Entries from January 2009 ↓

Victoria, Saturday am. That’s me spouting at right.

At eight degrees in the sunshine on Saturday, Victoria strutted its stuff. This, many locals are convinced, is exactly why desperate cold half-expired Boomers in the burbs of Mississauga and Calgary will flow here in a steady stream, desperate to buy real estate at any cost.

At least that was the argument I got from folks about every five minutes before and after my talk. Given the fact it was snowing like the end of days in suburban Toronto, it made sense. Until you realize nobody’s moving anywhere anymore because they can’t sell their houses. That, combined with a stressed BC economy, bloated riduculous home prices, a forestry industry death spiral and the bankruptcy of California means Victoria real estate values are likely headed for a 30% decline. Oh yeah, and the 2010 Olympics debtfest.

Still lots of people are interested in hearing the message. They filled 700 chairs on a weekend morning, and stood a few rows deep at the back. They lines up, mercifully, to buy copies of my new book afterwards, and then kept me busy for an hour answering questions and signing my name.

“Man,” said the CHEK television reporter afterwards when we did a clip for the new, “that was rock star treatment.” I lowered my shades, signalling my body guards to remove him, but not kill him.

Actually, it had its moments. One vivacious young woman bought a book from the Chapters table set up outside the lecture hall, waited patiently in line, had me inscribe it to her husband, then leaned over, stuck out a blue felt-tip marker, bared her bosom and asked me to autograph it. As the crowd egged me on, I checked to ensure no cameras were present and then did what any financial author would do.

Did I mention these are strange times?

First comes financial crisis. Then an economic crisis. Then people lose their jobs – millions of them. Finally, anarchy.

If you caught the news lately, that’s exactly what is happening. Unruly crowds in Britain. A million marching in France. Tear gas in Iceland. Riots and busted heads in China.

This is precisely what governments around the world have been fearful of, and that political terror has helped coordinate the greatest concerted global effort in history. Interest rates have come crashing down in unison. Monster bailout packages rushed into effect. Central bankers have burned up the phone lines. Staggering financial institutions have been propped up with golden crutches financed by taxpayers.

But, will it work? Or will the fact that 2,500 more people every day lose their jobs in Britain guarantee social unrest and some burned-out cars? After all, with the GDP numbers released in Canada and the US on Friday it’s clear we are now in a semi-freefall. If the economy in this country contracts for all of 2009 at the pace it did in November, we will have a technical depression.

Well, it’s late as I write this, sitting in my hotel room in Victoria. It took me far too long to wing my way from Toronto, and it’s not hard to see that Air Canada is one stressed-out company.

My afternoon flight to Vancouver was delayed for more than two hours because the plane died. That meant I would miss my connecting flight to Victoria, where I am speaking Saturday morning. So, I called the AirCan reservations desk from the terminal, to change the Victoria flight. That, the snippy lady told me, would cost $340, on top of the ticket I’d already purchased.

But it’s your fault, I said. And she hung up.

As it turned out, the Van flight was three hours late, and the second plane could not dock at the gate out there because of multiple malfunctions. After 30 minutes on the ground the AirBus had to be towed in by a piece of baggage equipment.

I managed to find a nice airline employee who got me on a packed shuttle to Victoria, but not before I had to sign an autograph for his brother and answer some questions about the Federal Reserve. That flight was fine – all 18 minutes of it, each of which the airline had tried to charge an additional twenty bucks.

Is it greed? Or incompetence?

Whatever. Let’s riot.

In a world where governments toss around billions like pennies, it’s not much.

But for 100 people, this means the end of their jobs. For some commercial landlords, it means 12 more Big Box stores will be empty soon. For suppliers, it means $5 million in bad debts at a time nobody can afford any. For southern Ontario-based Giant Carpet, it’s lights out.

This is how the economy is dying, one retailer, one parts manufacturer, one exporter, one rig company, one shop at a time. And it’s just really starting. Brave words by the Bank of Canada won’t bring rug-buying customers through the door. Misleading statements from politicians and bankers in newspapers too few people read anymore won’t do it, either. This is the big one.

Ford reported on Thursday it lost almost $6 billion in the last three months – and it’s the healthiest of the car companies. New home sales in the US crashed by 15% to the lowest point on record. Brand new houses are now selling for an average of $206,000, down another 9%. If not another new house were built for a year, no buyer would go unsatisfied.

Gold has broken through the $900 mark and its boosters are calling for much more. Oil is sinking again, now back to the $40 mark. The Obama rescue package looks like it may sideswipe Canadian products by permitting only US-made stuff to be used in public works projects. And in Canada, one day after the budget, the new debt and deficits, nobody feels more confident.

In the last two hours I received three emails from career realtors asking me for personal advice. They’re all in their fifties, all successful by industry standards, all owning multiple properties, all of them scared. While the people in charge of their real estate associations madly reassure the public they should buy now before prices vault higher, the folks on the street know otherwise.

So, is it all doom?

Of course not. In every reversal there’s opportunity. Real estate is becoming more affordable. Governments are relearning the fact they can’t tax without end. Regulators are realizing how much they screwed up. Bankers are waking up to the crisis their lax lending policies caused. MPs, I hope, see how careless they were in gutting mortgage standards and pissing away our nation’s budget surplus. Now when citizens need help, we must borrow to do so.

Recovery and growth will come. They’ll be led by financial markets, lagged badly by housing markets. Jobs will return, but in tens and dozens, after being lost in hundreds and thousands.

Between now and then it gets worse.  But maybe when we get there, the world will be a more honest place.

Today’s blog: Chain of Fools