History repeats?

history repeats

To enlarge, right-click and select 'View image'

Reader Lorne Beagle sends this along to ruin the weekend for most equity investors. “I overlayed these charts today.” he says. “I just thought you might appreciate the similarities (… guess we’ll see if it keeps etching out a similar path??)”

We sure will. Now, let’s hear it for Fibonacci.


108 comments ↓

#1 Gonzo on 08.28.09 at 11:02 pm

A good reason not to put 80% of wealth into stocks right now. By elliot wave and sentiment indicators, we are getting close to the peak of this bear market rally… and not just in stocks – across the board in commodities as well.

#2 squidly77 on 08.28.09 at 11:06 pm

history always repeats over and over again
we were running out of oil 29 years ago and again in 2008
the stock market casinos you can forget about them as they are going down to their historical trends
they have to..if they dont it would mean that history means nothing and generations of people were wrong

dont click on the below link if you looked at it last night as its the same with 1 video added
4 charts prove that history repeats always
charts are 1 post down

#3 Terry on 08.28.09 at 11:25 pm

This a nice read on our current political failure to understand reality …

http://www.steadystate.org/Files/Jackson_2009_Beyond_the_Growth_Economy.pdf

#4 Calgary_rip_off on 08.28.09 at 11:37 pm

Garth whats the point of this graph.

There are too many variables to say arbitrarily that this applies as having any meaning. Coincidence, maybe, but variables have lined up to give a similar graph. The end result in terms of the lines may look the same, the path to get there different. Therefore, so the stock situation is similar.

What’s next world war 3, since that would come next according to timeline? Armageddon?

Why follow Wall Street? Forecasters dont even know what to predict. Im sure my daughter could figure out which stock to buy than some of these educated “analysts”. And she’s in grade school.

How about some correlation and substantiation of this graph nonsense. The nitty gritty. What it means to the people who do the scut work in Canada and keep the wheels turning.

No more posts please with realtors and other photos of people who have never mopped a floor on their hands and knees or done physical labour.

So this graph has what correlation with interest rates and federal spending? Any? I dont think so, unless these people crash and require a tax bailout.

Many of these business sites and the “news” are a bunch of idiots. They arent telling anyone what to do. Solution? Figure Donald Duck and go back to listening to death metal music. The end is near.

Enjoy: Freight Train.

http://www.youtube.com/watch?v=J1-aix3CqCc

#5 Crash on 08.28.09 at 11:43 pm

I’m happy I’m out of equities. It’s a rigged game these days anyways.

#6 Dave on 08.28.09 at 11:45 pm

i have a question about the volume of sales of real estate in Canada and Toronto. For those that are familiar with technical analysis, the typical head and shoulder top formation would have a lot of volume on the left shoulder and then it would drop. A rally would begin again to the same point of the left shoulder but with less volume (head) which would confirm the potential for that formation.

The question is: the increased price in homes that have been sold, is the volume lower than in the previous price highs of a couple of years ago? Are we looking at a head and shoulder formation in Canadian real estate? this market will follow the trend like any market. I guess I”m trying to decipher things.

thanks

#7 Bogdan on 08.28.09 at 11:45 pm

Garth, this one is kind of real time…
http://dshort.com/articles/2009/bear-turns-to-bull.html
http://dshort.com/charts/bears/four-bears-large.gif

#8 Concessionman on 08.28.09 at 11:59 pm

Wow…since my 100% turned into 50% and now is back to 80% maybe time to bail from the equities…those bank preferreds are looking good….

#9 Peter Wiener on 08.29.09 at 12:19 am

QUITE SIMPLE REALLY

If you were making an investment in the Canadian real estate market and you had to rely on one of these two Canadian market opinion leaders for advice as to the direction of prices in the forseeable future, whose opinion would you follow;

BRAD LAMB, the self titled Condo King and blowhard real estate BULL with a track record (falling entirely within the biggest bull RE market of all time) of maybe 7 to 8 years;

or;

ERIC SPROTT, the self made all markets BILLIONAIRE with a track record of over 35 years (matched by maybe half a dozen people tops in the world) who is bearish on the RE market?

Your choice of mentor as posited above should indicate your course of action.

#10 Peter Wiener on 08.29.09 at 12:22 am

#1

sorry, was tired and forgot to add the last line;

Think about it!

#11 bigpictureguy on 08.29.09 at 12:23 am

This is more scary.

The Great Depression and Today – Sobering Parallels Abound

http://finance.yahoo.com/news/The-Great-Depression-and-etfguide-1598524595.html?x=0&.v=1

Are we headed for a 2nd leg drop below March 09 lows? Checkout point 7,8,9

1927-1933 Chart of Pompous Prognosticators

http://www.gold-eagle.com/editorials_01/seymour062001.html

#12 Albertaboy on 08.29.09 at 12:30 am

Seeing how I can’t view a larger copy of it Garth – are there any other stats that mirror the events of ’29? (ie: inflation, M3, etc)

#13 Steve on 08.29.09 at 12:39 am

The graph is most disturbing if history does indeed repeat itself. Meaning we have about another 4 years at least of troubling news, to say the least.

#14 Nostradamus Le Mad Vlad on 08.29.09 at 12:41 am

“. . . the weekend for most equity investors.” — Our CFP downsized us to seven different Cdn. equity mutual funds a few years back, and even now, they are either holding steady or improving.

So just for the heck of it, I binged ( http://www.bing.com/ — far superior to Google and Yahoo!) Cdn. equity mutual funds and discovered they are still doing relatively well.

The monthly dividends are automatically reinvested to buy further units / shares (whatever they are called).

So far, we have no complaints, although the chart is quite eye-catching.
——
So the Yanks have gone nuts. What’s new?! —
http://finance.yahoo.com/techticker/article/312185/Obama%27s-Spending-Spree,-Budget-Numbers-
“Two of the biggest rallies of more than 40 percent occurred during the Great Depression, says Davidowitz . . .”
——
Ten in-demand jobs, along with a list of five more for 2016. There is work to be done — just gotta find out where it is! —
http://www.thefinancialblogger.com/what-recession-10-careers-that-are-in-high-demand/
——
Good ol’ Uncle Sam is jumping from a boiling hot cauldron of a fire pan into the same, in two (or more) parts of the world. —
http://www.globalresearch.ca/index.php?context=va&aid=14936
http://rawstory.com/news/afp/Netanyahu_calls_for_crippling_sanct_08272009.html
“. . . Benjamin Netanyahu called Thursday for “crippling sanctions” against Iran to stop its disputed nuclear work . . .” — I ‘spose the crippling sanctions also applies to Israel, until Dimona is gone!
——
These may have more to do with China dumping US Treasuries and Bonds rather quickly! —
http://www.cnbc.com/id/32581463
http://www.businessinsider.com/lefrak-commercial-real-estate-will-kill-500-small-banks-2009-8
http://www.prisonplanet.com/economic-collapse-bank-runs-china-peter-schiff-gerald-celente-max-keiser.html
——
Talking of Those Magnificent Financial Parasites In Their Flying Machines —
http://www.blacklistednews.com/news-5356-0-13-13–.html
“The problem with parasites is not merely that they siphon off the food and nourishment of their host, crippling its reproductive power, but that they take over the host’s brain as well. The parasite tricks the host into thinking that it is feeding itself.”

#15 Future Expatriate on 08.29.09 at 1:00 am

Let’s hear it for the long hard slog… to nowhere.

#16 canuck99 on 08.29.09 at 1:15 am

Umm.. So we’re just going to compare the DOW of ’29 to the tech index of 2000 and ignore the current DOW, S&P & Russell indices now … what’s the point?

For a REAL DOW chart please see: http://stockcharts.com/charts/historical/djia2000.html

Based on the NON-Tech indices we are just finishing year one of your chart and have a long, long way to go down still. Rough guess using the ’29 DOW and ’00 Tech bubble patterns you have displayed we should see DOW hit 2.5K by 2011.

#17 Michael on 08.29.09 at 2:55 am

That is crazy how accurate the repeat is going.

Answeeeeeeeeerrrr myyyy eeeemmmmaaiiil Garth, I’ll paypal you 2US dollars.

#18 Future Expatriate on 08.29.09 at 6:07 am

Banks still failing like crazy. Or, like 1932.

Deja Vu

#19 b0jangl3s on 08.29.09 at 7:21 am

With all due respect to Garth and Lorne (who submitted the graph), this kind of transposition is really meaningless.

I am really hoping that your Fibonacci reference does not mean you actually believe the Elliott wave principle. Even when I disagree with your conclusions I have always respected how you justified your positions with logic and reasoning ( at least as much as possible for someone in the business of trying to predict the future, while still writing in an entertaining way). I’m sure you are much better versed in economics than I am (my background is 75% comp eng, 20% math, 3% economics, 2% other), so I’m sure you realize that EW theory is barely above phrenology as an analysis tool.

#20 The 'VULTURE' on 08.29.09 at 7:35 am

A British Columbia couple have a six-month-old daughter, a house (principal residence) $1,100,000.00!! and a small apartment building ($300,000.00). Their real estate assets have a total value of $1,430,000. They have incurred total debt of $1,138,632, which is 8.3 times their gross annual income of $136,654. Debt service charges add up to 59 per cent of their after-tax income. With property taxes, the bill rises to 77 per cent of the family budget. (Source: Globe and Mail, Saturday August 29, 2009)

“We’re worried that we are carrying too much debt for our income level,” “Are we overexposed to inflation and interest rate changes?” (Source: Globe and Mail, Saturday August 29, 2009)

Buy Garth Turner’s book “The Greater Fool – The Troubled Future of Real Estate” and “After The Crash” and read and study the books great in depth. Come to a greater understanding of Garth’s message and wisdom. That is your answer to your question “We’re worried that we are carrying too much debt for our income level,” “Are we overexposed to inflation and interest rate changes?”

People, study what the term “Debt To Equity Ratio / Debt to Income Ratio” means.

#21 Kevin in Winnipeg on 08.29.09 at 8:16 am

“If past history was all there was to the game, the richest people would be librarians.”
-Warren Buffett

It seemed somewhat fitting.

#22 ca on 08.29.09 at 8:23 am

There are many analog charts floating around, including this one on Japan v US:

http://www.zerohedge.com/article/meltup-cometh

#23 cashman on 08.29.09 at 8:36 am

#4 Calgary_rip_off

As a matter of fact, we are indeed heading for ww3. That’s what the elite international bankers want. They also want to reduce the world’s population to under 1 billion people. What the int’l bankers are doing now is criminal. Why else do you think the Fed’s are spending money like water? With so much money in the system right now, the us$ is devaluing. It’s devaluing because there is going to be a new North American common currency called the amero dollar. Once the amero comes in, it will float against the euro and then the euro will reign supreme. Don’t believe me check out a view from space http://www.640toronto.com @8pm eastern time. When you listen you can research what he is saying. What gives the spaceman credibility is there is no book to buy, no cd or dvd or newsletter to purchase. You think he is a crack pot, smoking some really good stuff. However, there is really no other logical explanation for what is happening in the world today.

Oh yeah, I’ve got a really good deal on some T.O. real estate for you. Just call me at 1-800-I-take-your-money-and- skip-town-leaving-you-with-really-high-mortgage.

#24 jess on 08.29.09 at 8:51 am

Statement from Bart Van Ark, Chief Economist, The Conference BoardQ2 GDP Offers No Hope for Quick RecoveryPRNewswireNEW YORKJuly 31
NEW YORK, July 31 /PRNewswire/ –Today’s advance Q2 GDP growth estimate of minus (-) 1 percent relative to the first quarter confirms that the path to recovery remains a long haul, with more disappointments likely in the months to come. The contraction – though less severe than most forecasts – offers no sign of a V-shaped recovery.

Consumer spending came out worse than expected and is likely to remain weak into the third quarter because of ongoing clogging in income and credit channels. The very rapid decline in inventories raises hopes for a recovery in industrial production, but also increases chances of a pushback later in the year as domestic and global markets remain weak. With capital spending still falling and unemployment rising, neither investors nor workers are likely to see strong rewards anytime soon.

SOURCE The Conference Board

#25 DaleFromCalgary on 08.29.09 at 8:55 am

The charts are nice but not that predictive. Past performance is no guarantee of future performance. Better to analyse the fundamentals such as:

The manufacturing jobs are gone to Mexico or overseas and they’re not coming back. Ever.

Peak Oil was sometime between 2006 and 2008, depending on which set of statistics you read. Even $147 oil failed to boost supplies. That’s why I’ve invested 10% of my assets in physical conventional oil (mineral rights and partnerships in producing wells).

Currency isn’t even worthless paper anymore, it is electrons on the computer screen. Only gold and silver are real money. Both are back to what they were a year ago, while stocks are still waaay down. Interest on investments is not income, it is compensation for currency depreciation. Gold and silver don’t pay interest because they don’t have to; they have no counterparty risk. I’ve never regretted buying bullion, but I wish I hadn’t been so much into stocks.

I agree with Garth that overbuying on a house is foolish, but a house in the long run is security. If you rent, you are never more than 30 days from living in the street. A paid-for house has its expenses but you are not at the mercy of a landlord. I bought my house for $80,000 in 1982; the first five years of the mortgage were at 17% and I never paid less than 10% thereafter until I paid off the mortgage in 1997. But I lived in the basement suite and rented the main floor, which not only gave me income but allowed me to deduct half the house expenses. After I paid off the mortgage, I took over the whole house and have lived securely ever since. We don’t all move once every five years. Don’t think of a house as an investment, think of it as your castle, secure against the world.

This, “If you rent, you are never more than 30 days from living in the street,” is a false statement. In most of the country tenants have more rights than landlords. Resist unresearched comments. — Garth

#26 Nostradamus jr. on 08.29.09 at 9:07 am

Garth, Garth, Garth,

1/
…You put out potential prognostications ending with a (?) Question Mark.

If you are wrong…it wasn’t you, if you are correct…you take the credit.

…Have you ever thought about running for Politics(?)

2/
To all my Eastern Canadian critics.

…North America’s Cote d’Azure, West Vancouver (and sister North Vancouver) will be known as the Canada’s safest, private gated community.

Eastern Canadians will, one day, require passports to visit.

#27 Peter Wiener on 08.29.09 at 9:08 am

# 6 Dave

Price follows volume.

In case you doubt this ‘law’, look at the national housing statistics from 2000 to present for the United States. (They collect and publicly report the most comprehensive and reliable housing market data and statistics in the world).

#28 dd on 08.29.09 at 9:23 am

#21 DaleFromCalgary

…We don’t all move once every five years…
But most do.

…Don’t think of a house as an investment, think of it as your castle, secure against the world….
But why overpay?

#29 dd on 08.29.09 at 9:28 am

#20 The ‘VULTURE’

…They have incurred total debt…8.3 times their gross annual income…
Nostradamus jr. will tell you this is a normal ratio for Vancouver.

#30 Alberta Renter on 08.29.09 at 9:30 am

So much doom and gloom it’s getting overwhelming.

Garth, do you do market surges, or just crashes and depresssions?

It’s a chart, dude. If you can’t handle it, go back to Lavalife. — Garth

#31 Repatriated Expat on 08.29.09 at 9:39 am

As a scientific researcher, technical analysis of stocks never made any sense to me whatsoever. These markets don’t follow any fundamental laws, so why should past patterns repeat themselves.

Given free reign of timelines or indexes I can show a correlation between anything. Correlations do not make a cause and effect scenario.

Stats may help firm up technical anlaysis, but again the fundametal market laws (rules) do not exist.

Of course they shouldn’t repeat. But they often do. Analyze that, and you might find human proclivities behind it. — Garth

#32 Gord In Vancouver on 08.29.09 at 10:22 am

#20 The ‘VULTURE’

…….Debt service charges add up to 59 per cent of their after-tax income. With property taxes, the bill rises to 77 per cent of the family budget. (Source: Globe and Mail, Saturday August 29, 2009)

“We’re worried that we are carrying too much debt for our income level,” “Are we overexposed to inflation and interest rate changes?”
________________________________________

Hopefully, that BC couple is the exception, not the norm.

#33 dd on 08.29.09 at 10:38 am

#31 Repatriated Expat

…These markets don’t follow any fundamental laws….

True these markets don’t follow fundamental laws at a point in time. Markets are foward looking or are manipulated. What is fundamental at this point? A V shaped recovery? I think not. It is more like massive liquidity injection by Central Banks. V shaped recoveries do not follow credit bubbles. The reality is that if you through enough money at something prices are bound to go up, even in the short term.

#34 Alberta Renter on 08.29.09 at 10:41 am

Interesting retort Garth, I wonder why you thought I was a dude.

I now also wonder if man who says the sky is falling is able to recognize when there is a turnaround, given there are a hell of a lot of books to move and profit to make off all this doom and gloom.

#31 makes a lot of sense. I have read your remarks criticizing others about doing there homework, and I’d like to direct them back to you. The chart you posted is nothing more than a magic slight of adjusting timelines and looking for patterns. The chart’s Y-axis should also be presented as a % from a reference point. The modern Nasdaq also represents a completely different class of companies than the older Dow Jones. Hardly comparable I might add, without a well defined and rationalized benchmark.

It does however prove, that most anybody can manipulate information to illustrate a point, and someone with books to sell might post that information because it aligns with the nature of his prize – profit.

If people are to take you seriously, most of all yourself, I challenge you to brush up on your logic and analytical skills.

I did enjoy your book though. You are quite entertaining.

Deep down and shallow, we are all dudes. — Garth

#35 OttawaMike on 08.29.09 at 10:50 am

I’m loading up on AIG insurance co. stock, it’s up 264% and going to the moon baby! Who cares if they are insolvent.
http://money.cnn.com/2009/08/27/news/companies/aig_stock/?postversion=2009082716

I agree with #31 Repatriated Expat’s post. technical analysis rarely works. The game is so rigged that the Dow could just as easily go to 15000 as drop to 5000 by year’s end. After all those pesky short speculators need to be dealt with.

#36 The Great Gazoo on 08.29.09 at 10:53 am

HA HA lavalife!! That is so 2002! Don’t give the guy that much credit, he seems to be more of a plentyoffish.com kind of guy, ignoramus looking to court cougars and single moms.

#37 timbo on 08.29.09 at 11:03 am

#26, Nost,

“To all my Eastern Canadian critics.

…North America’s Cote d’Azure, West Vancouver (and sister North Vancouver) will be known as the Canada’s safest, private gated community.”

lol, I’ll buy the ticket in two years to come over to visit but your idea of the gate might just be used for a different reason than you think.

http://www.youtube.com/watch?v=ckvDo2JHB7o

vancouver after the crash….

#38 bigpictureguy on 08.29.09 at 11:14 am

Many are in the shoes like this couple below with multiple properties and highly leveraged primary homes fueled by cheap historically low credit. All it takes is interest rates and hikes and the dominos will fall.

This is not an exception but the rule in BC and major cities.

BC couple drowning in RE debt

http://www.theglobeandmail.com/report-on-business/couple-drowning-in-real-estate-debt/article1269362/

#39 bigpictureguy on 08.29.09 at 11:21 am

This is an excellent write up tracking and comparing performance between 1930s and current crisis across many macro economic indicators.

http://www.voxeu.org/index.php?q=node/3421

#40 bigpictureguy on 08.29.09 at 11:24 am

Will the USA soon follow the Germans?

German state to lend directly as second credit crunch looms

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/6095203/German-state-to-lend-directly-as-second-credit-crunch-looms.html

Germany could directly intervene in the credit insurance and lending markets as soon as September to head off a looming credit crunch, as it fears the economic recovery may soon falter as banks refuse to roll over loans.

#41 john m on 08.29.09 at 11:29 am

Interesting chart.. personally i think we are going to take a dive far exceeding what happened in the chart.People are carrying debt loads far exceeding anything in history and borrowing more in a dismal-falling economy.Relying on the “same old,same old” to bring us out of it.It is a dream beyond reality–what brought us here will keep us here unless we get some realistic,sensible leadership. Borrowing from peter to pay paul is a road to destruction.

#42 Got A Watch on 08.29.09 at 11:32 am

I trade almost entirely based on technical analysis, and seasonality, it seems to work pretty well for me. And I would not doubt the power of Fibonacci at all, it is found everywhere throughout nature. Pattern recognition is also of great value.

These are all just tools, to help you decide when to enter a trade. I day-trade, or short-term trends, and for that type of trading there is no other way. I suppose if you are only a long-term oriented investor you can ignore these indicators, but your risk tolerance would have to be above most people’s, as holding throughout the inevitable down-turns can cause great stress. Ask somebody who has been holding their “investments” for years how they feel these days when they see an account statement in the mailbox.

Elliot Wave is of limited use to me, as a trading tool, as it is highly subjective and backward looking. But it is of use as a backdrop to make you aware of various scenarios that could lie ahead, depending on where we are in the wave count. A serious Elliot Waver has several alternate wave counts on the go at all times, with each assigned a probability. My favorite site for EW these days is Evil Speculator where Wave counts and probable outcomes are updated daily. It is something to be aware of, but not a final decision maker.

You have to distinguish between the commentary on the macro economy, and a trading call. See Peter Schiff. Most of the Elliot Wavers, like Prechter, McHugh etc have correctly called the evolution of this credit crisis. Their timing may have been off, but they did foresee the big picture on this Great Recession much clearer than any MSM analyst for example.

One financial Blog was discussing the other day, IIRC, the claim that out of “15,000 economists in North America, only about 10-15 foresaw this crisis”. I don’t know where that data came from, but it sounds about right to me. Economists are usually wrong on just about everything. It is “the science of being wrong” after all, and the biggest reason to ignore them all for trading signals.

I see many here disparaging the “goldbugs” too. If you would have been reading the ‘bug’ forums 10 years ago, they were talking about this crisis ahead back then. So was Prechter. Way before a word was spoken or written by any MSM “authority”. The same “authorities” who now are all saying “Recession Over!” – the MSM are just lying right to your face, again.

I’ll read the Bloggers and the Elliot Wavers and the “Goldbugs”, then I make up my own mind. I don’t even read or watch the MSM much anymore, the kool-aid there is too strong for me. They have lied their way to irrelevance.

#43 john m on 08.29.09 at 11:35 am

The future??………..California loses $107.2 billion in property values
Schools, public health and safety programs will be some of the biggest victims of these lowered assessed values in a state facing some serious fiscal challenges.

#44 Bill-Muskoka (NAM) on 08.29.09 at 11:39 am

Scientifically speaking, what the overlaid graphs show clearly is that the economic theory that has been used is destined to cyclic failure. Former FedRes Chairman Alan Greenspan even admitted that.

In the world of analogue cyclics such a repeat would indicate a natural harmonic and wise people would stay as clear of the import as they would a heart attack.

The problems lies in the short term thinking of people, and that is spurred on by the incessant media hyperbole that supports the ‘dream like’ theory that growth can be achieved merely by inflationary means without actually producing something tangible of greater value in the process.

No wonder in this day and age of penile enlargement scams. Those came right from the economic theory people have been following…Bigger is both better and achievable. Just ask GM how that has worked out?

The world’s universities have been promoting this fallacy long enough in their so-called MBA programs. That is how the religion was started and has been maintained.

The use of digital computers, percentages of change, and statistics has left the picture of reality lacking in the finer details. Digital computers can only make one of two choices per bit, ‘On or Off’, ‘1’ or ‘0’. Each result must then be processed in an additional equation. Analog(ue) computers can inject the entirity of the results back into the equation and provide the total effect of all the variables. There is a point at which a final equalibrium or chaos occurs. In short, digital computer modeling may provide rapid results of fixed variables, but they cannot simultaneously process all the variables as they occur.

Therefore, our reliance on computer modeling of projections leaves us wanting for true answers as to the outcomes of decisions. Just as the closing of the TSX shows the final result of the averaged activities, it cannot show the ‘Why’ the market performed the way it did at any given point ion time, nor overall during a specific time period. It is, in fact, nothing more than an opinion with resultant numbers of the random activities of the day’s trading based on human perceptions of a self-fullfilling reality. In other words, it is a huge casino where the gamblers come to play.

In another view consider the opus of Dr. John Nash who was awarded the Nobel Prize for his game theory analysis of economics.

Get back to reality before reality gets back at you. And for those who think hoarding will be the answer consider this story of overly thiftiness. ;-)

A Scottish Solder in full dress uniform marches into a chemists.

Very carefully he opens his sporran and pulls out a neatly folded cotton bandana, unfolds it to reveal a smaller silk square handkerchief, which he also unfolds to reveal a condom.

The condom has a number of patches on it.

The chemist holds it up and eyes it critically.

“How much to repair it?” the Scot asks the chemist.

“Six pence,” says the chemist.

“How much for a new one?”

“Ten pence,”says the chemist.

The Scot painstakingly folds the condom into the silk square handkerchief and the cotton bandana, replaces it carefully in his sporran and marches out of the door, shoulders back and kilt swinging.

A moment or two later the chemist hears a great shout go up outside, followed by an even greater shout.

The Scottish soldier marches back into the chemists and addresses the proprietor, this time with a grin on his face.

“The regiment has taken a vote,” he says.

“We’ll have a new one.”

This, BTW, is precisely what happens to companies who do not look forward and re-invest profits into their own future in upkeep of facilities, personnel, and quality. Skimming off the cream at first taking simply does not secure a sustainable future.

#45 Sphinx on 08.29.09 at 11:57 am

<>

So much for your ego, Garth. The chart is not relevant, I repeat not relevant…comparing DOW 1929 to NASDAQ 2000 has no value…why not compare it to PorkBelly or Corn…apples to apples Garth, apples to apples. and please stop picking up on posters when they post some logic.

Not my chart. But all information should be welcomed, and prod us to constantly question common wisdom. — Garth

#46 Dean on 08.29.09 at 12:02 pm

Forget about the stock market! If this chart is right we’re about to enter WWIII. Crap, now I have to go back and read all of Nostrodamus Jr’s posts — he was right all along!

#47 Future Expatriate on 08.29.09 at 12:06 pm

#4- “What’s next world war 3, since that would come next according to timeline? Armageddon?”

Haven’t you been paying attention? What comes next is Obama’s “smart” Obamageddon.

Son of Father of Lies? So far so “good”.

#48 Future Expatriate on 08.29.09 at 12:13 pm

I must say, it’s hysterically funny watching desperately frightened paper-pushers wet themselves here with attempts to pooh-pooh history and parallels that have been obvious to all except idiots for quite some time.

Keep on truckin’ suckers; by the time you realize the parallels definitely do apply, you’ll be destitute and raining on Wall Street.

#49 robert on 08.29.09 at 12:25 pm

I think pretending we are in 1938 (while certainly not good for equity investors) is like pretending the years 1930 to 1932 did not exist. I am still of the view (as are apparently some of the other posters here) that a modern version of those terrible years is quite likely to unfold. The extreme rally in junk equities and bonds (time, price but sadly not volume) is not particularly reassuring. We should be reducing the leverage, speculation and debt rampant in our financial system not increasing it. Also I am not convinced the epitaph for the Treasury Bond market has been written. I cannot think of any asset class that is so ignored or derided apart from the US dollar. If this economy could fly on its own, interest rates would be soaring. Instead Treasury Bond prices reached a nadir in June and have been rising since, despite all the stock market ebullience. Somebody is wrong and for my money I do not believe it is Mr. Bond.

What will change my mind about equities? A bona fide and sustained rise in employment. A sustained bottom in housing prices in the United States. Company insiders buying (they are presently selling at a historic pace). Trading volume rising with price. General skepticism by the mainstream financial media/punditry that these empirical improvements are anything but a mirage. Caveat. The time frame for this is likely to be measured in years not months.

#50 Bill-Muskoka (NAM) on 08.29.09 at 12:33 pm

#48 Future Expatriate

Shhhhhhhh now! You are destroying their most fundamental religious beliefs. :-) Their Great Money God is not as invincible as they wish to believe. It’s all due to the little men behind the curtains.

#51 HouseBuster on 08.29.09 at 12:40 pm

So according to that chart the Nasdaq will trend sideways in a range for the next couple of years and the worst is behind us.

#52 bigpictureguy on 08.29.09 at 12:51 pm

#49 robert

Bingo Dude.

#53 Bill-Muskoka (NAM) on 08.29.09 at 12:55 pm

A grand illustration of failure to use critical thinking.

Historic house turns into ‘renovation from hell’

The city could have easily used a modfied survey plat to remedy the situation. This has been done many times where old surveys are found to be erroneous. To say the least this exemplifies bureaucratic idiocy gone wild.

#54 Gonzo on 08.29.09 at 12:57 pm

I’m not saying I’m a believer in Elliot Wave, but…
The theory works best when investment decisions become based more on emotion/gut feelings and less on fundamentals… which tends to happen in bubbles (Pets.com anyone?). The rationale as to why patterns emerge is that human behaviour, when driven by emotion is predictable. I don’t think this is such a stretch. During a boom, people see everyone making money, get excited, and want to get in. Then, just when people are the most excited, the market turns. Then the reverse happens on the way down: dropping prices fuel panic, more selling etc, until the point where people are maximally pessimistic. Elliot wave just takes this herd behaviour and tries to characterize it mathematically… by doing so, patterns emerge which do repeat themselves.
Also, if the theory is totally useless, then how could Prechter predict:
-the 1987 crash
-the Oct 2008 crash
-the March 2009 low and bear rally to S&P 1000-1100

Also, look at this blog: When markets were reaching lows in the spring, posts were about eating squirrels and building bunkers. Now, when the markets are higher, it’s about best ways to invest cash. Really, people should been buying stocks in the spring.
Should we be stocking up on squirrels now?

#55 kitchener1 on 08.29.09 at 1:21 pm

Wow, a lot of bulls read this blog!

In trading, all these diff economic indicators are just tools people use to gauge market sentiment. EW and the Fibb are all relevant tools.

The problem with comparing todays market to that of the 30’s is that it is not the same market, the bailout money as well as the FDIC skew the data as those did not exisit in the 1930’s.

However, patterns do repeat themselves, take a look at the bond market and the yield rate, there is a lot of volume that is driving yields down, means that something is coming up in the next 1-2months max.

When the big boys are parking their money in bonds with next to nothing in yeilds, its interesting to say the least.

#56 Munch on 08.29.09 at 1:24 pm

Never mind Elliot Woof (sic)

Markets have peaed, the next leg down has started

Did anyone REALLY think we could have a bubble of this magnitude and then follow it up with a mild recession?

No really, come on children, the magnitude of the BUST has to at least match the size of te bubble!

#57 Got A Watch on 08.29.09 at 1:30 pm

With reference to the discussion the other day about BMO and whether they were going out of business or not:

Jesse’s Cafe (a great Euro based trading and economics Blog) has “Where Are The World’s Safest Banks?” discussing “The World’s 50 Safest Banks”, a new edition of an annual report.

Interestingly, on that list, RBC is at # 10, T-D is # 14, Caisse central Desjardins is # 26, and lo and behold BMO is ranked # 31! Links to the source study and methodology at Jesse’s.

Even more interesting is (quote Jesse) “In this annual list by Global Finance, not one US bank is in the top 30 of the Safest Fifty Banks in the world.

It was the poor regulation of the banking system, and the reckless management of the money supply, that has brought the US, and by extension of the dollar contagion, a greater part of the world, to the financial crisis which threatens the global economy today.”

Canada’s finance system certainly has it’s own problems, but compared to that of almost other nations, we don’t look too bad. In the Kingdom of the Legless, the one legged man is King.

I can’t imagine people on the internet pushing unsubstantiated rumors about certain Canadian Banks were motivated by anything other than a strong sense of public duty. Or not.

#58 eddy on 08.29.09 at 1:50 pm

is someone buys a house with virtually nothing down, and prices ‘correct’ downward 15% in the near future, it’s not a big deal. in fact, even if prices collapsed the buyer can mail in the keys- he has ventured virtually nothing, therefore lost nothing! but if high inflation happens ( it’s already started-there is absolutely no other way out of this mess) the buyer gains, big time. i believe that buyers know this instinctively. this greater fool inflationary ponzi is even government sanctioned!

This is not Detroit. Mail in the keys, but you are still responsible for the entire mortgage, plus legals, arrears, penalties and associated costs. A 15% correction would put legions of recent buyers into negative equity. High inflation will also be accompanied by rising mortgage rates. How does it all work on your planet, Eddy? — Garth

#59 Evangeline on 08.29.09 at 2:09 pm

((The chart’s Y-axis should also be presented as a % from a reference point. The modern Nasdaq also represents a completely different class of companies than the older Dow Jones. ))

During last year’s crash there was no place to hide; no class of company was exempt and every asset class got hit. That scenario, which many expect will happen again, makes comparing similar classes of companies past and present irrelevent.

#60 Denis on 08.29.09 at 2:11 pm

#9⁠ Peter Wiener on 08.29.09 at 12:19 am

QUITE SIMPLE REALLY

If you were making an investment in the Canadian real estate market and you had to rely on one of these two Canadian market opinion leaders for advice as to the direction of prices in the forseeable future, whose opinion would you follow;

BRAD LAMB, the self titled Condo King and blowhard real estate BULL with a track record (falling entirely within the biggest bull RE market of all time) of maybe 7 to 8 years;

or;

ERIC SPROTT, the self made all markets BILLIONAIRE with a track record of over 35 years (matched by maybe half a dozen people tops in the world) who is bearish on the RE market?

Your choice of mentor as posited above should indicate your course of action.
——————
+1 …. Completely agree with you! I’m a big Eric Sprott fan as well… His Monthly Newsletters and Analysis of current market conditions are very insightful. Lamb’s just betting on continued appreciation no matter what the circumstances.

#61 Another Albertan on 08.29.09 at 2:18 pm

Watch/56 –

If you look closely at Jesse’s blog, you might find some evidence that the author is either a) a Canadian with extensive life exposure to Europe or b) a European with extensive life exposure to Canada.

One of the giveaways is one of Jesse’s alter-egos. You have to dig for it but it’s “Arthur Cutten” – a reference esoteric enough that there has to be a some Canadian connection.

#62 Matty Gibson on 08.29.09 at 2:38 pm

Thanks, garth, for posting this chart, and for all the other anecdotal and factual tidbits and analyses that you offer up. Like your other posts, I find today’s to be thought-provoking and entertaining. What I do NOT take it to be is any of the following:

1. An accurate forecast.
2. Investment advice.
3. The only analysis available.
4. Negative.

The last one needs some further explanation, especially for those respondent’s who seem to think that ‘bearish’ forecasts are negative. They are not, unless you are heavily invested in assest bubbles.

Bubbles are not a friend to the community or its economy, only to the few who know how to profit outrageously from them. Their ending, always inevitable, is a long-term positive, even though those caught up in them will suffer financially. Affordable (owned or rented) shelter is essential to the individual and the community: real estate as an ever-inflating investment is not.

#63 Evangeline on 08.29.09 at 2:41 pm

((It was the poor regulation of the banking system, and the reckless management of the money supply, that has brought the US, and by extension of the dollar contagion, a greater part of the world, to the financial crisis which threatens the global economy today.”))

Politics also played its part. The sub-prime mortgage crisis was in large part politically driven, pushed by the Community Reinvestment Act. That latter is what ‘encouraged’ (do it or else!) the banks to loosen their lending standards.

#64 Jake on 08.29.09 at 2:50 pm

#53 Gonzo,
You raise some interesting points there. The heard mentality is alive and well indeed.

#65 Men With Hats on 08.29.09 at 3:10 pm

How does it all work on your planet, Eddy? — Garth

Sea shells are coin of the realm on Eddy’s planet .

#66 Live Within Your Means on 08.29.09 at 3:37 pm

#38 bigpictureguy on 08.29.09 at 11:14 am

Many are in the shoes like this couple below with multiple properties and highly leveraged primary homes fueled by cheap historically low credit. All it takes is interest rates and hikes and the dominos will fall.

This is not an exception but the rule in BC and major cities.

BC couple drowning in RE debt

http://www.theglobeandmail.com/report-on-business/couple-drowning-in-real-estate-debt/article1269362/

Oh Sh*t. How do people allow themselves to get into such financial predicaments? Unfortunately, I do know. Not our experience but some that I do. Its’s mostly about ignorance of day-to-day finances. Its a Charge it mentality – I want it now – never mind saving up to buy it. Wow, they really need to get their house in order.

#67 eddy on 08.29.09 at 3:41 pm

This is not Detroit. Mail in the keys, but you are still responsible for the entire mortgage, plus legals, arrears, penalties and associated costs. A 15% correction would put legions of recent buyers into negative equity. High inflation will also be accompanied by rising mortgage rates. How does it all work on your planet, Eddy? — Garth

In the event of a collapse, the buyer would go bankrupt, but that’s no big deal for someone who had or ventured nothing.
Negative equity of 15% is manageable. Higher rates are guaranteed, but in an inflationary scenario the equity would be increased too, making them feel rich. Rising mortgage rates traditionally cause prices to drop, but in this case it won’t- there will be an emptying of the banks and a rush to hard assets.

#68 Shawn Allen on 08.29.09 at 3:44 pm

The problem I have with the chart is the scales are different. NASDAQ scale on left goes zero to 5000. Dow scale on right goes zero to 350.

To make it comparable DOW scale should go 0 to 500, so an inch on the chart would be the same percent in both indexes.

I agree with #4 Calgary-rip-off, too many varaibles.

Essentially a case of data mining. (Manipulate the scales and years chosen to get the best fit).

Absolutely we should learn from the past but to expect indexes to exactly trace past movements seesm silly.

I have been hearing since around year 2000 that stocks will make no money. Meanwhile I have made lots of money in stocks. Lost some in 2008, got it all back and more in 2009.

#69 Chincy on 08.29.09 at 3:49 pm

#54 Gonzo…excellent post.

#70 Joseph on 08.29.09 at 4:00 pm

There is a view out there that the US government itself is manipulating the US stock market to prevent panic selling. Raymond James writes a dated piece (2006),

“Is the Federal government manipulating the equity markets? …

It sounds like a crazy conspiracy theory for sure, but it is one that has currency and won’t go away. The conspiracy goes like this: There is a group of federal government officials — the Treasury secretary, the Fed chairman — plus senior NYSE officials who make up, the Plunge Protection Team. It is said they intervene to put a floor under stocks whenever they are at risk of penetrating important levels of technical support, such as when the 50-day moving average slips under the 200-day moving average. Technicians call this the Death Cross, because, when that happens, it can trigger a larger, steeper rout caused by ask-no-questions programmed selling, which can lead to outright panic selling.”

People need to be careful these days.

#71 BD on 08.29.09 at 4:26 pm

#44 BILL (NAM)

Just about every problem today is a result of companies only being concerned about the next quarter and failing to plan for the future.

I read on the Automatic Earth last night that France is trying to introduce a new compensation system for bankers and CEOs that is under great fire from the U.S. and others. They want to spread bonus payments over three years and have a claw back for non performing loans. Imagine the cheekiness of that!

Years ago when I sold life insurance this was normal and personally I would like to see it changed to the life of a loan or amortizaton period. Until there is some accountability for the long term profitability of companies the systm can never be fixed.

I can’t imagine why there is such an uproar over such a simple idea? (snicker, snicker)

#72 Future Expatriate on 08.29.09 at 4:34 pm

#50 – LOL thanks.

When it comes right down to it, since the invention of cyperspace, paper is only good for one thing and one thing alone.

Wiping your ass.

#73 Peter Wiener on 08.29.09 at 5:00 pm

# 42 Got A Watch

“They have lied their way to irrelevance.”

Brilliantly stated and doubly brilliant if you authored this statement!

#74 Alberta Renter on 08.29.09 at 5:05 pm

I’ve read a few posts on low stock market volumes so decided to analyze some Dow Jones data myself, rather than listen to self proclaimed pundits…and because the data is easy to get.

I chose to test the hypothesis > Are “After the Crash” Dow Jones Index volumes significantly different than before crash volumes (pivotal reference date = March 5, 2009).

I blocked the data into 50 day trading blocks, and compared each block against the overall span of the 200 day average. I chose this benchmark because it spans an equal number of days on either side of the crash (100) and should provide stable means on either side. Right or wrong that’s what I did.

The results. Over a 50 trading day average (May 19 – July 29, 2009), there is a 19% reduction in trading volumes compared to the previous average of 200 trading days. Over this same period, the DJ (adjusted close) has increased by 7.7% from the previous average of 200 trading days.

While it appears this is another example of the 80/20 rule where 80% of the volume has set the price over the last 50 days. How much more could that 20% of volume effect the index? Maybe it’s just that 20% scaredy cats missed the boat.

Rationally, the next question is; what affect does volume change have on the average DJ adjusted close. This can easily be tested, but my gut feel is there is probably very little correlation. As poster #31 eludes, cause and effect are not easily differentiated, especially data concerning human greed and money and selling books.

So, I don’t buy the simplified model that it’s all about volume. If you believe that, then you have to believe that only 20% of the volume has the “right” information about the economy to influence or react to stock market price.

If anyone wants to see the data, let me know and I will send it your way. Or get off your duff and get it yourself and do some work before you spout off about dooms day and Armageddon… supply your evidence.

Oh and, Great Gazoo, I’m sure there are a few Plenty o Fish women out there, that read your post and think you’re the idiot that cat-called them today. Get a life… if that’s who you really are.

#75 Peter Wiener on 08.29.09 at 5:05 pm

# 66 eddy

Sure thing pal.
They still have to service the debt.
Pretty hard to do with no job.
Give it up – its all over but the crying.

#76 Peter Wiener on 08.29.09 at 5:19 pm

General (rhetorical) Question

Why does everyone, including Ben Bernanke, presume that the Great Depression was avoidable “if only they had the right policy respose, monetary tools, printed more money, lowered interest rates, et., etc.

Corollary;

Why do so many folks think this unfolding Greater Depression can be avoided or cured if we just do…..”

Maybe some things are not repairable without very painful structural changes. That used to be the function of revolution.

#77 comrade okie on 08.29.09 at 5:56 pm

Hunger passes Grasshoppers, one way or another.

For those who think the lumber and 30 foot lot they acquire in lieu of a lifes work is substantial; I wish you well with your indentured existence.

#78 The Great Gazoo on 08.29.09 at 5:58 pm

Lets talk about history and the debt driven economy big bankers and re moguls thrive in today, while unemployment runs rampant…

Check out what Marriner S. Eccles, Franklin D. Roosevelt’s Chairman of the Federal Reserve from November 1934 to February 1948 wrote on what he believes started the great depression, very eerily similar to what is happening now with loss of manufacturing and middle class jobs in North America today:

“As mass production has to be accompanied by mass consumption, mass consumption, in turn, implies a distribution of wealth — not of existing wealth, but of wealth as it is currently produced — to provide men with buying power equal to the amount of goods and services offered by the nation’s economic machinery.

Instead of achieving that kind of distribution, a giant suction pump had by 1929-30 drawn into a few hands an increasing portion of currently produced wealth. This served them as capital accumulations. But by taking purchasing power out of the hands of mass consumers, the savers denied to themselves the kind of effective demand for their products that would justify a reinvestment of their capital accumulations in new plants. In consequence, as in a poker game where the chips were concentrated in fewer and fewer hands, the other fellows could stay in the game only by borrowing. When their credit ran out, the game stopped.”

#79 Albertaboy on 08.29.09 at 6:28 pm

#75 – Peter Weiner – there were monetary tools (ie: Quantitative easing), policy response, etc done in 1929 just the same as today, however, the outcome is the same as it will be for us – a greater depression as you said.

The last housing boom comparable to this one was even greater than what we have now. By 2006 statistics, housing investment was about 6.5% of GDP, in ’23 when housing last peaked – it was almost 8% of GDP (in the US). I don’t know who posted the link to the article on the Tale of Two Depressions ( http://www.voxeu.org/index.php?q=node/3421 ) but thank-you – it was a very good, logical and well thought out article. What I found most interesting was the drop in Industrial Output of major countries – including Canada and how close we’re trending to 80 years ago. If history repeats itself, we have a long, painful way to go before things get better. Although for those who have their heads in the sand and believe whatever MSM is told say by their political handlers, things will be much worse. Amanda Lang may be cute – but she hasn’t got a clue.

#80 jess on 08.29.09 at 6:29 pm

exotic hum …education the hard way

“It’s hard to blame the Wisconsinites for not understanding the transaction: They were dealing with one of the most complex derivatives ever designed—a synthetic collateralized debt obligation, which is a combination of two other derivatives: a collateralized debt obligation (CDO) and a credit default swap (CDS). This is the kind of security that Federal Reserve chairman Ben Bernanke called “exotic and opaque.” Investment guru Warren Buffet called it a “financial weapon of mass destruction.” In other words, one of the most dazzling—and dangerous—illusions in all of fantasy finance.

As we’ll see, these investments were truly mysterious in their design and in their execution. One of the most “exotic” features was that these securities didn’t give the buyer ownership of anything tangible at all. The buyer received no stake in a corporation, as they would have with a stock or bond. Instead, the school districts, without realizing it, had become part of the trillion-dollar financial insurance industry. (It was not called insurance, however, since insurance is, by law, heavily regulated.) In fact, they had put up their millions, and had borrowed millions more, to insure $20 billion worth of debt held (or bet upon) by the Royal Bank of Canada. And that debt included some very nasty stuff: home equity loans, leases, residential mortgage loans, commercial mortgage loans, auto finance receivables, credit card receivables, and other debt obligations. Technically, Mr. Noack may have been correct when he said that the schools didn’t own any subprime debt. They didn’t own anything. Instead, they had agreed to insure junk debt. The revenue they hoped to receive each quarter was like receiving insurance premiums from the Royal Bank of Canada, which was covering its bets on the junk debt.
http://www.alternet.org/workplace/140208/the_looting_of_america%3A_how_wall_street_fleeced_millions_from_wisconsin_schools/?page=entire&ref=patrick.net

#81 jess on 08.29.09 at 6:45 pm

slavery never ended but the talking goes on

http://www.freetheslaves.net/Page.aspx?pid=375

#82 Gord In Vancouver on 08.29.09 at 6:56 pm

#36 The Great Gazoo

HA HA lavalife!! That is so 2002! Don’t give the guy that much credit, he seems to be more of a plentyoffish.com kind of guy, ignoramus looking to court cougars and single moms.
___________________________________

Stigmatize single moms? Almost 40% of Canadian marriages end in divorce.

http://www.divorcemag.com/statistics/statsWorld.shtml

#83 john m on 08.29.09 at 7:01 pm

All i can say is i read and absorb what you have been saying for a long time Garth……….another huge plant i hear from very reliable sources is closing in October–Metaldine in Thamesville …a huge contributor to the local economy..makes me sad..where is the up side to all of this?? Anyone who can tell me how much better things are in Canada since “Harper” came to power i would really like to hear it..cmon you western boys lets hear just one good reason ok :-)

#84 taxpayer like you on 08.29.09 at 7:04 pm

53 Bill – pasted from your link:

“That’s when things went off the rails and the city issued a stop-work order. It took the position that Hertzman and Pencarrick were constructing new foundations, and wouldn’t let them build on what was admittedly a few inches of their neighbour’s lot.

Possessory title, commonly known as “squatter’s rights,” is unavailable under the British Columbia land titles system, even though all the houses on the block have been encroaching onto their neighbour’s land for 117 years.”

The city is correct in its assessment. It cannot allow new construction to encroach on private property. It is a question of ownership. It is not their call. It is up to the
property owners to apply to adjust the boundary (ie transfer the underlying ownership) to accomodate the building.

#85 Evangeline on 08.29.09 at 7:04 pm

((I read on the Automatic Earth last night that France is trying to introduce a new compensation system for bankers and CEOs that is under great fire from the U.S. and others. They want to spread bonus payments over three years and have a claw back for non performing loans. Imagine the cheekiness of that!))

Financial advisors should not be able to collect fees either unless they make money for their clients. No one should have to pay for the privilege of losing money through a boneheaded or incompetent investment strategy. Any bozo with an investment advisor shingle can make money in a bull market but a bear market separates the competent advisors from the bozos. They should all have to EARN their bread, not just automatically deduct their fees even when a portfolio is being decimated.

#86 john m on 08.29.09 at 7:22 pm

Lots of people who are under the impression the Government will always be there to bail us out..should really realize its only a loan!!..which we will have to pay back tenfold for generations in higher taxes..its inevitable! Hard times are coming..the future is innovation the way we have been doing things has not worked! The old boys that grew up in the depression and built huge manufacturing industries knew that…the future is in the hands of the upcoming generation…………desperation brings innovation and survival ………..we will survive it will just take time..and hard times………..the leader’s of our country’s ideas just have not worked

#87 Grumpydawgs on 08.29.09 at 7:24 pm

I am sad that I haven’t heard much outrage at the BOC ( CDN government) shorting the CDN dollare yesterday by flooding the markets with 3 billion CDN dollars to buy USD in a ten year bond deal. There were a plethora of apologists quoted in articles afixed to the business sections of the two ( isn’t it sad) Canadian papers. They all made quite a point of saying that the move wasn’t intended to dent the loonies progress. Look guys, if it wasn’t such an issue then why the ‘circle the wagons’ technique and the well rehearsed scripts?

The red herring that a low dollar is good for Canada is just nonsense. What a low dollar does is insure that Canadian businesses can never evolve into world competitive entities because the low dollar thwarts any possibility of being competitive with capital improvements, equipment and technologies. Our guys can’t improve productivity and thusly improve wages because they can’t afford to buy the newest machinery.

The low dollar insures that we will be perpetually drawers of water and hewers of wood. The idea that we will sell intelligence services to the world has been proven wrong by the fact the every other developed country has a higher wage scale and higher standard of living than we do. Is Germany suffering because of a high Euro?

The reality is that the low dollar idea started with Trudeau and his half baked one world villlage BS. He wanted the CDN dollar low as an example to the developed world that we ( in the west) should sacrifice while the third world caught up. he was intent on bringing up the standards of living in Mexico and did everything he could to keep Canada from from outpacing the economies of Latin America. This was all part of the crazy headed ideas that he and that PM from Norway Bruntland cooked up when they dreamed up ‘ sustainability” ( thats western powers shifting economies and cash to the third world ) in programs like the KYOTO Accord and the main documents that contained this international socialism bunk that Trudeau was so fixated on.

I was sad when so many people missed another opportunity to lambast the government for perpetuating this stupid policy of beggering canadians for the short term gain of a few jobs in a few ridings in the voter rich ( Liberal Created ) constiuencies of southern Ontario. If the policy was overturned was overturned we would create jobs and a future that Trudeau thought was evil but would in fact be very good for Canadians.

You were smokin’ up until that last para. There is no political logo on stupidity. — Garth

#88 TJ on 08.29.09 at 7:30 pm

This was posted by an astute and very angry commentor regarding the handling of the ridiculous Cash For Clunkers Program.

Now that Carney and the Bank of Canada rogues have basically told speculators it’s open season on the soon to be shellshocked Loonie – you can bet a Susan B. Anthony that we will have all kinds of bailouts. That money that we have coughed up with our penurious Tax code is already spent – so let’s borrow, and give people ‘Free Money’ – but then you look closer and realize it has made things worse. DEBT has to be cleansed from the system. You can delay all you want – it just causes more pain down the road.
IF you think this bull, within a Secular Bear Market is real – you will be sorely aggrieved in the next 4-10 years.

Anyway – let’s get back to the Excited States.
>
Everyone knows that this ridiculous program was not a “green” initiative. It was a devious handout to GM and Chrysler our government owned car dealers. Not only was it a complete FUBAR, with dealers still not getting paid, GM and Chrysler got less than 25% of the sales combined. Their sales were lower than their normal market share. Toyota alone had almost as much in sales as GM and Chrysler.

The US Taxpayer paid $2.9 billion so people could buy foreign cars they didn’t need. Now the used car prices which matter to poor people have jumped, production is all out of whack, and sales are now plunging after this gimmick.

The government is extemely proud that they came in “underbudget”. Only government could set a $1 billion budget, screw it up so badly that they had to throw another $2 billion into the kitty, and then proclaim they came in underbudget at $2.9 billion.

So we borrowed $2.9 billion (cost over 20 years will be $12 billion with interest), gave it to consumers who took out 7 year 0% interest loans from GMAC (we gave them $5 billion, they will make it up on volume), and the consumers bought Japanese cars. How much do you want to bet they’ll do this again?

http://tinyurl.com/mt4nsy

#89 taxpayer like you on 08.29.09 at 7:35 pm

38 Big show:

“This is not an exception but the rule in BC and major
cities.”

I dont believe this is the norm. I own a share of a rental and dont have this problem, likewise my two partners in that property. My other friend owns both his home and rental outright, and is renovating rental without borrowing. I do know some individuals with multiple properties and I cant think of any who are having difficulties.

Why do you think its the rule?

#90 Job Rutgers on 08.29.09 at 7:38 pm

The progressive forum website has an interesting article on the ongoing bubblification of Canada.

http://www.progressive-economics.ca/2009/08/14/bubblenomics-is-alive-and-well-in-canada/

#91 saanichtonian on 08.29.09 at 7:40 pm

For any here that wish to understand what the debt borrowed from private banks in the name of the people of Canada goes towards, I would highly recommend perusal of the 1993 Report of the Auditor General of Canada (http://www.oag-bvg.gc.ca/internet/English/parl_oag_199311_e_1157.html), specifically chapter 5

“5.41 The cost of borrowing is the third area that affects the annual deficit. In 1991-92, the interest on the debt was $41 billion. This cost of borrowing and its compounding effect have a significant impact on Canada’s annual deficits. From Confederation up to 1991-92, the federal government accumulated a net debt of $423 billion. Of this, $37 billion represents the accumulated shortfall in meeting the cost of government programs since Confederation. The remainder, $386 billion, represents the amount the government has borrowed to service the debt created by previous annual shortfalls.”

My favorite line though is:
“5.14 Experts will, of course, realize that there are complexities we did not touch on, but we hope that they will agree that there are significant barriers to dealing with them until there is a better and more widespread level of understanding.”

Perhaps it is time that we all strive to attain a “more widespread level of understanding.”

I would also suggest a 3 part video,
The Crime of the Canadain Banking System
http://www.youtube.com/watch?gl=CA&hl=en&v=O8Zl1Wax8MI&feature=related

The other 2 parts are linked on the right.
Canada’s Great Experiment: 1935-1974
and
Gerald Grattan McGeer

I hope to see more and more people asking THE questions.

#92 bigpictureguy on 08.29.09 at 7:46 pm

#65 Live Within Your Means on 08.29.09 at 3:37 pm
#38 bigpictureguy on 08.29.09 at 11:14 am

Why? Canada’s real wage and purchasing power has declined/stagnated over 20 years and the hypnotic power of Real Estate and cheap credit seduction. With these 2 powerful forces it’s nearly impossible to resist.

#93 john m on 08.29.09 at 7:47 pm

Ceramic Battery Could Be Breakthrough for Electric Cars

Tesla

The Holy Grail keeping the electric car from supplanting today’s gasoline vehicles has always been energy. Batteries that have been used in electric vehicles of the past — and even the recent Tesla electric sports car — are large, have limited ranges and take hours to charge.

A new company called EEStor is working on a ceramic device — don’t call it a battery — that will deliver a range of 500 miles on $9 worth of power, which equals about $60 worth of gasoline at today’s prices. The technology is still being worked on, but the device contains no hazardous materials and can be fully charged in five minutes.

The Tesla proves that an electric car can be fast. It hits 60 mph in 4 seconds and has a top speed of 130 mph. Unfortunately, it also has a range of just 250 miles and needs more than three hours to charge. A power pack like the one EEStor is working on will make any electric car both practical and efficient, and may even kill the gasoline-powered car. ………..kind of off topic but related to the economy………i seen presentation of one of theses batteries it fit in the palm of ones hand and could store enough energy to power the average household for 24 hours?? …something to think about i thpught ??

#94 OttawaMike on 08.29.09 at 8:19 pm

It’s a chart, dude. If you can’t handle it, go back to Lavalife. — Garth

Ahh Lavalife: The odds of meeting somebody on there are good but the goods are odd. YMMV…

#95 Nostradamus Le Mad Vlad on 08.29.09 at 8:25 pm

#23 cashman on 08.29.09 at 8:36 am — “. . . heading for ww3. That’s what the elite international bankers want. They also want to reduce the world’s population to under 1 billion people. . . . spending money like water?”

Good post. The FF (Fiscal Fiasco) took baby steps a few years back, followed by a pandemic of gargantuan proportions with all these self-important yahoos making irrelevant statements about nothing at all.

Mix and add to the stew all the war talk — October and / or Spring Surprise (and regional wars) going on thruout this classroom of a planet, climate change and Exploding Nachos With Hot Jalapenos, one can see that we are quite capable of blowing ourselves into the middle of next week, so no one gets anything.

But take one more ingredient, and put it through a sieve and see how it pans out. At present, scientists estimate there are 20,000 asteroids / comets / space junk floating freely and at great speed, all within range of us and only 6,000 of which have been identified.

Any of those, the size of a shipping tanker hitting the Atlantic Ocean at 25,000 m.p.h. would certainly speed Global Population Reduction up enormously, and that is the quirky aspect of change!

It would bring change in the Pacific as well, where Lemuria, a.k.a. The Lost Continent Of Mu (check online or the book should be at a library) has been quietly awaiting its return. Think anyone would care about the FF? Not a cat in hell’s chance!

The WH US$9 trillion deficit figure over the next decade wouldn’t rate a blip on the radar. It sure would be great to have everyone on a level playing field again, no monetary system. Bartering looks good!
——
Re: The Maple Syrup Candy Coated Pancake Pandemic —
http://dprogram.net/2009/08/27/startling-new-evidence-that-the-swine-flu-pandemic-is-man-made-2/
“However, in 2009, all liabilities for death and disability from faulty or contaminated vaccines have been stripped away. Any wrongful death or disability lawsuits against Novartis or any other company will today be summarily dismissed. Novartis today has carte blanche blanket immunity for their actions . . .”
——
Seems as if more and more countries are spying on their citizens. —
http://wikileaks.org/wiki/Norway%27s_Knut_Storberget_tells_ISPs_to_deploy_secret_censorship_lists,_29_Aug_2009
“The letter was sent to internet providers in Norway. It was leaked because such a move should be debated in the Parliament rather than implemented without debate behind closed doors.”

#96 Peter wiener on 08.29.09 at 8:55 pm

#92 john m

Actually one of the biggest drawbacks to current battery technology is weight and also reliability.

Btw, search Top Gear Tesla on You Tube to get the real story on the Tesla roadster – piece of junk and you’ll see why in the video – these reviewers are reknowned for being completely unbiased.

The ceramic technology you refer to is minimum 10 years away from commercial application.

#97 Future Expatriate on 08.29.09 at 10:22 pm

#85 Actually, THE biggest drawback to battery technology, or for that matter, ANY superior technology is Big Oil will buy it, shelve it, sit on it indefinitely, and kill it. And has already. Tens of thousands of times, tens of thousands of patents.

And THAT reprehensible fascist tactic has been the biggest drawback to technological advance since they took over from the whale oil franchise.

That’s why you have to at least respect T. Boone Pickens for trying… it takes quite a revolutionary infrastructure to beat Big Oil.

Or a revolution.

#98 robert on 08.30.09 at 12:21 am

Yes. Wonderful. Our banks are some of the healthiest horses in the glue factory.

#99 robert on 08.30.09 at 12:23 am

Sorry. Too much Old No. 7. Reference comment #57.

#100 robert on 08.30.09 at 12:29 am

Sorry. Too much Old No. 7. Reference comment #57

#101 The Great Gazoo on 08.30.09 at 12:39 am

hey Gord in Vancouver,

You’re very resourceful with stats, sorry if I was politically incorrect, you sound like a good wing man.

Listen I have from plentyoffish a couple of cocktail waitresses from Casinorama coming down for some Bud lights and retrorock music night at the Loose Moose Tap and Grill, you would be the perfect wingman. Don’t worry, one of their 18 year old son’s is gonna drive us home at the end of the night.

You’re cool, Alberta Renter has gotta lighten up and he seems like too much of a nerd.

#102 Bill-Muskoka (NAM) on 08.30.09 at 9:30 am

#70 BD

I watched a marvelous program on PBS on Geothermal Energy. The U.S. has 22 plants in California that produce more electricity than all of Iceland’s GT facilities combined. The only catch is that the water, which makes the steam, must be replenished for the plant to keep profitable operation.

Geothermal Heats Up

All the electricity we need is available from the Earth’s natural furnace. This eliminates the need for diesel electric trains, gas powered vehicles (with proper research into battery technology), and literally eliminates pollution from coal, oil, and nuclear fired plants.

I suspect the Great Lakes will be a major source as we have the water and certainly can tap the Earth’s mantle for the heat. As with most such endeavours the only thing lacking is the political will to act.

#103 Bill-Muskoka (NAM) on 08.30.09 at 9:31 am

#99 robert

Hail to Dr. Jack! LOL

#104 Kelly McMae on 08.30.09 at 12:28 pm

#82 john m on 08.29.09 at 7:01 pm
All i can say is i read and absorb what you have been saying for a long time Garth……….another huge plant i hear from very reliable sources is closing in October–Metaldine in Thamesville …a huge contributor to the local economy..makes me sad..where is the up side to all of this?? Anyone who can tell me how much better things are in Canada since “Harper” came to power i would really like to hear it..cmon you western boys lets hear just one good reason ok

From west of the rockies and I can safely say that nothing good seems to have happened under the Harper regime. Whether that’s a reflection on Harper or based on some grander macro-effects is for others to discern.

#105 BigAl (Original) on 08.30.09 at 4:30 pm

Garth wrote: “…In most of the country tenants have more rights than landlords. Resist unresearched comments. — Garth”

They both have equal rights. What both sides, landlords and tenants, hate is the fact that it is up to them to go and do the work of enforcing their rights through a civil court or adjudication body (board or commission). Speak to tenants and they say landlords have all the rights, speak to landlords and they say tenants have all the rights.

Two cases I dealt with just this week:

1) Tenant, complaining about a landlord. Landlord lives upstairs, she lives in basement apartment. On weekends, on numerous occasion, when she comes out of the shower she finds her landlord standing there in her apartment. He claims its some emergency. She wants something done, to end her lease and leave at the end of this month. While noone can stop her from leaving, her lease obligation remains until she files a case, waits for a hearing (1 to 2 months), and proves her case (what if the Landlord denies it, how do you prove it?). Police generally won’t help, tell tenants they have to pursue it in a civil forum. “So,” she says, “then landlords have all the rights”.

2) Landlord complaint. Landlord has tenant that hasn’t paid rent, and is tearing the place apart. Landlord has to serve a notice, wait sometimes a week or two, apply for a hearing, hearing can be weeks to 2 months away, and if they prove their case and win, get an eviction order allowing them to hire a sheriff (around $350 in Ontario, MUCH more in other provinces that might have privatized bailiffs), sheriff takes another couple of weeks.

The point is that BOTH sides have to wait about a few weeks to a month and then prove what they’re accusing the other side of. Many people feel they should be able to accuse the other side of anything, and be allowed to act on that accusation immediately. Who knows what the better system would be.

Where tenants may have the advantage is in the area of collectability (is that a word??) of debts. ONLY if they have a secure job that they stay at, or some assets that the LANDLORD can provide the enforcement office about, the government does not help one bit in collection of judgements. Even if the landlord gets a judgment for rent or damages, many tenants just take off. When they landlord tries to enforce their judgment, they are told to go and find the tenants, their info, where they work, etc. There is not garnishment of disability or social assistance either, so landlords have no recourse for rent arrears or damages in these cases.

I think maybe our collection and garnishment laws, rather than landlord/tenant laws, need updating.

#106 Mike Hunt on 08.30.09 at 5:25 pm

#9 @ Wiener

Back from summer vacation at the cottage and I’m delighted to see that you have eschewed the negative and condescending comments and are focusing more on the topic rather than the people writing them.

Maybe one of these days you and I will meet. Perhaps I will introduce you to my good friend and business partner, Eric, one day, too.

Keep up the good work (and good attitude).

#107 Peter on 09.01.09 at 2:25 am

Alot of people are throwing out numbers and graphs online to prove that they are right but the only thing I trust is momentum…Where do you find momentum ? Momentum was found right now since March when these green shoots and major major brainwashing scheme from TV, Media, Newspaper, Bankers, Economists, Analysts, Real Estate Agent, Your Branch manager at the bank, your mortgage broker and anyone you deal with money that tells you our economy are simply so fine that nothing or ditto has been happened and we are heading for great recovery and asset appreciation – “buy now while price is cheap cause everything will only go up but not down”.. Well, I think these people very much because when 100 % of these guys and gals so optimistic on every market, its time to sell off when they reach new highs and take profit before they switch out their voices to the black bear !!!

#108 bill on 09.01.09 at 11:54 am

GOOD DAY ALL;
please check out Niall Fergusons take on ”living dangerously : risk in the 21st century” at his website.