings Inc. failed in 2008.

The entire country has been on a retreat of sorts ever since.

No bank failures, no housing crash, no deep recession and no sovereign debt problems.

Relative to much of the rest of the world, life has been pretty good as Canada ducked the worst of the global credit crisis sparked by Lehman's failure. But four years on, it is more of a crisis delayed than a crisis averted.

The Canadian economy feels the repercussions of Lehman every day in the form of artificially low interest rates.

We're continuing to import ultra-low rates from the United States and Europe, where the crisis is worse.

That has set the stage for some potentially nasty credit problems ahead, including a housing correction, rising mortgage delinquencies and a full-fledged consumer retreat.

Mr. Harper loves to remind Canadians that the country's sound banking system and stricter regulation saved us from the worst in the months after Lehman.

He is only partly right. Stricter lending standards and the absence of tax incentives to pile up mortgage debt means Canadians typically have much more equity in their homes than Americans do.

Dumb luck and a highly-concentrated banking industry played an equally important role in softening the blow from Lehman. Back in 2008, Canada's big banks were still reeling from the bath they took in the telecom collapse. So they were playing it conservative and cautious even before the crisis hit.

There is also very little U.S.-style subprime mortgage lending in Canada because lenders have little incentive to compete as aggressively with risky product offerings.

The danger now is that interest rates have remained too low for too long.

Bank of Canada Governor Mark Carney has warned repeatedly in recent months of a swelling $50-billion household deficit. As the global credit bubble has deflated, Canadians have continued to pile up debt, mainly to buy homes.

But they have done so at a faster pace than their disposable income is growing. In other words, Canada's economy is being sustained by conditions that are, by definition, unsustainable.

The Bank of Canada has struggled to set an independent interest rate policy while its neighbour and largest trading partner – the United States – has been aggressively priming the pump with expansionary monetary policies. And more may be on the way as the U.S. economy continues to struggle.

As long as U.S. interest rates stay at rock-bottom levels, Mr. Carney and the Bank of Canada can't easily raise rates because the Canadian dollar could spike dangerously high, inflicting even greater pain on manufacturers. So Canada's overnight rate remains stuck at 1 per cent, likely well into next year.

Meanwhile, with turmoil raging in much of the rest of the world, Canada has become a haven. Foreign investors have been flocking to Canada's triple A-rated bonds, keeping longer-term rates artificially low.

That explains why mortgage rates and government bond yields have continued to drift lower over the past couple of years. This is good for borrowers, but not so good for savers.

Low rates have also helped fuel a rapid escalation in home prices in cities such as Vancouver and Toronto.

In a blunt report last week, Moody's Analytics said a housing correction for Canada is now inevitable. The rating agency said house prices are overvalued by 10 per cent to 15 per cent in some cities.

"The housing market represents a serious threat to the stability of the Canadian credit markets," the Moody's report cautioned. "Canadian leverage ratios have clearly risen to a dangerous point, well in excess of that experienced in the U.S. amid its own housing boom."

Few experts are predicting the kind of foreclosure mess that hit the U.S., where millions of homeowners found themselves "under water," owing more on their mortgages than their homes were worth.

The greater threat is a return to more normal interest rates. Higher borrowing rates would put many Canadian homeowners at risk of delinquency and default – not because their homes are worth less, but because their incomes can't cover inflated mortgage payments.

The final chapter of the Lehman saga is still being written in Canada.