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These are stories Report on Business followed this week.

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On housing and the borrowing binge
Canadian consumers appear to be getting the message that their borrowing binge simply couldn't run at such a fevered pace. The question is, will the moderation last?

The Bank of Canada, despite seeing signs of a pullback, isn't so sure.

"Housing activity is beginning to decline from historically high levels," the central bank said this week as it held its benchmark lending rate at 1 per cent and reiterated that, at this point, the next move in rates will be up, not down.

"While the household debt burden continues to rise, growth in household credit has slowed. It is too early, however, to determine whether the moderation in housing activity and credit growth will be sustained."

Later in the week, in its financial system review, the central bank sounded an alarm about Canada's condo market, The Globe and Mail's Barrie McKenna reports.

The comments by Governor Mark Carney and his colleagues on the central bank's policy-setting panel came amid further evidence that the housing market is slowing, notably in certain cities. Sales have slumped in some centres and, according to the latest measure by Teranet and National Bank of Canada, prices dipped in October by 0.2 per cent from September.

It's showing up elsewhere, too. Bank of Montreal's chief executive officer, Bill Downe, said this week that the mortgage restrictions brought in during the summer by Finance Minister Jim Flaherty "are having the desired moderating effect on housing prices in most markets."

In its review, the Bank of Canada said that the growth of consumer credit has "continued to moderate" in the past six months, but that it is eclipsing the growth of disposable income and that its simulations "continue to suggest that households are vulnerable to adverse economic shocks."

But the central bank is optimistic that the key measure of debt to disposable income, now at 163 per cent, will stabilize over the next two years.

Carney won't 'blink'
The central bank also painted a brighter picture of 2013 following a third-quarter stall it said was partly due to "transitory disruptions in the energy sector."

The Bank of Canada wasn't expected to change rates after its meeting early in the week. Nor was it expected to change the language of the accompanying statement, and it met market expectations on both fronts.

As it now stands, the central bank still plans to hike rates, though that's not seen happening until late next year at the earliest. Some economists believe it won't occur until 2014.

Mr. Carney cited the third-quarter soft patch, but, he and his colleagues said, "although underlying momentum appears slightly softer than previously anticipated, the pace of economic growth is expected to pick up through 2013."

Its rate signal makes the Canadian central bank something of an outlier. Other major banks certainly aren't suggesting rate increases at this point, and the Reserve Bank of Australia just this week cut its benchmark rate by one-quarter of a percentage point, taking it back to the levels of the financial crisis.

"Despite a raft of disappointing data of late, the bank has not blinked on their bias -- not surprisingly, since they had just recrafted the bias last time out," said deputy chief economist Douglas Porter of BMO Nesbitt Burns.

"Still, this is a bit of a softer statement, in that Q3 growth 'was weak,' core inflation will take a bit longer to get back to target, housing 'is beginning to decline,' and the fiscal cliff concerns loom. If growth does not soon rebound, as they expect, look for a further softening on Jan. 23, when they release their next [monetary policy report] and simultaneously issue their next rate statement."

National Bank of Canada economists disagree with the central bank's position.

"Weakness in Q3 was much more broad-based than just energy as reflected in the overall decline in corporate profits," said Stéfane Marion and Paul-André Pinsonnault.

"In non-energy manufacturing, earnings were down for the third consecutive quarter with a sharp erosion in margins. This isn't a harbinger of a strong labour market. Indeed, we are somewhat surprised that the central bank didn't acknowledge that the private sector has actually created no jobs over the past six months. Unless we see a sharp reversal of that concerning trend in the upcoming employment reports, we would expect a major change of assessment in next January's Monetary Policy Report."

Canada approves deals, sets rules
The Canadian government has approved two controversial takeovers by Asian state-owned enterprises of Canadian oil companies, but will block any further acquisitions in the oil sands by such government-owned firms, Shawn McCarthy and Steven Chase report.

Prime Minister Stephen Harper late Friday announced a tough new foreign investment policy that erects major hurdles for acquisitions by state-owned enterprises, even while welcoming non-controlling investment from them.

Barring state-controlled investors from new takeovers in Canada's oil sands and making it tougher for these entities to buy assets elsewhere in the country is the latest populist move from a government that has shown it has no qualms about keeping unwanted capital at bay.

"To be blunt, Canadians have not spent years reducing ownership of sectors of the economy by our own governments only to see them bought and controlled by foreign governments instead," Mr. Harper told reporters.

Europe's outlook dims
These are depressing days in Europe, and the outlook is growing bleaker.

As our European correspondent Eric Reguly reports, the European Central Bank this week cut its forecasts for the 17-member euro zone, projecting tough times that will do little to ease its crippling jobless rates.

The central bank for the monetary union now sees the economy contracting by 0.5 per cent and 0.3 per cent next year, climbing back to growth of 1 per cent in 2014.

Britain also cut its projections this week, as did Germany's Bundesbank.

Germany has been the engine of Europe, as well as its deep pockets, but its central bank on Friday warned of growth of just 0.4 per cent next year, well down from its earlier forecast of 1.6 per cent.

"Enterprises are cutting back their investment and hiring fewer new staff," the Bundesbank said.

"The main drags are not only the adjustment recessions in some euro area countries but also the slowing of the global economy. Nonetheless, in its latest projection the Bundesbank does not foresee a protracted slowdown but instead anticipates a return to a growth path soon. This is predicated on the assumption that the global economy regains momentum and the euro-area reform process progresses further."

Shakeup in REITs
The map of real estate investment trusts in Canada is fast being redrawn, with two key moves this week alone.

It began with a consortium led by KingSett Capital, and which includes the Ontario Pension Board, unveiling a hostile run at Primaris Retail REIT, worth $4.4-billion, or $26 a unit. Primaris has rejected that.

If KingSett does eventually triumph, a chunk of the properties would be sold to RioCan Real Estate Investment Trust, Canada's biggest mall operator, as Tara Perkins reports.

Then, later in the week, a surprising move by Loblaw Cos. Ltd., the grocery chain, with an announcement that it's launching its own real estate investment trust.

It would put some $7-billion in property into the REIT, then lease it back long-term, and would hold majority control, Marina Strauss and Bertrand Marotte report.

"Spinning off its real estate assets should complement its core grocery business well, especially as it faces increased competition from recent new entrants into this space, such as Wal-Mart," said Queen's University Professor John Andrew of the School of Urban and Regional Planning.

"REITs have attracted a great deal of capital over the past year, primarily because they have significantly outperformed nearly every other investment asset class."

Six Things
1. This study of French men, published in the journal Human Reproduction, sounds awfully like an economic indicator (besides being a problem for said men): "There was a significant and continuous decrease in sperm concentration of 32.2 per cent … during the study period. Projections indicate that concentration for a 35-year-old man went from an average of 73.6 million/ml … in 1989 to 49.9 million/ml … in 2005. A significant, but not quantifiable, decrease in the percentage of sperm with morphologically normal forms along the 17-year period was also observed."

2. You always knew this, right? As Forbes reports, a new study shows that "hiring managers don't always pick the most qualified applicants." They look for people they want to hang out with. Or, as the study puts it, "employers sought candidates who were not only competent but also culturally similar to themselves in terms of leisure pursuits, experiences, and self-presentation styles."

3. Tony Clement, the chief of Canada's Treasury Board, had this to say on Twitter Sunday night while watching TV: "The Walking Dead is seriously intense tonight." (You should hear what the Liberals say about him.)

4. The Vatican says Pope Benedict XVI will begin tweeting on Dec. 12, using the Twitter handle @Pontifex. Pontifex has more than one meaning, one of which is "bridge builder." It's also a game for $20 from Chronic Logic where you design and test bridges.

5. "Merchants at fast food businesses, restaurants and drinking establishments near NHL hockey arenas in Winnipeg, Vancouver, Toronto, Montreal and Calgary have experienced a sharp overall decrease of -11.23 per cent in spending in 2012, compared to a game day in 2011," credit and debit card processor Moneris Solutions said Tuesday.

6. Clever thought of the week, from Bloomberg: "Three bears seek signs of Goldilocks economy as U.S. outperforms," news agency says, referring to comments by David Rosenberg of Gluskin Sheff + Associates, Mohamed El-Erian of Pimco and David Levy of Jerome Levy Forecasting Center.

Required reading
The birth of an ice island is rarely seen, Nathan VanderKlippe writes. But what begins in remote high Arctic latitudes can, in the years and decades that follow, have a real impact on places that are far more visible, like shipping lanes and offshore oil platforms.

Canada's energy industry has forged unrivalled access to the federal government among major industries, as key companies and their associations met frequently with politicians and senior bureaucrats in recent years to craft common messages and discuss regulatory changes, a new report finds. Shawn McCarthy reports.

The e-commerce battle is shifting ground this holiday season as major retailers scramble to offer low-cost, sometimes free, shipping, Marina Strauss writes.

Hunter Harris and his management team at Canadian Pacific Railway this week outlined to the financial community in New York their restructuring plan, which includes cutting 4,500 jobs over four years and dramatically reducing costs, Guy Dixon reports.

A sea change is rippling through Latin America, a region once better known for hyper-inflation, political instability and high poverty rates, Tavia Grant writes.

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