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These are stories Report on Business is following Wednesday, Dec. 10, 2014.

Follow Michael Babad and The Globe's Business Briefing on Twitter.

Fat debts
A troubling statistic from the Bank of Canada today: About 12 per cent of Canadian households are so deeply in debt that they could be in big trouble when interest rates inevitably rise.

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That's about one in eight of us.

The Bank of Canada didn't say they'll be in trouble, by the way. It simply cited the fact that the 12 per cent have a total debt-to-income ratio that tops 250 per cent.

But any financial adviser will tell you that you'd better get your act in gear. Fast.

What that means, noted Toronto-Dominion Bank economist Brian DePratto, is that these people are carrying debts of more than double their income.

And the fatter the debt, the bigger the shock in terms of servicing it when rates rise.

That 12 per cent has been steady over the past few years, the central bank said in its semi-annual review of the financial system, but it's double the level of 2000.

"These highly indebted households carry about 40 per cent of overall household debt," the Bank of Canada said.

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"Low interest rates may not only encourage some households to take on high levels of debt, but they may also encourage some financial entities to lend to riskier borrowers," it added.

Just last week, Fitch Ratings also sounded the alarm on household debt levels in Canada, warning that the "Canadian consumer has essentially had to lever up to keep pace with the growth in house prices."

Canadians are carrying $1.8-trillion in debt, some $1.3-trillion of it in mortgages.

As The Globe and Mail's Barrie McKenna reports, the central bank also said it's monitoring the "significant growth" in auto lending, and uninsured mortgages that have "grown markedly" in the past while.

"A more worrisome aspect of this trend is that a sizable proportion of new, uninsured mortgages are being issued to riskier borrowers."

Over all, household debt to disposable income is "broadly stable" in Canada, though near record levels, the central bank said.

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And it still believes the housing market is headed for a soft landing.

The Bank of Canada also attempted to put a figure on the overvalued housing market, saying its new model suggests prices have been inflated by at least 10 per cent since 2007, and overvaluation could now be in the area of 10 per cent to 30 per cent.

"The Canadian housing market has been overvalued by more than 10 per cent since at least 2007, and has exhibited only a modest degree of upward creep since 2009," it said.

"This supports the view that a soft landing is the most likely way forward: A stronger Canadian economy will continue to support the housing market, while household imbalances gradually diminish."

All in all, Bank of Canada Governor Stephen Poloz and his colleagues aren't sounding overly loud alarm bells, though these threats are on its radar.

"At least up to this point, they seem to be soft-pedalling concerns on the deep drop in oil prices (the risks are 'complex'), while at the same time sounding a tad more concerned about the steady build in housing-related risks," said chief economist Douglas Porter of BMO Nesbitt Burns.

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"However, there is also little sense of urgency on their part about having to act on the still-robust housing market, and Poloz went out of his way at the press conference to say that the bank is not 'targeting the housing market in any way,'" Mr. Porter added.

"On balance, we continue to believe that the bank will be extraordinarily patient with interest rates, likely standing still until next October."

About 5 million in low-income group
Almost 5 million Canadians were living in low-income status in 2012, or 13.8 per cent of the population, Statistics Canada said today.

It's the first glimpse of low-income trends for 2012, but the numbers are not comparable with prior years as this is the first release of Statistics Canada's new Canadian income survey, The Globe and Mail's Tavia Grant reports.

The new survey showed median after-tax income of Canadian families of two or more people was $71,700 in 2012. Families of two or more people in Ontario, Saskatchewan, Alberta and British Columbia all saw higher-than-average median after-tax income.

Families in Alberta had the highest median at $92,300. Those in New Brunswick had the lowest at $59,300.

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Oil, stocks sink
Oil prices sank again today, and stock prices tumbled fast in North America.

"The second week of the month is often one of the quieter weeks and much of the sentiment tends to be driven by Asia, where a number of important economic indicators provide an update on how the countries are performing," said market analyst Craig Erlam of Alpari in London.

"The problem we have at the moment is that the data coming from China and Japan paint quite a depressing picture, with both economies facing quite difficult situations and thus far, struggling to show they're up to the task."

The oil rout picked up steam as OPEC cut its projections for crude demand next year.

The Canadian dollar, meanwhile, touched a low point of just below 87 cents U.S. and a high of 87.44 cents.

Vacation, all I ever wanted
A beach vacation looks pretty good right about now, as the cold sets in.

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Just remember that the loonie is worth only about 87 cents in Miami today, compared to, say, what it'll buy in Cancun or Rio de Janeiro.

Or, better still, perhaps consider Whistler, B.C., where a dollar's worth a dollar.

"With that sunny Florida vacation getting pricier by the day, Canadians might want to shift their sights to other destinations this winter, like Brazil or Mexico, where the loonie has appreciated 11 per cent and 3 per cent, respectively, since the spring (versus a 4-per-cent drop against the greenback," BMO senior economist Sal Guatieri said of the various currencies, based on Monday's rates.

"Then again, with the cost of driving 22-per-cent cheaper, a 'staycation' is also an option (albeit a chillier one)."

Especially given that the Canadian dollar is expected to erode further.

The loonie is worth about 12.5 Mexican pesos and, to Brazil's real, 2.3.

Of course, you can drive to Florida and enjoy the lower cost of filling up.

By the time you drive to Mexico, vacation's over.

Of course, airline fuel charges should drop any day now.

At least, that's what the International Air Transport Association said, oh, about six weeks ago.

Today, in Geneva, IATA said we can expect the world's airlines to make even heftier profits in 2014 and 2015 as oil prices drop and the global economy grows, almost $20-billion (U.S.) this year and $25-billion next.

"Consumers will benefit substantially from the stronger industry performance as lower industry costs and efficiencies are passed through," the airline group said.

Right. Still waiting.

Here's another way of looking at it: Per passenger, the net profit among airlines next year is projected to rise to $7.08, compared to this year's $6.02 and 2013's $3.38.

(To be fair, IATA said it's a highly competitive industry, and that next year's $25-billion amounts to a margin of 3.2 per cent. And that these things take time.)

Société Générale, by the way, believes that the Canadian and U.S. dollars will be next year's strong performers, though the former will still slip against the latter through to next March before inching back up.

It works the other way, too.

The Conference Board of Canada said in a new report this week that it expects a boost to tourism next year, partly because of some big upcoming events, like the Pan Am Games and the FIFA Women's World Cup, but also because of the weaker loonie and the stronger U.S. economy.

"Improved economic conditions in the U.S. and a weaker Canadian dollar will boost overnight visits from American travellers by 3.5 per cent in 2015," the group said in an accompanying statement.

It added, though that "while growth in overnight U.S. visitors is expected to increase over the next three years, they will remain well below the levels seen a decade ago."

BP sees charge
BP PLC expects restructuring charges of about $1-billion (U.S.) by the end of next year as it cuts jobs and operations.

In a statement today before an investor presentation, the energy giant did not spell out the details, but gave the expected total over the course of five quarters, including the current three-month period.

Reuters quoted sources saying they expect to see hundreds of jobs slashed.

"We have already been working very hard over these past 18 months or so to right-size our organization as a result of completing more than $43-billion of divestments," said chief executive officer Bob Dudley.

"The simplification work have already done is serving us well as we face the tougher external environment," he added.

"We continue to seek opportunities to eliminate duplication and stop unnecessary activity that is not fully aligned with the group's strategy."

Worth noting is that BP said it approves its projects at $80-a-barrel oil, but it also tests them at $60 "to understand the resilience of the portfolio."

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