Comments on: The 40-year twitch

By: Islander

Islander — Sun, 25 May 2008 09:59:05 +0000

What I don’t get, David, is how a guy at ease with finance – and an unshakeable belief in his educational superiority to realtors – has a Grade 3 undestanding of how markets work.

A realtor’s job is to move product. It is not a realtor’s job to decide on behalf of a greed-infested buyer whether it’s intelligent to suffer negative cash-flow on a property bought for “investment” purposes. The buyer, operating on free will, controls the pen that signs the purchase documents.

As for your moralizing about real estate and finance not being productive parts of the economy, well, buying and selling of real estate occurs between willing parties at a mutually agreeable price. Banks lend money to help make it possible and realtors help facilitate the transaction. I don’t see the coercion that you and other professional victims desperately imply.

Nobody is forced to use a realtor. Nobody is forced to borrow money on a mortgage. Nobody is forced to buy real estate.

By: David

David — Thu, 08 May 2008 02:06:08 +0000

Probably because it is called conservative nanny state capitalism. The rewards are private, but the risks and losses are everyone’s business.
It is absurd to think that the central bank would assume assets that can not possibly have anything like an assignable value. One can only hope that there are many sober second thoughts about this in Parliament and the nays drown out the yays.

By: Greg

Greg — Wed, 07 May 2008 07:09:25 +0000

So if Canada’s banking and mortgage industry is in such good shape, then why is Carney asking to have the central bank do the same as the Fed and trade garbage assets for cash? Welcome to bagholder land – population all of us.

“Carney asked the MPs to support legislation that would widen his powers to expand the assets the central bank can accept in order to lend chartered banks money in times of financial stress.”

By: David

David — Tue, 06 May 2008 17:28:21 +0000

Vultur, you probably have the benefit of seeing both sides of the rent versus own arguments. You are in the property rental business, so there is a certain amount of discipline imposed on you when evaluate buying and selling properties. You have to deal with cash flows, occupancy, interest rate fluctuations and sustainable cap rates.
Virtually all of the overpriced condos and McMansions on the market today would show a strong negative cap rate when compared to renting.
It is truly sad that the real estate industry and the banks are selling such a counterfeit product and not being called out for doing so is amazing.
In your case, you will probably be lucky enough in a few years to nibble on the carcasses left over from the real estate bubble as a cash buyer. The folks who unwittingly or stupidly bought into the dream will not be so lucky.

By: vultur

vultur — Tue, 06 May 2008 04:22:06 +0000

David,

You make perfect sense. Clearly you don’t belong in this forum,