Sum of fears

lith-riots11

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.

106 comments ↓

#1 dd on 01.31.09 at 12:59 am

I hear Britain, Spain, and China are losing ground big time.

Roubini suggested that China could actually have negative GDP (don’t beleive that papers or govt) and not the 6% as claimed.

#2 Canadian@V on 01.31.09 at 1:08 am

Leave AC, get into Westjet Garth…I agree to ur point that times will get tougher and human natures more volatile if recession drags too long. We as Canadians are not used to such extremes(in recent times) but as they say “prevention is always better than cure”. Be prepared.

“When blessing comes into your hands, don’t forget to share to others, so that blessing will not stop in your hands. Let the blessings spread and flow from your hands infinitely…” By : Ed Pudol

If we as Canadians stand together(no east vs west bs), we can surely come out stronger than any other nation in the World.

#3 bailoutsLOL on 01.31.09 at 1:08 am

Garth – did the worker also ask about the Illuminati? :)

To #1: Roubini has clarified that China is in fact in recession when you take the 6% number and convert China’s formula (year over year) and apply to the quarterly calculation that everyone else uses.

Really good Roubini podcast with Tom Keene on Bloomberg ……. he’s really pessimistic and laying the smack down on all the optimists in Davos

#4 Patrice on 01.31.09 at 1:13 am

Scary times indeed.

The calm will come after the storm.

Hopefully the storm wont be too strong.

The world was highly unstable and unbalanced; hopefully they will let the shaky castle of cards fall to the ground and build stronget fondations for the next one.

Painfull times; but this might mean that young ones will have a brighter future… or not.

#5 kc on 01.31.09 at 1:35 am

Don’t worry about civil unrest in this country… remember Harper had his papers signed in texas last Febuary… we will all be ok as the US army marches down our streets to subdue the sheeple…. thank christ our army is in afghanistan…..

#6 Dave in Calgary on 01.31.09 at 1:47 am

Don’t panic Garth, it’s just British Columbia. Just think slower and it will all be good.

#7 kc on 01.31.09 at 2:14 am

Here is a good piece to back up what garth’s entry has to say:

Economic & Financial Markets Forecast 2009: Collapsing Global Financial System Ponzi Scheme

http://www.marketoracle.co.uk/Article8593.html

“Never before in history have so many investors made decisions based on PHONY data and false headlines. Most in the alternative information arena are fully aware and have reported extensively on the POLITICALLY correct but practically incorrect economic data emanating from G7 governments. This is nothing but PR for public consumption as the real numbers would spawn RIOTS in the streets. So the public are NEVER told the true story as it is too horrible to acknowledge. The public is fed FALSE data.”

this article goes on to explore the myth about treasuries being bought up by off shore investors, and talks about the implosion of unpayable debts. And also lays it on the line how insolvent the banks in G7 really are.

worth the read if you question the MSM truth

#8 Central Banker on 01.31.09 at 2:45 am

Well Garth, welcome to Lotus land, you have arrived to the city of newly weds and nearly dead, and over mortgaged, I look forward to listening to you in Victoria!!!

#9 Anonymous - GTA on 01.31.09 at 2:51 am

I just came from a visit to India.

IT (Information Technology) seems to be doing good
People working in Mumbai seemed to be unaffected.

From people working in poorer categeoy of jobs in a town not far from Mumbai, one of the words i heard quite frequent was “Slowdown”

Out of two people i knew that were working in diamond industry, one was laid off. The other had his salary slashed to half. Reason: “Slowdown in US”

Also met a family where 2 brothers (+ their families) worked in a city away from their home town. They emptied up their houses in the city and brought “everything” back to their hometown house for storage until situation improved. Reason: Their manufacturing company closed down. Unemployment increased. Daytime robberies increased. The quote i heard was “If they see a lock on your door even during daytime, your home will be robbed !!!”

Scary picture!!!

As i heard these stories, Garth’s blog on survival tactics didnt seem unrealistic.
Thinking (and telling myself) Canada is a different country though…

#10 Peter Coupland on 01.31.09 at 3:31 am

You just picked the wrong airline Garth,If I have to fly,it’s on WestJet,I wouldn’t even think of Air Canada.

#11 Jim on 01.31.09 at 4:30 am

Let’s Riot? Is that before, after or during the appearance in Vancouver on Thursday night?

Hmmm… what do you wear to a riot? Will the Stanley Cup be there? (of course, it doesn’t matter… it wasn’t here in 1994 either).

#12 DazedandConfused on 01.31.09 at 6:48 am

Garth… No mortgage on my house… Should I sell now and rent?

#13 Matt Stiles on 01.31.09 at 6:55 am

I’m living in Germany right now. I see the riot footage on TV almost every night. Latvia, Greece, Bulgaria. The entire EU is falling apart. Individual economies cannot control their own rates of interest, therefore the only recourse is to cut wages. That is not exactly popular. Eventually, individual countries will start opting out of the monetary union. Those betting on an inflationary collapse of the US Dollar are looking the wrong way. It’s about to skyrocket in value…compared to other paper currencies.

I mentioned this in an article “The Crisis of the Euro”
http://futronomics.blogspot.com/2009/01/crisis-of-euro.html

#14 Apocalypse Now on 01.31.09 at 7:16 am

FOUR HORSEMEN OF THE APOCALYPSE

1. Economic Collapse / Bread will be worth its weight in gold; buy gold now so you can buy bread later.

2. National and International unrest (read civil wars and mega wars.) All imperialist governments have attempted to disguise internal problems by finding scapegoats and launching wars. The scope of this economic collapse that is only just beginning foreshadows a war the likes of which the world has never seen. WW III is almost certainly unavoidable. Those who still believe that this is a purely economic problem do not know their history and history has a great penchant for repeating itself.

3. Food shortages due to climate change and man made causes: Australia bakes in a record heat wave while North America and Europe have record cold winters. There is drought in many parts of the world and already there is a forecast that the wheat harvest this year will be less than last year. Remember the dust bowls of the 30’s? It wasn’t just the stock market crash that caused the depression: history does repeat itself so lookout for some severe weather anomalies, and dust bowls appearing worldwide rather than just one continent. The Irish potato famine of the 19th century, and the Ukrainian man made famine of the 20th century will be repeated on a much larger scale, except this time there will no place in the world that will be able to satisfy the hunger of the famished since there will be no food to spare. Stock up now; have 2 years worth of food, it will be worth more than gold.

4. Pandemic disease: Bird flu is back in the news. In China, in India, in BC… http://www.google.com/hostednews/ap/article/ALeqM5ghdkIg5knBtGcVm1UfEwvXSnaAPAD95USRAG0
It’s only a matter of time before bird flu mutates into a more deadly variety that will be transmissible human to human. Whether this mutation occurs naturally or in a lab somewhere only God knows but something like this is coming.

The world is facing a perfect storm; the mother of all storms one might say: Economic collapse, civil unrest and international warfare, famines and food shortages, and pandemics and diseases. And oh yeah, oil will rise just as rapidly towards the three figure mark as it declined last fall; it will not be a gradual rise.

I believe the first half of 2009 maybe all the time we’ll have to prepare.

#15 HalifaxFamily on 01.31.09 at 7:17 am

Patrice – this is the calm before the storm. …or the eye of the hurricane.

#16 Mike B on 01.31.09 at 7:39 am

Re the GDP numbers. Some economists were pleasantly surprised that the US ONLY had a 3.5% decrease vs the expected 5.5% drop. That is some optimism I tell you. Only 3.5 drop in just one quarter. Yikes… Lets dance with joy!! Canadian GDP drop of .7% in just one quarter. That is huge.

As for stimulus working. It did not in Japan who have had virtually 0% GDP for over 10 years BUT have tripled their debt since 1996. Too much debt created by the short sighted government. The same will happen in US who have over 3 times the debt of Japan. But hey just keep printing that money … Your kids and grand kids will be so pleased.

#17 MissedTheBoat on 01.31.09 at 7:51 am

This article attests to what you are saying, Garth:

http://www.guardian.co.uk/business/2009/jan/31/global-recession-europe-protests

“France paralysed by a wave of strike action, the boulevards of Paris resembling a debris-strewn battlefield. The Hungarian currency sinks to its lowest level ever against the euro, as the unemployment figure rises. Greek farmers block the road into Bulgaria in protest at low prices for their produce. New figures from the biggest bank in the Baltic show that the three post-Soviet states there face the biggest recessions in Europe….”

Funny times we are living in….

#18 D Griffiths on 01.31.09 at 8:01 am

Financial meltdown, economic ruin, massive unemployment, hunger, and environmental catastrophe are all excellent reasons for a riot. But my personal favourite has to be airtravel!!

#19 David Bakody on 01.31.09 at 8:01 am

#3 Patrice on 01.31.09 at 1:13

Agree in principle but I also am aware this is a complex issue that was hatched by those who control world order. As I have mentioned the 40-20-20-20 plan is moving along quite well.

#4 kc on 01.31.09 at 1:35 am

Do not be surprised to wake up one day and see that Harper has decided to move on to some Bush appointed job only to resurface and once again spin his neoconservative views alongside Blair and Howard. And then or course it will be all our fault because we did not support them 100% and had we things the world would not be in this mess ……

As I first stated it was coming and when the dust settles those who remain may have many good years until the next round. But for now they appear to have found a way to knock the top of the baby boomers off stride not to mention a host of others.

WRT to fighting in the streets that was called some time ago but the US was suppose to experience it first …. look for Poland and Hungary to fall next. California is shaky at best in more ways than one.

#20 Canoz on 01.31.09 at 8:17 am

I have never understood Air Canada. I have flown them several times over the years and their customer service is terrible, lacking organisation and respect for their customers. I only fly them because they are the best route from Australia to Toronto. They have a large market in Canada, and the best route from Australia, yet their poor service and system leaves customers frustrated.

#21 CalgaryRocks on 01.31.09 at 8:40 am

Fly West Jet, seriously.

#22 Bill-Muskoka (N.A.M.) on 01.31.09 at 8:44 am

Let’s riot?

My, my Garth, you are starting to sound like a supporter of ‘V is for Vendetta’! Okay, here is the plan (and we know it works because the movie proved it does), you need to makeup a lot of Garth masks, ship them out, give us a time and place, and we will BE THERE, enmasse!

Finally a valid use for all those 10%’er lists.

BTW, is there a subway under the Parliament Building? LOL

Oh, and I see Steve is ever so worried about being upstaged by President Obama. Well, Steve, has more than adequately upstaged himself as this photo-op bears witness.

#23 pbrasseur on 01.31.09 at 8:49 am

A million marching in France!

What’s new? They do that all the time, it’s a sport over there.

If they setup a guillotine on Place Vendome then worry ;)

#24 Chris P on 01.31.09 at 9:08 am

Lovely….and what do we all have to show for it? Turn your stuff over ladies and gentleman and read the bottom sticker…it’s from China and it’s currently valueless.

Will this shake the entitlement from the mind of children or will parents protect their little ears as long as possible? I’m doing a renovation right now for a family and while we toil away at a rate of time and material (on the parents pocket) the children watch tv and complain about what they are getting….for free. This is the perfect time to put them all to good use, contribute to their house and save their parents some money. Least they could do is keep the construction area clean and tidy so we could work more efficiently. They are all in their teens so could easily learn a skill like painting and so forth.

I rent a house to students and have always wondered why my tenants have no idea about how to run a house, how to shut off the main water, how a hot water tank works (or doesn’t) how to flick on a breaker, how to trouble shoot anything and so forth. Best was when one fairly intelligent (University grade here) kid called me about putting the shower curtain back up after it fell, he had no clue (true story). I could write a book about how clueless these kids are.

Too bad things have to go so wrong before they get back to where they should be. Alas people aren’t perfect so they must learn out of necessity and out of failure.

#25 Marc on 01.31.09 at 10:21 am

Lets riot.

I thought this was a great idea. Figured I would smoke some pot and think about what I needed to prepare myself for the riot. Sorry lost my motivation to be violent after getting high, I promise next time to drink alcohol, as that is a better drug to make people get violent. Try again next time.

#26 Leasa on 01.31.09 at 10:53 am

Don’t be afraid Garth. Here, I have the answer for you, the answer to the meaning of life. Please turn your volume up, it gets really interesting in the middle. You can thank me later. XX Leasa

http://ca.youtube.com/watch?v=Z4Y4keqTV6w&feature=email

#27 Rhino on 01.31.09 at 11:22 am

Garth

Thank you for pointing out that those who sit here and feel everything is o.k. because THEY have not lost their jobs, or their region is doing well, are only fooling themselves. Desperate people do desperate things. If you have to steal to eat, you will steal. If you have to use violence to protect your things, you will do so.

Canadians tend to look south to the American ghettos, and think that could never happen here. All you need to do is look even further south, to South American cities like Sao Paulo in Brazil, or the major cities of Columbia, to see what poverty can do to social stability and crime rates. It is time to stop being smug about “I’m o.k.” and start looking at a system that has grown the prosperity gap drastically over the past 20 years.

Our political and economic systems have FAILED the MAJORITY of North American citizens, as our lawmakers have not adapted from the frontier mentalities towards a more social support of your neighbour.

All you need to consider is the jealousy when your neighbour puts in that nice pool, or drives up in the Ferrari while you are trying to make do with a Chevy and swimming at the levy. Multiply that by a thousand, when you watch your neighbour bring home big bags of grocery, while you try to eke out a survival with macaroni and cheese, after having to sell the Chevy for a month’s grocery. Even worse, starving while the neighbour throws garden parties.

Of course it spells ANARCHY! You may not rob the next door, but maybe you will walk down the street to someone who looks “rich enough”.

As a friend of mine said, the upcoming stock market turn-around – when it happens, will mostly reward those who caused the problems, as they are the ones with the secured assets and cash to be able to buy up stocks and watch them rise, while the masses of workers, who have lost everything, will still be trying to scratch out a living for survival. Sadly, it is the common man who has been duped with the lie that growth was unending.

For social peace, you must have social justice. Continuing to reward the wealthy and allow them to profiteer on the backs of the workers, will fuel the flames of dissention.

We are in for a very rough time, and unless our government becomes more egalitarian, the rich better buy bigger guns, and get ready to live in walled communities… just like too many of our American friends.

#28 brazer on 01.31.09 at 11:36 am

Haven’t been able to following the comments the last few days, so not sure if this was already discussed…..any event, TD has back-peddled on its $35 inactivity fee for LOC’s.

http://www.thestar.com/Business/article/580129

http://business.theglobeandmail.com/servlet/story/RTGAM.20090130.wtdfees0130/BNStory/SpecialEvents2/home

#29 JO on 01.31.09 at 11:55 am

What we have seen so far is but a warm up to what will be coming down in the next 3-4 years. This is a life changing era, not event. If you want to make your voice heard, please contact your MP and tell them: 1) The problem is too much debt which comes directly from the policy of fractional reserve lending (set by central banks, run by large commercial banks) and the ongoing devaluation of our money due to the Fed/BofC, 2) End the policies of # 1 by eliminating the BofC / Fed by joining Endthefed or signing any online petition for this if you wish to keep a lower profile, debt enslavement programs such as the CDIC/CMHC need to be elininated once the crisis passes for true long term reform and to prevent the next depsression , 3) Boycott all products of all companies, where possible, that have recieved or asked for any bailout money from US/Can taxpayers, 4) Tell all your friends and family to do the same. 5) Save as much as possible and pay down your debt. Refuse to become trapped into the high consumption, debt fuelled lifestyle our governments and central banks (run mostly by bank people) try so hard to force us into.

If you are affected by this (almost everyone is) or complain about it, do something about it. Speak up, and contact the people in power.
JO

#30 Bottoms_Up on 01.31.09 at 11:56 am

Air Canada credits:

If you book with air canada, and then have to cancel the flight, don’t even think that you’ll get a good deal.

With this company, credits from cancelled flights are only good under your name (non-transferrable), are only good until the anniversary date of the day of booking (not the day of your flight–thus, if you book well in advance, but cancel near the flight date, you lose the time value). Also, when you go to use the credit, they make you pay airport and extra taxes using cash or credit card, they will not take these fees off the credit you have!!!!! And to boot, you can only use your credit file once!!! So if you have $1000 credit, but take a $200 flight with it, you lose the $800. They are a horrible, horrible company.

#31 Keith in Calgary on 01.31.09 at 11:58 am

Air Canada……heh. *$^%#&#+= !!!

I fly 100,000 miles a year and avoid them like the plague……..when I need to go to Toronto from Calgary for example, I’ll fly on United Airlines, either connecting thru Chicago or Denver. It takes longer, but UAL treats me right. Really right.

When I was a Super Elite on AC they could have cared less…..but as a 1K on UAL they care that I give them my business. I haven’t flown on AC since 2002……and have spent some $180K with UAL since that time.

AC is the perfect example of how a union culture and a sense of entitlement from the old “Air Pierre” days of when it was a government owned crown corporation have destroyed a company.

#32 K on 01.31.09 at 12:02 pm

Heres some good news for all you people from the east. Its only a matter of time before real estate prices in Victoria hit bottom. With tourism forestry natural gas prices and the Olympics all in the tank it will only be a matter of time before we all start a mass exodus out of here. Moldy, leaky,condos and bungalows will be going for cheap. We have a wonderful winter climate here. We also have earthquakes. I plan to move to Alberta , I will buy a cheap DRY condo and sell my earthquake kit in a garage sale. As for the climate …Give me a snow shovel over a bulldozer any day. P.S….. Garth did you bring your earthquake kit and inhaler? or did Air Canada manage to lose it.

#33 Waco on 01.31.09 at 12:19 pm

The only riot i ever heard of in this country is the street protest in Montreal for Maurice Richard… a riot here must be kidding it’s so uncanadian.

#34 Rob in Onterrible on 01.31.09 at 12:25 pm

Garth nails it again. I can’t envision Canadians rioting, though. We’re far too passive (at least compared to the French) and tend to vote the bad guys out instead of voting the good guys in.

#35 Dawn in Calgary on 01.31.09 at 12:36 pm

No worries everyone — all we have to do to fix this crisis is give ourselves a shake.

Isn’t that great news! I’ve been waiting for someone to give me such great advice.

Off to do some shaking.

http://www.calgaryherald.com/Homes/Time+give+yourself+shake/1239641/story.html

OK people, it’s time to shake your-selves out of that funk you’re in. What has happened to the housing industry in the United States will stay in the United States, for the most part.

Canada has seen its new and resale sectors soften, but because our lending regulations are so much more stringent than those to the south of us, we will easily avoid the financial pitfalls that have reined in the home ownership dreams of buyers and battered sellers forced to drastically cut prices and/or go into foreclosure.

#36 john on 01.31.09 at 12:47 pm

Every day here in Canada we head closer to chaos,its obvious from our highways,for sale signs,closing factories etc. Between the war in Afghanistan and our government throwing billions at every spur of the moment decision…the future is inevitable!The younger generation in this country will not be able to cope…….they never had to and they don’t know how. Thousands of migrant workers come into this country every year,they make minimum wage but the farmers have to pay their plane fare and provide lodging it would be cheaper to hire locally and pay more than the minimum…..why? because it is impossible to find people who want to work or have any work ethics (i know i live in a farming community). Our society is in for a very big wake up call.

#37 dd on 01.31.09 at 1:04 pm

West Jet all the way.

Flight delays yes … nasty no.

#38 Wealthy Renter on 01.31.09 at 1:04 pm

#25 Hi Marc,

Laugh out loud.

Perhaps the powers that be should actively stage & subsidize Marijuana Party rallies the same time and day that the protestors and rioters coalesce for their purposes. Hopefully, they would meet and combine like chocolate and peanut butter in a Reese cup.

Think of the positive economic spin offs (promoting & providing BC bud,) and we could sell some good ol’ Canadian potato chips and bottled water.

Everybody wins.

Of course I am joking. A similar pairing of realtors, bankers, homebuilders and Japanese bike riders didn’t mix well with Garth Turner Bloggers.

#39 dd on 01.31.09 at 1:07 pm

#12 DazedandConfused,

What do U want? Just depends on your situation. If you have a lot of cash on hand … no.

Read some of Garths books … he suggests what kind of house might hold value in the future.

#40 a renter on 01.31.09 at 1:24 pm

I’ve noticed lots of discussion about the merits of our cities on this blog. So to add some fuel to the fire, check out this column by the Star’s urban critic, Christopher Hume.

Haligonians, get ready to gloat. Calgarians not so much

http://www.thestar.com/comment/columnists/article/580078

Will be on Nature of things this Thursday, should be interesting

#41 dd on 01.31.09 at 1:27 pm

Calgary Real Estate Board & the Calgary Herald Home Section:

“Markets should balance this year … prices might even dip some”

Come on you guys. The worst recession is here, now, and will be getting more ugly and this is what you are telling the market?

Who is paying your wage?

#42 Pete on 01.31.09 at 1:27 pm

“Unruly crowds in Britain.”

Well it’s Saturday. The football’s on.

#43 Justin on 01.31.09 at 1:28 pm

The Frenchies got it right! Governments should fear their people. In North America, people fear their governments. A little rioting never hurt no one ;)

#44 WAK on 01.31.09 at 1:42 pm

Garth. Have you ever been to a third world country.
I have, lived it, emersed in it for several years. But look at me I’m just fine. Even if this country goes into a depression, we’ll still be far better off than them. We’ll just have to get used to having a little less and be happy.

In fact, that’s one thing I learned from that part of the world. People have less in material things but they are rich in spirit. This coming depression may just be a lesson for us, a lesson of humility.

#45 Paul Fist In Your Face on 01.31.09 at 1:50 pm

From TAE this morning, some joker has named the ‘bad bank’ idea Bad Asset Repository Fund or BARF. Which got me to thinking what would a good term for the whole bailout mess be. Well lets see, they are taking taxpayers money to bailout insolvent financial institutions that untill recently had more money than God. Forcing feeding billions of dollars down the Fois gras coated throats of the clever greedy men that caused this. Leaves me nauseated. Ah Ha! Lets call it “Publicly Underwritten Keynesian Economics” That would make BARF a part of the PUKE plan.

#46 dd on 01.31.09 at 1:52 pm

16 Mike B

“As for stimulus working. It did not in Japan who have had virtually 0% GDP for over 10 years BUT have tripled their debt since 1996.”

True. However there were too many 1/2 measures taken in Japan. The bank should have collaped or at least written off the bad debts ASAP and It took them 4-5 years to lower the prime to reasonable levels. Furthrmore … demographics.

#47 David Bakody on 01.31.09 at 2:08 pm

#24 Chris P on 01.31.09 at 9:08 am

Hey Chris, last summer I was watching TV and they were talking about parents having to take their kids for job interviews and sit with them to help them through it ….. like giving their full name and address ….. well almost that bad ….. the sad part is the perspective employer allowed it! So should the crunch come we just may be deeper in the ode cucka pooh than we ever dreamed and there is little we can do for them …. because you know your can not tell a Heinz Pickle ….. xxxx all.

#48 Wealthy renter 2 on 01.31.09 at 2:09 pm

KC, you were right about your post – few days ago.
BAC has 1.2trillion dollars in assests, and 39.85trillion dollars worth of derivatives. If that is not insolvency i don’t know what is. I mean we are not talking millions, or billions, we are talking trillions. Geez with all these trillions, we could end poverty for the entire world twice over.

Not sure how Canada will be affected…I’m curious on your opinion? seeing as how the bankers and analyst haven’t dared touch that one?
Thanks for the link on #7

link for BAC info:
http://seekingalpha.com/article/117135-thinking-the-impossible-could-bank-of-america-go-to-zero?source=article_sb_popular

Interesting read on inflation/deflation.
http://www.greenfaucet.com/economy/big-inflation-coming/31387

#49 yukon Don on 01.31.09 at 2:11 pm

Bingo Marc #25 you have the answer dude , legalize pot , use the tax dollars to help economy? Harper can put budget money into pizza places , cash floods in and bingo the whole mess goes up in smoke , everything is paid off! gee being an economist is easy , next problem please….

#50 GrandePrairiegirl on 01.31.09 at 2:15 pm

#24 Chris P.
If that’s true about the shower curtain eposide then it proves my personal upoinion. 90% of the population has no common sense or reasoning skills. Something which I believe will be of immense value in the years to come.

Garth you should try Westjet. They’ve lost my luggage twice but always delivered it to me once found.
The only thing with Westjet is you’ll get to hear the corniest gawd awful jokes from their staff. And that would be while your in mid air and a captive audience.
Also where are your solar panels made? Please say somewhere other than China. Seriously.

#51 GrandePrairiegirl on 01.31.09 at 2:16 pm

Forgot to proofread again.
That should read, personal ‘opinion’.

#52 colette on 01.31.09 at 2:31 pm

I think we are in the position where this turmoil could be used as aspringboard to go forward to a world that is more united, cleaner, and equal…or it could be as it was after the fall of Rome…Dark Ages.

Trouble has been with us throughout the history of man. Many times it was the troubles that brought positive changes. Other times it brought unrest, poverty and bloodshed.

I believe that this challenge will change our world forever…either good or bad. But I also believe that the course the world was on was not sustainable so I am hoping that we in our wisdom will bring about changes that make it a world where all countries share the bounty, where all citizens are deemed worthy, and where we realize we share the world with other species and we set aside our greed to ensure that the world is still viable for our grandchildren.

#53 Vancouver_Renter on 01.31.09 at 2:45 pm

#14… Yes, my bigger concern is also war – not necessarily tomorrow but within the next decade or so. If you read your history books, you find that most major wars resulted from economic hard times, unrest, protectionism, and resource shortages (food, water, energy, etc).

I look at my young kids, in their carefree world of relatively prosperity, peace, and security, and wonder what their lives will be like in a few years. Maybe we are all just living in a brief “golden age” that precedes a terrible future.

Through the ages, so many people have been died from mass hunger, disease, and war. I’m sure many of them had happy and secure lives at one point and assumed that their lives would always be that way. If you told them that they were going to die in a concentration camp or be vaporized in a nuclear blast (Hiroshima/Nag) they would never have believed you.

There’s one specific scenario that I’ve wondered about… The US is clearly worried about the use of a nuclear weapons by a terrorist group. I keep reading that this threat is increasing, not decreasing, and in one article a prominent US military expert (I forget his name) was quoted in saying that such an event is almost assured in the next 40 years.

Let’s say that, one day, we all wake up to the shocking news that a nuclear bomb has detonated in a city somewhere in the world. What would be one of the first thoughts in your head? Mine would be, “Is MY family a target? Can this happen to me??”

I think that, if such an event ever occurs, urbanization will instantly unravel. There will be a mass exodus from “targets” which include all major cities. Think of the effects on the economy, real-estate, and society as a whole.

I know people who own inexpensive 2nd homes in faraway, very thinly populated places (outside of Canada/US) for this very reason. Of course, I remember reading that many inhabitants of the Falkland Islands had moved there to escape the threat of a Soviet-American nuclear exchange, and inadvertently ended up in the middle of a war! So maybe there is no surefire escape?

#54 a renter on 01.31.09 at 3:29 pm

In Central Toronto C9, we’ve seen an explosion in “accidental landlords” listing their homes for rent after months of trying to sell without success.

Now we’re seeing it with higher-end new homes in established neighborhoods like Rosedale and Moore Park. Here’s two examples — both had been listed the the 3M+ range since mid summer and are now available for rent as well…

http://www.realtor.ca/propertyDetails.aspx?propertyId=7919110

http://www.realtor.ca/propertyDetails.aspx?propertyId=7911542

Based on the sky-high rents they’re asking, the carrying costs for these McMansions must be huge. The original tear-downs would have been in the 1.5M to 2M range, also property taxes are in the 20k / year range

I expect we’ll see lots more of this in coming months

#55 Metaldwarf on 01.31.09 at 3:33 pm

I just returned home from the Howestreet.com Money Expo 2009 at the Victoria Conference Center. I only stayed for Garth Turner, as everyone else seemed to be selling something I didn’t care to buy.

The opening video by Doug Casey on “the greater depression” was very doom and gloom, end of the world, sky is falling, type stuff. He is a gold bug and shows it. Fun to watch and giggle but not my style.

The room was filled with a few hundred chairs, and it was standing room only in the back. I was quite impressed by the attendance. From my view at the back left of the seats I saw a sea of bald and grey heads laid out in front of me. The group was primarily populated with seniors and boomers, I was likely the youngest in the room at the tender age of 24.

Overall Garths talk was good, he had a very entertaining slideshow of various newspaper clippings, many including funny pictures which were worth a laugh. Garth spoke throughout for the first ¾’s of the talk, giving a review of all the things that have brought us to the current predicament, easy credit, past bubbles, etc. he made some comparisons of houses in Detroit ($300) and Vancouver ($1Million) which was lifted directly from his blog a few months back. Overall he gave thoughtful conservative advice but didn’t bring any newfound revelations, at least not for the crowd whom will be reading this post. Many of the topic he covered have been discussed here at length and was merely a rehash for me. I did, however, see many many people scribbling on notepads throughout the presentation, so for some people I am sure it was an eye opening experience.

The last quarter of the talk was on what actions we can take to best protect us if things continue for the worse. Surprisingly Garth was very tame on this subject; there was no talk of squirrel soup or living off the grid. The advice he offered was common sense, but to many I think some of the ideas were strange and new as pens franticly scribbled his words.

Contribute to an RRSP or TFSA… really should I be doing that?

Pay down debt… but I like owing other people money.

RRSP Loans… what are those?

There was brief discussion of making debt tax deductible, an incredibly shallow example of the Smith Maneuver was mentioned, as well as the concept of an RRSP meltdown. More pens scribble beside me.

At one point I glanced at the lady sitting to my left, in pink writing she had written “RRSP meltdown” followed by question marks and enthusiastic exclamations points. I leaned over to her and offered some information I wish has been mentioned by Mr. Turner but had been omitted, “RRSP meltdowns work, however, they are risky. It is possible to lose more money than you can save.” A quick glance to her husband and she drew a line through the words. For those not “in the know” the Smith Maneuver and an RRSP meltdown both involve leveraged loans and investments. If the investments perform poorly you can lose not only your own money but the money you borrowed. There is a lot of risk involved in these strategies, just ask anyone who has been doing either strategy this year, they likely are not too happy about it. I am not against these strategies, I plan to using them personally but if someone has never even heard of them they likely do not possess the investment knowledge required to comprehend the risk associated with them. /end personal rant.

After doling out some simple good points to live by, pay down debt, make your investments tax efficient, have a rainy day fund, keep some food on hand in case of emergency; common sense stuff really, Garth took questions from the floor. Most of the questions were very specifically about the person asking them so I won’t go into detail. I raised my hand to ask a question but was unfortunately not called upon, I was really hoping to ask if we could trade squirrel recipes.

All in all it was a good talk, a little simplistic for my liking, and all very based around common sense. It was worth going too but nothing new was offered to those of us who frequent these blogs.

Bullet point run down
– If you want to sell your home in the next 2 years do it NOW and be aggressive
– Garth is bullish on stocks
– Garth is bullish on energy
– Garth is bearish on gold
– Garth is hopefull but hedging his bets
– Garth thinks it will get worse before it gets better.

Speaking of incredibly shallow, I’d say you did well. I don’t endorse the Smith manoeuvre, and you obviously did not listen closely enough. But it was good of you to dash the enthusaism of the lady next door and fabricate risk. I would not wish to inspire anyone to improve their situation. BTW, r u banker or realtor? — Garth

#56 Amy in the 'Peg on 01.31.09 at 3:38 pm

#35 Dawn in Calgary

Is that so? If what CRAB is pumping out is true, then why did I sell my 3 bedroom double garage 1000 sq ft house in calgaryin Dec of 2007 for $299K and I now see the exact same style of house on my very same street asking 204K and another for 209K and another. Look for yourself. My husbands parents neighbors house was for sale for the last 400 days and they finally took it off the market. There are now 6 houses for sale in their cul-de-sac.

#57 Amy Clowater on 01.31.09 at 3:43 pm

#35 Dawn in Calgary

If this is true, why did I sell my house in Calgary in Dec 2007 for 299K and now the exact style on the same street is asking 204K on the MLS. It’s been renovated, mine hadn’t….

In my parents neighborhood there are 6 houses for sale in the same cul-de-sac. Their neighbor just took their house off the market after it being on for over 400 days. Look for yourself.

#58 Accremonium on 01.31.09 at 3:45 pm

#32 Waco on 01.31.09 at 12:19 pm

The only riot i ever heard of in this country is the street protest in Montreal for Maurice Richard… a riot here must be kidding it’s so uncanadian.

How soon we forget the Regina Riots in 1931.
http://www.ccge.org/ccge/english/Resources/rivers/tr_rivers_SKRdirtyThirties.asp

Just google that and there is a plethora of articles!

#59 Jimster on 01.31.09 at 3:52 pm

Garth,

Riot?
You seem more the ‘flash mob’ type.

#60 Accremonium on 01.31.09 at 3:53 pm

Garth, I have been boycotting “Tear Canada” for years. If you are stuck, it is high time you made friends with some of the freight jocks, the ones that haul air cargo, especially the Charter guys. They do on occasion take a paying passenger or two! Enterprize keeps their equipment up to snuff, in spite of their one accident over at Hamburg, N.Y.

#61 dekethegeek on 01.31.09 at 3:57 pm

Air Canada’s motto – “You wont know you’ve left the ground because we’ll treat you like dirt”
Heard that from a friend of mine whose wife is a Flight Attendant for A.C. ! ( god help you if you call them a stewardess! It garauntees exceptionally slower service)
Yup, economic chaos begats social upheaval. Gonna be real interesting to see what happens on the Soviet – Sino borders as things spiral down and the government needs a convienient scapegoat. Germany had Poland> gotta shift the blame to someone other than your self.
Gee, one wonders when the Quebec separatists will start pointing fingers everywhere else except socialist,unionized Quebec.
Why is it that all the economic “experts” such as our beloved finacial advisors, realtors, bankers, ( all the people that are SUPPOSED to know the markets) etc. Didn’t see this slow down coming?
Buy food for a year folks ‘cuse it could potentially get ugly.

#62 VicREBear on 01.31.09 at 4:20 pm

I enjoyed your presentaion in Victoria this morning, Garth. I could practically hear the sweat breaking out on the foreheads of all those Boomers in the audience when you told them that Victoria house prices were poised to drop by 30 percent! Thanks for coming; we appreciated your words and advice.

#63 North Vancouver Citizen on 01.31.09 at 4:28 pm

Case-Shiller Prices for Seattle and Portland

Seattle -13.6%

Portland – 12.8%

Detroit, L A, San Diego, San Francisco, Miami, Las Vegas, Phoenix -35% to -42.6%

http://globaleconomicanalysis.blogspot.com/

#64 Chris on 01.31.09 at 4:35 pm

Hi Garth,

Great presentation in Victoria this morning! I was there and it seemed like you took a little bit of the edge off your message than you do here. Probably wise, given that a lot of people in the room are knee deep in real estate – I mean the lady who asked you about her two houses sitting on the market for 6 months and what she should do about it – uhm duh?? You’re priced way too high – I was waiting for you to really lay into her, but I guess that wouldn’t be very nice!

I tried asking a question, but you didn’t see me, so I’ll ask it here instead and hope you answer. It’s regarding what you think about the longer term, 5 years from now. I totally agree with you regarding short term being deflationary…but for how long until we hit hyperinflation when all this printed bailout money is in the system.

Many thanks again for coming to sleepy and newly tagged, “7th most unaffordable city in the world,” Victoria, BC.

Cheers,
Chris

Thanks for the kind comments. Deflation has just started in Canada and will be with is for at least this year and next, and after that – depending on how the US is able to resuscitate itself, we may start to see inflation building. However, it is a moot point right now since there’s too much uncertainty ahead and too great a chance the wheels might come off. I find those people who ask me this question think that just by waiting they will see their real estate come roaring back. Dream on. BTW, she was an elderly lady. Not gonna bite that head off. — Garth

#65 Gold Bug on 01.31.09 at 4:40 pm

Flaherty says “…who knew…”
http://www.financialpost.com/news/story.html?id=1235914
The list of people who knew or predicted: Robert Shiller, Marc Faber, Jim Rogers, Garth Turner, Peter Schiff, Charles R Morris, Nouriel Roubini,… and the list goes on.
There was even a movie, “I.O.U.S.A”, but of course, that doesn’t apply to us since only 60% of our exports go to USA.

#66 shadow boxer on 01.31.09 at 4:48 pm

Air Canada – what’s new? I can remember sitting on the tarmac @ Heathrow for over an hour in 1979 for some piece of navigational equipment that had to be replaced.

What’s new with rioting in France & Britain?

#67 john on 01.31.09 at 5:08 pm

I was just chatting with a friend from windsor on the phone (a realtor -not anymore 25 years, now working in a doctors office). She had just came home from shopping at a liquidation store,she said brand name clothing for example-dresses $150 for $15.The mass production people are trying to raise cash.When the sell off is finished….what then?…..remember when the first computers came out…(they were thousands of dollars). The bargain toys a result from mass production wil be no more.My father (now deceased) lived thru the great depression (he was born in 1901 and 45 when i was born)..he told me about the depression,i paid little regard when i was younger but things he told me are coming back in waves….money was practically worthless,people worked for a meal or a place to sleep,if you had money you did not advertise it–you were a target,people shared what they had and travelled hundreds of miles for a job for a week….are we headed there i wonder?

#68 go green on 01.31.09 at 5:08 pm

#27 brazer on 01.31.09 at 11:36 am

Haven’t been able to following the comments the last few days, so not sure if this was already discussed…..any event, TD has back-peddled on its $35 inactivity fee for LOC’s.

http://www.thestar.com/Business/article/580129

Thanks for posting the above brazer. We’ve had a $10K LOC with TD for the last 20 yrs. Used it once for a couple of days. We were waiting to receive a letter from TD before going to see our Branch Mgr. to either cancel our LOC or demand he nullify this directive for us.

Some have blamed TD when they merged with CIBC. Our experience is the the opposite. When TD merged with CIBC, TD started to charge all kinds of extra fees. We had been with TD, and formerly Central Guarantee Trust, and had never paid any fees for transactions. I recall several years ago we were notified they were going to charge us for fees. They estimated our transactions to be 7-12/mo and were going to charge us $X. I checked my statements for the previous year and on average our transactions were 3X the amount they estimated.

My husband spoke to the Bank Mgr. and said we’d pull all of our money from the bank unless they agreed to not charge us any fees. He told told the Mgr that he had friends who would do the same thing. The Mgr signed the back of his business card that we would not be charged for any bank fees and handed my husband a stack of his bus. cards to give to my husband’s friends. We have never been charged bank fees. Our statement each month indicates the # of transactions and fees waived. Last month our waived transactions were 63 for $40.95. The only time we are charged fees are if we should take money out of an ATM from another bank. That has occured about 2 times. When we need cash we ask for cash back at grocery, etc. stores.

Years ago (after TD wanted to charge us per transaction) we opened up a President Choice account and transferred half our money from TD to PC as their savings account rate is higher.

Can you imagine if more banks were allowed to merge?

BTW, we have 0 debts – house paid for, 2 used cars – a 2007 Camry and a 2000 Accord (125 klicks on it). Pls don’t take this as bragging. My husband is a very good bargainer and barters his IT skills for car services. We save up & pay cash. Anything that is paid with CC is paid off at the EOM. About 24 yrs ago I took out a bill payer loan and swore I’d never get into debt again. That’s about the only NY’s resolution that I carried out on. :-)

I do & don’t feel bad for people who allowed themselves to get into such bad debt. Our consumer driven society has led people to believe that all would work itself out in the end – there would be no day of reckoning. And many of today’s parents have succumbed to their children, to the detriment of their children.

#69 john on 01.31.09 at 5:27 pm

#52 colette on 01.31.09 at 2:31 pm………..great post Collette and i agree,bad times produce real friends .I have been at the top of the heap and at the bottom and i made my best friends in bad times.We have a beautiful world that so many take for granted,money doesn’t buy happiness…we all came into the world with nothing and we sure as hell are going out of it with the same…..perhaps a time to sit back appreciate, smell the roses,be thankfull and be prepared.

#70 Greg W., Oakville on 01.31.09 at 5:30 pm

Hi Garth, FYI 6 min youtube video

Fed lends $2 trillion without oversight — and that is what’s irritating Congressman Alan Grayson
http://ca.youtube.com/watch?v=oxuqmPyKqcs&eurl=http://www.alternet.org/blogs/video/

#71 Watching & Waiting on 01.31.09 at 5:30 pm

#44 Re: Depression “a little less or a lot?”

My Brother in law’s mother grew up during the Great Depression in Fort Sask AB. Her father took 6 pigs to market and got a box of apples for them. Her mother made clothes for them from flour sacks. My father lived in Toronto, had to leave school at 13 to support his family during the same time, lived on cheese sandwiches. Sure it was a more agrarian society but……http://www.europe2020.org is calling this the Very Great US Depression and say this crises is much worse than 1929. They predict another tipping point will come in March when the world realizes this (GEAB 30) Perhaps they already are with all the riots in Europe.

#72 canmoreguy on 01.31.09 at 5:35 pm

just some personal experiences with the next generation – life skills, work ethic, common sense, values etc (re: comments on this thread, and others previously). i’m a mid-40’s professional, who gets to work with lots of co-op students and new grads entering our profession. most are great kids – intelligent, principled, compassionate, eager to learn and work. we need to believe in them, and invest our time in them. if we do, i think the future is in great hands

#73 Ron on 01.31.09 at 5:55 pm

What the world needs now is some kind of punctuated evolution, there’s still too much monkey in the mix.

#74 squidly77 on 01.31.09 at 6:03 pm

prices were very slow to fall in the beginning but in the end the bottom completely gave out in one of americas biggest bubble states
median price down an average of 53% in 20 months

calgary prices are off 20% already
the centre couldnt hold and its all blowing apart now

price crash is now dead ahead..

#75 Comrade Okie on 01.31.09 at 6:05 pm

What happens when the lights go out for the last time?

How it all ends.

http://www.weblogcartoons.com/cartoons/window.gif

#76 john on 01.31.09 at 6:05 pm

The Luxuries Of Life And A Depression Lasting 10 years…..We have had it good,what will happen if this lasts 10 years? What will money buy you?……….Our government doesn’t get the picture,all their projections are for a quick cure and life as usual (it isn’t going to happen!..things are too bad world wide and there is no quick fix).They would have been far better to hoard the cash and invest it wisely in things that have a future our lifestyle is not sustainable. What will happen in the best case scenario? in my opinion-our vote buying politicians will spend till there is nothing left (imagine what a million dollars would do for the food banks) billions being pumped out daily to failing corporations.Smart people are hanging on to their cash waiting as our governments should be doing and looking after the people and our necessary services.In my opinion our government will have nothing left,we will be burdened by huge taxes,poverty,and no chance for recovery when the global situation starts to recover and if it lasts 10 years…………just think what we will have left?…What will our dollars buy?? –holidays in plush resorts–they will be closed,airline travel–most airlines will have gone broke, a new cadillac—they won’t be making them anymore,dinner in a high scale restaurant with exotic food?–they will not exist etc ,etc all of the luxuries we now enjoy depend on the working man’s dollars that he splurges on his 2 weeks holidays a year …………………..????

#77 Irvine on 01.31.09 at 6:08 pm

Cause of this meltdown: ? The high cost of oil. The mortgage crisis was just the gasoline on the fire that finished off the USA

Back in 2006, I remember seeing that the bond yields were inverted..a signal of a looming recession. This was a year after the price of oil & gas had started it’s rapid march upward. Oil reached the “lofty” height of 50 dollars a barrel (now considered cheap) and gas prices rose to all time highs in dollar figures. This continued until the frothy mess of last summers 147 dollar a barrel oil and 1.50 a litre gasoline

World economic growth requires cheap oil. The high gas prices in the USA “mugged” the US consumer and toppled the economy. Only..when it fell the next domino was the mortgage crisis. With millions of people having no equity in their homes..it made it easy to walk away from them. If you’ve got 50K in equity you’ll deliver newspapers to keep your house. If you have nothing invested in your house…well you just walk away.

The money for the bailout should be used for two things. Mortgage assistance for homeowners (under strict rules) and the construction of a massive North American wind/geo thermal corridor. 10’s of billions into wind farms that will make electricity cheap..and the reality of electric cars possible.

Because what you all seem to miss is that even in this dark hour..crude is still 40 bucks a barrel. Compared to the lofty heights of last summer, it sounds like a bargain. But just a few years ago, the oil industry was giggling like a piglet at the thought of 40 dollar crude. 50 bucks seemed like a dream.

If crude is 40 bucks..in this dark hour, the minute the light appears it’ll be 100 again. And this process will stay all over. I must say, Kunstler was more accurate than he imagined in the Long Emergency.

#78 Marion Blanche on 01.31.09 at 6:28 pm

Garth
We read your Blog faithfully.I am 75 so I remember much of the Great (why great) depression, My Father was very strong minded on things like saving, living within one’s means. Having a garden and the ability to do things that contributed to independence was important. We had wonderful conversations, he served in two world wars, nothing was wasted, Mother made beautiful warm quilts, and rugs for our floors, from, you guessed it, old clothes that were to small and not worth passing on to other families, but still had some service left in them.
I still sew and can foods ,we grow a great garden,we share what we can, but we do not plan on going hungry.
Why, I wonder, if you own your home,no mortgage ,would you think of selling? Why do people buy great big houses that cost a fortune to heat,and maintain, when they could have a comfortable smaller home with a nice big garden?
Children who do not know how to do anything to help themselves, have been tought that life style. all children should know how to use a vacuum,broom, cook a meal from scratch, make a bed,shovel the drive,and my favorite, dig a garden. Working in the soil is good for the soul.
Teach your children well, there is still time, make them work for their allowances.

#79 john on 01.31.09 at 6:34 pm

Problems and solutions?….Well we had both and we still do…Garth told us the problems we would be facing and stood up in parliament and told the country..Harper and Flaherty ridiculed him with every opportunity! Garth your salary as an MP was the best tax dollars ever spent! I thank you for the time and effort you spend allowing us this blog to express our thoughts…your honesty is priceless! You had the answers and the foresight!

#80 go green on 01.31.09 at 6:37 pm

#52 colette on 01.31.09 at 2:31 pm I think we are in the position where this turmoil could be used as aspringboard to go forward to a world that is more united, cleaner, and equal…or it could be as it was after the fall of Rome…Dark Ages.

Trouble has been with us throughout the history of man. Many times it was the troubles that brought positive changes. Other times it brought unrest, poverty and bloodshed.

I believe that this challenge will change our world forever…either good or bad. But I also believe that the course the world was on was not sustainable so I am hoping that we in our wisdom will bring about changes that make it a world where all countries share the bounty, where all citizens are deemed worthy, and where we realize we share the world with other species and we set aside our greed to ensure that the world is still viable for our grandchildren.

————-

Collette – Wish I could have said it as well as you.

#81 Eduardo on 01.31.09 at 6:39 pm

Hey Irvine RE 75,

Just a few years ago FD&A costs were much cheaper all around the world… not just the oil sands. Deepwater is becoming a bigger % of new production. Shale production like the bakken was nonexistant.

Using data from BP’s world in review published mid-08:
http://www.bp.com/productlanding.do?categoryId=6929&contentId=7044622

You’ll see that reserves actually are smaller in 2007 than 2006 even considering the high price of oil. I can almost guarantee that reserves will have shrunk again in 2008 despite the price of oil due to high costs and will fall again in 2009.

Since 2003 demand has increased from 77 mil bpd to 81.5 mil bpd. This year they are saying that demand will fall back to 80 in the midst of a massive global recession which means that when we come out demand will be __?? 85 in 2-3 years? I agree that as soon as there is light at the end of the tunnel oil will shoot back to 100 and the world will be blaming the oil companies for not investing even though Shell, Exxon, Chevron, Total and BP have all pledged to spend almost all their earnings next year and they still won’t manage to increase production significantly. Not to mention they control a fraction of the world’s reserves…. but don’t worry… big oil will be blamed.

#82 EW on VI on 01.31.09 at 6:41 pm

67 Dear John. I’ll yield to someone with the expertise on
this, but I dont think money was worthless in the depression. The problem was that there was very little of it (illiquidity they call it) and little to buy with it.

If you go through a deflationary stage, your cash dollar
actually buys more. You seem to acknowledge this in
mentioning “target”ing and in your later posts by
recommending holding cash. What will it buy if we tank?
Who knows.

Go Green – Re the goldwatcher. Halfway through. Reads more like a textbook than a Garthbook. Some very interesting stuff, and some not so. Filled with theories from many economists, many of them contradicting. “Fascinating” as Spock would say……

#83 john on 01.31.09 at 7:04 pm

71 canmoreguy on 01.31.09 at 5:35 pm just some personal experiences with the next generation – life skills, work ethic, common sense, values etc (re: comments on this thread, and others previously). i’m a mid-40’s professional, who gets to work with lots of co-op students and new grads entering our profession. most are great kids – intelligent, principled, compassionate, eager to learn and work. we need to believe in them, and invest our time in them. if we do, i think the future is in great hands
>>>>>>>>> just one question ,,do you think they are willing to get their hands dirty,sweat and do a days work??..what profession do you work in? …….i was an employer for many years in several businesses..certainly not the picture i was exposed to ……in fact i closed a couple of profitable businesses for that reason?? …….tell me please what profession you work in and if you are the guy paying the cheques ok?

#84 wjp on 01.31.09 at 7:23 pm

Go Green…TD didn’t merge with CIBC
TD with Canada Trust
Canadian Bank of Commerce with Imperial Bank of Canada…
Point well taken however…

#85 john on 01.31.09 at 7:33 pm

#80 Eduardo on 01.31.09 at 6:39 pm…. >> well eduardo when Canada’s economy was starting to get in trouble BIG OIL and their greed dealt the crushing blow with the huge raise in the cost of fuel and now they are whinning well it appears to me the world is now seeking alternatives. The world is sending a message…we can no longer be subjected to these rip offs and in the future we will no longer need you..we are seeking alternatives and in the mean time we are consuming as little of your product as we can……THE PEOPLE HAVE SPOKEN :-)

#86 Metaldwarf on 01.31.09 at 7:55 pm

Garth I am not a banker or a Realtor, I am actually an employee benefits specialist, so I am quite impartial.

Would you care to justify your two positions of recommending paying down mortgage debt, and the recommendation of taking on additional (riskier) debt in the form or smith maneuver or RRSP meltdown?

The lady I was talking too was elderly and was likely looking for more security and to preserve her capital.

cheers,

I did not mention the Smith manoeuver, nor would I. It is not recommended. Also, I do not consider non-callable, tax-deductible debt to be risky. — Garth

#87 squidly77 on 01.31.09 at 7:59 pm

$83 derrin
prices have been dropping by about $7,000/month

so while you may find me amusing your losing $7,000 each and every month..and thats what i call very amusing

anyhow i work in the trades mainly up in the tar pits
we have a lot of younger people working up there and i will tell you this..they work hard they dont complain about the cold and they are prepared to work all the hours that they can
i have all the faith in the world in them

btw..this will upset a few but oh well
there are still hundreds if not thousands of foreign workers employed up there and canadians from coast to coast that have depended on the oil sands to feed there familes are unable to secure employment and thats not right

there have been and continue to be mass layoffs occurring for the past couple of months
mega project after mega projects have been shelved
Upgrader Alley projects toppling like dominoes….

fire away at me..i dont get insulted easy

#88 TomOfMilton on 01.31.09 at 8:08 pm

#26 Rhino
“Of course it spells ANARCHY! You may not rob the next door, but maybe you will walk down the street to someone who looks “rich enough”. ”

I hope you are wrong. There are a couple of conversations I’ve had:
1) With my mom…explaining to her my worries about living close to a major city and things going wrong enough that there is no food. I told her how worried I’d be about a large population like that not having food. She told me: “I’m not sure if this is true of people now, but during the war, [WWII] in Holland there was food shortages. A man would steal a loaf of bread from a cart to feed his family…but he didn’t kill the cart driver and take all the loafs of bread. People just weren’t like that.”

2) The second conversation was about a different matter altogether, talking with my Russian friend he made a funny comment:
“You know, it is different here in Canada. And it is because of the people. In St Petersburg, you do not cross the street without making sure there are no cars, for they WILL hit you. In Canada, I’ve found that drivers will watch carefully for pedestrians not paying attention.”

Both these conversations give me hope. I do expect things to be difficult. I do expect people will suffer. I will work hard to help those who need food and shelter. And I will be cautious while expecting the best from people.

Sadly though, I do find myself getting angry with neighbours that just don’t seem to care about those around them. The kind of stuff that makes you grind your teeth:
1) Leaving derelict vehicles taking away parking spots from their neighbours.
2) Allowing large and unfriendly dogs to chase young families indoors
3) Selling/Producing drugs from their home…causing the dangerous traffic
…The list goes on. Each one of them is irritating to my neighbours or dangerous to my family.

I’m trying to keep good hearted. How do you build community with the neighbours that don’t care? I think I’m going to spend my time on the ones that do care. Ignoring the others. (Except I’m going to kill those damn dogs the first chance I get…and before you get all upset…its not Lassie and Benji…it’s probably Killer and Spike…if they even bottered to name them. And calling the local animal control is a joke. You need to have your kid bitten before the poor little doggy woggy can be taken away.) Sorry. Had to rant a bit.

#89 Slopetester on 01.31.09 at 8:09 pm

#65 Gold Bug on 01.31.09 at 4:40 pm
Right on Gold Bug! Add Doug Casey, Bob Chapman, Antal Fekete, Bill Murphy (GATA Chairman) and MANY others who understand Why Gold? I heard Garth declared this morning that “in 400 years of history it (Gold) has always been a dud investment,” .. to which I might reply: Mr. Turner, please provide ONE other investment that has been around for 400 years? Mr Turner also stated that Gold is going nowhere because “if everybody is saying that it’s a good thing, it can’t be a good thing.” I just scanned todays Globe & Mail for any mention of Gold hitting all-time highs, again, in Euros, Lbs, Cad Loonies, Aus Dollars .. NOTHING! If “everyone is saying it’s a good thing,” it sure is funny how it never appears in the mainstream media! Mr. Turner, if people like Schiff, Rogers, Casey, etc. like Gold, and have been right on Gold for eight years, and like you about the bursting bubble (s), isn’t it time YOU learn why? You need to study a little more history my friend. Otherwise there will be mucho eggo on your face-o.

So, buy gold. In my book I say I have no problem with having 15% of your portfolio in buillion for the same reaon I think at least 15% should be in energy securities. Commodities will rebound sometime over the next few years once this mess moves on. But gold has a disastrous long-term track record and has performed poorly when pitted against equities. If you think the US dollar is going to be worthless, then you sure need one of my generators and a basement full of meal kits. My comments this morning came after a video of Doug Casey saying to put all your money into gold coins. That is lunacy. — Garth

#90 Rural Rick on 01.31.09 at 8:09 pm

The best investments we could make right now are in our ecosystems. Invest in biodiversity. Plant a garden make some habitat for the critters. Join your local stewardship council. Try to make a place for nature. This is what will sustain us. The bigger picture right now is the mass extinction of thousands of life forms on this planet caused by our huge numbers and thoughtless exploitation of resources. Millions of wind turbines will just accelerate this process. We have to invest big time in mass transportation systems and sustainable use of resources. Our economic problems are inconsequential compared to the devastation we have unleashed on our planet. You can’t have squirrel stew if we eat all the squirrels.

#91 squidly77 on 01.31.09 at 8:16 pm

not to insult any posters but learning to plant a garden and such is a very good attribute
but i think that people who can mentally cope with changing times will come through this in the best shape

i know one couple already into the foreclosure process
(due to a job loss) that cant get it in there heads that even going to timmys for a cup of joe is a luxury
i dont know whats going to happen when they are forced out of there $500,000 home and move into an apartment i really dont

i dont know there financial circumstances but i do know that they both drive nice newer vehichles and live quite high on the hog..its gonna be tough on them

#92 Shifty on 01.31.09 at 8:17 pm

I attended the Victoria seminar today with some of the younger generation in tow. Excellent presentation, I would recommend to anyone as time well spent. Thanks Garth for taking the time on some very important subjects and providing some future guidance. You have saved two young families, who are just starting out, from making some serious financial mistakes. Many thanks.

#93 canmoreguy on 01.31.09 at 9:06 pm

john #82 – i’m a chartered accountant in public practice, and yes i am a partner in the firm. i don’t challenge your experiences in any way, i can only speak to my own

the kids we see are coming off 4 years university study, usually financed by summer jobs and student loans. they work long hours in tax season. while working f/t and supporting themselves in a new community, they also have to complete “CASB” (CA School of Business) – 6 back to back study modules which they do evenings and weekends for 2 years, unpaid, as part of their articling requirements. They’re often the ones turning off the office lights at 8pm. Some of these kids even volunteer on community charity boards in their ‘spare’ time

Maybe we’ve just been lucky. But honestly, i see alot more good than bad in the young people we work with. I also appreciate the energy and ideas they bring to our team

Again, just my own experiences. Cheers

#94 rural route on 01.31.09 at 9:21 pm

Just a quick note regarding the concern that the younger generation is clueless and won’t be able to cope, if and when our economy goes for a dive. I have great faith in young people to adapt as required. The stronger and healthier they are mentally now, the better they will cope if things go bad.

I’ve always been leary of those two miles on foot, uphill both ways to school stories. Our kids have a different set of struggles, and as a mother of four boys, I am amazed everyday. They grow and learn and develop skills as needed.

When I was 17 and living for the first time on my own, truth be told, I was clueless too. I piled the dishes till they went moldy, stayed up too late, and couldn’t even fry an egg, etc. etc. Necessity is the mother of invention. I learned, I grew, I developed the skills I needed.

Please don’t fret about the younger generation. They’ll rise to the occasion.

#95 Pat G on 01.31.09 at 9:29 pm

Garth:

This is a serious question.

If the Gov’t . of Cda. opened up greater eligibility to E.I., so that most people who had paid into it for any decent period of time during their lifetime, would get benefits, would there be enough money left for government to pay for the other necessities of the country. I would include in this the usual transfers to the provinces.

There is a lot of vagueness in my question but with your experience, maybe you can come up with some kind of answer. There are things that seem to make sense to me but I don’t really know if they are possible.

I am concerned with what joblessness causes in society. Already we have read of pacts between parents to kill their children and then take their own lives. This is the ultimate in hopelessness and fear and while it is not a good answer because there are people who will help us get through things that we cannot think our way out of until we can collectively come up with social means to make life good and worthwhile, the mental stress, worry and fear will lead to other social unrest. Especially when people don’t understand who to blame, they may take it out on anyone who seemingly has more than they do.
It is hard to blame someone if they steal out of desperation for their family and can see no other way.

Can we do more to help people who have and will lose their jobs?

#96 Pat G on 01.31.09 at 9:38 pm

I should have said in my last post that I think it is most unfair for employees and employers to pay EI premiums and then not to be able to collect at least a proportionate amount in benefits. If a private insurance company did that, it would be illegal. — Well, actually, now that I think about it, they get away with not paying legit claims too, don’t they?

#97 Rural Rick on 01.31.09 at 9:40 pm

That was our other investment our youth a powerful force.
It is a great place to plant a seed.
I do agree that there are a LOT of young folks out there that are capable, enthusiastic and just need opportunity.
Sure every generation has their screw ups. Look at ours.
They are our future and we have been borrowing.
We owe.

#98 nonplused on 01.31.09 at 10:07 pm

What do they need a bad bank for? I thought they already had lots of bad banks? What we need is a good bank!

We need to show some compassion for those poor Air Canada employees. They have lost their pension and stock savings so many times now that they must be able to sense that it’s about to happen again.

The problem with the blog world is that you just can’t find a good doom and gloom site without the “illuminati” and “new world order” crowd speaking in tongues. If there were an illuminati you’d think they’d have planned things a little better!

I put 15% of my portfolio in gold some time ago and now it’s 25%. I agree sort of with Garth that gold is not the same kind of investment as a stock. You aren’t likely to get rich trading gold. It should be viewed more like a zero coupon currency with no credit risk. When it goes up or down, it is usually more of a reflection of the changing value of currencies than scarcity. But to earn a real rate of return you usually have to take some risk.

#99 squidly77 on 01.31.09 at 10:17 pm

derrin..my intention was not to insult you
many posters post under different names
i misunderstood the spirit of your comment

#100 Future Expatriate on 02.01.09 at 12:12 am

A differing opinion on deflation vs. hyperinflation worth looking at, by someone who has the real stats to back it up:

Hyperinflation Special Report

#101 islander on 02.01.09 at 6:07 am

Garth,
Next time you’re stuck at YVR, cab it to the Tsawassen Ferry Terminal for $60. Take a $15 ferry ride. Hop the shuttle bus into downtown Victoria for about $20.

#102 Bottoms_Up on 02.01.09 at 9:44 am

These people that are calling the current generation of kids clueless are forgetting that they too were once clueless. Thrown out of their homes at the age of 15, they were off on their own to try and earn a living. I’m sure there was much ‘trial and error’ back then at that young, ‘clueless’ age. People are much the same, never forget that. Let’s try and be mature adults here, supportive of each other and our faults rather than finger pointing and destructive.

#103 nonplused on 02.01.09 at 10:36 pm

I don’t know I see clueless people everywhere I look, even in the mirror!

#104 BigAL on 02.02.09 at 2:47 am

Re- Air Canada / Service
Bad service seems to be everywhere these days and growing, and it will get worse because no one really wants to make a change, we all just want to vent on the person on hand…the clerk, the stewardess, others on this board. But you have to go right to whoever the leader/manager is in any situation and start really bugging them. It is only when situations affect them directly will change happen. You have to remember that managers feel that part of the job of the front lines is to put up with your frustration yelling, insulating them from it, and protecting them from having to actually work and change their policies.

I have read the same old tired blaming …the ‘unionized’ clerks, stewardesses, auto workers……the “oh boy will they get what they deserve now”, and all that. As if these people have any power to change the fundamentals of the business they work for. And don’t say you get ‘fantastic’ service from non-unionized workers…get real. Do you live on the same planet I do, and deal with Rogers, Wal-Mart, etc.? I have a strong suspicion the fellow above who heaps praises on United Airlines is doing so from a purely ideological, anti-union perspective because let me tell you I have flown most of the american airlines and its no better, and in most cases worse than any AC flight I’ve taken.

When I worked in a gov’t office, the public came in and would often complain, and rightfully so, about our policies, procedures, rules, etc. Most of these policies were truly unfair, ridiculous, bureaucratic, etc. But their complaints went nowhere. You know why? Because the public does exactly what the policy-makers/managers/supervisors want the public to do. They yell and scream at the front-line clerks, then go away mad – that’s it. The clerks were told to listen and do nothing. They were not to bring it to a higher level, and simply tell people to write in to a manager if they wanted to complain, insulating managers fully from the front lines of the business. (And no, you could NOT speak to someone in charge, you had to write to them – it was simply their ‘policy’).

Its not rude workers, it is lazy leaders and managers who are too lazy to properly supervise and lead, who are too incompetent to deal with bad workers, and who couldn’t care less if you had bad service.

So keep yelling and complaining to the peons on the front lines….see what changes.

#105 cms on 02.02.09 at 11:57 am

[I]The 3rd Infantry Division’s 1st Brigade Combat Team has spent 35 of the last 60 months in Iraq patrolling in full battle rattle, helping restore essential services and escorting supply convoys.

Now they’re training for the same mission — with a twist — at home.

Beginning Oct. 1 for 12 months, the 1st BCT will be under the day-to-day control of U.S. Army North, the Army service component of Northern Command, as an on-call federal response force for natural or manmade emergencies and disasters, including terrorist attacks.[/I]

Read into this what you will…

#106 Robb on 02.02.09 at 9:25 pm

Hey Garth what’s the bid, ask on fryer grease from McDonald’s I hear there’s been a run on bio fuel generators to power up the log cabin deep in Algonquin Park and I want to place my order.