The greatest fools


Ever been to Leaside? Some wonk paid $160,000 over asking for a place there last week, I heard.

The mid-Toronto neighbourhood is populated with 1930s-style brick houses without garages built on lots the width of two cars situated on streets with plumbing problems. A couple of blocks away is a huge industrial area where munitions were made during WW2. The dirt was so toxic it had to be hauled away before big box stores could be built. And a good chunk of Leaside’s finest street was once a garbage dump.

But hey, it’s desirable. Upscale. Expensive. Most listings are now north of a million and, local realtors tell me, they’re in hot demand.

Welcome to the parallel universe. As I have been detailing lately, the greatest fools in real estate are not those who bought at the height of the bubble in late 2007, they are the ones buying now, at the pinnacle of denial.

Let me give you a few more reasons why this is going to end badly. You can add them to relentlessly rising interest rates, the demographic tsunami, chronic unemployment, destruction of the national manufacturing base, inevitable tax increases and an energy price crunch.

Canadian household debt has red-lined. The country’s accountants have just warned that families now owe $1.3 trillion, most personal debt on credit cards and LOCs. Sadly, 85% of us have unpaid credit card bills. Worse, a third of all families could not handle an unexpected $5,000 expense. Even worse, one in ten families could not pay a $500 bill.

Two points: First, it seems almost nothing was learned by anyone in the near-death experience of last autumn. All the reasons we rushed headlong into a credit disaster are still there. Second, how are we going to have any kind of sustainable real estate recovery (especially when rates start rising again), when so many consumers are tapped out?

Meanwhile, corporate profits are non-existent, meaning any recovery will be essentially jobless. Look at BMO. Earnings down more than 40%, and 1,100 people being laid off. As I said days ago, consider GM dealerships, where 14,000 people are facing a black hole. GM,  by the way, will be bankrupt by Monday. And this week we heard of record numbers of Canadian collecting pogey last month.

The news Stateside just darkens. Home prices in the latest Shiller-Case report, out Tuesday, were down a withering 19% – the greatest drop ever. This signals the bottom has not even been hit yet, after more than four years of meltdown. Said economist Robert Shiller: “There are very few V-shaped recoveries in the history of real estate, and this one is likely to be even slower…”

More troubling is the next wave of mortgage defaults, the “options ARMs” – variable rate loans which allow buyers to pay less than they owe, with the remainder added to the principal. After a time, the loans are reset to reflect the increased debt, plus higher interest rates. It means for many people monthly payments could double even as the value of their properties has plunged. Yeah. More foreclosures.

BTW, there are $314 billion in option ARM mortgages coming up for reset in the next two years. It’s estimated that as the mortgages are adjusted, most homeowners who have then will have negative equity equalling 20% to 40% of the home’s value.

Meanwhile, as you know, Canada’s finance minister has admitted the annual deficit will be more than $50 billion. Three years ago the budget was in surplus by $15 billion.

So, arrive at your own conclusions.

These are mine:

* The current real estate buzz will destroy the wealth of those now buying, especially in multi-offer situations.

* Current first-time buyers will face a double threat of rising mortgage rates and collapsing values over the next two to five years. They will truly wonder why they took such a gamble and how helicopter parents, friends and ‘experts’ could have been so wrong.

* In two years there will be virtually no move-up buyers. High-end houses will be nailed. Bye-bye Leaside.

* Houses in Canada are essentially over-valued and will correct sharply. Given our foundation of debt, the bottomless pit of US property values, unemployment, stagnant incomes and deteriorating national finances, the lunacy of paying current prices will soon be apparent.

* And as all of the above comes together in the next dozen or two months, supply will swamp demand.

Those shelling out full price in the Spring of 09 will look as equity cowboys did in the Spring of 30.


98 Dewhurst Blvd, Toronto (Danforth Ave. & Subway)  Listing here

Listed price: $549,000 SOLD: $715,000

Days on market: 4       Offers submitted: 23


In the news:

Low interest rates attract first-time buyers


#1 Jon B on 05.26.09 at 9:36 pm

A pretty grim picture you paint for the future Garth. So where’s the opportunity in all of this?

#2 Barb the proof reader on 05.26.09 at 9:37 pm

#78 timbo 05.25.09 11:48 pm “….and when they are gone will blame something else as more jobs are moved offshore to save money…. NAFTA will wipe out the working class family.”

Great post timbo.

#3 Investor on 05.26.09 at 9:49 pm

BTW, there are $314 billion in option ARM mortgages coming up for reset in the next two years. It’s estimated that as the mortgages are adjusted, most homeowners who have then will have negative equity equalling 20% to 40% of the home’s value.

True, but I would think many of these mortgages are already in trouble. The key in the US will be the prime borrowers, if majority of them can withstand the economic downturn and avoid being forecloused.

They are not ‘in trouble’ until reset. That’s coming. — Garth

#4 Dan on 05.26.09 at 9:51 pm

I’m looking to buy, but waiting until Sept/Oct. Hoping this crazy spring pop will end soon – Or at least more quality inventory comes along.

#5 lgre on 05.26.09 at 9:54 pm

” Some wonk paid $160,000 over asking for a place there last week, I heard”

yeah no doubt, in the summer of 07 some other wonk paid $500k over asking..more money then brains obviously.

#6 john on 05.26.09 at 9:55 pm


We are into year four of your predicted real estate collapse…..

That’s amazing, since I only predicted this in January 2008. — Garth

#7 lgre on 05.26.09 at 9:55 pm

option arms and alt-a’s are said to be totalling about 1.5 trillion, they will hit hard starting next year and peak in 2011.

#8 Paul on 05.26.09 at 9:58 pm

Well the “small window” you said I had to sell took 2 1/2 months to get an offer. Lots of interest but only one offer after a $30,000 price reduction.

We took it.

#9 Paul on 05.26.09 at 9:59 pm

Forgot to mention….my partner said “Garth better be right”

#10 Barb the proof reader on 05.26.09 at 10:08 pm

Add to the list the rising, crazy cost of living in these cities. It does not look good for the future. DH and I have come to the conclusion that we will not be able to afford to live in Calgary one day, despite our love of our city. Our property taxes of late are prepared by robber barons, our city utilities bill is tallied by thieves, and ditto for energy costs.
Hey, did you hear, beer also costs more in Calgary than the rest of Canada. Ouch.

#11 James on 05.26.09 at 10:08 pm

Down here in Windsor we’re having this big debate about developing some vacant land west of our downtown. Our “leadership” wants to dig a pretend canal and line it with trendy shops and condos. MLS has over 3000 residential listings for the entire county. 2600 plus in the Windsor/Lasalle/Tecumseh centre of population. Proponents seem to think lots of “boomers” are going to move here. I think those “boomers” are all going to be stuck in their McMansions because they won’t be able to sell them. It’ll be interesting to see who’s right.

#12 Finanzkrise on 05.26.09 at 10:10 pm

#3 Investor re: …prime borrowers in the US..

Alas they are getting into “trouble” now too. 600k / month job losses is hurting subprime, ARM, alt-A and prime without much discrimination.

Garth is right that it aint much different in Canada – we are losing as many (or more) jobs per capita as the US, which will (eventually) hit both our prime and subprime (0% 40yr) mortgages.

#13 Seanmhair on 05.26.09 at 10:11 pm

#3 Investor

Excellent visual of US mortgage resets to come here:

Article explaining same here:

It boggles the mind that fools are still rushing in….far too much for this old brain to comprehend.

#14 Jeff on 05.26.09 at 10:17 pm

Hello Garth,

If you’ve predicted a substantial rise in oil and gas prices (I’m not sure what time frame you’ve given it), what does this mean for western cities like Edmonton and Calgary? Are housing prices shielded there from further price erosion, or is it more a question of what comes first – spiking interest rates, or spiking commodity prices?



#15 smwhite on 05.26.09 at 10:17 pm

Houses in Canada are essentially over-valued and will correct sharply.

Essentially? Ha Ha!

Price does not always equal value despite what all the RE moguls that pop their hollow heads up here now and again say. Does anyone actually think we’re going to become rich without having our manufacturing and commodities sectors pushing out exports?

Maybe we can become a service oriented country like America and sell people wonderful products like MBS’s and CDO’s.

The economy is stalling, again, and it doesn’t matter who in the world thinks Canada is in better shape then whatever other country. We are on the verge of world wide depression, at least that’s whats the numbers from the OECD say. Down 2.1% first quarter…

As a country, maybe we are the greatest fools, we’ve seen this movie all around the world, the government keeps changing its outlook, for the worst, and we keep telling ourselves fairy tales that everything is Ok and Canada is super strong, and we’re different(pat pat), except we have nobody to export our items with our ever increasing dollar…

Greed and stupidity is not geographical, its human nature.

#16 john m on 05.26.09 at 10:28 pm

Great post Garth– a lot of people are living in a fantasy world..success in the future will be measured by survival instincts.

#17 Investor on 05.26.09 at 10:31 pm

They are not ‘in trouble’ until reset. That’s coming. — Garth

That will depend if the reset limit was reached as option arms work in two ways they either rest after certain period of time or LTV limit triggers the rest. What about people who let say have 2 or more properties and are already falling behind on their option ARM?

#18 Fool me once... on 05.26.09 at 10:32 pm

Garth, you’re a better man than me. It appears with some people if your predictions do not come to fruition, they get the rope out for you. The problem as I see it is that they actually take these as predictions as opposed to information to be used in risk analysis. I best explain this to my peers in this way. If one were forced to play Russian Roulette with two guns, the one revolver had six bullets, and the other had one. If I were to advise the participant on which revolver to choose, I would recommend the latter. If this were compared to your situation, I would be blamed if the one bullet actually fired.

#19 Aston on 05.26.09 at 10:40 pm

Paul… Garth is interesting, and he may be right, but for God’s sake, do your own critical thinking!

#20 CalgaryRocks on 05.26.09 at 10:42 pm

#95 Barb the proof reader on 05.26.09 at 9:50 pm #93 CalgaryRocks on 05.26.09 at 2:15 pm

So you’d also prefer not to pay for police because you can take care of your own problems with your own gun? And remove support for the library from your taxes because you don’t use it?

Typical union BS. The topic is GM. I had no idea that CAW provides library and police service. How amazing, no wonder they don’t have time to build cars that people will actually buy. Between that, their mandatoy smoke breaks and 8 weeks vacations! Crazy how productive these people are!

Maybe you should keep on topic instead of coming up with BS sob stories about your family, all of whom seems to be on some kind of disability.

#21 Confused and fed up on 05.26.09 at 10:42 pm

I think that one of the reasons people are buying real estate now is because they believe that high inflation (if not hyperinflation) is coming soon.
Buying gold is for the rich at 952 US$ an oz. At least with real estate having fixed debt in inflation time actually favors the debtors. In that case the greatest fools become the luckiest
Don’t know what to believe anymore!!!!

#22 timbo on 05.26.09 at 10:42 pm

very good radio on credit card debt for Canadians.

#23 Kootenay Guy on 05.26.09 at 10:45 pm


I am sitting on 600K in cash. Waiting to buy a home in the Kootenays. It is very tempting.

Thanks for being the voice of reason!

#24 smwhite on 05.26.09 at 10:47 pm

#6 john

John, thanks for stopping in, I’m assuming during your regular CPC trolling duties.

Let me summarize for you:

(1.) 2006 – Jim Flaherty decided that in order to get another CPC mandate, he’d make every Canadian feel temporarily richer and brought in the 40 year mortgage.

(2.) 2007 – Biggest resale year in Canadian history, moves the Canadian housing market from stable and sustainable growth to a bubble. TSX stalls at 15000 in the summer. Canadians happy because they are rich by proxy of home ownership.

(3.) 2008 – TSX moves between 14000 and 15000 during the spring and summer. Election announced as well as the termination of the 40 year mortgage. CPC gets their mandate, Harper says everything is dandy. Of course, we all know in the fall the TSX hits just under 8000.

(4.) 2009 – Interest rates dropped to 0.25%, majority not born before 1975 have trouble comprehending monetary policy and seeing the big wheel barrows of $ waved in front of their face, race to get a chance to buy that one last time before they are left behind to be vagrants. TSX stuck at 10,000, or 2/3rds its value from 1 or 2 years ago.

So John, the CPC has red lined the Canadian economy, blew through a 15 billion surplus, and keep telling us that things are great, but every month, numbers are telling me and a lot of others without their heads situation inside their anal cavities, unlike you self, otherwise…

What the current government has done in order to preserve their best interest is nothing short of nauseating. Canadians not even born are going to be paying for Flaherty and Harper’s monkey shines, and you come on here like a smug SOB? Are you serious?

If ignorance is bliss, you must be one extremely happy donkey.

#25 Eduardo on 05.26.09 at 10:51 pm

Garth, please give a realistic view of the Alberta housing market. I’m unclear where you stand because of your position on oil.

#26 MenWithHats on 05.26.09 at 10:52 pm

Listen up cowgirls . Ignore Garth’s wisdom at your peril .
You have been warned .
And stop asking stupid questions .

#27 john on 05.26.09 at 10:57 pm


You are correct (typo) ..should read:

We are into year 2 of your predicted real estate collapse….

#28 Mrs Loquacious on 05.26.09 at 10:58 pm

Last night I had a dream where I was being shown a big, beautiful, multi-story walk-up townhouse (with an in-law suite) in downtown Vancouver, listed for $1million. It was probably everything that I would want in a place, save for some of the old carpeting that I’d need to replace, and a few other minor reno’s here and there.

Despite the place being what I was looking for, I told the RE agent that I was going to pass on the “opportunity of a lifetime” and wait for market prices to fall, because I was certain that they’d plummet, and $1mill was steep, even for this property. The RE agent then abruptly left, explaining that he had other appointments with potential buyers, and couldn’t afford to waste any more time with someone like me who wasn’t going to buy.

When I woke up, I realized that even my subconscious is smart enough not to be the greater fool in this crumbling RE market.

He who has ears, let him hear…

#29 BBC on 05.26.09 at 11:11 pm

I agree with Garth but what I don’t understand is how the general public can’t see the obvious? I realize it is like hitting a dead horse but why do people still keep buying….why aren’t they waiting? I would consider myself pretty average in terms of ‘global awareness’, do you think that some of these people are the same but just desparate to jump in the RE market out of fear that it will continue to go up or is it just people who are making lateral moves and purchasing Up? I just don’t understand….it seems so logical to sit and wait things out!!!!

#30 Da HK Kid on 05.26.09 at 11:15 pm

Garth, it is all starting to sound somewhat repeatable as many of us regulars on your blog have noticed.

However, not to the negative as newbies, those holding in level 3 denial and some of the dimwits I see posting here need to be hit over the head to see the ultimate disaster we face.

Prime yes, Option Arms yes, Alt A’s yes, Commercial yes, Credit Cards yes, LOC’s yes, Auto Loans yes, Case Shiller 19% yty yes (only 20% more to go) yes, further delinquencies for all in RE yes, forget 0-40’s how about 5-10-15-20 – 30’s going under water yes, first time buyer in 3-5 years yes, overpriced trade-ups yes, unemployment 12% in US by year end yes, CAD rising when Canada needs exports at the worst time yes, yes and more to come! THE DEATH SPIRAL HAS STARTED IT IS FULL OF BAD NEWS FOR YEARS TO COME!

All the time people ask me where should I invest, invest in some brain matter as we are living in the land of HOPE! Invest in patience, knowledge and liquidity and sit on the sidelines watching 95% of world unfold!

Visited Mish and he has a good RE related article called Downsizing of America – Thoughts On A Vanishing Lifestyle.

The key RE component here was an example of a guy who is looking at an appraised $3.5M valued property in Portland foreclosed with a $2.7M mortgage on offer for $900K. He is thinking of buying this 10,000sqft slightly bruised home for fixer upper and offering $600K.

Reality kicks in and he decides the taxes, est. $41K and work needed to be stuck with something worthless down the road is just insane.

This is by far an extreme but let’s face it, as your article describes above, this could be Leaside, and you dont want to living under the Leaside Bridge.

Remember the cost of running a home, remember that the tax is based on appraised value so when the 50% comes off you are still paying 100% of the taxed value.

I could go on but you all get the point!

#31 joseph on 05.26.09 at 11:18 pm


The difficulty first time buyers are having right now is that they have two (poor) options:
1) Buy now at slightly reduced prices and incredibly low interest – with the opportunity to lock-in, in a year or so when rates look like they may rise; or
2) Wait a couple years when interest rates are high, with only the possibility that prices will have dropped.

It comes down to affordability – with rising rates a sure thing in the near future, it is hard to see bottom line affordability rising by any substantial amount.

#32 Vankouver on 05.26.09 at 11:31 pm

Love the post Garth. Many friends continue to be grossly misled by the “opportunity to own”. Evidently the “opportunities” of a 300K+ mortgage set in when the bills start to pile up, and the rental suite is vacant. Relationship counselling could be a booming field in this economic time…though who will have the money to go?!

#33 ValueHunter on 05.26.09 at 11:36 pm

Garth, any evident of phantom bids?

#34 Harold on 05.26.09 at 11:38 pm

Why is it so important to Toronto home buyers to live in the ‘right’ neighbourhood? I mean the houses are likely of similar size and quality as in other neighbourhoods. Is it because people like to talk about where in the city they live so as to impress people? What’s so special about Leaside or the Annex or the Beaches? I don’t get it but then I don’t live there either.

#35 WillsDad on 05.26.09 at 11:44 pm


We are into year four of your predicted real estate collapse…..

That’s amazing, since I only predicted this in January 2008. — Garth


#36 dd on 05.26.09 at 11:53 pm

#6 john

“We are into year four of your predicted real estate collapse…..”

Look in USA, UK, Spain …

#37 Steve on 05.26.09 at 11:56 pm


You’ll be thanking Garthy before you know it

And Your partner with think you’re a star

Great call (to sell)

#38 wayupnorth on 05.27.09 at 12:03 am

Garth , your key words in your post are “in two years there will be few move up buyers”

Real estate is not rocket science unless you spend your life watching the crap on the home and garden channel. Using traditional lending practices it takes $25 an hour wage to qualify for a $200,000 mortgage if you are debt free. Add the number of people in this catagory looking for houses and subtract inventory tell you if there is a buyers or sellers market and whether you should get into a bidding war for any particular house. Oh yah there is that down payment thingy, you know the $50,000 or so that banks expect you to invest yourself. If you don’t make $25 an hour then you need two wages of $14 an hour to qualify for the same mortgage.

Anyone care to guess how many people are left in this country who qualify under normal conditions for a $250,000 house? Last time I looked out my front door I could see 6 for sale signs so anyone paying even close to asking price right now is certifiable and those paying more should just throw their money in the air for others with more sense to spend for them.

So what about homes over $250,000? Do the math and consider that anyone who can afford one probably already owns one and you can see where that market is going. Also consider that most of those homes are owned by people in the last quarter of their lives who in many cases will want to move into a small bungalo or condo and you can see where the next boom market will be as these same homes used to be called starter homes which have a steady market for first time buyers anyway.

Another point to consider is a question I asked the fellow who built his home across the street. “why do builders only build big homes today?” He said that his dad was a home builder until he could no longer get electrical parts not built in China. He didn’t want to be liable for the fires that will inevitably be caused by the garbage we are putting into houses today. His answer was simple, builders make a profit of up to $100,000 on a $400,000 house and only 10-$20,000 on a $200,000 house. Sort of like GM making $10,000 on a $40,000 vehicle instead of $1,000 on a $20,000 dollar one. The answer is either laziness or GREED!

#39 Einsam Solo on 05.27.09 at 12:04 am

Meanwhile in the parallel universe news, BCREA chief economist Cameron Muir says on Global TV BC “housing market conditions are improving more rapidly than expected.”

I’d like a prescription for whatever drugs he’s taking.

#40 Shaun on 05.27.09 at 12:34 am

Hi Garth,

I’ve been reading your blog for a while. I’ve noticed that in your predictions about real estate, you generally talk about Canada as a whole. However, when you give examples of Canada’s greater fools, they’re generally about people who purchase houses (or little condos that some people seem to like) in Vancouver, Oil Land and the Ontario rust belt.

I don’t want to put you on the spot and ask you about regional trends in Canada, but here in Winnipeg, you could get a little starter home for 160,000$ (which is what some ‘wonk’ overbid for a house in Toronto) and for 250,000$, you could get as big a house as any family would need. I was wondering what your opinion is on cities like Winnipeg (who have had a real estate boom this decade where prices have gone up significantly) yet prices still seem ‘reasonable’.

Would someone who has a reasonably safe job be a ‘greater fool’ for purchasing a house in a city like Winnipeg? (Assuming that they actually have a down payment and can afford a 6-7% interest rate long term)?

By the way, my sympathies for having to read comments of people who seem to have caught the gold bug which has proven to be more contagious than the swine flu lately.

#41 Munch on 05.27.09 at 12:47 am

“Garth better be right”?


What happened to taking responsibility for your actions?

Is Canada a third world country?


#42 . . . fried eggs and spam . . . on 05.27.09 at 1:10 am

“. . . this is going to end badly.”

Question: As we ambled into the current downturn, spending ourselves into wanton oblivion, there was no fixed starting date for the start, so when are the best estimates of everything bottoming out?

The youth over ‘ome (the UK) don’t have a cat in hell’s chance of finding reasonably good jobs, as the older workers are fighting like hell to keep theirs. With nothing to do and no prospects, this leads to a greater crime wave.

Mish’s site said about 20% of US grads would start working, so where do the rest go? On pogey, with MBAs, law (shark) degrees and the like which mean diddly-squat to potential employers now?

“. . . nothing was learned by anyone . . .” — Sheeple the world over don’t have the intelligence to learn anything. They simply graze, that’s all believing ‘this will never happen to us’, and again, this is the herd mentality so prevalent today.

There are some bright and talented youngsters in the world, but they are being swept away in a fierce current which, through no fault of their own, is dragging them out to sea like a rip tide does and leaving them drown in someone else’s debts.
One thing leads to another, so first = hyperinflation; second = the Bilderberg Group (NWO & Friends). — /\
I guessed someone put these two together around 1965 — The Titanic and the United States. —
Last night, I mused that new taxes on health care / RRIF’s may be introduced to [screw us royally] cover the govts.’ liabilities and costs. Two links from the US, but wot chance is there ever of paying it down?! — /\
Today’s conspiracy theory. Full of laughing space aliens! —

#43 Mwebs on 05.27.09 at 1:17 am

Interesting read from a 2005 article in Reality Times in which they claim at that time there was no bubble:

#44 Jeff Smith on 05.27.09 at 2:08 am

What is the equivalent of Credit Default Swaps (CDS) in Canada? Anyone know?

#45 Leonard on 05.27.09 at 2:16 am

Well, I kind of hope these deflationary events will occur very soon. I guess, governments cannot postpone the collapse forever. I wish for quick collapse so we can know when the bottom is. I prefer a sudden suffering rather than a long long degradation sitting on the sideline.

I am convince tax will increase too, that’s what I started offering my clients support to establish offshore company and offshore banking accounts. Based on the principle that our hard won money should not go to banksters and incompetent governments.

###Da HK Kids let me know when you’re in Malaysia, may do a trip there this fall with my family, from Shanghai.

#46 Jay Currie on 05.27.09 at 2:25 am

And yet, and yet as I walked through Dunbar in Vancouver I saw “sold” on the majority of the real estate signs.

I think you are dead right Garth. But the 0 percent interest rates for a year and the media and the governments are keeping hope alive. The alternative is unthinkable.

Me, I like renting.

#47 Mike (Authentic) on 05.27.09 at 3:23 am

Garth, my congratulations on posting such a great article to read this morning. You really sum it up very well and accurately what is happening now and will happen in the future.

I frequently forward your article to my wife so she can share it at work, but this one I forwarded to my friends across Canada.

Great job, excellent read.


#48 Mike B on 05.27.09 at 5:12 am

Ahhh I hope Garth is correct … While I whole heartedly agree with the facts on debt and unemployment and with the dollar manufacturing being hit, I have seen here in T.O. a wave of home buying that has caused me nothing but grief. We sold in late 2007 and watched the market shrivel and now, with free money, bounce back with fury. Things that don’t sell in a week is being taken off
the market and up for lease for a year with the option of a buyer assuming the tenants. If there is any sustainable correction in Toronto prices it may be a long time in coming .. Factors at hand are 30,000 agents, low interest rates, limited supply and a ton of morons.

#49 ally ally oxycontin free on 05.27.09 at 6:57 am

Vantage Point: UAV observer, overlooking CanaDUH in bomb jettison mode …

From the annals of Fabulous Flim Flam Flaherty’s False Fiscal Flatulism.

Jobless People need NOT look to Ottawa, unless they’re prepared to embark on a massive public protest … IN OTTAWA.

Harper’s gonna borrow Connie Black’s toy SOJERS, so’s he can meet us in the street.

Tax increase coming … But only when Harper and Flaherty want to reopen their sieve-like reporting system.

#50 Joe on 05.27.09 at 7:10 am

If 85% cannot pay off their credit card bills, why do we hear that 70% pay off their monthly bill? I would just like to know which percentage is correct.

In the early part of this decade the Bank of Canada kept rates low to boost sales of everything. Can they do this for the next decade? This would hold mortgage rates down. I just don’t know if it is possible as if it is possible they will do it.

#51 john on 05.27.09 at 7:20 am

#48 Mike B

I think we should wait before congratulating Garth on his predictions until the collapse happens. To date it has not…2 years into his prediction.

Even though you revised your statement to be less embarrassing, it’s still wrong. I predicted a real estate tumble in my book, Greater Fool, published in January of 2008 – 16 months ago. And I was sadly correct. I did not forecast a “collapse”, rather a correction of 15-30%, which has largely transpired in most markets. I also forecast that this would happen in two stages. The second has yet to occur. Back to your day job, dude. — Garth

#52 wjp on 05.27.09 at 7:31 am

#21 To dazed and confused…it is no wonder we are confused, however, one must weigh what the government is doing against good common sense.
In the end they will be no different that any person with a few credit cards and a line of credit to boot. They can print and print (or borrow, borrow) until the cows come home but the day of reckoning does eventually come. The present ideology of flooding the market with cheap credit and encouraging people to spend, spend, and spend more when the personal debt is 1.3 Trillion and climbing, and 1 in 5 have already admitted they are unable to repay the debt at this time, will have a very bad ending. The bet here is whether the end will precede hyperinflation…personally I side on the bad ending arriving first! The basic reason I see it that way is because this debt must be borrowed, and the lenders will want rates commensurate with the risk, which grows daily. So debtors will be facing raising rates and an L shape economic recovery…doesn’t bode well for the debtor, at least, in my opinion. Consumers. up to their eyeballs in debt in a raising interest rate market, are unlikely to create demand.

#53 DG on 05.27.09 at 7:44 am

Aren’t energy prices the possible wild card to all of this? Surely the inner city will be far more desirable (and the suburbs far less desirable) when oil is back to well above $100 / barrel. There will have to be densification, so land in areas close to city centres, with good transit access will surely command a premium.

I’m not saying this trend will play out in a way that justifies paying $150k over asking for a place in Leaside, but relative to a similarly priced home in the suburbs five or 10 years from now it’s probably going to look like a bargain.

#54 Munch on 05.27.09 at 8:04 am

Greater Fools

In the book “Trading In The Zone” the author Mark Douglas argues (very convincingly!) that in the stock market fundamentals and the market movements have a loose correlation, at best

I would argue the same for the property market

While that explains the chasm between fundamentals and property prices, it doesn’t help much in explaining WHY people do this – or is it as simple as most people really ARE ignorant, and they rely on “experts” to tell them what to do and when?

I would further argue that is what we witnessing right now

Who started with this “green shoots” nonsense anyway?

Someone on Wall Street, I betcha!

#55 Nostradamus jr. on 05.27.09 at 8:42 am

A few small, teenie, tiny changes….

—* The Greatest Fools…to…The Greatest “Ontario” Fools.

—* Houses in Canada…to…Houses in “Ontario”are essentially over-valued and will correct sharply.

—*You can add them to relentlessly rising interest rates, the demographic tsunami, chronic unemployment, destruction of the national manufacturing base, inevitable tax increases and an energy price crunch.


You can add them to relentlessly rising “Ontario” interest rates, the “Ontario” demographic tsunami, chronic “Ontario” unemployment, destruction of the “Ontario” manufacturing base, inevitable “Ontario” tax increases and an “Ontario” energy price crunch.

…Now you are accurate Garth…..and Western Canadians will soon enough initiate their cessation from Eastern Canada…bet on it.

To my friends dd and Rhino, enjoy Eastern Canada.

…I predicted this nearly 500 years ago…

#56 Jonnay on 05.27.09 at 8:42 am

Canadian household debt has red-lined. The country’s accountants have just warned that families now owe $1.3 trillion, most of it on credit cards and LOCs (this is in addition to mortgage debt). Sadly, 85% of us have unpaid credit card bills.

Let’s remember that this debt increasing at 10% a year, according the Bank of Canada, is a Good Thing, and it needs to continue to prevent deflation (otherwise they’d start the printing press). We’re in trouble.

#57 lgre on 05.27.09 at 8:55 am

“2) Wait a couple years when interest rates are high, with only the possibility that prices will have dropped”

so you believe that the economy can withstand high rates and high prices, only one at a time, hence why people are buying inlfated property now..low rates…there is no posibility, it is a guarantee..or they halt all new construction and have 1 house on the market for 3 buyers..then you can probably have both.

#58 Grantmi on 05.27.09 at 9:08 am

Once again! BC is an Island!!

BCREA – Cameron Muir.. biggest cheerleader for RE in BC since Bob Rennie… has said the BOTTOM IS IN!!

We’ve turned the corner Kiddies!!!! BC home prices are going to swing up!!!

Wait.. you read the Sun Article today (page 2 – Business) .. and it’s ONLY going to be down 8% instead of 13%!!! (Always love when the press puts the BIGGER BAD number in digit form.. and the one they don’t want you to see in written form)


#59 My_View on 05.27.09 at 9:13 am


Not bad, I partially agree, however why don’t you ever talk about how solid Canada actually is? The States is being debunked, but I know you can’t count that monster out yet. Our largest trading partner the USA will shift to other emerging monsters. The economy is shifting and their will be a lot of opportunities. Further more, Garth’s predictions (Greater Fool Jan 2008) 10-30% drop in values. As for the 30% drop that will happen with product that has all the negative variables i.e. size, location & craftsmanship. The holding ground for price support will be 2005 sale prices. Next spring Ontario will still have a lot of activity because of the HST. So what year will it be that Canada’s R/E tumbles? Last thing, Garth will you run in the next election? How will you canvas the neighborhoods in your riding, knocking on doors and saying I sort of told you so?

#60 VOODOO on 05.27.09 at 9:14 am

1.3 trillion debt (excluding mortgage debt) for Canadian families is:

$162,500 per family (assuming there are 8 million families in Canada).

This is a huge number. And there are likely less families, making it an even greater number.

#61 My_View on 05.27.09 at 9:16 am

#62 ally ally oxycontin free on 05.27.09 at 9:18 am

#54 Munch on 05.27.09 at 8:04 am

Green Shoots

Do Be Wary of Green Shoots

Hold your horses on calling a new bull market — the bear has several years to go.

Google ‘search’ query: ‘economic rebound green shoots’

#63 Signal Loss on 05.27.09 at 9:20 am

#6 “year 4 of your predicted real estate collapse…”

John, I’m just curious, where are you located that you have not noticed? I’m not being snide or anything – have you not noticed declines in your area?

In any case, as has been pointed out above, the slow-motion train wreck that is the real estate crash has been ongoing in the US, Spain and the UK for several years now. Turner tried to explain this to Canadians in his January 2008 publication.

Next book in the queue: Jeff Rubin’s “Why Your World is About to Get Smaller”.

#64 PTDBD on 05.27.09 at 9:33 am

U.S. unfunded pension and health care liabilities: “We at the Dallas Fed believe the total is over $99 trillion,” … Richard Fisher, president of the Dallas Federal Reserve Bank in responding about warnings about money printing from China.

Marc Faber’s Zimbabwe inflation warning is debunked on Canada’s BNN financial network as “the guy is crazy”. Faber has been around a loooooong time in the investment world and has had an excellent record including forecasting this latest bounce. Perhaps BNN should at least give him the courtesy of presenting his arguement.

When Geithner opened his wallet before Congressional cameras he had some credit cards and a souvenire Zimbabwe bill. Not one American dollar. I wonder who gave him that and what he thinks of it? I hope he thinks of it.

#65 SaraBeth on 05.27.09 at 9:33 am

Garth ~ you wrote:

“Houses in Canada are essentially over-valued and will correct sharply.”

I agree, but what I want to know is how over valued are Canadian houses, and what do you see as the bottom of that correction…say perhaps in the Golden Horseshoe of southern Ontario? Or even in Toronto?

Thanks, SB

#66 CalgaryRocks on 05.27.09 at 9:40 am

There is an article on the CBC web site about McGuinty wanting to prop up private pension funds with taxpayer money. Based on the comments, most people agree that this is indeed unfair to those that happen to also be working class, yet not part of the CAW.

The attempt by Barbie to marginalize anyone that doesn’t agree with her as angry and uncaring is typical union bs. Not even the leftwingers on the CBC are falling for it anymore.

#67 Calgary_far_left on 05.27.09 at 9:43 am

Nice post Garth.

That sounds like Calgary, too. However, if you look at the stats, there’s around 3000 houses listed in Calgary and around 1200 get sold a month. Prob a slow decline in prices here. Today the Sun paper said Calgary EI has spiked dramatically. The current prices in Calgary still reflect overinflated prices, and with oil going up again, who is to say another boom wont happen? This time, though, if prices spike houses may peak so much then crash because people cant afford them. Who the people are that are currently buying in Calgary are is anyone’s guess. They are likely people wanting to lose equity, join the hordes in traffic, ripe for green light tickets, and conservatism in any form.

To anyone wanting to move to Calgary, dont. Its too cold, too crowded and claustrophic, and the single family homes look like Garth’s photo above in his post. Seriously. About 5 feet between houses. And you paid $500K for that?

Calgary’s planning is very poor. Compare oil rich Houston Texas: In Katy, Texas a person can buy for $100K what would cost $400K in Calgary.

You are right Garth. Canada’s real estate is for Greater Fools.

#68 Calgary37 on 05.27.09 at 9:45 am

In my recent update on the North American Union, I made the following statement:

“One quick way to implement the NAU is if the American Financial System collapses and is followed by a flu pandemic. This means that paper and coin currency would be prohibited from use. This would allow the Amero and a Cashless Digital Currency System to be implemented. While TPTB are giving you your flu shots, they could also implant a microchip implant to use in this Digital Currency System, or they could give everyone a prepaid Debit Card for you to use until they can set up a more permanent system.”

Well here is another option that they can use that may be a little quicker to implement:–.html
Microchipping your money – New theme park wristbands carry ability of a debit card


#69 60ish on 05.27.09 at 9:49 am

Last evening the Vancouver TV Global News (Tony Parson), ran a story suggesting strongly that the local real estate market has bottomed out. They followed a couple buying their first home – they’d been watching one particular house for some time, falling in price $60K; then they bought it. A spokesman for the local real estate market suggested that prices will remain stable for at least two years.

It is difficult to know what to believe. On one hand, we have Mr. Turner providing logical evidence day after day that the economy is nowhere near ready for a recovery. In the US, analysts like Martin Weiss and his team ( are warning that things are going to get worse before better. Yet the TSX and DOW are surging; here in Victoria, real estate, while not exactly booming, is moving. Driving around the city, I don’t see more ‘for sale’ signs than usual.

Maybe it’s going to take something trigger the second crash (after last fall’s) – what might it be? A GM bankruptcy? Sudden rise in interest rates? Continuing rise in unemployment? A crazy little man in North Korea doing something really stupid?

What I wouldn’t give for a fully functioning crystal ball….!

#70 POL-CAN on 05.27.09 at 10:08 am

Damn that was the house I was interested in.

But I would not have paid more the 500K

Sadly, people in T.O. are still smoking the green shoots and drinking the kool-aid

#71 Soylent Green is People on 05.27.09 at 10:22 am

#34 Harold on 05.26.09 at 11:38 pm

I so agree, my b/f sold his detached Annex house Spring 08 for $870,000. I declined to move in there: houses very close together, most of them semis (semi’s to me are a horror show), no grass in backyard (rare parking instead), area run down, lots of renters, last street in city to get snow removed, no place to shovel the snow, everyone battling for street parking, no big parks nearby, very very noisy even at night, etc. But it felt like many families felt so executive to live there.

The only advantage to this was 3 minute walk to subway which is pretty cool to run downtown so easily, also you could walk to Bloor and get some tampuro (sp?) and it’s fun to see so many people going about their business, okay, not so fun to see the homeless panhandling. Living in Annex to me requires a lot of disposable income, so if you have a lot of money to spend, I’m sure you’re having loads of fun there.

Hopefully they have a cottage so they can get away from it all every weekend hara har har

At the end of the day, where you enjoy living is a subjective issue i.e. different strokes for different folks.

#72 Live Within Your Means on 05.27.09 at 10:42 am

#96 Just a Girl on 05.26.09 at 11:01 pm
#78 Live Within Your Means wrote: “Bill – I retired at 54, having bought back some Fed service from the late 60’s. I attended a couple of pre-retirement sessions. The break even age of collecting CPP at 60 versus 65 was at age 77. If you think you’ll live beyond 77, by all means take CPP at 65. My colleagues chose to collect it at 60 based on actuarial advice at those seminars. I’m quite sure I’ll never see 77.”

Do you happen to recall if there were any base investment factors in taking the CPP at age 60, to break even at 77 … eg. 3% per year compounding, etc? Just curious as I have a friend who turns 60 this year, and is debating the same thing.

Just a girl – I retired 6 yrs ago this month. I often can’t recall what I did yesterday let alone the discussions that ensued at that seminar :-). But, I just did a search and came up with the following which seems to agree with the break even 77 .

and from a Govt. of Cda website which details the break even point for each year between age 60 and 66, IIRC

#73 VOODOO on 05.27.09 at 11:09 am

Listed price: $549,000 SOLD: $715,000

Days on market: 4 Offers submitted: 23
No problem! 22 other buyers saved, for a greater fool ratio of 1/23 = 4.3%

The real question is: what did those other 22 buyers bid?

#74 wetdog221 on 05.27.09 at 11:23 am

Great post . . . I’ve never understood myself how RE prices got so far past reality. We purchased our first home in ’85 for less than 60K, albeit in Oshawa. That very same house in Vancouver would cost you 1.5M

Yes, Oshawa is Oshawa and Vancouver is Vancouver, but houses are just houses. We rent in a Vancouver neighbourhood where small post-war bungalows start at 850K and are most often torn down to make way for zero lot line monstrosities. Its just plain insanity.

People have clearly been taken in by all the RE hype. Combined with the predominate “I want it all and I want it now” mentality.

Lets hope RE prices re-engage with reality sometime soon and we’ll see affordable housing.

#75 David Bakody on 05.27.09 at 11:24 am

Almost 70% think our Finance Minister (Flaherty) numbers of $50 Billion are indeed low ….. hello he said: ” Our Economy is as strong as the Canadian Shield” and his deficit numbers well> were picked out of thin air.

Is Garth Turner Wrong?

Word from other smart people south of border is the US is down to running on LOCs and Credit Cards from coast to coast… should they fail …. it is game over.

Is Canada different or just a few months behind?

And Harper wants to extent the Afghan Mission to 2015, Why? Because Republicans think the Winds of War will stimulate the economy ….. hello them there days are gone! Replacement costs and long term health care will destroy the Armed Forces not to mention what little moral is left in the Navy and Air Force.

There is more, much more en-route.

#76 Steve Heath on 05.27.09 at 11:25 am

There is some misinformation being thrown out in some of the posts regarding the 1.3 Trillion of Canadian Debt. It is not all consumer debt:

“Of the $1.3 trillion in debt weighing down Canadians, Lefebvre said $900 billion is from mortgages – reflecting the rising costs of housing in many parts of the country – and $400 billion from general consumer debt.

Lefebvre said mortgage debt levels decreased slightly in 2008, while consumer debt rose.”

Nor is it increasing at 10% per year:

“[…] Lefebvre said, adding that debt has been rising 5.5 per cent annually over the past decade.”

In addition, the statement that 85% of households have a balance on their credit cards does not mean they have an overdue balance on their credit cards, it means they are spending on them. For example, even though I pay my cards off each month from the money in my checking account, it considers that I carry a credit card balance because at any given time there will be money owing to the card provider. The same holds true with people with 0% card balances who have the cash set aside earning interest.

On top of that, 400 billion from general consumer debt includes debt used for investment purposes (tapping the LoC to buy stocks), RRSP loans, and car loans… In addition, since there are over 33 million people in Canada, not 8 million as suggested in another post, that means that consumer debt per capita is in the neighborhood of $12,000.

Now, it still may be bad news and worrisome that it is increasing, but at least if you are going to talk about the results of the report, read it, and if you’re divide by the population of Canada… google a reasonable number instead of pulling it out of your hat.

#77 smw on 05.27.09 at 11:27 am

#66 CalgaryRocks

Amen brother…

How big was the government bailout of Nortel(As well as hundreds of tech based companies)?

How much serverance had been handed out to Nortel employees since bankrupcy?

How much public money was siffted to overvalued pensions for Nortel employees?

The big difference is those working in these technolgy jobs have skills that are still in demand and can’t be replaced by some Chinese farmer that has been converted to the Asia manufacturing machine.

I do feel empathy, but not enough that I’m going to pay for the unions and managments lack of foresight and risk management. Sorry you bet on the wrong horse, and that’s the beauty of capitalism. If you don’t make a product that is of quality and competatively priced, you go tits up?

I’ve bought my last GM vehicle, I would definately consider Ford, just from the stand point that they seen the writing on the wall, paid the price and haven’t become a bunch of pan handlers.

#78 Paul B in Ontario on 05.27.09 at 12:08 pm

Hi Garth – Please let us know when to lock in our mortgages for the longer term instead of leaving them open….I’m starting to get nervous from your posts that this time is coming soon….


#79 john on 05.27.09 at 12:08 pm

#63 Signal lost

Glad to answer that for you. The region I reside in is Vaughan or specifically Woodbridge.

In the second year of watching and waiting for a “correction”.

#80 Stephen Smith on 05.27.09 at 12:17 pm

Garth with the upward pressure on oil is this not going to cause inflationary pressure in the economy as a whole is oil is linked to so many other area, farming, food production, transportation, etc.

#81 Oil Amen on 05.27.09 at 12:22 pm

Garth, you and all your bloggers are absolutely crazy to think that real estate in Alberta (especially Edmonton) is going to devalue at all. It’s going to go only one direction: UP. Has anyone looked at gas and oil prices lately? They are going the same direction as real estate (slowly creeping up right now, and shooting through the roof next year). I just bought a condo in Edmonton for a steal (300 grand) and I plan on flipping it spring of 2011 for around 500-600 grand). We’ll see who the fool is when the dust settles.

Good joke. Thanks. — Garth

#82 Barb the proof reader on 05.27.09 at 12:50 pm

#20 CalgaryRocks “..sob stories about your family, all of whom seems to be on some kind of disability”

Well Calgary Rocks, could you be a bigger jerk? I don’t think so. Shame on you for your complete stupidity, at least my B-I-L with low IQ has better taste and judgement than you. And no, he’s never been “on Disability” as you sneered. He HAS a disability but you like to make fun of that don’t you? His whole life he has held down regular, good-paying jobs and he works hard, unlike you. The problem my brother-in-law was protected from, was chemical exposure, from on-site contamination making him sick. The company didn’t care. He was able to turn outside the company, as mentioned before, and it was found they had to clean up their act as the jobsite was completely toxic.

Companies putting workers in toxic environments, or a WWII veteran who got MS after the war but still worked his whole life in two careers for the next several decades.. “a sob story?”!!?? Ha! You are a shallow, narrow-minded and perverse judge. And as for “the rest of my family”? (as you say), not one, is, nor ever, has been “on Disability” per your ridiculous sneering… they are all hard-working contributors to society, in many ways. Something you will never be.

#83 mattbg on 05.27.09 at 12:53 pm

Some corrections to above comments about the recent CGAAC report on Canadian household debt:

1. The $1.3 trillion does include mortgage debt. It is the outstanding balance of household credit, which includes mortgages and consumer credit. This one should pass most people’s basic sanity check, though: how could an average Canadian family in Canada possibly have over $100K in non-mortgage debt?

2. The “85% have credit card debt” is wrong, though not by much. The report says that 85% of those having outstanding debt have outstanding credit card debt, while only 85% have outstanding debt. So, it’s actually 72% that have outstanding credit card debt. I agree that this is far removed from the numbers we keep hearing that say something like 70% of Canadians pay off their balance every month. This number is old (from around 2004, I think) and also used in association with arguments against further credit card regulation… so, who knows where it comes from? But, also, I haven’t looked at the CGAAC report’s methodology (I am still trying to find it), so who knows how valid the CGAAC report’s findings are?

#84 MikeB on 05.27.09 at 12:57 pm

Wet Dog 221 Post 74—- There is only one way to weed out the poison from the system… High Interest Rates…That will force people to live within their means and will force prices lower… although you have a tonne of people with a vested interest in it staying high and going higher.. With 30,000 realtors in Toronto it seems unlikely that things will head lower.. If they do it will take a very long time indeed….years IMO… whereas if there is a sniff of a recovery whatsoever they will go up to retarded levels (as if they aren’t already)
We have personally witnessed a young 30 something couple buy a house for 780K only to make plans to tear the sucker down and put up a 4000 sf monster.
Surrounded by homes that aren’t worth much more than 700K… Total cost is likely over 1.5 million … taxes per year of at least 12 grand…
How can they afford that you ask??? Free money dude.

#85 Dawn in Calgary on 05.27.09 at 1:01 pm

Garth, great post — I’ve shared it with many.

An observation/rant about recent comments — it’s interesting how many people ask Garth for specific research on ‘their community’ or to tell them ‘when to lock in’.

I read his postings as they are informative and contrary to advertiser-led MSM. But asking for specific directions gives him a lot of power over your personal life — when he doesn’t know you from Adam.

Do people ask for specific details so they don’t have to do the research themselves?

Look, if you are scared and want to lock in, lock in! Look around your neighborhood and do your own due diligence. Buy/Sell/Rent. Do what’s best for you!

Don’t wait for someone to tell you “DO IT NOW” — is that so you can have someone to blame when SHTF? Take responsibility! GAH SHEEPLE!


#86 Hardly on 05.27.09 at 1:04 pm

“And I was sadly correct. I did not forecast a “collapse”, rather a correction of 15-30%, which has largely transpired in most markets. I also forecast that this would happen in two stages. The second has yet to occur. Back to your day job, dude. — Garth”

Not really, Garth.

First, a correction of 15-30% hasn’t happened in most (major) markets. Only Calgary and Edmonton have had >15% drops according to

Second, even though it’s just semantics, I think it’s fair to say that you predicted a collapse. I don’t remember whether or not that word was used in your book but the impression you left with most of your readers was that a collapse was coming.

Of course, you probably didn’t see the low interest rates buoying current real estate levels of affordability. Fair enough.

But you’ve *always * been a real estate bear in all of your books and talks, and some might think that you’ve seized upon this opportunity to “prove” that you’re right. A six month period with a 15% dip in house prices in two our of six over-inflated markets does not make a 15-30% correction that you’re claiming you predicted.

There’s nothing wrong with being wrong. And there’s nothing wrong with saying that the timing didn’t work as you had expected.

Perhaps a new blog post with updated predictions, “what Garth didn’t see coming but has happened”, and where you tihnk things will go from here would be a good thing for everyone.

Given what’s happened recently, no doubt, things have to have changed for everyone.

If you think this is over, you are the fool. Say, how’s your book doing? And why don’t you use a real name? — Garth

#87 Mike (Authentic) on 05.27.09 at 1:04 pm

Listed price: $549,000 SOLD: $715,000

Days on market: 4 Offers submitted: 23

I wouldn’t be surprised to learn it was the selling realtor selling it to another realtor (or himeself) to spur interest into the “hot” “green shoot” Toronto RE Market. It’s happened in Calgary with Realtors swapping homes to generate sales figures.


#88 Nathan in Edmonton on 05.27.09 at 1:17 pm

A stunning home for sure, but they should of been able to get the other half of it for that price. Almost 3/4 of a million for a semi; crazy.

#89 Bill-Muskoka (NAM) on 05.27.09 at 1:24 pm

I wouldn’t buy one of the POS’s for even a dollar. High taxes, old and worn out everything, and maintenance costs sky high. What are these fools…oblivious to all reality?

#90 Bill-Muskoka (NAM) on 05.27.09 at 1:51 pm

#68 Calgary37

A more important post your link has is Politico: Officials gave Bilderberg briefings

Thanks for that very informative link.

#91 Bill-Muskoka (NAM) on 05.27.09 at 1:57 pm

#72 Live Within Your Means

Yes, I have heard that said also. Thanks for the feedback.

We all know somewhere some actuaries have computed things out to the government’s benefit! ;-)

I suppose by then the price of gasoline will be so high that the $2,500 Oddawahaha offers for burial exenses will not even cover the fuel costs for a proper cremation?

Hey, maybe all the bodies will be shipped to Nunavit for ‘consumption’? Maybe we should allow cannibals to immigrate and then have a ‘sealer hunt’?

Can we all say Solylent Green together? LOL I envision a new Catholic Church Mass using those tasty little wafers, eh?

#92 hkris on 05.27.09 at 1:58 pm

Unemployment rises in AB. I wonder why, since the oil price is going up

#93 Vancouver_Renter on 05.27.09 at 2:17 pm

I think we are approaching a major turning point.

Bob Hoye, and a couple other analysts that I follow, predicted late last year that we’d have a strong bounce in practically all asset classes out to May of 2009 before the next phase of the deflationary spiral begins. So the recent rebirth of the real estate mania, as well as strength in commodities and many stocks, are in line with those deflationary predictions. Today’s optimism means very little.

What really matters is the next 6-12 months. I believe this period will clarify what is really going on here:

1. If the credit crisis resumes and most markets roll over and free fall in the 2nd half of 2009, with the US dollar strengthening, then there will be no doubt that we have deflation. Run for the exits from almost every asset class and get yourself into cash and gold stocks. Debt will be deadly. (This is my bet)

2. If the US dollar plunges and gold bullion, oil, and most other commodities take off, then we will have hyper inflation. (Not out of the question but less likely that deflation, in my opinion)

3. But if we somehow have a V-shaped bottom and comfortably recover from this mess and return to status quo, then I’ll be scratching my head. (In that case, the big deflation/inflationary meltdown will have just been deferred to another day, in my opinion. )

As a geopolitical and financial/market history buff, I find that it is absolutely fascinating to watch how this all pans out. I’ve made significant financial bets for all three scenarios above, with the heaviest weighting in favor of the deflationary outcome (#1).

#94 CM on 05.27.09 at 2:34 pm

Deficit ballooning from $50B to $75B or so – whatever. What’s $25B between friends?

Meanwhile cost of war in Afghanistan set at a conventional $27B or so, with costs just bound to rise as “unforeseen” expenses, cost overruns and other boondoggles will probably push that way up.

Hmmm…what to do, what to do?

How about the unmilitary solution?

But that would be heresy.

#95 gold bugger on 05.27.09 at 2:46 pm

wayupnorth writes: “… builders make a profit of up to $100,000 on a $400,000 house and only 10-$20,000 on a $200,000 house. Sort of like GM making $10,000 on a $40,000 vehicle instead of $1,000 on a $20,000 dollar one. The answer is either laziness or GREED!”

Wrong and Wrong, Trotsky.
Home buyers want bigger houses. Builders provide them. It just so happens that most of what the suckers are buying is enclosed airspace. The bigger the house the bigger the airspace. The land cost is the same and the material costs go up only incrementally. With cars, the margins are higher on the more expensive cars and trucks because people are willing to pay for bigger vehicles.

What is it about the free market you don’t get?

#96 Barb the proof reader on 05.27.09 at 3:01 pm

David Bakody #68 “were loved to bits” Question for you re: navy at #100

#97 Jason on 05.27.09 at 3:06 pm

#93 Vancouver_Renter

Please see my last comment here:

#98 MenWithHats on 05.27.09 at 3:20 pm

Archaic tax law cripples employees with options :

Thousands of Canadian workers who purchased stock options from their employers before the market downturn are expected to pay millions of dollars in taxes on income they haven’t received because the shares have lost their value.
The income tax is applied to stock options, a benefit many Canadian employees are given as part of their remuneration. Employees at various levels of companies in high tech, mining, banking and other industries are allowed to buy stock in their firm at a significantly reduced price.

A little-known loophole in Canada’s tax law:

People are expected to pay income tax on the market value of the stocks when they are issued not on their lesser value if they are later sold at a lower price. Those affected call it a tax on “phantom income.”

if an employee bought $100,000 worth of stock for the employee price tag of $25,000 early in 2008, they would be taxed on $75,000 worth of “income” for that year. If the employee held on to their stock, as many do, they would still have to pay tax on the $75,000 even if the stock’s value drops to mere pennies. Employees can defer remitting the tax until they sell the stock or the company is sold, but the tax bill doesn’t change.

Finance Minister Jim Flaherty indicated Ottawa has no plan to help affected taxpayers.

“The tax laws apply to all of us equally,” Flaherty said. “There are some remedies that are available through hardship cases, but the reality is that those stock option situations are not uncommon and apply to a large number of Canadians. So, I can’t and I won’t hold out any hope of any tax exemptions in respect to that.”
“Beware of Greeks bearing gifts “

#99 David Bakody on 05.27.09 at 3:34 pm

#94 CM on 05.27.09 at 2:34 pm

And CM we must add worn out equipment replacement and long term health care costs for our brave troops soon after they return and years to come …. and CM there is no plan to keep Veteran’s Hospitals open after WW II & Korea vets die off. Sad

#100 Alex on 05.27.09 at 3:38 pm

Calgary’s concern over abandoned construction sites grows:

“As Calgary’s building boom turns into a muffled thud, city council plans to increase security and safety on a growing number of abandoned construction sites.

A combination of the slowing economy, falling real estate prices and years of record building during a boom have halted some construction…”

#101 Calgary_NDP on 05.27.09 at 3:42 pm


it’s really funny that some people in Alberta actually think their properties are worth market value. As oil price seems to be going up, housing in Calgary especially may skyrocket. That’s really good news, because any person wanting to buy will wait. Consider that the actual value of a house in non boom dollars is around $200K. No more than that, certainly. Sellers and would be sellers count on the desperation of buyers. The facts remain: What equity is there to gain on buying a property at its peak in an artificially priced market? The answer: None. It is better to rent than putting oneself in a dire situation financially. Besides, as a renter you are upwardly mobile and can get the hell out of Alberta when eventually everything will go to hell. Its not a question of if, but when, oil resources are finite and are limited by their formation requiring vast amount of water and power to extract the oil. Already some developments have slowed because of a lack of water. There you have it. There is no Alberta advantage.

#102 lgre on 05.27.09 at 3:53 pm

Oil Amen – you got sh*t smeared all over your face not oil, better wipe it off before it sinks into your braincells and your stupidity becomes retardation.

#103 Bill-Muskoka (NAM) on 05.27.09 at 3:59 pm

#93 Vancouver_Renter

Remember that when using the term ‘If’ it also is applicable to ‘If a frog had wings it wouldn’t bump its arse on the ground!’

#104 john m on 05.27.09 at 4:07 pm

95 gold bugger on 05.27.09 at 2:46 pm

wayupnorth writes: “… builders make a profit of up to $100,000 on a $400,000 house and only 10-$20,000 on a $200,000 house. Sort of like GM making $10,000 on a $40,000 vehicle instead of $1,000 on a $20,000 dollar one. The answer is either laziness or GREED!”

Wrong and Wrong, Trotsky.
Home buyers want bigger houses. Builders provide them. It just so happens that most of what the suckers are buying is enclosed airspace. The bigger the house the bigger the airspace. The land cost is the same and the material costs go up only incrementally. With cars, the margins are higher on the more expensive cars and trucks because people are willing to pay for bigger vehicles.

What is it about the free market you don’t get?…………..actually im amazed at where you accumulated this knowledge? First off you do not build a $500,000 home on a lot surrounded by $200,000 homes unless you are a damn you can bet your ass the land is going to cost you more..also the bigger the more land you need..there are regulations on distances from lot lines etc. Bulk buying of materials lowers the cost so the profit margins are higher,moving equipment setting up etc also costs money….. builder’s do get a kick back on materials the pricier the home the more the cost….only a fool builds a $500,000 shell and completes it with $200,000 fittings. ..etc……..

#105 Patrice on 05.27.09 at 4:08 pm

#78 timbo 05.25.09 11:48 pm “….and when they are gone will blame something else as more jobs are moved offshore to save money…. NAFTA will wipe out the working class family.”
Great post timbo.
stupid post both of you.
You ignorant people must learn and educate yourself before speaking.
Such ignorance and stupidity is appalling.

The idea is to stay competitive with the world market in the industries we decide to compete against the low wage countries.
If you are going to manufacture t-shirts here in Canada, you must be competitive with China.
Otherwise you need to resort to protectionism, which affect and hurt the entire country.
And if your factory is crippled by a strong union with high wage, you only have 2 options. Close the shop, or protectionism, as the factory cannot compete anymore.

We live in a modern country, the best approach is to abandon low end industry, stuff that can be done by anyone and doesn’t require any special education, stuff that can be made cheap in China or india…

And focus on high end jobs. Stuff that cannot be made easily in China and india. Requiring well educated population.

This is how to develop our resources (in this case it would the highly educated workforce)

protectionism will give temporary benefit and hurt us in the future (ob-fucking-viously)

You cannot fight progress, fighting progress only hurt. otherwise you would still be pissed off we closed the coal mines and be pissed people drive gas cars as it reduce the number of jobs in our coal mines.

You can only accept reality, and make the best out of it.
even if it means we must stop doing business the way we used to, and that many people will lose their jobs.
If you invest in our resources, we will be competitive with the rest of the world in the future.

This is simple free market 101.

One world, no more boundaries, A much more flexible agreement than NAFTA with the entire world, this is the future, and it is beautiful if you can understand it.
Any country fighting this will look like any socialist or communist country after 10 years; decrepit, lifeless…

retards like you are the reason Canada is struggling today.

#106 Chincy on 05.27.09 at 4:10 pm

#93 Vancouver Renter

I think you make alot of sense…I too follow Bob Hoye and agree with your take with regard to outcome #1, but seems we are constantly being tested with our theories. I guess that is what makes any market, contrasting opinions…

#107 2x gold ETF on 05.27.09 at 4:31 pm

#93 Vancouver_Renter

Question: re: #1 outcome , cash & gold stocks??

How can gold stocks go up when even gold bullion has crashed in a period of deflation ??? thx

#108 Barb the proof reader on 05.27.09 at 4:33 pm

#88 Nathan in Edmonton “3/4 of a million for a semi; crazy”
Nathan, my 2 neighbours paid a full mill for semis right-ch here in Alberta.

#109 CM on 05.27.09 at 4:40 pm

With what’s going on down here, this sounds like a wonderful solution.
Canadian heading for 6-month Space Station stay

“A Russian Soyuz space capsule carrying Thirsk, Russian cosmonaut Roman Romanenko and Belgium’s Frank De Winne soared into the hot afternoon skies over Kazakhstan’s northern steppe Wednesday.”
Good thing Peter MacKay wasn’t poking the Russians in the eye before this launch. Maybe somebody clued him in.

#110 john on 05.27.09 at 4:53 pm

I agree…Garth must admit the real estate market has not “corrected” as he forecasted. He gives examples of some areas affected thus far and it gives the impression on a broader scale that this is what is happening everywhere but that is simply not accurate up to this point. We should not praise Garth to this point for his prediction…we will gladly do this if/when it happens…just not yet…2 years into his prediction.

This blog is suddenly full of people who have a lot of trouble seeing the distinction between short-term conditions and economic trends. Oh well, believe what you want. It’ll be interesting. — Garth

#111 smwhite on 05.27.09 at 4:55 pm

Dear Eduardo and Calgary Rocks,

You are a perfect example of the small portion of the bitter west actually stupid enough to believe its the NDP, Bloc and Liberal’s fault we are where we are today.

The one problem with your collective thesis is that this time, during potential hyper inflation, its a supposed CONSERVATIVE party running the show and leading the public to empty pockets, not Trudeau.

It was the PROGRESSIVE CONSERVATIVE PARTY(The one our esteemed Blogging Champ was from) that paid the political price for the good of the country implementing the GST in the early 90’s.

It was a Liberal government, that lied, and said they’d remove it, didn’t, but thankfully managed to bring the country out of the depths of a .60 dollar and to prosperity? What 15 billion in the coffers? As a country we paid the price, we collectively suffered but we all enjoyed growth from 1995 on to 2006.

In a few short years, its the Federal Alliance Party and Ontario PC party rejects running the country into the ground. Its very obvious that this party from the top down doesn’t have a clue. And don’t dare bring up its a global thing and we couldn’t help it, Australia managed to see the writing’s on the wall, as did dozens of other economists. Guess the Aussies were more interested in their citizens well being then being “global” leaders and chumming around with the USA.

Maybe if Flaherty and Harper acted like CANADIAN CONSERVATIVES and not politicians, more interested in furthering their career, I’d have faith they’d do the right thing.

But as long as there are partisan rags like you two out there, its the same stupid uneducated arguments and “attack adds”. Being part of the party and waving the flag doesn’t make you a conservative, as I’ve stated on many occasion, Iggy is more conservative then whatever the [email protected] the CPC mandate is. And we need somebody that is willing to make some tough and unpopular decisions, and a true conservative will make those decisions during a crisis, not worry about votes.

Expect an election and expect the CPC to get dusted. This current prime minister and his jack ass finance clown lacked any foresight and risk management.

Even a simpleton like myself can figure out that when the country you send 80% of your shit to goes tits up, here comes trouble.

I don’t give a sweet crap who’s in power, provided they use sound economics and some common sense. It seems to lack in solid-blowhard CPC supporters.

#112 CM on 05.27.09 at 4:59 pm

Re #99 – David Bakody

Yes. I keep remembering the War Amps campaigns from several years ago with their rallying cry, “Never again!”
The War Amps association is still there, but the “Never again!” is gone.

I don’t know whether you’ve ever heard of Jeff Huber, a retired USN commander who writes a blog called Pen and Sword. He thinks that the military have gone completely off the rails and the needs of past and present veterans as well as the citizens have been completely forgotten.

But the arms dealers and military contractors are making out like bandits.

#113 smwhite on 05.27.09 at 4:59 pm

#86 Hardly

Its not just Garthy anymore, I thought Garth was late to the housing collapse party last year, I didn’t equate for more government stupidity aka 0.25% boc rates…

Roubini’s team is expecting “a major correction this year” in the Canadian housing market. BNN interviews Rachel Ziemba, senior analyst, RGE Monitor.

#114 ts harpoon on 05.27.09 at 5:07 pm

Current first-time buyers in th age of insanity:

#115 char on 05.27.09 at 5:10 pm

It’s funny how the nice, educated, multi-cultural Torontonians suddenly turn into a bunch of raving David Dukes when it comes to buying real estate.

You want an affordable house ? “A house is a place to live, not an investment ?” So look at the mls in the Dufferin/Eglinton area. Detached 3bdrm, parking, ttc, $260-$310.

Leaside is not only white, it’s the whitest. Gen y plus may have grown up on hip hop, but will pay a mil + for a tiny house on a toxic dump with no transit, before they’ll raise their kids near people who may have recorded the hip hop.

Oh please, let’s not pretend we’re mystified by these prices.

#116 eddy on 05.27.09 at 5:12 pm

garth’s prediction has been accurate- in toronto between 08 peak and present day a drop of around 15- 20 %, but it’s over. now we have a mini boom. some areas of TO are undervalued, like Scarborough. in this boom i also see fear of inflation, which is justified. IMHO, a well chosen principal res in TO is a safer inflation hedge than an RBC savings account

#117 smwhite on 05.27.09 at 5:14 pm

#93 Vancouver_Renter

Dude, I want to thank you and “Got a Watch” for posting the Hoyle article from the 14th, its a long read but finally picked through it over the week.

It just confirms everything I’ve been shuffling through for the past 5 years, there are a lot people that should read that article.

I’m sitting in scenario #1 like yourself, I’m prepared for #2, but 3#, well, that’s based on “Hope” unlike the first two that are based on “Reality”.

Investing in hope is just what people bidding up RE are doing.

Good thing we put off that 2002 recession and created bubbles.

What’s the opposite of a market bubble? Whatever it is its coming!

#118 Bill-Muskoka (NAM) on 05.27.09 at 5:14 pm

Perhaps you need some education as well? Try reading John Ralston Saul’s book ‘Collapse: The End of Globalism and The Reinvention of The World’ and then tell all the ignorant people how wonderful Globalism has been and will be!

#119 Bill-Muskoka (NAM) on 05.27.09 at 5:16 pm

How can gold stocks go up when even gold bullion has crashed in a period of deflation ??? thx

#107 2x gold ETF

Bre-X is BACK?

#120 DM on 05.27.09 at 5:17 pm

I’ve been reading this blog for over a year and this is my first post, so I will try to keep it brief. I am a 32 year old teacher, I have been a diligent saver for 7 years and I am getting married in 6 weeks. My fiance and I were looking to buy a house in Oakville for over a year and just that did last week. We paid 32K less than the original asking price and we will only have 100K on the mortgage which I would like to pay off in 10 years max.!

I know that you are going to say that we are greater fools Garth. I seriously wanted to hold out a little longer (at least until the fall), but the future Mrs. M said that it was a waste of money to rent and that even if prices dropped by another few Gs how much could we possibly save?

Anyway, suffice it to say as much as I would like to agree with you (and believe me I strongly do) I am a pragmatist and I KNOW that this Harper/Obamaflation will wipe out my years of hard earned savings. Besides, if rates do climb back up in the next few years, why am I putting my money in stocks when bonds would be the better way to go? Furthermore, if corporate profits are low (or negative) now why would I buy shares in that?

Seriously though, I am pissed off at this Gov’s plans to wipe out everyone’s debt by printing more money. We’ll all soon be millionaires, but what’s the point when even being a millionaire will be the new standard for poor?

#121 Anonymous on 05.27.09 at 5:26 pm

#81 Oil Amen,

2007 was the year of Alberta Real Estate. That was the top and now it’s over. Stop trying to relive the past glory days. It makes you look foolish, like wearing platform shoes and diggin’ disco.

#122 Republic_of_Western_Canada on 05.27.09 at 5:29 pm

3.72 percent and climbing. hee, hee, heeeee….

#123 Republic_of_Western_Canada on 05.27.09 at 5:38 pm

#107 2x gold ETF –

Dummy! Gross revenue is (price x volume), not just price.

Gold stocks are not derivatives on underlying bullion, even though they may leverage underlying prices a little. They are shares of producers who profit when the ‘product’ of product price and volume goes up. Just like oil.

A lot more people in the coming decade will be interested in gold as either a value security reserve (vs USD) or even as money (yes, as money); but not necessarily for capital appreciation (vs the new world currency basket). So the volume demand could increase even if price stays the same (due to recycling for instance, or central bank liquidation) or even drops.

#124 @Garth 2 on 05.27.09 at 5:46 pm

#63, stop reading consumable finance books!

Please remember that Garth, Jeff Rubin, etc… these are writers of finance porn…no different than the real estate porn in magazines and newspapers. And just like porn, it is satisfying a perceived need in the consumer.

As for the face-off between john and Garth, I’m afraid john has the up right now. Especially locally (T.O.), the market is up and away. Garth has NOT been proven right so far. There has been no crash when average prices are up 3% on May of last year. How could one *possibly* construe that as a crash??!?

Garth has the nod on fundamental analysis, historical allegory, and consensus among those bothering to post here, but nothing else (i.e. real Canadian price data).

I’m critical of “Greater Fool” because Garth is not capable of admitting a mistake… He advised selling at the absolute bottom (meanwhile to his credit, *he* bought a property), and then said wait-it-out. That was hugely misleading. This is reminiscent of an earlier prediction in the late nineties that the Dow going to 30,000 was reasonable.

Unfortunately, Garth is backed into a corner on analysis because he predicts a real estate crash, but not a worse crash in equities. He suggests equities will rally perhaps with some congestion, while home prices tank.

To be on the side of a real estate crash now, I believe you must be committed to a serious equity downturn, such as the one last year that caused the mild correction in Canadian real estate. If this does not occur, what is the catalyst? Certainly a laundry list of fiscal mismanagement crimes made by governments and citizens is not going to do it. That we have seen already: this blog, Garth’s book sales, and the current Canadian home price levels .. i.e. no crash.

This is a porn site? As for predicting a real estate downturn (‘crash’ is your term, not mine), I stick with my call of a 15-30% national decline. If you think the adjustment period is over already, you need to work on your reading comprehension. That would be your conclusion, but it has not been mine. We are still on the path to very significant change. — Garth

#125 Vancouver_Renter on 05.27.09 at 5:53 pm

#103 “Remember that when using the term ‘If’ it also is applicable to ‘If a frog had wings it wouldn’t bump its arse on the ground!’”

Well, strategic planning for every obvious outcome is the only way I’ve been able to mitigate risk and get ahead. I suppose I could just turn off my brain and just do what everyone else in my generation is doing, but I’m quite convinced that that strategy isn’t going to result in any more happy endings, going forward.

#126 Republic_of_Western_Canada on 05.27.09 at 6:01 pm

#93 Vancouver_Renter –

The US dollar is on very shaky ground. Any recent perceived ‘flight to safety’ vs emerging currencies, or any residual petrodollar momentum, is now highly countered by the USD’s own near-infinite value dilution due to skyrocketing debt and money in circulation. Just ask the Chinese how happy they are about it.

Further, the definition of deflation is less dollars chasing the same or greater amount of goods. But, no way do we have less dollars (debt + currency issue ‘printing’) now. Even goods stockpiles are declining as reserves slowly get consumed without replenishment by zero-revenue, near-bankrupt producers. So, no monetary depression exists, regardless of job losses due to historic overcapacity in production or cratering real estate prices.

You see, no net debt has been paid off or paid back yet, regardless of how many people stand in souplines or how many new houses rot in the desert sun. Bankruptcy or median price declines do NOT eliminate debt, they just shift it around, so someone or something else takes the hit in future earning/spending power. So, the debt + M3 money supply are not decreasing. Ergo desto, no deflation.

My vote is for crushing stagflation coming soon.

#127 squidly77 on 05.27.09 at 6:10 pm

please consider that the following comments come from a blog that is 100% censored
Garth Turner says today’s buyers are the greatest fools

#128 The Coming Depression on 05.27.09 at 6:11 pm

Unbelievable that someone paid that much over list. Total loser, he/she should be headlines for the biggest town clown in in denial deadbeat in the city of Toronto. On the other hand, Marc Faber states that he is 100% sure Hyperinflation will occur equal to Zimbabwe. That will put us into a Great Depression. Won’t have to worry about housing.

#129 Vancouver_Renter on 05.27.09 at 6:12 pm

#107 “How can gold stocks go up when even gold bullion has crashed in a period of deflation ??? thx”

Most people are making predictions based on what logically SHOULD happen. Bob Hoye, who our investment club holds in highest regard because he predicted all the events of the last couple years (he REALLY did), is a market historian. He bases his investment advice on what DID happen.

He has pointed out that in the five Great Depressions of the last 300 years, gold held its value during the deflationary downturns (in the case of the 1930s, the gold price was fixed but in other downturns it wasn’t). Investors use gold during deflationary contractions to preserve wealth. Yes, cash is king, but can you trust your cash investment? Gold has no counter-party risk.

Anyway, back to historical precedent… During the last five Great Depressions, gold stocks initially fell with the general markets but then went on to be the premier asset class. Why? Because gold held up while the cost of mining (energy, labor, materials, etc) fell. So gold miner margins went way up.

In the Great Depression of 1929, holders of gold stocks made a fortune. This article show how investing 15% of your portfolio in gold stocks during the Great Depression as a hedge would have saved your portfolio:

Now look what has happened since 2000. Gold has increased in price from $250 to around $1000. But gold stocks have done nothing. Why? Although gold miners realized greater income, their cost of doing business also increased dramatically as oil, equipment, and labor went up. So their margins did not increase.

But if gold holds at around $1000 and we enter into a deflationary contraction where gold miner operating costs decrease, their profits will increase dramatically and gold share prices should rise in response. We’ve already seen this in the last six months as gold stocks have more than doubled off their 2008 lows.

#130 The Coming Depression on 05.27.09 at 6:27 pm

#86 Hardly- You are totally delusional if you believe that we are on a cusp of some kind of recovery. Spring time is a delusional time for many, rates are down, flowers are blooming, the weather is nice , of course rejects will be buying. Just because housing didn’t go down in a straight line , you have to realize that the media own homes. They tend to write positively as the market slowly crashes around them as they desperately try to keep unsustainable fantasy levels.. Winter will come, a new set of rates, unemployment will be higher, inflation will return so desperate measures bring desperate means. Welcome to the CRASH of 2009-2010

#131 . . . fried eggs and spam . . . on 05.27.09 at 7:09 pm

Well, I got half the score right. FC Barcelona did indeed score two goals. Unfortunately, Manchester United never bothered to show up, so they didn’t score at all — completely outplayed.

So congrats to FC Barcelona — they did the first-ever triple in Spanish soccer today. More power to them!
#75 David Bakody at 11:24 am — “. . . Word from other smart people south of border is the US is down to running on LOCs and Credit Cards from coast to coast… should they fail …. it is game over.”

Now that Japan has re-entered the arms race (don’t know whether they are building nukes), but other military stuff they certainly are, to create artificial employment to falsify their own slump.

My guess is that all this present nonsense is leading to something happening much greater than what we sheeple will ever know.

BTW, Harper and Flaherty lied about I.T.’s, so why would they change strategy for Af’stan?

The govt. still spends approx, $100 / mln. a month (google it to find a clearer understanding of the price we all pay) for this pathetic show of force — Alexander the Great is the only person who has ever invaded, and held Af’stan for three years before he was booted — and war is a really quick and great way to bankrupt a nation.

O/T, I understand that Venus crosses the Sun on June 5-6, 2012 and the Mayan Calendar concludes (approx.) Dec. 21, 2012. It will be an interesting few years, to say the least.

#132 David Bakody on 05.27.09 at 7:17 pm

Hi Barb:

Small world ….. The RCN was the third largest allied Navy at the end WW II. The RCN’s ERA branch was integral to the Navy attaining such a high standard in doing so …. Engine Room Artificers (ERA) and “C” stands for Chief Petty Officer.

Canada had over One Million in uniform during WW II with only a population of 12.5 M and to-day with a population 32M + we are hard pressed to find 60K to serve. And we are about to spend more billions and it will not solve a dam thing in Afghanistan nor stimulate Canada’s economy and when the soldiers return home they will not find jobs nor build/buy homes as was the case in 1945.

#133 David Bakody on 05.27.09 at 7:21 pm

….. heard talk of rising interest rates in the US could we now be even closer than Garth mentioned. Banks like to make money and we know they can be ruthless when hungry.

#134 WillsDad on 05.27.09 at 7:22 pm

My mother who lives in Calgary had her condo assessed at $390,000. Her property taxes are $2200/year.

Does this seem low to you Garth?

Doesn’t seem like much to me…

#135 Herb on 05.27.09 at 7:34 pm

This should have been on the last “Why is this man smiling” thread, but darn, it didn’t get published until to-day:

This guy is easily the most ineffectual federal finance minister in decades. Why believe a word from his mouth? Does anyone seriously believe he believes most of it?

More at

#136 Vancouver_Renter on 05.27.09 at 7:35 pm

#126 “You see, no net debt has been paid off or paid back yet, regardless of how many people stand in souplines or how many new houses rot in the desert sun. Bankruptcy or median price declines do NOT eliminate debt, they just shift it around, so someone or something else takes the hit in future earning/spending power.”

You may be right. We may enter into hyperinflation or stagflation. I’ve kept an open mind with regards to the possible outcomes.

But I would counter that this money printing and easy credit has been going on for many years, if not decades. At some point, the debt gets too big and the assets too inflated in price. It’s right out of the history books. I’d rather base my bets on what DID happen rather than what we all think SHOULD logically happen.

In the Great Depressions of 1929, 1873, 1825, 1772, and 1720 central banks and government also printed and stimulated like madmen. But nothing could stop the deflationary contraction once the debt bubble started to implode. The money supply ultimately contracted because debt was defaulted upon. No credit-worth firm or individual wanted to borrow. And banks tightened their standards so that they would only lend to credit-worth people. Catch 22.

And in those deflationary depressions they ALSO had bear market rallies like we are experiencing this spring.

The hyper-inflationary guys did not accurately predict what happened last year. But Hoye did almost perfectly. And as Hoye often says, if the governments and central bankers have it all figured out and are in control, why did they let the great crash of 2008 occur? Answer: They don’t and they aren’t.

#137 smwhite on 05.27.09 at 7:38 pm

If lowering of interest rates expands credit, whats happens when you can’t expand credit anymore?

You devalue your currency via the illusion of growth, inflation.

Faux Spring? Remember that gem?

Yeah, history NEVER repeats itself; life isn’t cyclical…

Your not playing the stock market, your playing people…

#138 CalgaryRocks on 05.27.09 at 7:40 pm

#111 smwhite, at least get your facts right. I was raised in Montreal and have full first hand knowledge what crazy socialist policies have done to Quebec. Ask Rhino, he’ll tell you.

Pretty hard for the 3 stooges to complain about deficits whenFlaherty followed their policies. For that alone, he should be ashamed.

#139 Jordan on 05.27.09 at 8:04 pm

Edith Lederer

NEW YORK–The United Nations predicted Wednesday that the global economy is in considerably worse shape than originally thought.

The UN cited that the global outlook will shrink 2.6 per cent this year as a result of the world financial crisis – a considerably deeper downturn than the 0.5 per cent contraction forecast in January.

In its midyear economic projections, the UN said developing countries have been disproportionately hard hit by the global economic crisis.

The crisis started in developed countries, but the UN report said developing nations have suffered most from capital outflows, rising borrowing costs, collapsing world trade, lower commodity prices and falling remittances from overseas workers.

On a slightly optimistic note, the UN report said that if current policy measures to stimulate economic growth take hold, a mild recovery could take place in 2010.

But the UN said a more prolonged global recession is also possible if financial destabilization is not reversed by concerted global policy actions.

The world economy grew an average of nearly four per cent per year between 2004-2007 and 2.1 per cent in 2008, the report said. But most countries across the globe are now deeply mired in the most severe financial and economic crisis since the Second World War.

Between September 2008 and May 2009, it said, the market capitalization of U.S. and European banks declined by 60 per cent – or US$2 trillion.

The report added that despite enormous write-downs and massive financial sector rescue operations by governments, banking problems have not gone away.

“If financial markets do not unclog soon and if the fiscal stimuli do not gain sufficient traction, the recession would prolong in most countries with the global economy stagnating … well into 2010,” the report said.

According to the UN, world trade has declined dramatically since the end of 2008, falling in the first quarter of the year at an annual rate of more than 40 per cent.

For 2009, the UN forecast that the volume of world trade will fall more than 11 per cent, a figure that hasn’t been seen since the financial crisis of the 1930s.

A rapid rise in unemployment has also taken place since 2008 and is expected to worsen in 2009-2010, the report said.

Initial projections of 50 million unemployed over the next two years could easily double if the situation continues to deteriorate, the UN warned.

“Lessons from past financial crises indicate that it typically takes four to five years for unemployment rates to return to pre-crisis levels after economic recovery has set in,” the report said.

According to the UN projections, world income per capita is expected to decline by 3.7 per cent in 2007. At least 60 of the 107 developing countries for which the UN obtained data are expected to suffer declining per capita incomes, the UN said.

Only seven countries – down from 69 countries in 2007 and 51 in 2008 – will register per capita growth of three per cent or higher this year. Growth of three per cent is considered the minimum required to achieve significant reductions in poverty, it said.

Associated Press

#140 Marina on 05.27.09 at 8:13 pm

University of Toronto salary list – have a look

#141 dd on 05.27.09 at 8:16 pm

#81 Oil Amen

Ya I have seen gas. Natural gas is at a multi year low. Natural Gas drives the province not oil. Furthermore not all people participate in high energy prices. Some but not all.

If your estimate was correct real estate prices in july 2008 would have been the at the top of the market along with oil. But it wasn’t.

People are loaded up on debt and facing unemployemnt. And until this washes out of the system … you loose.

#142 taxpayer like you on 05.27.09 at 8:20 pm

Barb: Further to the intense posting of yesterday/today, I have located an old article about pension funding for you.

I do apologize for any and all personal attacks you and your family suffered at the hands (fingers?) of some of the bloggers. Most of it kept it clean and on topic (even though it may have been off topic to start)

If you’re happy to move on from here, I am fine with that, but if you want some insight as to why many of us
feel as we do about pension bailouts, let me know. Thanks.

#143 OttawaMike on 05.27.09 at 8:37 pm

Personally, I cannot see how this country will be the only G8 nation to experience continuing house price hikes but then I just keep watching the equity markets go on their upward march for no sound fundamental reason either.

I am beginning to wonder if all this worldwide govt. money at nearly 0% interest has distorted things so much that housing prices and markets just will not react to natural market forces.

#144 cowgirl kiss on 05.27.09 at 8:44 pm

My 19 year-old daughter is working at one of the largest youth hostels in Australia, and she is going to arrange to work there for one more year. She says that no matter where her co-workers are from (Sweden, Norway, Ireland) ALL of their parents are recommending that they work and savour the opportunity of working at McJobs in Australia.

I guess no matter where these kids are from, there isn’t much point in rushing home.

#145 dave on 05.27.09 at 8:46 pm

Looks like Garth is on the right track about interest rate increases:

New Investor Worry: Treasury Selloff Spiking Interest Rates

Now if Garth can take another look at gold…… :>

#146 Barb the proof reader on 05.27.09 at 9:16 pm

#142 taxpayer like you

Thanks. I’ve enjoyed your posts and insight, and I don’t disagree with you. And don’t worry, I’ve been on Garth’s site for over a year and I’m much tougher than you’ll know :)

And contrary to what the usual attack dog trolls simply broadbrush, I was posting the thoughts on behalf of people like my F-I-L who has no say here or anywhere else. I dislike any bailouts, but I’m also realistic… and these are strange times, but then, we saw this coming for years. And I mean years, but then, people don’t pay attention anyway. They all live in their own little world.

These problems are huge and have been coming for a long time… and they are long-term. Looking at a problem from the middle of it, is not enlightening. I like to look at a problem from “The Big Picture” to get past it and look for solutions. I’ve known of the growing problems with pensions and co’s figuring out how to run from them, leaving unsuspecting victims. I had my own face-to-face look at that awhile back.

Yes, I know of the OPBGF — I was saving up to enlighten CalgaryRocks and others at some point… I thought it might give him a heart attack to find out the union-luvin’ lefty red commies in Ontario have been happily “Bailing out pensioners since 1980” :) Rednecks hyperventilate when they read things like this:

The Ontario Pension Benefits Guarantee Fund is unique in Canada.

There are more than 7,500 pension plans registered in Ontario and more than 2 million Ontario pension plan members. Fifty-one percent of the plans are defined benefit pension plans.

The Ontario Pension Benefits Guarantee Fund provides basic pension benefit protection in the event a pension plan is wound up without assets sufficient to cover liabilities. It was established by the Government in 1980 to protect basic pension benefits if a pension plan has insufficient assets to provide promised benefits and guarantees payment of basic pension benefits accrued in respect of service in Ontario.

The Fund is governed by Ontario’s Pension Benefits Act. It is funded through assessments paid by employer sponsors of defined benefit pension plans and is administered by the Superintendent of Financial Services.
The PBGF provides pensioners with up to $1,000 a month in the event a pension plan fails to provide its full benefit, or any at all. It is funded by Corporate contributions. The government has no legal obligation to top it up. In the past, the provincial government has found ways to support the fund when it has been insufficient to meet demand, including when farm-equipment maker Massey Ferguson and Algoma Steel filed for bankruptcy during previous recessions.

#147 john on 05.27.09 at 9:21 pm

To put into context what Garth is saying,

Nationally a $300,000 (greater fool) home at the height of the boom would correct from $210,000 to $255,000.

Enough said.

And it will. — Garth

#148 Sean in E-Town on 05.27.09 at 9:23 pm

#105 “protectionism will give temporary benefit and hurt us in the future (ob-f***ing-viously)”

Actually, if you bothered to read Krugman or follow political economy you’d see that the harm from national industrial strategies are generally short-term and the benefits are long-term (Stability of employment/market/income spurs investment, as people are not concerned about being over-leveraged for one.)

Or if you don’t care for that I shall quote some other pinko economist:

“Isn’t it curious that there are many laws preventing the combination of men to raise the price of labor, but none preventing the combination of men to lower it.”

-Adam Smith

#149 Vancouver_Renter on 05.27.09 at 9:34 pm

#119 “Bre-X is BACK?”

Actually I think that Bre-X was very good for the gold mining industry (in the long term). Because of it, very tight standards were introduced to help prevent a repeat of that kind of fraud. Many investors don’t realize that when a mining company now reports its resource figures the numbers must be NI-43-101 compliant, as described here:

I think that the banks and investment firms – and governments themselves – have yet to go through this process. They are currently ripe with fraud and manipulation. We’ll know we’re through this meltdown when, someday, they too will have to comply with standards that truly protect their investors and the public – rather than the shiesters who rob the public blind.

#150 Barb the proof reader on 05.27.09 at 9:39 pm

#132 David Bakody

Thanks David.

You may recall Dad’s RCAF/RAF.. Libya.. he set out from Halifax in 1941’s Operation Scarlet.. Navy took the pilots and their newly-built Hurricanes across the Atlantic.

Hubby’s dad.. Navy.. Halifax. Both signed up before the Battle of Britain. We often listen to their stories and treasure what they did for us. It is so different now.

#151 patrice on 05.27.09 at 9:59 pm

#118 Bill-Muskoka (NAM) on 05.27.09 at 5:14 pm

Perhaps you need some education as well? Try reading John Ralston Saul’s book ‘Collapse: The End of Globalism and The Reinvention of The World’ and then tell all the ignorant people how wonderful Globalism has been and will be!
Globalism brought 700 millions chineses from living in pitiful poverty, to middle class who have a tv, and the freedom to choose.

700 millions. that is 10 times more than the entire population of the usa, and canada put together.
Countries like the usa should stop crying and bitching about the damages done by globalism to their economy, adapt, adjust, and move on and welcome and be thankful for this wounderful globalism.
The entire humanity should welcome globalism, if only for what it have allowed already.

unless you want to go back to some countries running and exploiting the rest of the world, countries attacking other countries for their ressources, globalism is the only option.

Too bad for your uninsightful opinion buddy but the free market is by far the most efficient system we have.

The humanity as a whole should be very thankful for it.

Use you brain to think. Not to repeat blindly what other people have told you. Think. it is not difficult, but no one can do this for you.
If you start to use your brain, it will develop rapidly and it will get easier in the future.

#152 john on 05.27.09 at 10:10 pm


But the reality is it hasn’t yet!

More importantly I would wager a guess that if you asked most that read your blog what they expect a $300,000 home to correct to, a large number would have predicted $150,000 – $175,000. Now I realize you never claimed this…I wish you would speak in less shades of grey and more black and white.

#153 CalgaryRocks on 05.27.09 at 10:15 pm

#146 Barb the proof reader on 05.27.09 at 9:16 pm #142 taxpayer like you

Yes, I know of the OPBGF — I was saving up to enlighten CalgaryRocks and others at some point… I thought it might give him a heart attack to find out the union-luvin’ lefty red commies in Ontario have been happily “Bailing out pensioners since 1980″ Rednecks hyperventilate when they read things like this:

Everybody knows about this Barbie. The 12K is peanuts compared to what GM pensioners (the new retirees) want.

#154 dbg on 05.27.09 at 10:18 pm

David Bakody and Barb the Proof Reader

Yup, those were the good old days when we all signed up for war as there weren’t any other choices. And what great stories it made after.

Gosh golly gee…. I sure wish Beaver was back.

#155 David on 05.27.09 at 10:41 pm

Anyone who overbids to that extent probably should not own a house or might find a padded room with heavy dosages of seroquel to be of greater benefit. Denial always seems to find its own justification. Every time I mention the home price bubble to people in the coffee shop, I get the “it won’t happen here because our banks are regulated” argument. When I mention fundamental metrics and risk I get the “buyers are thinking big short term profits” argument. When I speak about hard economics, they tell me they saw some Clairol blonde realtor lady on TV saying, “now is the best time to buy, because the market is balanced and the deals are so good”, I shudder.
South of the border things are dismal, with the bulk of the sales being a limited number or repos. Since when did buying bankrupt assets become a “market”. The contagion is on the verge of spreading to the prime and Jumbo (plus$417K market). Banks have held a large number of foreclosed from the market to prevent a true market depression in housing.

#156 Bob and Doug ...the Canadian Bro's on 05.27.09 at 10:48 pm

Another great quote on this blog from the negative vortex – “There is more, much more en-route”

More of what??
We should take the whole lot of you(doom and gl/boomers and ship you over to one of those countries that looks like Canada 200 years ago. You keep telling us how bad it is and there is more to come.

I hope they change the immigration policy and send all of you to the moon and let a few more people in that enjoy Canada and America. There are people that are fighting to stay in this country everyday and you people just spend your days whining.

Shove off ……!

#157 Bottoms_Up on 05.27.09 at 11:09 pm

Globalism brought 700 millions chineses from living in pitiful poverty, to middle class who have a tv, and the freedom to choose.

700 millions. that is 10 times more than the entire population of the usa, and canada put together.

Sorry my friend. The USA has 306.5 million people ( 700 million is 20x the population of Canada and a little over 2x the population of the USA.

#158 Eduardo on 05.27.09 at 11:26 pm

Re #111
You’re a fool. You goofballs in Ontario love to blame the conservatives because you’re bitter that Ontario isn’t ruling the country with their view from the CN tower.

Was this problem created in the years of minority govt?
No, it was created by western culture’s years of excess and entitlement. The same reasons the CAW in Ontario thinks they are better than whatever oilfield workers in Alberta and they always deserve raises and not to be laid off.

You know why Australia wasn’t affected? THEY DON’T HAVE AN AMERICAN AUTO SECTOR.

If we didn’t we would be in the same position as Australia as a result of our commodities.

THE DOWNTURN HAS NOTHING TO DO WITH CANADIAN POLITICS. It has everything to do with the US auto sector and financial industry. It’s funny how Ontario likes to knock Alberta as a one-trick pony. Take a good long look at yourselves… oil was 35 bucks and we have 6% unemployment… The autosector has seen hard times and Ontario has entire cities that are practically unemployed.

Calgary/Edmonton bashing is penis envy…

#159 timbo on 05.27.09 at 11:37 pm

#105 patrice,

Facinating insults, won’t go there as it’s pointless and does not add to an arguement.

if you feel that making things for yourself is a task given out to “little people” because you are better than that then I’ll pass you a crown for your small world.

China has the right idea because they have the money…?

#160 rory on 05.28.09 at 12:08 am

#110 john …GT said:

“This blog is suddenly full of people who have a lot of trouble seeing the distinction between short-term conditions and economic trends. Oh well, believe what you want. It’ll be interesting. — Garth”

GT, they are scared to death and no not what to do ..deer in the headlights syndrome does apply here …please take the extra high road with them and all of us.

#93 Vancouver_Renter …kudos to you for getting the ‘gang’ reengaged

#140 Marina …apply the 80/20 rule …20% deserve every dime the other 80% not so much …your university education could and would be just as successful with teachers vs whatever a professor is…IMO.

GT …you know (like you didn’t know before) what pushes the buttons on this blog…right or wrong – conclusions.

#161 Barb the proof reader on 05.28.09 at 1:21 am

#105 Patrice clips: “stupid post both of you”
“You ignorant people must learn and educate yourself before speaking”
“Such ignorance and stupidity is appalling”
“Retards like you are the reason Canada is struggling today”
— Patrice”

Other way around “Patrice”.

By the way, your “ideas” are too late. Much of Canada’s resources are already foreign owned. Bugger, eh?

#162 BigAl on 05.28.09 at 1:27 am

#151 Patrice
In order for Free Trade to benefit all, as today’s globalists/free traders like to claim, you’re forgetting the fundamentals of Free Trade Theory.
Four things have to occur: Free trade of goods and services, free flow of capital, a single currency, and free flow of labour. If ALL FOUR of these components are not in place, severe distortions and imbalances occur, and very few benefit while most suffer. Another major fault is the assumption that there is free flow of truthful information to all participants.

While we have semi-free flow of goods and services, and of capital, the world does not have a unified currency nor the free movement of labour, and we never will. This is why “Free Trade” does not work, no matter what illusory benefits you try and paint it with.

And who says protectionism is all evil?? Only the talking heads on the business “news” programs and the useless MBA professors and graduates who are mainly responsible for this economic mess. They, and you, are dangerous ideologues for whom “free trade” is more of a religion than anything else. Like religious zealots you curse and froth at anyone who hasn’t converted to your faith. You keep saying how good everything is with free trade and how everything else is evil, free trade critics are evil and ignorant. On the one hand you say how much life is -allegedly – improved for millions of chinese workers, and then you curse North Americans for wanting decent wages, rights, and standards of living that previous generations here fought and worked hard for, waving your finger at us saying we had better lower our standards, lower our pay, and “compete” with these low-price labourers or else we’ll pay. You tell us that our economy will be better off doing the high-end “thinking” type jobs that those countries cannot do. Oh yeah? They’re already taking those jobs too – engineering, finance, consulting in all areas from architecture to accounting to pharmaceuticals. What exactly is it that they will not, eventually, be able to do?

Then what will we do?

Basically, with free trade, your business and political leaders have sold you out, and sold your children out, and have lined the pockets of themselves and their friends along the way. Free trade has only gotten us cheaper plastic laundry tubs and such. Don’t even bother with the “better built foreign car” example either because, again, the business leaders in the American car industry could have done better, but they sold us out too.

Please quit telling us, average middle class, middle income people, we have had it too good. Quit telling us that the messiah of free trade will save us from ourselves, and wash us of all of our sinful thoughts of wanting decent living standards, rights, and pay. Quit telling us that we will be better off going back to the era of ruthless industrialists and abusive workplaces like the chinese have. Quit telling us that that is a good thing. We have evolved and progressed, and escaped from that thinking. It’s time you did too.

#163 Barb the proof reader on 05.28.09 at 1:34 am

#153 CalgaryRocks in your head

IF a uniquely large group such as GM pensioners began to require help from PBGF, it would get tapped out quickly, fail and be gone.

Gone. Get it? Gone. Not there. Not there for it’s original purpose. Subsequent pensioners who later look to the PBGF in their days of dire need, like people here who could be with a company that fails and they need to turn to the PBGF, won’t be able to, because it won’t exist. So get as pissed off as you like that taxpayer dollars help others all the time, but as in this case, it’s for a reason, like maybe to “protect everyone’s protection” in the long run. Long term thinking doesn’t come naturally to some, but practice it once in awhile will ya?

#164 Bill-Muskoka (NAM) on 05.28.09 at 8:00 am

#151 patrice

Ah, we can tell by your superior math and demographics knowledge that you have succumb to the effects of the Kool-Aide! Seek help!

#165 Bill-Muskoka (NAM) on 05.28.09 at 8:31 am

#162 BigAl

Beautifully stated. I call it ‘Wimpy Economics’!

#166 Bill-Muskoka (NAM) on 05.28.09 at 8:32 am

#158 Eduardo

You and Patrice should get together. Then you will have someone who thinks like you do!

#167 Soylent Green is People on 05.28.09 at 9:10 am

#82 Barb the proof reader on 05.27.09 at 12:50 pm #20 CalgaryRocks “..sob stories about your family, all of whom seems to be on some kind of disability”

Well Calgary Rocks, could you be a bigger jerk?


What are you? Ten years old?

#168 smw on 05.28.09 at 12:21 pm

Eduardo, for a guy walking around, blaming and claiming east vs west penis envy, you should put your little raisins in check and do your home work before you start talking shit. Your teeth are so brown its disgusting.

No American Auto Sector in Austrialia?

So the point I was making, before you went off on a little hissy fit is that, every country is facing the same consequences, and some prepared for the raining day, and some ran up a deficiet of 25 billion dollars with tax gimicks to get re-elected.

You chose to defend the undefendable, so prepare for a few “barbs” directed at your “social credit” fundamentals. You can try and make it a west versus east thing, I don’t give a sweet shit, you kung fu is weak and all you have left is a bad arguement.

When Austrialia seen the writing on the wall, they tried to reign in credit by raising the bank rate. In Canada at the same time we extended the 40 year mortgagae and left rates in bubble territory. Many warned of this, like the ex bank governor Dodge. He was right to question CMHC, and be pissed, about the 40 year mortgage, courtesy of Jim Flaherty.

It was Harper and Flaherty’s watch, it was his choice, and its his consequence, just like cutting the GST was Harper’s call.

Except responisbility for your actions, hasn’t your mother taught you anything; other than its ok to act like a selfish partison little prat.

I like many other conservatives in Canada will be happy when the likes of conservative Canadian ideals come back to the fore-front, and not conservative American ideals.

You would think that a couple of guys that talk about how important trade with the USA is would have understood that the reduction in demand of our 80% exports to them, would effect the bottom line.

I’ll be more than happy when McKay or the likes of Canon, red tories, have more say in the party, like the final call.

But then again, isn’t this why Garth wrote his book.

Now go [email protected] off…

#169 Eduardo on 05.28.09 at 1:25 pm

When I say bad policy. I mean full and complete dependency on the US. That’s not the Cons fault, no matter how you want to cry about it.

#170 JOE SIXPACK on 05.28.09 at 2:03 pm

sounds pretty bad…everything is bad..maybe we sould all just do ourselves in…you first Garth,,

No, please, I insist. — Garth

#171 Barb the proof reader on 05.28.09 at 2:05 pm

#167 Soylent Green is People on 05.28.09 at 9:10 am

So Soylent Green, you are going to believe what he said, that all my family are disabled when none of them are? (except for my husband’s elderly father)

And you think it’s just fine that he uses disabilities as a bully baseball bat to taunt and jeer and associate as weaknesses?

Only the weak of mind use such tools, only the weak of mind resort to minimalizing the helpless.

And what’s with the name. Were you just shocked to find out that the biscuits were humans. Don’t be so childish.

#172 Bill-Muskoka (NAM) on 05.28.09 at 3:02 pm

When I say bad policy. I mean full and complete dependency on the US. That’s not the Cons fault, no matter how you want to cry about it.

#169 Eduardo

And WHO brought in NAFTA? It was the biggest Con of all time Lyin’ Brian!

Granted the Canadian businesses that whine and cry about a high Loonie are just as bad. They do want to make finished anything, just sell raw materials and small sub-assemblies, then sell them at low prices to the U.S. corporations.

#173 Bill-Muskoka (NAM) on 05.28.09 at 3:04 pm

Oops! Should read ‘They do not want to make…’

#174 Eduardo on 05.28.09 at 5:50 pm

One of my posts got either deleted or didn’t post and I don’t want to post again… it explained the years of bad policy better. Here’s the jist:

You can’t blame the recession on bad Canadian policy by the Conservatives… they’ve been in power for how many years of the last 50-60? And the last few have been a MINORITY GOVT.

If Harper had his way, Ontario would probably be getting way less money than they are and then they could and spend and bailout themselves into oblivion provincially instead of taking the whole country down with them.

This is not a political blog. Get focused. — Garth

#175 Investor on 05.28.09 at 7:03 pm

I think it is astonishing with all the layoffs, wage cuts and very weak global economy that people would involve themselves into bidding wars over what is essentially a giant box. Where is the common sense?

I guess those people have learned nothing from the global financial crisis as the root of it is real estate prices.

#176 Cory in Winnipeg on 05.28.09 at 9:30 pm

The sooner we accept the Canadian housing market has been overcooked and needs to adjust, the better, not least because mapping out the future requires an understanding of what has happened. Canadian politicians need to accept the bursting of the property bubble as an economic coming of age and play their part in adjusting downwards expectations of wealth, wage and inflation. They must begin to focus on where we would like to be in 10 years, and not just in 10 months. The biggest mistake policymakers and politicians could make at this stage is to continue propping up the asset bubble in the property market. (30, 35, 40 year mortgages/No money down mortgages/ridiculously low interest rates/etc….) And don’t believe the housing market in Canada has improved at all. That’s just realtors and realestate related machines trying to create false hope and predictions for the future. Affordability index spells it out loud and clear. Canadians can not afford housing any more and prices will crash. That’s a fact!

#177 Danny on 05.29.09 at 10:31 am

I have been listening to Garth Turner and his fellow followers waiting for the sky to fall and the housing market slip into the abyse for a long time.

I hear people waiting for the past 3 -4 years waiting for the bottom to fall out and to snap up a house for a bargain. Well it appears that the market in Toronto has already hit bottom and in the very near future the prices will be on their way back up. I am not a real estate agent, but I do think those who stand on the sidelines waiting for a miracle to happen will be priced out of the market.
I have friends that are trying to buy near Toronto’s core and keep losing offers. Those interested in places near the city centre are not losing money on their houses at all. In many areas the prices have not decreased at all.

Keep waiting and listening to Garth. I have heard him say for the last two years that the housing market will crumble. I AM STILL WAITING LOL

I first articulated this in January of 2008, not two years ago, and the dangers are all still present. The forecast has not changed, nor has the certainty current conditions are temporary. Buyer beware. — Garth

#178 Slava on 05.29.09 at 5:19 pm

Interesting article.

People buy because they need place to live. That’s something that can not be postponed.

We needed to move, and what options do I have? Buy now, or rent for one more year, then buy? I’d rather potentially lose 30K than go through moving process again, lol.

So we bought a place.

#179 Tony on 05.30.09 at 11:23 pm

#24 smwhite
When the US dollar bottoms out in about a months’ time or less you’ll see the TSX back at the March 6th level or around the 7,000 mark. Gold, silver and oil prices will be hammered to the downside.

#180 Tony on 05.30.09 at 11:55 pm

#81 Oil Amen
I’ve been buying here and there in the West and South West areas of Edmonton. Mostly townhouses and apartments at a 40 to 50 percent reduction from the peak of June 2007 prices. In the future you’ll see all the people who lost their jobs in Ontario moving to Alberta. That my friend i can guarantee is a fact as the cost of living in Edmonton is dirt cheap compared to southern Ontario.

#181 Irishmonk on 06.02.09 at 10:33 am

Er, to all those hurling invective at the poor saps who are still buying homes, you do realize that those are the folks who are keeping this economy from completely tanking. If everyone suddenly stopped buying real estate, home values would plummet to near zero, and this gossamer thin recovery would turn into a depression the likes from which we may never recover. So, to all those generous, kind-hearted folks loading up on overpriced real-estate–bless you. You’re the reason I still I have a job, an internet connection and a sliver of hope.