Juiced

Carneyjuice1

A few days ago I wrote about being a contrarian. Lately I’m feeling crowded.

This week, for example, the latest numbers showed the Canadian economy is contracting, not expanding. Duh. Like we needed to count anything to know that.

The H1N1 saga is going from scare to farce, and on its way to panic. There will be economic ramifications of this. Count on it.

The US GDP grew by an astounding amount but the stock market caved. Why? Because while you may be able to stimulate some things into a better mood, but the economy ain’t one of them. Give people money to buy stuff, and they will. Just don’t try cutting them off.

Oil prices at triple digits? It’s the latest scandalizing buzz, just like the Canadian dollar at par. And you read that stuff here a-g-e-s ago.

And real estate? Pshaw. The MSM just noticed we have a bubble brewing, thanks to that wild & crazy dude, Mark Carney. I mean, look at this. Greedy vendors. Rapacious buyers. Gluttonous lenders. Giddy realtors. It’s all there – the classic ingredients of an asset ready to pop, thanks to interest rates so low they have turned into a narcotic.

But, not news here. This just means it’s probably coming faster.

Still, it hurts. Give me a hug. I’m going m-m-m-mainstream.

170 comments ↓

#1 s33knges8 on 10.30.09 at 9:53 pm

It’s time. Sink that ship. We, just like Sardine in Kits, have been living simple in E Van waiting for the moment and sitting on cash. PCs are coming through quickly now on the RE listings. Houses are selling below listing price. Please, oh please sink that ship now. It may be the best Olympics yet.

#2 $fromA$ia "Marc Carneys Conscience" on 10.30.09 at 10:33 pm

Garth, your picture is wrong it should be Flaherty as Beatle Juice and he’s holding MarC Carney’s head.

After all, Carney is the puppet. :P

Marc, I think you knew all this was comming. Your boss just told you hush, hush.

#3 Jason on 10.30.09 at 11:04 pm

The globe article had Flaherty hinting that he could, as done in the past, make some changes to mortgage regulations such as 5% down, 35 yrs etc… This could get interesting.

#4 Joseph on 10.30.09 at 11:11 pm

No question about it, you were one of the first out of the gates to warn Canada of the real estate trap. Like many on this blog have already stated, what you saw coming was deferred because of the Bank of Canada’s interventionist policy of driving real interest rates down to next to nothing. But it seems likely that the cure will make things alot worse when real estate does really crash. I am somewhat unsettled by the fact that the risk of all these mortgages has been deferred to the taxpayer through CHMC (backed up the Government of Canada). I think our debt to GDP ratio may just get a whole lot bigger than any of us expected when this recession started. Not a happy time.

#5 Elle on 10.30.09 at 11:25 pm

Garth……….awwwwh

There does seem to be a bunch of copy cats slowly crawling out of the woodwork…..

…..so annoying when ‘Johnny come lately’, trys to steal your thunder !! Never mind, keep thundering on and let them eat your dust !!

We heard it all here first.

elle

#6 rant in Calgary on 10.30.09 at 11:30 pm

THINKING OUT LOUD

What will the government do when the real estate bubble bursts?
The people who cannot afford their mortgage payments will then not able to sell for a higher price quickly. This will create foreclosures instead of record sales. Then the Canadian banks run to CMHC for help on mortgage defaults. But, wouldn’t it be cheaper for the government to subsidize homeowner payments until inflation kicks in?

Hmmmm… high Canadian dollar, the U.S. is broke and encouraging to “Buy American”, global recession, tight credit, trade deficits, un-employment, and manufacturing is moving off shore… so who is surprised by the GDP contraction??

CARNEYJUICE … CARNEYJUICE …..

#7 Dan in Victoria on 10.30.09 at 11:59 pm

Yeah, the sheeple have been spinning the chamber and pulling the trigger for quite a while now.Gleefully they click away, nothing has happened,man we’re smart they think.Now the PTB are going to start putting bullets in one at a time.Try to Dodge that Carnage,suckers.
Maybe Geena can whisper some words of wisdom in his ear.We’ll be back to bows and arrows before you know it.

#8 DaBull on 10.31.09 at 12:00 am

My favorite paragraph in the whole linked article is:

Evridiki Tsounta, an economist at the Washington-based International Monetary Fund, published a working paper this week that concluded that “while house prices might be a bit overvalued in the West, over all they are close to equilibrium,” considering fundamental factors such as incomes and commodity prices.

Even the IMF see’s no bubble. Like the rest of us Bulls.

#9 Elle on 10.31.09 at 12:03 am

If the death, of any parents child…..is off topic, then I am off topic now……..

The blood red poppies…..are present again,
….everywhere. To remind us. November 11th.

It bothers me, when I see them. Does it not seem strange and terrible, this procuring of unending supplys of priceless human lives to be sacrificed on the killing fields ……. only to be severely mourned ….and another poppy needed to be made?

133 Canadian Soldiers died so far in Afghanistan…..
someones child….sacrificed to the god of war…..

But you might say…….what if no one went to war?? well, what if …………..no one did ?

http://news.ca.msn.com/top-stories/cbc-article.aspx?cp-documentid=22466434

elle

#10 TaxHaven on 10.31.09 at 12:03 am

Doesn’t matter whether you’re mainstream of contrarian…it’s what YOU do PERSONALLY to take financial advantage of the situation that counts…

#11 InvestorsFriend on 10.31.09 at 12:05 am

Garth mentions a couple in the Mortgage business who got a 1.5% interest rate.

I don’t understand why a bank would lend money at that rate.

Banks traditionally want a spread of about 2% in order to make a decent profit.

Even if the bank is paying a 0% rate to depositors on chequing accounts, the 1.5% spread is thin here.

Admittedly at floating rates the bank can only get about a quarter of a percent or so in Government Treasury bills

http://www.bankofcanada.ca/en/rates/tbill.html

I guess the whole reason they can lend at such a low rate is that the mortgage is guranteed by CMHC. From the bank’s perspective as long as the loan is insured the credit of even the 5% down / 35 year crowd is effectively as good as that of the Canadian Government.

Still, though, there must be considerable delays and costs when a mortgage goes bad.

I just don’t think there is a rational business model for banks to lend at 1.5%.

And it only possibly makes sense when they can get their hands on our deposit money at 0%.

For any deposits that they are actually paying the customer interest on there is no way a bank can make money with low mortage rates like 1.5%.

Perhaps these ultra-low mortage rates also indicate that Canadian banking is finally becoming more competitive. After all when you shop for a mortgage rate, that is the ultimate commodity. All you care about is getting the best deal from the bank.

The increasing presence of mortgage brokers and on-line banks is finally starting to hurt the banks, they are having to skinny their profits way down in order to win business.

Luckily though they have other products like credit cards and chequing account fees that for various reasons they can still get away with charging fat profits on.

Bottom line, if you can get a mortage for 1.5% that is a sweet deal for you. But make sure you are able to afford it at a more normal rate of say 5% otherwise you may be asking for trouble.

#12 DaBull on 10.31.09 at 12:06 am

A link to the IMF report from my previous post.

http://www.imf.org/external/pubs/ft/wp/2009/wp09235.pdf

#13 GregW., Oakville on 10.31.09 at 12:16 am

Hi Garth, FYI re: health issue
(report is ‘Inaccurate and Unacceptable’)

• NEW CANADIAN REPORT FOR PUBLIC COMMENT: Fluoride in Public Drinking Water – Comment period ends November 27, 2009.

Carole Clinch, BA, BPHE, Research Coordinator for People for Safe Drinking Water in Ontario, suggests that people submit commentary to Health Canada and the Ontario Ministry of the Environment using any or all of the following material:

(1) Letter: Health Canada’s review, Fluoride in Drinking Water, is Inaccurate and Unacceptable
(2) Response to Health Canada 2009 Review
(3) Omissions

And EMAIL to:

• CDW Secretariat [CDW = Federal-Provincial-Territorial Committee on Drinking Water, authors of report]

For more info, and to find above with links to the letters/responce/Omission statment.
(Scrowl down a bit to find it)
http://www.fluoridealert.org/

#14 GregW., Oakville on 10.31.09 at 12:52 am

Hi Garth, FYI, Re: another health issue

US issues health warning over mercury fillings

They’re in millions of mouths worldwide, but have been linked to heart disease and Alzheimer’s. Now a report concedes they may have a toxic effect on the body

By Geoffrey Lean, Environment Editor
Sunday, 29 June 2008
http://www.independent.co.uk/life-style/health-and-families/health-news/us-issues-health-warning-over-mercury-fillings-856582.html

#15 Watched Bubble Never Pops on 10.31.09 at 12:53 am

Thus far, Mr. Carney is right and RE doomsters are wrong – and this has been the case for many many years now. RE bubble? Won’t end well? Good luck with that.

http://www.theglobeandmail.com/globe-investor/easy-credit-soaring-prices-raise-new-housing-fears/article1346308/

“Evridiki Tsounta, an economist at the Washington-based International Monetary Fund, published a working paper this week that concluded that “while house prices might be a bit overvalued in the West, over all they are close to equilibrium,” considering fundamental factors such as incomes and commodity prices.”

“Mr. Carney doused talk of a house-price bubble during parliamentary and senate testimony this week, saying much of the current increase in home buying and prices is the work of buyers who put their plans on hold during the worst of the recession. Mr. Carney, who expects the real estate market to cool off by 2011, also pointed out that construction of new homes remains below year-ago levels, suggesting that purchases of existing homes in superhot markets such as Vancouver and Toronto is skewing the national picture.”

“Canada’s housing market is certainly not stained by the sort of excesses that characterized the U.S. market before the crash. Subprime lending in Canada is estimated to represent less than 5 per cent of the market, compared with more than 20 per cent in the U.S. prior to the crisis.”

“And even though he dismissed the idea of an imminent bubble, Mr. Carney still encouraged discussion of the subject. The reason: The more people talk about bubbles, the less chance they form. A key ingredient in the U.S. subprime mortgage crisis was the lack of attention that was being paid to the problem as it brewed.”

#16 GregW., Oakville on 10.31.09 at 12:57 am

Hi Garth, FYI (artical)

Nano Particles used in Untested H1N1 Swine Flu Vaccines
Part III: ‘It’s the vaccines, Stupid!

by F. William Engdahl
Global Research, September 13, 2009
http://www.globalresearch.ca/index.php?aid=15092&context=va

#17 rp on 10.31.09 at 1:03 am

Don’t worry Garth, it won’t last long. If the US is any indication, a mere 6 months after everything goes to hell the politicians and the mainstream media will be right back into mushroom farming mode.

#18 Jake on 10.31.09 at 1:25 am

Sorry Garth, but here is one more post from a wingnut. I just can’t believe the swine flu hysteria here in Edmonton. People crying because they can’t get their shots, line ups around buildings. Were any of you alive in 1976? There are some striking parallels to what’s going on today. Why has this not been brought up? (Thanks to whoever provided the link to this vid)

http://www.dailymotion.com/video/x9mh9f_swine-flu-1976-propaganda_webcam

ps, I am not antivaccine. I have been inoculated to the hilt. This whole thing just seems like a big cash grab. BTW, how many TRULY confirmed cases has their been?
Do some research and see through the rhetoric.

Sorry for hijacking your blog, but there are some outside the box thinkers here. Happy Halloween blogdogs.

#19 JoeCalgary on 10.31.09 at 1:30 am

http://ttnews.com/articles/basetemplate.aspx?storyid=23085

“NAFTA Surface Trade Declines in August”

“U.S.-Canada trade fell 29.6% to $32.9 billion.”

#20 Jake on 10.31.09 at 1:32 am

One more thing. Have you watched this Garth? It suggests that the governments have been hijacked by banks and corporations. I’m sure most people on this blog would be interested in much of what the producer has to say. It is conspiratorial in nature but, in some way, isn’t this blog?

http://www.youtube.com/watch?v=VebOTc-7shU

It is long, but worth a look during the intermissions of tomorrow’s triple header on Hockey Night in Canada.

#21 vanman on 10.31.09 at 3:58 am

Great video. if they are willing to uncover the fraud that caused this recession – it’ll get worse. If they aren’t willing to uncover it, we will be living Japan’s lost decade in the US and Canada and it’ll be way worse.

http://www.pbs.org/moyers/journal/04032009/watch.html.

http://www.pbs.org/wgbh/pages/frontline/warning/view/?utm_campaign=viewpage&utm_medium=grid&utm_source=grid

#22 TheBigLebowsky on 10.31.09 at 4:43 am

U.S economy- print money out of thin are and give it to people to buy stuff. Thats the only reason they have any gdp at all . This is all inflationary, and if Carney decides to print money to buy U.S bonds. We will be importing their inflation and the competitive devaluation of all currencies will have begun.

#23 TheBigLebowsky on 10.31.09 at 4:43 am

U.S economy- print money out of thin air and give it to people to buy stuff. Thats the only reason they have any gdp at all . This is all inflationary, and if Carney decides to print money to buy U.S bonds. We will be importing their inflation and the competitive devaluation of all currencies will have begun.

#24 fred jotel on 10.31.09 at 5:13 am

As concerns the Canadian housing bubble:

Mr. Carney told the Senate banking committee.

“People are anticipating a potential vulnerability as opposed to looking in the rear-view mirror and seeing a vulnerability that is already here. That is one of the ways that one prevents that.”

If one is anticipating a “potential vulnerability” , why not take steps to eliminate it ? Itsounds more like Mr. Carney is waiting for it to creep up slowly on him then hell shoot it.

#25 David Bakody on 10.31.09 at 6:18 am

Oil prices at triple digits? It’s the latest scandalizing buzz, just like the Canadian dollar at par. And you read that stuff here a-g-e-s ago.

Indeed we did, an so did a few thousand others. Those in position to take all the free information collected and put onto this blog was thrown down the well by the very people responsible to help hard working honest everyday Canadians .

Why would our Main Street Media (MSM) Real Estate (RE) people and Politicians of all colours at least not investigated and take The Honourable Mr. Garth Turner to task if they thought it was way off base. Many ex cabinet ministers are called to the mike for their views and predictions time and time again. Who in our MSM took these points of views and predictions seriously, sure a little lip service here and there but really folkes honest and open debate ….Never!

Simply …. no government can continue to print money (paper) and distribute to ensure all things financial will be well and bailout failed institutions without full and complete disclosure of their balance sheets and then onlhy act when a solid and secure plan of recovery is put forth for the taxpayers to view.

Governments knew if the taxpayer’s were told the truth they would not allow it so once again spinning the truth and buying out true and friendly government supporters just might work. Unfortunately the people who got all this new printed cash were the type of companies that have prayed on the people who under normal circumstances feed their business ” And” what did they get …. “The Shaft” … in a myriad of ways from job looses, layoffs, pay cuts, benefit cuts, higher taxes, less hours, shared hours, higher prices, more transportation costs, low cost loans all wrapped in less job security.

Get the picture MSM!~ the working class did months from the get go.

#26 Onemorething on 10.31.09 at 7:15 am

Wanna Be Contrarians, put your money where your mouth is!!!

I bet you wont because you dont have a set!

I bet you cant because your locked into RE or already have no savings to play with.

Have a nice Q4! Sorry only a very limited few in the VIP seats, ie. The Sidelines!

#27 Onemorething on 10.31.09 at 7:19 am

Oh Yeah, we may see a new AGE!

THE AGE OF CONSTANT STIMULUS!

The band the Vapours said it best ” I think we’re turning Japanese!”

#28 Herb on 10.31.09 at 7:28 am

… the corporate elite rubbing shoulders with the political class — the people who own the country socializing with the ones who run it.

The crux of an article describing the function celebrating the retirement of “a father of free trade”, Thomas d’Aquino, after 30 years on the Canadian Council of Chief Executives and its predecessor Business Council on National Issues. You have to read the whole thing to get the full flavour –

http://www.ottawacitizen.com/business/Farewell+father+free+trade/2167159/story.html

Between greed on one hand and accommodation on the other, we are in good hands indeed. Happy Halloween!

#29 Keith in Calgary on 10.31.09 at 8:06 am

The RE bubble in Canada is the big bad bogeyman in the closet. It has been there since the fall of 2007…….and it is getting tired of hiding.

The MSM knows that it is there, the governor of the Bank of Canada knows it is here, and the politicians know that it is there, yet none of them dare call it out of the closet, because they are all trying to keep their high paying jobs by maintaining zero accountability for the bogeyman that they “unexpectedly” created. They all want, and a “desperately” need, it to become someone else’s problem. Preferably after the next election……..whenever that occurs.

Problem is, they cannot lower rates any further, they cannot extend mortgage terms out any farther, they cannot loosen credit qualfications any more than they have……so what is left to keep feeding the bogeyman and keep him in the closet ?

A home buyers tax credit perhaps ?

That will never happen, for doing so would be an admission that the bogeyman exists, it would anger existing home purchasers……errrrrr, overextended voters……it would be fiscally imprudent (I know that sounds silly in light of the above) and finally it would be politically unpalatable and cause an election that the governing party would probably end up losing as a result.

So what can we feed the bogeyman with ?

#30 X on 10.31.09 at 9:06 am

‘Mr. Carney doused talk of a house-price bubble during parliamentary and senate testimony this week, saying much of the current increase in home buying and prices is the work of buyers who put their plans on hold during the worst of the recession.’

Does Mark Carney really believe in his own statement? Have we even seen the worst of the recession? Unfortunately his statement will attempt to fool the public two-fold.

#31 DaleFromCalgary on 10.31.09 at 9:07 am

“Oil prices at triple digits? It’s the latest scandalizing buzz, just like the Canadian dollar at par.”

I guess it depends on where you live. Triple-digit oil would be welcomed in western Canada and Newfoundland (half because they have offshore rigs and half because their menfolk can get jobs again in Fort McMurray). My conventional wells are doing fine at anything over $20 and fabulous at anything over $60. Sorry about your auto factories Back East.

For gold bugs like me, a high loonie is just fine because it levels the price of gold. We’re not all survivalists; gold is the best old-age pension fund because it will still be worth something twenty years from now. Ask a General Motors retiree about that.

“The US GDP grew by an astounding amount but the stock market caved.”

If you read the fine print, most of the GDP growth was due to the Cash-for-Clunkers and fake profits listed by Wall Street banksters. That’s why the stock market caved, once the traders finished reading the little details buried in the footnotes.

Not that it really matters to the traders because they make their money whether the market is going up or down. That’s why they don’t like physical gold, because they can’t charge commissions for frequent trading.

Gold has no counterparty risk, doesn’t pay interest because it doesn’t have to, and has minimal storage costs compared to broker commissions.

Yes, gold and oil are both inflation-hedge commodities. The only difference is, oil’s useful. — Garth

#32 Nostradamus jr. on 10.31.09 at 9:24 am

“”Ford to close St. Thomas assembly plant””

…Another 1,500 jobs gone in Ontario…

How will this affect Real Estate prices across Canada you ask?

Friends….U.S. Corporatism/Lobbyists, Unions along with its Government have caused the world to fall to its knees.

…Western Canada will survive because our Loonie continues to depreciate…our commodity export driven economy will flourish.

Things are a lot worse elsewhere around the world…a lot worse than in Ontario and Quebec.
(at least Quebec still has its Snow Removal Industry…uh oh carefull, Global Warming?)

…Unfortunately Canada will polarize to the brink of Separation…..Western Canada will in fact secede from Eastern Canada…it is a given…Quebec’s buyout, I mean partnership, w/ New Brunswick was their first step towards a Nationalism of the new future soverign Quebec.

Soon, the Federal Govt will be asked once again to steal $$$ from the West to support the unstopable growing “Unemployable Society” in Ontario.

…Ontario manufacturing economy is dying and getting worse.

Smart folks are moving west.

Have I ever mentioned Vancouver will soon become the North America’s new Financial, Trade, Culture and Leisure capital?

Nostradamus jr.

#33 Bill-Muskoka (NAM) on 10.31.09 at 9:26 am

Absolutely love the graphic Garth. Beetlejuice is still one of my favourite movies.

Happy Halloween and may the Goblins be pleasant!

As to the roller coaster daily figures, they mean nothing except to those obsessed with stats, like some sports fans. The market’s daily results might as well be like a casino’s. But then, I am neither a gambler nor a fool.

#34 Bill-Muskoka (NAM) on 10.31.09 at 10:03 am

Ah, what a month, eh? We have a completely inept herd of morons running the show. The MSM, has pumped the H1N1 almost as much as they did (still are to some extent) Michael Jackson’s demise. Oil is UP and then DOWN.

People’s worst is coming out showing the good old ‘Me FIRST!’ attitude, when they have been told how things will be done to protect to most vulnerable. As to ‘trusting’ the soothsayers of ‘Get Vacinated’..Well, these are the same bozos who couldn’t see ahead enough to protect our medical isotope supplies; sent body bags to the First Nations reservations; have lied, hidden like cowards; acted like spoiled brat children, etc., and we are supposed to trust them? I think NOT!

None of the politicians seem to have a clue what they are there to do, other than lambast each other and pontificate how they are great, will be great, could be great ‘if only’ they were given the chance by the people.

Meanwhile, the last disciples of Globalism are desperately trying to keep their self-serving candle lit in the hurricane of financial reality checks.

And we thought Halloween was supposed to be scary? HA! All the worst goblins, witches, zombies, and vampires are nothing compared to the plethora of scumbags leeching off people’s hard work and lives.

How is the economy doing? Just ask yourself if you feel good about spending money right now? There is THE ANSWER! All the stats are WHAT HAS HAPPENED, not what IS HAPPENING, nor WILL HAPPEN!

Time for a good revolution I think! I would love to see ‘V is for Vendetta’ become a reality. Perfect timing, now where are our masks?

#35 T.O. Bubble Boy on 10.31.09 at 10:17 am

I also had noticed a few MSM articles changing their tune in the last few weeks – the CMHC Bubble article in the Financial Post, this G&M article Garth linked to, and a few others that came out when Australia raised their fed rate to try and calm the Aussie housing bubble.

However – given the H1N1 insanity, I don’t think that this is front page news yet. And, as we all know, it takes a LOT of coverage for even basic information to sink in with the general public.

One example: every Torontonian’s favourite housing bubble report — Hot Property on CP24. Caller phones in (I think it was someone from Maple, ON): “I have a question: I put a down payment on a condo using my HELOC. The condo will be done in August 2010. I don’t have a job right now. How would I go about arranging a mortgage on this new condo?” (the answer was: since the condo will be a rental property, the rental payments will pay the mortgage, so you don’t need a job!)

Also — if anyone needs the ULTIMATE sign that things are about to change in Toronto Real Estate: Mr. Brad J Lamb just moved into a shiny new office!

For those who were in Ottawa or Silicon Valley during the tech boom/bust, you probably noticed that when a company started moving into some giant new office space, this almost always followed with a crash that left most of the new space vacant. This happened to all of the big names of 1999-2000: Cisco, Yahoo, Nortel (in many different cities), JDS Uniphase, and many others.

….

To the folks (read: realtors) on this blog who want the bubble to keep growing, and are quoting that IMF report to prove their point: no one is saying that Canada is the *exact* same as the US. We didn’t have ARMs, we don’t t have the same number of people buying “investment properties” with 0% down, we can’t walk away from houses that easily, and our 5-bank monopoly means that we don’t have thousands of shady lenders duping people out of their savings.

Our bubble is not the same, but it is a bubble nonetheless:

– House prices have increased 5-10% per year for 8 years vs. traditional house price growth of approximately the rate of inflation.

– Unemployment continues to grow.

– Wages for those who still have a job are not growing.

– Federal Stimulus money will stop flowing soon, and all of those government temp jobs, road re-paving jobs, and kitchen renovating jobs will dissapear.

– HST will decrease everyone’s spending power by 5-8%.

– Servicing our already record-high debt levels will also decrease everyone’s disposable income.

– With ridiculously low interest rates, Boomer retirees can’t generate any reasonable income, so their purchasing power is also far lower.

– Higher and higher percentages of home buyers are requiring 5% down / 35-yr mortgages just to “get in the game”.

– Those 0% down / 40-yr mortgages from Jan 2007 thru Oct 2008 will be up for renewal in a couple of years.

– The supply shortage that exists today (a major bubble factor that is often overlooked) will become an over-supply of listings once people freak out in the first half of 2010 and rush to sell before rates rise / HST kicks in / etc.

QED

#36 lgre on 10.31.09 at 10:23 am

The experts are worried but still would not admit to a bubble, once it pops thats when everything comes out in the open..one problem with that, it shows either incompetence or just total dishonesty..probably both holds true but the latter more so.

#37 Ken on 10.31.09 at 10:37 am

Wonder what David Dodge ex governor would have done under these circumstances?

#38 Into The Sunset on 10.31.09 at 10:44 am

To answer Elle #9.
You would be speaking German right now and if your hair and eyes were the right colour, along with your features and your ancestory was correct, you would be bred to produce more of the “super race”.

Don’t ask Canadians that question!

#39 jess on 10.31.09 at 10:46 am

If you liked the warning on Frontline you will enjoy this interesting program that relates the devastating domino effect of the economy to some real people in New York/ Florida.

http://www.pbs.org/wgbh/pages/frontline/closetohome/view/?utm_campaign=homepage&utm_medium=proglist&utm_source=proglist

#40 Evangeline on 10.31.09 at 11:01 am

((Friends….U.S. Corporatism/Lobbyists, Unions along with its Government have caused the world to fall to its knees.))

before ‘corporatism’ it was goverment ‘affordable housing’ policies that spawned the sub-prime mortgage crisis and all the toxic securities based on same.

#41 crashing yuppy on 10.31.09 at 11:08 am

http://www.thestar.com/yourhome/newsfeatures/article/719126–home-bidders-get-personal-our-baby-loves-your-house?bn=1

Garth, You know that the bubble will pop soon when you read puff like this:

Its almost to bizarre to believe

#42 Barb the proof reader on 10.31.09 at 11:14 am

#28 Herb “… the corporate elite rubbing shoulders with the political class — the people who own the country socializing with the ones who run it.”

Herb,
That reminds me of the Olympics…. ‘the expensive way to make fun of democracy’.
The elites sure are good at spending our money, in their own names, whilst hoisting kids as human shields during their heist. The Olympics will cost tax payers well over six billion dollars, but the government will hide most of that from us — alas, more destruction of democracy using blunt (albeit shiny) objects.

http://www.vancouversun.com/Sports/Olympics+bill+tops+billion/1207886/story.html

………

Olympic Watch
http://www.2010watch.com/

cuts to services and the under-funding of health care and education are typically blamed on debt loads that all levels of government carry. “What can we do?  We have to live within our means” becomes the official mantra. The Olympic machine exposes this as a lie….
For projects the government wants to fund on behalf of their friends in the private sector — even at enormous expense — it can. The glaring reality is that money exists — just not for purposes of ordinary people

http://2010watch.com/articles/2008/march.html

Also…. one has to wonder right now how far will the Vancouver Olympic Officials and police will go to squelch tax payer’s ‘right to protest’ the Olympics? Protest signs can easily turn out to end you up in jail for six months ..and $10K fine…. “the definition of an unapproved sign is open to interpretation”.
http://www.cbc.ca/canada/british-columbia/story/2009/10/09/bc-anti-olympic-sign-law-bccla.html

And…. will the Olympics bankrupt the City of Vancouver?
http://www.canada.com/vancouversun/news/story.html?id=f2c1937a-a9d4-4eb6-9a29-2e5ff3746ea6

Canadians heavily subsidized Vancouver, had no say in it whatsoever, but don’t you dare say a bad word about all that..

#43 Barb the proof reader on 10.31.09 at 11:16 am

Garth,
Sorry to bother you, I’m usually pretty good at searching back your posts, but I wanted to send your particular vult blog to someone who is thinking of selling a couple of rental houses. Can you post a link to the page, please, of “How to short the Bubble” or something like that.. ie sell now, ask for $50K down and hold the mortgage and wait and see if the buyer can handle the inevitable rate increase, etc. I think it was in July or August.
Many thanks.. just back from a long trip and a bit tired I guess.

#44 Watched Bubble Never Pops on 10.31.09 at 11:17 am

#4 Joseph

“Like many on this blog have already stated, what you saw coming was deferred because of the Bank of Canada’s interventionist policy of driving real interest rates down to next to nothing.”

Any prediction that hasn’t come true is deferred. Some of the other ‘deferred’ predictions from this blog and blog dogs include:

1. RE bubble will burst
2. gold will go to $2000 per ounce
3. inflation is around the corner
4. the BoC will raise interest rates right after Australia 5. the CAD will reach parity with the USD
etc.

‘Deferred’ is just a nice way of saying that the prediction has thus far been wrong.

#45 Watched Bubble Never Pops on 10.31.09 at 11:20 am

#17 rp

“Don’t worry Garth, it won’t last long. If the US is any indication, a mere 6 months after everything goes to hell the politicians and the mainstream media will be right back into mushroom farming mode.”

You should make this a rotating 6 month prediction like others on this blog so you can say that you ‘saw it coming’. :)

#46 Watched Bubble Never Pops on 10.31.09 at 11:23 am

#24 fred jotel

“If one is anticipating a “potential vulnerability” , why not take steps to eliminate it ? It sounds more like Mr. Carney is waiting for it to creep up slowly on him then hell shoot it.”

Because there is no ‘vulnerability’ despite what you want to happen.

#47 dd on 10.31.09 at 11:23 am

#31 DaleFromCalgary

“Yes, gold and oil are both inflation-hedge commodities. The only difference is, oil’s useful. — Garth”

Dale. If you hold gold your return would have been about 5% from lows to highs in the year. It is priced in US. Better to have bought stocks in gold miners.

#48 Watched Bubble Never Pops on 10.31.09 at 11:25 am

#29 Keith in Calgary

“So what can we feed the bogeyman with?”

We can feed it with predictions of its existance which, since 2007, have been shown to be completely wrong.

Go search for the Loch Ness monster, you’ll have better luck finding that.

#49 Watched Bubble Never Pops on 10.31.09 at 11:27 am

#30 X

“Does Mark Carney really believe in his own statement? Have we even seen the worst of the recession? Unfortunately his statement will attempt to fool the public two-fold.”

He believes it as much as you believe the opposite.

As for fooling the public, you should be more concerned about fooling yourself about RE.

#50 Watched Bubble Never Pops on 10.31.09 at 11:34 am

#34 Bill-Muskoka

“How is the economy doing? Just ask yourself if you feel good about spending money right now?”

I feel pretty good about spending money right now. Christmas is around the corner and I already bought a few pairs of very comfy Cole Haans.

“There is THE ANSWER! All the stats are WHAT HAS HAPPENED, not what IS HAPPENING, nor WILL HAPPEN!”

What IS happening is reported in the media. If you know how to read, this information is easy to find.

With regards to what WILL happen, nobody knows regardless of how much (past and current) data they use to justify their rationale.

Intelligent people don’t talk about what WILL happen, because they recognize that soothsayers squeezing cat gizzards can’t predict the future – even in the 21st century.

#51 Watched Bubble Never Pops on 10.31.09 at 11:36 am

#35 T.O. Bubble Boy

It’s nice that you can regurtitate data.

The RE market continues to boom…

#52 Barb the proof reader on 10.31.09 at 11:36 am

As Gilda Radner’s character, Emily Litella, used to politely say with a smile…. “never mind”.

By the shorts
http://www.greaterfool.ca/2009/08/14/by-the-shorts/comment-page-3/#comment-38883

#53 Kurt on 10.31.09 at 11:51 am

@ DaBull: I challenge you to read this paper and then repeat your position that the IMF report is worth the paper it’s written on:

http://mpra.ub.uni-muenchen.de/15892/1/MPRA_paper_15892.pdf

The economic models generally in use are completely blind to impending credit crises. Find a soure that has run an accounting model on the Canadian economy (as opposed to an equilibrim model.)

#54 Men With Hats on 10.31.09 at 11:54 am

” Figures don’t lie but liars sure do figure “

#55 Boombust on 10.31.09 at 12:25 pm

Garth,

“Charlotte Diamond and the Hugbug Band” can be your friend…

“Four hugs a day,
That’s the minimum,
Four hugs a day,
NOT the maximum”

That Charlotte! Still going strong!

#56 young & very foolish on 10.31.09 at 12:25 pm

OK, so, somebody please help me with this reasoning:

if the Government prints more money, money becomes less valuable …. no?

and if it does, then it takes more dollars to buy things ….no?

including “hard assets” like real estate …. no?

so then, how will we get to the housing bust?

And interest rates soar to cool inflation… no? Suggest you study some history. — Garth

#57 Got A Watch on 10.31.09 at 12:26 pm

Most of the participants have never seen a crack-up boom in their lives. You would have to have been born before the early eighties to remember a real estate bust in action. Around ’91 or so, when they were eight.

So we have many first-time buyers led to the credit slaughter by the HappyFace! badge wearing “industry” members. Having a 35 year mortgage for 500K is a scary theme for Halloween. Compute the payments at 8%, the historic average mortgage rate. Things are all different now. These here ‘Tulip bulbs’, err, real estate, are guaranteed never to go down in value! I personally assure you!

It will all end well, I am sure. Keep a positive mental attitude.

Daystar – Great posts btw. Don’t be so bitter at blue, red is just the other half of Team Payoff. Politicians serve only one master, the one with the biggest check.

Without knowing the inner machinations at CMHC, I don’t even know if the Government was directly involved. Certainly the idea to buy up bulk mortgages from Banks with CMHC was a political plan, to prevent Banks from cash flow problems during the early part of the credit crisis. What was the exact wording in the paperwork there, about who proposed the 35-year 5% plan at record low interest rates? Was there ever an Act of Parliament, or just a letter from the Desk of the Finance Minister? Is it in the Budget? Did Jim phone them up and yell about loosening up credit? It sounds like a mortgage broker/real estate agent dream, and Banks didn’t care because CMHC was assuming almost all the risk. And there would have been some “competitive” pressure, as 35-year is common in the US, don’t you think. There is always a segment who want to emulate everything American. Nothing more apple pie and red, white and blue than a real estate bubble.

A lethal mix of larceny, greed and avarice. Key ingredients for every financial crisis. Everybody got their piece of the pie, except the taxpayers, who get to pay for the feast even though they weren’t invited.

#58 char on 10.31.09 at 12:31 pm

I’ll give you contrarian. The US dollar is about to soar. It’s started: look at the index. The looney has just now started to drop like a stone.

Whatever everyone is saying, including the so-called contrarians ( funny how everyone’s a contrarian), the opposite will surely happen.

#59 Basil Fawlty on 10.31.09 at 12:41 pm

“Evridiki Tsounta, an economist at the Washington-based International Monetary Fund, published a working paper this week that concluded that “while house prices might be a bit overvalued in the West, over all they are close to equilibrium,” considering fundamental factors such as incomes and commodity prices. ”
Close to equilbrium? Over 18 million houses in the US are vacant! What a twit. To quote Nelson from the Simpsons “Ha Ha”.

#60 Basil Fawlty on 10.31.09 at 12:56 pm

“Yes, gold and oil are both inflation-hedge commodities. The only difference is, oil’s useful. — Garth”
Aristotle defined five attributes of gold in the 4th century. It’s:
1. Durable
2. Divisible
3. Consistent
4. Convenient
5. Has value in and of itself
And one new reason, it can’t be created out of thin air.
Which, contrary to Garths opinion, seems useful.

And where did that get him? — Garth

#61 jess on 10.31.09 at 12:57 pm

suburbian curb index

Carney juice is specially brewed for vultures. Who sip slowly while perched high up on their summits, patiently waiting for the sign of furniture piling up on the curbs.

The curb index

#62 The dog. on 10.31.09 at 1:08 pm

Watched Bubble Never Pops

Sure it does. You should change your name to – Relentless Realtor

#63 T.O. Bubble Boy on 10.31.09 at 1:11 pm

@#51 Watched Bubble Never Pops

No offense, but I’d take regurgitated facts over regurgitated opinions any day. I think that is why most educated people are fed up with many of the MSM: they only offer opinions – any many of these are from completely biased sources.

Anyway – I’ll continue to sit here on the sidelines, waiting for the 20%-30% correction in Toronto RE and paying off my mortgage early. Yes, that’s right, I’m a part of this bubble, but one who is paying off his 1.5% mortgage now before it becomes a 10% mortgage in a few years.

#64 shifty on 10.31.09 at 1:26 pm

So, what happens when all the stimulus packages run out and we’re back to the same old, same old. The only thing new, will be the level of debt and shrinking ability to pay.

#65 Grey on 10.31.09 at 1:28 pm

The comments in that Globe and Mail article are worth their weight in gold. No pun intended.

Our real estate agent called us this past week and said to us point blank, the market is out of control. He actually advised us to just stick it out where we are for the next couple of months or so and we’d get a much better deal next year when things start to fall down. I’ve asked him before why would he tell us to wait seeing as it’s his bread and butter to sell us a home. And he said quite candidly, you’re probably going to want to sell your first home down the line and I would rather have you guys come back to me as repeat clients, than watch you guys go under and no be able to afford to do anything down the line. I wish I could give out his name because he’s rare agent in this mess of a market in TO.

As for Carney’s quote Mr. Carney doused talk of a house-price bubble during parliamentary and senate testimony this week, saying much of the current increase in home buying and prices is the work of buyers who put their plans on hold during the worst of the recession.

Please!! I’m sorry, we are that ‘buyer’. We live in TO, make a decent wage and have been saving up for years for a respectable downpayment. We put our plans on hold for almost forever now to try and get a house in the middle of this madness. And now, NOW, for the life of us, we cannot get into the market even more so, because of his stupid idea to drop interest rates for a longer period of time. Last winter the housing market was finally starting to correct itself and he positively took something that should have made life easier for a lot of first time home buyers and made it a million times harder for them to get in.

So Mr. Carney, why don’t you go and have a talk with the average Toronto family and see just how everyone is barely making ends meet right now thanks to your genius idea.

#66 Basil Fawlty on 10.31.09 at 1:44 pm

“And where did that get him? — Garth”
Died from natural causes as one of the most important founding figures of western philosophy. Presumably leaving a rich endowment to his offspring.

Does buying gold mean you must become a humourless dink? — Garth

#67 The VULTURE on 10.31.09 at 1:52 pm

Raising The Roof

Why easy credit and soaring house prices are rousing new fears.

To raise the Devil chant this tonight outside under a full moon: 5/35 you will not survive, 5/35 you will not survive, 5/35 you will not survive, 5/35 you will not survive, 5/35 you will not survive, 5/35 you will not survive, 5/35 you will not survive, 5/35 you will not survive, 5/35 you will not survive, 5/35 you will not survive, 5/35 you will not survive, 5/35 you will not survive, 5/35 you will not survive, 5/35 you will not survive, 5/35 you will not survive, 5/35 you will not survive, 5/35 you will not survive, 5/35 you will not survive, 5/35 you will not survive, 5/35 you will not survive, 5/35 you will not survive, 5/35 you will not survive, 5/35 you will not survive,

Happy Halloween people!

Boo!

#68 T.O. Bubble Boy on 10.31.09 at 1:58 pm

Here’s another name to add to the list of bubble-makers: Karen Kinsley, President and CEO, Canada Mortgage and Housing Corporation.

http://network.nationalpost.com/np/blogs/fpcomment/archive/2009/10/30/letters-cmhc-important-for-canada.aspx

This kinda reminds me of the guy from AIG who wrote an opinion piece for the NY Times right after his group single-handedly killed a $100B+ company.

Speaking of regurgitated opinions… haven’t I heard Flaherty spew out this crap about 20x in the past:
“… the Government of Canada action to limit amortization periods to 35 years and requiring a minimum 5% down payment further protects and strengthens the Canadian housing market.”

These people just don’t get it: no one disputes that CMHC has some kind of role in the overall housing market… the issue here is that the CMHC’s policies have led to Canada having invested somewhere around $500B on 5% / 35-yr mortgages near the peak of a bubble.

How on earth could anyone argue that 5% down is some sort of drastic policy change from 0% down?
(especially when this was rolled out with the increase in RRSP withdrawal limit)

Throwing in Land Transfer Tax and Property Tax increases, plus the upcoming HST increase on closing costs, and 5% down in 2009 is actually LESS than 0% in 2007.

#69 Evangeline on 10.31.09 at 2:01 pm

#53 Kurt
((The economic models generally in use are completely blind to impending credit crises. Find a soure that has run an accounting model on the Canadian economy (as opposed to an equilibrim model.)
))

can you recommend such source?

it was a Canadian accountant who first warned me that the sub-prime crisis in the U.S. posed significant threat to the Canadian markets.

#70 Dan in Victoria on 10.31.09 at 2:08 pm

Post#50 WBNP, “Intelligent people dont talk about what will happen”Good to know what side of the bell curve your on.

#71 young & very foolish on 10.31.09 at 2:24 pm

for sure interest rates will rise, Mr. Carney even said so ….

but if my reading of history serves me right, inflation will continue to rise and so will prices of hard assets,
especially on the heels of devalued fiat currencies

sure, house values took 10 years to climb back after
the last crash (1989), but they did … after all, real estate is a long term holding and a reliable hedge against inflation

#72 Men With Hats on 10.31.09 at 2:51 pm

Question :
Is the housing marker reacting / responding the same way as it would react during hyper-inflation ?

#73 $fromA$ia "Marc Carneys Conscience" on 10.31.09 at 3:10 pm

“As for Carney’s quote Mr. Carney, saying much of the current increase in home buying and prices is the work of buyers who put their plans on hold during the worst of the recession. ”

Putting their plans on hold? Houses are still selling?

This makes no sence. Average family income in Canada $60,000. Pushing 10% unemplyment.

Message to Marc, use simple english words. No riddles please. Again he eluded to using economic references instead of just using plain english for sending the message to the entire Canadian Population.

#74 $fromA$ia "Marc Carneys Conscience" on 10.31.09 at 3:12 pm

Regarding Gold, your not going to win with Garth.

Talk about Silver, Platinum or Pladium. Their is many more uses for them than GOLD. Its a better argument.

#75 GregW., Oakville on 10.31.09 at 3:41 pm

Hi Garth, FYI. TVO this weekend

To say that political event has a theatrical quality is tantamount to an accusation that the substance of it is covered through use of dramatic effects. On the other hand, any situation that produces a division between players and audiences, inevitably brings about a stage. And where there is a stage, there is theatre. Especially in a court of law and even more so when the trial contends with issues which define the mores and passion of the day.

This weekend’s two-part lecture by University of Toronto historian Michael Marrus addresses the connection between high-profile trials and how they can be seen as dramatic productions.

On Saturday, Michael Marrus will discuss the Oscar Wilde trial at the Old Bailey in London in 1895

On Sunday, he will describe the theatre involved in the trial of Nicolae Bukharin during Moscow show trial in 1938 and trials of Nazi leaders during the Nuremberg trials in 1945/46

Also, if your intellectual interests veer towards science and technology make sure to visit our on-line library of lectures and discussions taped during the Quantum 2 Cosmos Festival in Waterloo

http://www.tvo.org/TVOsites/WebObjects/TvoMicrosite.woa?scientific_literacy

BIG IDEAS airs on TVO every Saturday and Sunday at 5:00 pm.

To download our podcast, please go to our website at http://www.tvo.org/bigideas.

If you miss the weekend broadcasts, you can also listen and watch to BIG IDEAS podcasts via iTunes.

Don’t hesitate to share this e-mail with friends who you suspect might be interested in BIG IDEAS lectures.

#76 GregW., Oakville on 10.31.09 at 4:07 pm

Hi Garth, FYI re: climbate change issue

Rallying around the call for 350
On October 24, people in 181 countries came together for more than 5,200 events in the most widespread day of environmental action in the planet’s history. People united globally to call on world leaders for a strong and effective climate change agreement coming out of negotiations in Copenhagen this December.

Across the country and around the world people rallied around the number “350” – coined by the 350.org campaign to reflect the 350 parts per million that leading scientists say is the safe upper limit for carbon dioxide in the atmosphere. Events on October 24 ranged from underwater demonstrations in the Maldives to a “circle of hope” at the White House in Washington. In Canada, 350 people in Whitehorse joined hands to form a circle around the Yukon Legislature. In Vancouver, the Cambie Bridge was closed to cars as 350 people took part in a salsa dance for the planet. In Calgary, the “Nightmare Before Copenhagen” costume parade travelled along the Bow River.

#77 Stop Puttin Down Boomers on 10.31.09 at 4:16 pm

Happy Halloween everyone. Hubby will man the door tonight. He’s much better with the little ‘buggers’ as he calls them than I. He’s just joking. I buy ‘healthy’ treats knowing that most won’t.

#78 Not Garth on 10.31.09 at 4:37 pm

Garth:

Listings are at yet another new multi-month high, here in sunny Vancouver.

Listings up, sales…well, sales are still pretty strong….

#79 Stop Puttin Down Boomers on 10.31.09 at 4:39 pm

It’s 6:15 pm here and the parents are out on the street already. Some of the kids can hardly walk. Personally, I think its a bit much – but then again I’m the age of a grandparent. We do give more to the kids/parents on our street. When all is gone, we just turn out the lights, as most I’m sure do.

#80 Dan in Victoria on 10.31.09 at 4:45 pm

Well,time to go get dressed up for halloween.Couldn’t figure out what to go as.I think i’ll dress up as a deflating housing bubble that should scare the crap out of all those first time buyers around the corner.

#81 Toronto C9 Renter on 10.31.09 at 5:02 pm

# 71 Said “…after all, real estate is a long term holding and a reliable hedge against inflation”

If you aquire the asset at a grossly over-inflated initial price, its not a hedge, its more like a ditch.

#82 InvestorsFriend on 10.31.09 at 5:18 pm

#71 Young and Very Foolish said…

after all, real estate is a long term holding and a reliable hedge against inflation

Okay, let’s agree that this is true.

Now give a thought to the extent which house prices have out-paced inflation over the past (pick a number 3, 5, 10, 20 years).

Now if the house price trend rose far above the inflation trend or its long term trend relative to inflation, what has to happen in order for house prices to get back more in line with inflation?

That’s right, they have to fall… (or inflation has to rise rapidly which could happen but is not on the horizon)

Regression to the Mean is a powerful trend!

#83 vantown on 10.31.09 at 5:33 pm

I am going to read the Evridiki Tsounta paper in detail, but this excerpt from the Introduction makes little sense to me:

Results reveal that at the peak of the housing boom, house prices were significantly overvalued in the west. However, following the recent steep decline in prices [“10 percent (both in real and nominal terms),” she states earlier], the overvaluation has decreased significantly; we find that house prices in Alberta and British Columbia remain slightly overvalued as of end-2009Q2 (at around 8 percent according to the model estimation), while at the peak of the housing boom, their overvaluation was estimated at double-digit levels.

What the author seems to be saying is that the same price in 2008 (at the beginning of the decline), which was considered a “significant overvaluation,” is in 2009 only a “slight overvaluation.” My understanding is that prices by Q3 were at or beyond the peak prices we saw last year, and this seems to be confirmed in the paper. I sincerely doubt that income has advanced quickly enough in the intervening months to compensate. WTF, to put it mildly. Am I missing something here?

Looking elsewhere in the G&M article, how on earth is a 140 percent debt-to-income ratio even possible? I remember hearing it had crossed 100 percent in B.C. a few years back, and thought it couldn’t last long. Is this a front ratio or back ratio DTI (see Wikipedia)? Either way, payments have to be made monthly to avoid default/bankruptcy: is there anything besides credit card debt that would tide people over in this respect?

Speaking of credit cards, the “second wave” of the crisis in the U.S. was, for a while at least, predicted to be credit card defaults. Has that happened, or begun to?

#84 Elevator fart on 10.31.09 at 5:35 pm

Greg W – Dont you know?? Climate change is the conspiracy of the global elitist banksters in order to enslave the populous via one world government – the new world order.

See the video link at Jake 20 – start about half way through

#85 Bill-Muskoka (NAM) on 10.31.09 at 5:47 pm

#50 Watched Bubble Never Pops
Intelligent people don’t talk about what WILL happen, because they recognize that soothsayers squeezing cat gizzards can’t predict the future – even in the 21st century.

Ah, you need to use chicken entrails, not cat gizzards. beside, between my Quija Board and Magic Eight Ball I can tell many things, not to mention my Genuine Crystal Ball (Not one of Garth’s BTW). Not to mention doing a Google using ‘What is the future?’

We, of course, can always ask our resident prognosticator Nostradumas because he knew 500 years ago. LMAO!

#86 Contrarian...whatever that means on 10.31.09 at 6:06 pm

#51…watched bubble never pops………

Obviously you are an uneducated “rich dad poor dad” kind of BOZO…………..

cheers

#87 Genghis on 10.31.09 at 7:40 pm

Real-estate in BC interior is not doing so great, according to this article:

http://www.theglobeandmail.com/report-on-business/rob-magazine/the-great-bc-real-estate-bust/article1343682/

#88 Watched Bubble Never Pops on 10.31.09 at 7:59 pm

#58 char

“I’ll give you contrarian. The US dollar is about to soar. It’s started: look at the index. The looney has just now started to drop like a stone.

“Whatever everyone is saying, including the so-called contrarians ( funny how everyone’s a contrarian), the opposite will surely happen.”

You are very wise.

#89 Watched Bubble Never Pops on 10.31.09 at 8:01 pm

#63 T.O. Bubble Boy

“No offense, but I’d take regurgitated facts over regurgitated opinions any day.”

That description reminds me of something… I can’t seem to put my finger on it…

“Anyway – I’ll continue to sit here on the sidelines, waiting for the 20%-30% correction in Toronto RE and paying off my mortgage early. Yes, that’s right, I’m a part of this bubble, but one who is paying off his 1.5% mortgage now before it becomes a 10% mortgage in a few years.”

You are very wise.

#90 Roial1 on 10.31.09 at 8:01 pm

Garth, Since you have very ably used ONE of my favorite movies for a lead into your blog, maybe you can consider using an other. It has such a good title for this type of blog. “Rocky Horror Picture Show”
Sounds so ———- coming to a realeste near you .

#91 Watched Bubble Never Pops on 10.31.09 at 8:08 pm

#73 $fromA$ia “Marc Carneys Conscience”

“This makes no sence. Average family income in Canada $60,000. Pushing 10% unemplyment.”

Average Canadian household income is $91,500.

http://tinyurl.com/ygzbwwm

#92 eddy on 10.31.09 at 9:30 pm

Carny’s assessment of Toronto’s bubble misses the point. Dolt On e-Guilty gives large land transfer tax rebates to First Time Buyers. And, he gave David Miller the power to mirror those taxes and rebates. Result? Massive bubble in Toronto for houses under 500k. And for the disadvantaged who are not “first time”, you know the type- some family with kids who outgrow their space, the structure of these taxes is punishing:

I know some of you will think this calculator is broken, it’s not. plug in any price, double it, and see just how fair these guys are

http://www.torontorealestateboard.com/LTT_splash/ltt_calculator.htm

we have a Very distorted market in Toronto

#93 T.O. Bubble Boy on 10.31.09 at 9:37 pm

I’m pretty sure that $91,500 number includes families with 3 or more earners… a bit hard to believe that all 3+ people would contribute to a mortgage.

The number does seem accurate though (it was $86k in 2007):

http://www40.statcan.ca/l01/cst01/famil05a-eng.htm

#94 InvestX on 10.31.09 at 9:50 pm

Watched Bubble Never Pops:

” Average Canadian household income is $91,500.

http://tinyurl.com/ygzbwwm

———————————————

Garth, havem’t you been stating a high 60K figure?
What’s the correct figure?

The chart you referenced is of unknown accuracy since it was “updated by the author.” Based on what? — Garth

#95 artisuseless on 10.31.09 at 9:56 pm

@#41 crashing yuppy

Just saw that same article – appalling. And pathetic.

This bubble seems to be bringing out the worst in people. Hopefully if egos deflate along with house and stock market prices their better side will come out…

#96 Kurt on 10.31.09 at 10:25 pm

@ Evangeline – I’m looking, haven’t found one yet. Equilibrium models dominate because they give lots of accurate detail in times of relative stability. I’ll post if I find one for Canada.

#97 Snowman on 10.31.09 at 11:10 pm

“I’m pretty sure that $91,500 number includes families with 3 or more earners… a bit hard to believe that all 3+ people would contribute to a mortgage.”

From your own link for 2007:

Non-elderly families:
Two earners 95,900
Two parent families with children:
Two earners 99,500

“The chart you referenced is of unknown accuracy since it was “updated by the author.” Based on what? — Garth”

So, what’s your 60k figure based on Garth?

#98 young & very foolish on 10.31.09 at 11:40 pm

Have houses really outpaced the true rate of inflation?

#99 JET on 10.31.09 at 11:46 pm

Guys like Peter Schiff watched and warned about the US housing bubble and guess what? It did pop!

#100 Taxpayer like you on 10.31.09 at 11:52 pm

Re: Average two-earner family income.

Compare the average of the whole to the average of the middle 20%. The average of the whole is skewed upwards due to some extreme earners at the top end.

#101 Watched Bubble Never Pops on 10.31.09 at 11:58 pm

#94 InvestX

Perhaps Garth can speak to the 2007 ($86K household) data from Stats Can at:
http://www40.statcan.ca/l01/cst01/famil05a-eng.htm

Which #93 T.O. Bubble Boy observes as close when compared to 2009 ($91k household) at:
http://tinyurl.com/ygzbwwm

#102 nonplused on 11.01.09 at 12:02 am

If Carney and the boyz are trying to talk it down, they know the bubble is already here. Actually it’s been here since about 2002-2004 depending on how steep you need the rise in prices to be before you believe it.

What I can’t figure out is why they are talking it down now. They started it, and they did it on purpose. Did Frankenstein get away on them? House prices (and stock prices) always trend the opposite direction of interest rates, and so it should have been no great leap of reason to conclude that when interest rates “crash” house prices will skyrocket.

We used to be a bit more insulated because people borrowed at the 5 year rate in Canada and the 30 year rate in the US, but of course that is all out the window because of the vast difference between the long rate and the short rate.

I have personal knowledge of REIT type companies who recently, upon mortgage renewal, opted for a line of credit because it charged 2% instead of the 7% a 10 year term would carry, and are dividending out the difference. Wow, what an increase in cash flow. But it’s death when rates go up because that 7% will be very elusive in a rising interest rate environment. When the big rush to lock in comes, the offer will “fade” as they say it the trading business. For those who don’t know what that means, the price is 7% when nobody wants it. But as soon as the offer gets lifted the next offer is at 7.5% . If that one gets lifted, the next offer is at 8% . Ok, sure, there might be 100 transactions but each is 0.01% higher than the last.

It’s the same in every market. When the buyers are out in force (and yes, people who need to lock in are buyers, they are buying debt at a given interest rate), the sellers back up (raise prices, fade the market). However, on the way down it works differently. Most people who need to exit a position will not sell at less than yesterday’s mark price and lock in a P/L loss. They wait until they get the tap on the shoulder because someone is telling them they are over their limit. The good traders “hit the bid” but they are far more rare than the ones who try and “aggressively mark the book” (i.e. refuse to enter current prices in the system and instead put in prices they deem more reasonable). That is why when markets go down, it tends to be much more swiftly than the rise that proceeded it.

How does that work? When the market is rising, margin is all in your favor, you have lots of “cushion”, and your broker is sending you big stacks of money in what they call a “pull back”. Happy days! You can even use the new found equity for leverage and buy even more, since prices are rising. So up it goes, but it’s usually a slow trend compared to the other side. What happens on the other side? Prices are declining, your broker wants you to “post” additional money by the end of the day, and if you don’t he will sell your shares without your consent and sue you for any shortfall in the account. So the rush to the exit is not driven by the holder of the equity, but by the lender, and it’s short, sweet, and to the point. Oh sure, you have Warren Buffet holding on to Coke for the long term, but he bought a long time ago for the dividend and the dividend services any debt he might have so he is immune. That’s not who drives a big rally like we just saw. And it’s not who is going to drive the return to earth of the “bungee jump” formation we are experiencing.

Carnival and Flatulence merely exercised something they learned about the “monthly payment consumer” for a short term gain that can’t be sustained, and now I think they are putting a good face on utter panic. “Only $169 a month for a new boat that I will only use 10 days a year and will be worth nothing when I pay it off??? Why not, I can afford $169 for a boat!” “$1900 a month for a house hat listed for $500,000??? I’ll hit that!!!” These dudes are only looking at the monthly payment as presented at closing, and couldn’t care less about time lines longer than next month.

#103 TheBigLebowsky on 11.01.09 at 12:16 am

#31 garth
gold is also useful because for 6000 years it has served as the canary in the coal mine to keep government spending in check . Maybe I should take your word on gold’s value but I doubt it . I would rather follow 6000 years of history . I think you have been sucking on the hind titt of government fiat money for too long. Don’t believe me, look at the charts in all currencies for the past 6 years, gold is re asserting itself.

#104 Emma on 11.01.09 at 1:57 am

#51…watched bubble never pops………

pay attention to your stats – this chart is referring to an ‘economic family’ of two or more people – StatsCan divides average income into a) economic families and b) unattached individuals

http://www40.statcan.ca/l01/cst01/famil21a-eng.htm

also, checking out the fine print – how did the author ‘update to 2009′ when the year isn’t over yet??

#105 Emma on 11.01.09 at 2:00 am

Sorry, meant to refer to the link in #91…watched bubble never pops………

your chart is referring to an ‘economic family’ of two or more people – StatsCan divides average income into a) economic families and b) unattached individuals

http://www40.statcan.ca/l01/cst01/famil21a-eng.htm

also, checking out the fine print – how did the author ‘update to 2009′ when the year isn’t over yet??

#106 Emma on 11.01.09 at 2:03 am

previous response to #91 not #51

#107 Nostradamus jr. on 11.01.09 at 3:50 am

Watched Bubble Never Stops

“You are very wise”

Thank you for the compliment.

….One observation…actually another prediction…

The proposed Harmonized Sales Tax, when instituted, will simply replace the uppest 10% of Real Estate.

…So it actually evens out in the wash for buyers and sellers….except those buyers who buy down.

So to those renters on this board….a 50% correction is a pipe dream.

Nostradamus jr.

#108 Persisting BC on 11.01.09 at 4:25 am

Garth,

I’ve been hesiant to share this website with others.
Call it selfish, oportunistic, shy, cowardess, etc… I have relayed, in opotune moments, some of the fundamentals that you’ve hammered home in the past x months. Every time I try to calmly recite reason and facts, only to be afronted with the same old tired lines. “Vancounver is different”, “foreign investment will not slow”, “the Olympics is the key contributor”. Any way you slice it, people see this bubble as a minor peak at worst. They all expect the left coast to keep rising, or have a ‘minor correction’ at worst.

There is no reality out here, only what is happening today, and what happened yesterday. People here still feel like this is the best place to live on the planet, and any price is worth spending. Of course, those people are (relatively) young, have jobs, have a future……have real estate. It’s the same problem in religion: how do you convert the unconverted? Answer: you don’t. You live your life, and hope that their beliefs don’t interfere with yours.

The problem I have is the same that most of the blog-dogs have – when the gov’t comes to bail out the home owners (and believe me, they will), where is the money for the prudent? Where is the money for those who lived within their means? Why is every tax payer footing the bill for poor personal investment decisions?

Where was the government when 90% of Canadian RRSP/pension holders lost money on Nortel? Where was the government when 90% of the country had health care cuts. Where was the government come election time – oh, yeah, they were spending in ridings where votes counted.

Government of Canada: please start being fiscally responsible. Borrow exclusively from the Bank of Canada, increase lending rates to a reasonable limit (for other banks, gov’t loans should be interest free), ebolish CMHC, and start investing in people (health care, education) instead of investing in corporations (banks, construction, tax rebates based on beautifying homes).

Lastly, start punishing the media for spewing advertising as news. This task will be the hardest, but we’re quicly becoming Fox News, where opinion becomes ‘facts.’ Bring back accountability in the media.

We’ve spent enough on tax dollars to deserve the truth, reasonable (at least) health care, and a plan to eliminate the federal deficit. Anything falling short is failure.

#109 David Bakody on 11.01.09 at 6:36 am

Up early or late depending on how one deals with the fall time change. In any rate my early morning thought is: H1N1 coupled with world financial instability = rough waters ahead for multi millions of unprepared people.

Those who have turned in here and have taken sound advise in the plainest and simple terms will most likely weather the storm. Both H1N1 and personal finances
(home, debt and savings) effect the most precious thing we have …. “Our health” and that is the cornerstone to our families well being. I was once told by a good friend: Remember David there is nothing material that can not be taken away from you, so sort out your “Priorities of Life” out first and foremost.

#110 RJT on 11.01.09 at 9:04 am

Take heart Garth – I know that merging with the mainstream provokes a lot of anxiety in a contrarian but try to keep a stiff upper lip. We all have to have our brushes with the mainstream and however unnerving it is we can be safe in the knowledge that it won’t last long!

#111 David Bakody on 11.01.09 at 9:25 am

it appears the second part of my last has started to smolder in the minds of many Upper Canadians…. Harper`s Sales Tax (HST) and say to the hard working people of Ontario & BC hold on to your hats because as far as taxation is concerned Harper`s Ottawa tax grab is going to make the Boston Tea Party uprising look like a Sunday school picnic! But it will give Harper his majority as the big blue “C” cheques will flow to key riding’s with the new massive inflow of taxation in the billions!

Garth Turner spelled it out here a couple of months ago.

Name it and you can be assured if a receipt is issued it will have Harper Sales Tax (HST) on the bottom line.

#112 GregW., Oakville on 11.01.09 at 9:38 am

Hi #84 Elevator fart,

Yes I have heard. Who might it benefit to add confusion to the issue? The oil and coal companies.

This guy has a good argument as to why doing what is need is a butter choice than doing nothing.
‘How it all ends.’ 10min video
http://www.youtube.com/user/wonderingmind42#p/a
(The guy once has a site with many more in-depth info on the issue of climate change, that is worth looking at. Just can seem to find a link to it right now.)

This is also a good show. You should send a link to your MP’s/ Governments.
‘The Most IMPORTANT Video You’ll Ever See (part 1 of 8)’
http://www.youtube.com/watch?v=F-QA2rkpBSY&feature=related

Speaking of unwise things people still do and get others to do to each other you should have a look at the info on this site. I’ve seen the good science as of Aug 2008, and I have also been convinced water fluoridation need to stop! http://www.fluoridealert.org/

Just fallow the money.
Also worth remembering

‘Belief in myth avoids the discomfort of thought’

#113 Dan on 11.01.09 at 9:53 am

WATCH BUBBLE NEVER POP

Is going to fell financial pain. You can talk all you want but the housing reality JUST LIKE THE US is going to hit and hit HARD.

#114 Contrarian...whatever that means on 11.01.09 at 9:56 am

Somehow my last comment was not posted……so again.
_____________________________________________
Watched Bubble Never Pops:

” Average Canadian household income is $91,500.

http://tinyurl.com/ygzbwwm ”

____________________________________________

Lets analyse your number.

Average income = 91500 – 27450 (roughly 30 % tax cpp ei deduction)-6000 ( 2 cars, 300 /car/month)-9600 (food for a family of 4) – 2400 (clothes,shoes etc ) – 1200 (entert. 100/month) – 5000 (vacation/yr) – 1200 (health cost,medicine,dental etc) – 12000 (savings,RRSP,TFSA) = 26650.

There are some other costs I have not included such as Furniture, Electronics etc.

So an average family has 26650 CAD every year to spend on housing.

Now tell me how big a house an average family can buy with this money left ?

#115 GregW., Oakville on 11.01.09 at 10:01 am

Hi Garth, FYI. Movie, V for Vendetta , (2006).

Just saw this video last night. I thought some others might like to see it.
The guys that made the Matrix produced it. It has a Orwellian, Big Bothers, 1984, NWO type of plot.

Or depending on wear you stand in relationship to the
‘Plato’s Cave’ view of the world today…

V for Vendetta, Official site link
http://vforvendetta.warnerbros.com/

“PEOPLE SHOULD NOT BE AFRAID OF THEIR GOVERNMENTS.
GOVERNMENTS SHOULD BE AFRAID OF THEIR PEOPLE.”

#116 Nostradamus jr. on 11.01.09 at 10:08 am

Current Canadian five year trend…Younglings who have become “Diploma Younglings”, move back home with their wives, making it a “four” family income.

Nostradamus jr.

#117 Brainsail on 11.01.09 at 10:32 am

#91 Watched Bubble Never Pops

If Garth quoted $60K as a median household income, he was correct.

http://www12.statcan.ca/english/census06/data/trends/table_2.cfm?T=PR&LINE_ID=408&TOPIC_ID=400

There can be major differences between mean or average versus median when reporting incomes and house values. Median is more realistic than average. Average can be much greater in these cases.

The following is a good Wikipedia article concerning U.S. income reporting. Read the whole thing or jump to 7 – Median Income and 8 – Average Income. Also, of interest is 4 – International Comparison.

http://en.wikipedia.org/wiki/Household_income_in_the_United_States#Median_income

This is a very good example of why the Canadian real estate agencies should be reporting median prices and not average prices!

Enjoy.

#118 Watched Bubble Never Pops on 11.01.09 at 11:07 am

#105 Emma

Your link at:
http://www40.statcan.ca/l01/cst01/famil21a-eng.htm

Is also different than T.O. Bubble Boy since it shows “Average income AFTER TAX by economic family types”

and T.O. Bubble Boy’s link at:
http://www40.statcan.ca/l01/cst01/famil05a-eng.htm

Seems to show “Average TOTAL INCOME by economic family types”

However, the author ‘adjusted’ his 2009 numbers, the $91K household figure isn’t a wild stretch.

#119 Seilfworcehtsa on 11.01.09 at 11:10 am

#84 Bill

Bill, it would appear that you have experience in the art of extispicy. The apppearance of chicken guts in your back yard, small as it is, no doubt portends a chicken dinner for the family such as it is.
Divination through the practice of haurspicy was a revered science in classical cultures. Many a fortune was acquired and many a battle was won because of the perspicasity of the practioner. That an equal number of fortunes were squandered and battles lost is another matter. But it goes to show that history unfolds as it ought regardless of what the chicken had for breakfast.

#120 dd on 11.01.09 at 11:25 am

#107 Nostradamus jr.

“So to those renters on this board….a 50% correction is a pipe dream”

I agree. However most real estate is still way overvalued.

#121 dd on 11.01.09 at 11:33 am

#56 young & very foolish

“so then, how will we get to the housing bust?”

Because wages will no be able to keep up with the rising costs of home ownership. Hard asset prices might be going up, however, I don’t see wages going up. Do you? So who is going to keep with bubble going without more money?

#122 CalgaryRocks on 11.01.09 at 11:36 am

“I’m pretty sure that $91,500 number includes families with 3 or more earners… a bit hard to believe that all 3+ people would contribute to a mortgage.”

From my experience this is one full-time earner and one part-timer that stays home to take care of the kids.

Maybe I’m elitist but I find it hard to believe that people on this site find 45K/year/person a lot of money. Seriously, not everyone’s a high school dropout.

#123 Taxpayer like you on 11.01.09 at 11:43 am

115 Brainsail and others.

The link lets you pick “economic family” or “household”. There is a huge disparity for the average between the
two. From one of the other links, an “economic family” is
defined as being related group living in a “common
dwelling unit”. It doesnt appear to include single people
living alone, which would be included in “household”.

So the median income for an economic family may be the best representation of “typical”.

Now lets take that number, and compare it to the median sale price for a detached, and maybe a semi-detached home in Canada – ie how the typical family lives.

#124 Seilfworcehtsa on 11.01.09 at 11:44 am

#116 Seilfworcehtsa/Bill

Should have been #85 Bill, not #84…. just goe to show: haste makes waste or leads to mistakes.
And as for Nostradamus, he predicted his own demise and until his reappearance on this blog it was considered that he got that one right.

#125 $fromA$ia "Marc Carneys Conscience" on 11.01.09 at 12:50 pm

#91 Watched Bubble Never Pops on 10.31.09 at 8:08 pm #73 $fromA$ia “Marc Carneys Conscience”

“This makes no sence. Average family income in Canada $60,000. Pushing 10% unemplyment.”

Average Canadian household income is $91,500.

http://tinyurl.com/ygzbwwm

Does that number include 10% unemplyment? :P
How about un declared basement suite income?

Food for thought.

#126 Watched Bubble Never Pops on 11.01.09 at 12:52 pm

#112 Dan

“Is going to fell financial pain. You can talk all you want but the housing reality JUST LIKE THE US is going to hit and hit HARD.”

You can also talk all you want, and guess what, the RE boom continues…

#127 Grantmi on 11.01.09 at 1:00 pm

More yob looses in BC!!

http://bit.ly/28GwLU

This will kill the town.. already reeling from other industries. WOW! 535 direct jobs.. how many INDIRECT!!!?!?

#128 jess on 11.01.09 at 1:01 pm

“Downsize is a recent example of a euphemism that found broad acceptance in the language and is not particularly thought of as a deceptive attempt to smooth over the pain of large-scale firings. But the search for less harmful terms goes on and on. The attempt to find even more positive-sounding ways to say “downsize” has led business executives and people working in human resources and public relations (both euphemisms themselves) to float a number of alternatives. Companies were being “reengineered” and even “right-sized”; laid-off workers had to be “separated” or “unassigned” for being “nonessential”; their jobs were said to be “no longer going forward.” Most of these terms were met with scorn, being regarded as cynical attempts to sugarcoat an inherently distressing phenomenon, and as failed euphemisms they accomplished the exact opposite of what they were designed to. Why one euphemism should be accepted while another is not remains something of a mystery, but the selection of such terms indicates one way in which social attitudes have a powerful effect on language change.
http://www.thefreedictionary.com/Downsizing+
========================

Advertising and Failed Euphemisms

…”HUNDREDS of new high-rise apartments on the upper north shore have stood empty for months due to a lack of demand, casting doubt on the State Government’s strategy of opening up the region for high-density development.

Developers have resorted to offering thousands of dollars worth of free furniture in an effort to sell apartments in the shiny new five-storey blocks that have sprung up from Wahroonga to Roseville.

But an analysis of local apartment advertisements, and the comments of real estate agents, suggest many of the buildings remain virtually empty.

One out of 10 real estate agents contacted by the Herald said: ”Unit sales are slow because there are so many of them and so few people in the market…

http://www.smh.com.au/national/empty-nests-too-high-for-the-empty-nesters-20091101-hrld.html

#129 Bill-Muskoka (NAM) on 11.01.09 at 1:04 pm

Last night Global National aired their segment ‘In Person’ regarding the pension plans. Ted Menzies, Parliamentary Secretary to the Finance Minister, said ‘We have to see what the costs will be.’ Well, the costs of NOT doing what is needed will far outweigh the costs of doing things right for the people.

This is the fundamental problem conservatives have…near sightedness when it comes to adequately funding essential social services. They only seem to see the current, near term costs, not the long term costs.

I look for some very major class action lawsuits if Parliament fails in their obligations to we who will be retiring. We have worked hard, and many have had devastating life events, some caused by the government’s knee jerk laws. A good example of such are family support laws which have robbed millions of their future.

I expect the only real voice for the average Canadian will be Jack Layton’s, because Ignatieff just won’t get it. We can forget Harper altogether when it comes to average Canadians.

#130 Bill-Muskoka (NAM) on 11.01.09 at 1:07 pm

116/#122 Seilfworcehtsa

Well, I find ‘spicy’ things to be okay in moderation. However, we have failed to give proper homage to tea leaves, the vegetarian means of foretelling the future. I am sure PETA members would never go the ‘spicy’ route? LOL

#131 Evangeline on 11.01.09 at 1:44 pm

((Lastly, start punishing the media for spewing advertising as news. This task will be the hardest, but we’re quicly becoming Fox News, where opinion becomes ‘facts.’ Bring back accountability in the media.))

you are a very scary person seeing as you seem to be against a free press

of course, I’m sure that you watch Fox firsthand, so that you are absolutely sure what you are saying about it is ‘fact’ and not just ‘opinion’ picked up from what you’ve read and heard about it from third parties

FACT: if we had a Canadian version of Fox we wouldn’t have to whine so much about the bs hype we find so much of in our national media …

#132 jess on 11.01.09 at 1:53 pm

Creative Destruction from the large to the ‘more nimble’

resize rebrand relaunch

http://www.smh.com.au/business/payback-time-with-new-british-banks-20091101-hrnn.html
===============================

http://news.smh.com.au/breaking-news-business/macquaries-boom-days-ending-analyst-20091101-hrfu.html

#133 Evangeline on 11.01.09 at 2:02 pm

#103
TheBigLebowsky

I’ve been thinking about Garth’s comment …

yes oil has a multitude of uses, as do trees and other things, and yes gold’s uses are limited. But perhaps that is gold’s very strength and purpose: to function standalone as the ultimate store of value.

and yet … the gold standard still didn’t prevent the debt problem that caused the great depression …

#134 jmcanuck on 11.01.09 at 2:24 pm

This is the only economic indicator that really matters in Canada and it is not looking good…

Tim Hortons may miss same-store sales targets

http://www.financialpost.com/news-sectors/story.html?id=2162826

By the way, lots of candy left over from Halloween. Traffic way down. I think the Swine flu fear-o-meter is reaching the stupid level.

#135 T.O. Bubble Boy on 11.01.09 at 2:52 pm

@#120 CalgaryRocks:

I don’t think that anyone was commenting on the average income per person per year…

The fact is that even $90k/household doesn’t justify $600k-$700k houses in Vancouver or $500k homes in Toronto and Calgary.

$90k = say $60k after taxes ($5k/month)

Monthly payment on a $600k principle at 2.25% = $2k/month (40% of take home), without considering property taxes, insurance, or basics like food and transportation.

If that 2.25% becomes 5% — still a low rate historically — the $2k/month becomes $3k/month (60% of take-home).

When the average household spends 40%-60% of disposable income just to handle the minimum mortgage payment, something’s gotta give.

#136 T.O. Bubble Boy on 11.01.09 at 2:55 pm

Oh – and that’s with 35-year amortizations! Put the numbers in a traditional 25-year amortization and the numbers get really fun.

#137 supersocco on 11.01.09 at 3:14 pm

Vancouver hits record highs in October http://www.yattermatters.com/wp-content/images/2009/11/Average-Price-Graph-01-11-2009-8-13-30-AM.jpg

#138 CalgaryRocks on 11.01.09 at 3:15 pm

of course, I’m sure that you watch Fox firsthand, so that you are absolutely sure what you are saying about it is ‘fact’ and not just ‘opinion’ picked up from what you’ve read and heard about it from third parties

Fox news is just repuke propaganda. Is it coincidence that almost everyone from the Bush administration is now a Fox correspondent?

I can always tell when I am conversing with a Fox News lover because they repeat word for word what they hear and have no background knowledge of the issue.

You can watch it all you want, nobody requested it to shutdown (another Fox fabrication), but it doesn’t change what they are.

They were first in line to cheer when the chimp and Darth Vader wanted MSNBC shutdown and Olberman fired. Calling them hypocrites is an insult to all hypocrites not affiliated with dirt bag Fox.

Fox makes me puke, and I’m not even a liberal.

#139 knucklewalker on 11.01.09 at 3:27 pm

To those who think that a 50% correction is unrealistic….I would say that you have lived a soft pampered life and you have no idea what is coming down the pipe at you.

CIT in the states is now in Bankruptcy this event is the start of the major unraveling of the commercial real estate/derivative market down south. It is the second state of Dmitri Orlovs stages of societal collapse. Canada is linked by the navel to the USA. During the last great depression Canada fared even worse than our southern cousins in most metrics.

If anyone thinks that Canadas residential market will hold in the face of full scale commercial real estate collapse down south…you are in never never land.

#140 Joseph on 11.01.09 at 3:42 pm

#44 said “Any prediction that hasn’t come true is deferred.”

Partly right, but it seems that too many folks expect Garth’s predictions to become reality within 6 months from him saying it. Because we are reading this blog on a daily basis, it seems that he has been uttering these predictions forever, when in reality it has only been a very short time. Perhaps he did make some short term calls that never materialized, but the undermining trends supporting his assertions are basically sound: a weaker US dollar, rising unemployment, a hollowing out of our domestic manufacturing base, and rising federal debts and deficits which ultimately need to be addressed through higher taxes. It may be a slower poison, but it will still achieve its inevitable results.

#141 mikef on 11.01.09 at 3:51 pm

I believe it jmcanuck #132.

For ten years I used to see a lineup out the door
at the Tims in Montreal on Cote-de-Liesse on weekdays.
(The one near 52nd,not the one bear the bowling alley
on Montee-de-Liesse)
Today I see 2 or 3 people in line and 90% are buying coffee.

#142 Bill-Muskoka (NAM) on 11.01.09 at 3:58 pm

#132 jmcanuck
I think the Swine flu fear-o-meter is reaching the stupid level.

ABSOLUTELY!!! The MSM have pumped this up more than Michael Jackson’s self-inflicted death. In fact the N1H1 version has Vitamin E in it. A good friend told me she is allergic to Vitamin E. Too much frantic FUD, too little testing time, and way too much HYPE!

Good hygiene and common sense is the best approach. I wouldn’t get the shot for any reason. Last time I got a flu shot (1995) it almost killed me.

Likewise, the mob mentality of the people is showing through clear as can be. How easily the Sheeple are manipulated by the MSM is quite evident.

Thankfully, we record the news shows on our sat PVR and skip right over all the H1N1 hype as well as all the commercials. TV has become enjoyable again. We watch very few programs live now and save about a fourth to a third of the time eliminating all the garbage they broadcast.

#143 Bill-Muskoka (NAM) on 11.01.09 at 4:12 pm

#129 Evangeline

He’s scary? You seem scary to me. Fox News, the actual news part of Fox is not that bad, BUT their opinions offered by Glen Beck, Bill O’Reilly, etc. are not NEWS. Therefore, they are not a freedom of the press issue.

Fox News defends itself against an attack by the Obama administration by explaining that most of their shows aren’t real news.

Blatant propaganda is nothing more than blatant propaganda. To understand the difference watch Jon Stewart’s show from Thursday night.

The Daily Show for Canadian viewers.

#144 jess on 11.01.09 at 4:27 pm

CIT -files for bankruptcy

CIT received $2.3 billion in government aid last year, a bailout that came in the form of preferred stock. That will almost certainly be wiped out in the bankruptcy process, the first definitive loss in the government’s rescue of the financial system.
http://dealbook.blogs.nytimes.com/2009/11/01/cit-to-file-for-bankruptcy-soon/?hp

#145 BAD on 11.01.09 at 4:28 pm

-
Seems one can always put optimistic numbers out first and then do the revisions later.

Canada’s recession has been much worse than originally believed and may last longer than many forecast, government figures indicated Friday.

Statistics Canada reported the economy unexpectedly shrank 0.1% in August but perhaps even more surprising were sharp downward revisions to figures for earlier in the year.

After adjustments, the statistics-gathering agency said GDP contracted an annualized 7.2% in the first quarter — worse than the 6.1% previously reported. The drop marks a record dating back to 1961 when Ottawa began collecting such data. For the second quarter, the economy shrank 4.1%, as opposed to a 3.4% reading issued in August.

V-shaped recovery not going to happen here

I think those are significant downward revisions (by 18.3% and 20.6% respectively) from the initial figures. Can’t wait to see the revision to the August number.
Since forecasting is by its nature even more inaccurate, one can forecast almost anything that suits one’s agenda, then correct (or not) later.

I am starting to lose confidence in the reported numbers, as they seem to be quite erroneous (whether on purpose or not). But if one cannot trust numbers released by Statistics Canada then what numbers can one trust? CREA?
By the way does anyone know if CREA ever revises their numbers?

Interesting times we live in, interesting indeed.
-

#146 Emma on 11.01.09 at 4:36 pm

#116…watched bubble never pops

Agreed, it is not a wild stretch … if you don’t count unattached individuals.

but recognize that you are also including scenarios like in #114

major skew!

#147 Blobby on 11.01.09 at 4:53 pm

#129 Evangeline:

*facepalm*

And i thought Canadians were supposed to be the intelligent ones?

#148 BAD on 11.01.09 at 4:58 pm

-
Here is a little song I wrote
You might want to sing it note for note
Don’t worry be happy
In every life we have some trouble
When you worry you make it double
Don’t worry, be happy……

One Hit Wonders: Don’t Worry, Be Happy

Seems our leaders grew up on this song:

As Stephen Harper leads the country toward a historic $55-billion deficit and beyond in the name of economic stimulus, recent polls show ordinary Canadians are starting to fret about leaving their kids drowning in a sea of red ink.

But not to worry. In the world according to federal Finance Minister Jim Flaherty, the national deficit will disappear when the Conservatives stop printing those big cardboard cheques for roads, sewers and new door knobs.

Canada’s red ink won’t vanish

Let us all sing then…

There is this little song I wrote
I hope you learn it note for note
Like good little children
Don’t worry, be happy

-

#149 Evangeline on 11.01.09 at 5:14 pm

#141
\

((He’s scary? You seem scary to me. ))

why? cuz I don’t want a pravda like government controlled press? what are you afraid of Bill? Do you wanna stifle all dissent?

((Fox News, the actual news part of Fox is not that bad, BUT their opinions offered by Glen Beck, Bill O’Reilly, etc. are not NEWS.))

and that is relevant how?

((Therefore, they are not a freedom of the press issue.))

I see, so the press is not free to publish opinion pieces. Gee thanks for that deep insight.

((Fox News defends itself against an attack by the Obama administration by explaining that most of their shows aren’t real news.))

It’s a good defence. Thank God it is not wrong YET for a news outlet to attack a politico in an opinion piece. Every newspaper and news network out there publishes opinion pieces and I’m quite sure you have no problem at all when your own political enemies are attacked. But of course, you would see that as ‘truth’ not opinion.

((Blatant propaganda is nothing more than blatant propaganda. To understand the difference watch Jon Stewart’s show from Thursday night. ))

I have watched it many times.

Your problem, Bill, is that you think blatant propaganda only flows from one side of the political spectrum .. NEWSFLASH: it doesn’t.

#150 Evangeline on 11.01.09 at 5:18 pm

((Fox news is just repuke propaganda. Is it coincidence that almost everyone from the Bush administration is now a Fox correspondent? ))

of course it doesn’t bother you at all that CBS, NBC, ABC, CNN, etc. are every single one of them shills for the Demcraps. One alternative voice out there and you get your knickers in a twist. It is laughable.

#151 BAD on 11.01.09 at 5:42 pm

-
Meanwhile let’s check the results of the US government bailouts…

CIT’s move will wipe out current holders of its common and preferred stock, likely meaning the U.S. government will lose the $2.3 billion it sunk into CIT last year to prop up the ailing company. The government could have lost billions more, however, had it not declined to hand over more aid to the company earlier this year.

The Chapter 11 filing is one of the biggest in U.S. corporate history. CIT’s bankruptcy filing shows $71 billion in finance and leasing assets against total debt of $64.9 billion. Its collapse is the latest in a string of huge cases driven by the financial crisis over the past two years, as bailed out industry heavyweights like General Motors and Chrysler both entered bankruptcy court.

CIT files for Chapter 11 bankruptcy protection

So, what was the point of the bailouts exactly?
-

#152 $fromA$ia on 11.01.09 at 6:03 pm

Calgary Rocks said, ” Seriously, not everyone’s a high school dropout.”
+++++++++++++++++++++++++++++++++++++

Ya sure but then again somebodies got to work at Home Depot, McDonalds, Ikea, Tim Hortons, etc. We can’t all be Lawyers and Doctors.

Somebody said earlier 40-60% of home income going to Mortgage Try 75% in Vancouver.

#153 Tim Siemens on 11.01.09 at 6:26 pm

#120 implies that those making under 45K/year canadian are high school drop outs.
So people forced to take jobs in the service economy are suddenly ignorant and uneducated?
Right.

#154 Nostradamus Le Mad Vlad on 11.01.09 at 7:16 pm

Two days of naked contemplation in an igloo, when the temp. is -187C is an adventure not to be missed, so it’s all yours!

There may be something in common with these. Plus something Garth said
——
For Nostradamus Jr. — it appears your prognostifications may be on the mark again. — Chinese Gold
——
#132 jmcanuck — Interesting, as only a week or so back, Timmy’s reported a 10% profit for the 3Q, Y-O-Y. I understand your point, ‘tho.
——
These two could be linked quite easily. First, a 5:35 clip — 2020. Second, note the words “in the beginning” toward the end of the first para. This from a billionaire. — In The Beginning. No matter what, everything (one) finishes its’ cycle, and this is why “Global Government” will never work. For a short while, maybe but for the long-term. thousands of years?

People get mighty pissed off when they are locked up for a while.

#155 Claudius Emeperor on 11.01.09 at 7:38 pm

Watched bubbles never pop wrote:

Perhaps Garth can speak to the 2007 ($86K household) data from Stats Can at:
http://www40.statcan.ca/l01/cst01/famil05a-eng.htm

Which #93 T.O. Bubble Boy observes as close when compared to 2009 ($91k household) at:
http://tinyurl.com/ygzbwwm

Well my friend this is for households with both 2 adults working.
Which is not the case for the average household with 10 percents registered unemployeed and 15 percents unregistered.

the average house hold income for Toronto is less then 80 k, somewhere around 74-75.

stop the manipulations my friend.

#156 Cash is King on 11.01.09 at 8:00 pm

CIT in chapter 11

Nikkei opens down 285 or almost 3 %.

Tomorrow is going to be ugly.

#157 Jmack on 11.01.09 at 8:21 pm

The insanity on the westcoast continues. It is now blatantly obvious people have lost their minds….

Purchase price in 2001 $229,000

http://www.realtylink.org/prop_search/Detail.cfm?areatitle=&ARPK=&ComID=&agentid=&MLS=V795515&rowc=2&rowp=1&BCD=GV&imdp=12&RSPP=5&AIDL=289&SRTB=P_Price&ERTA=False&MNAGE=0&MXAGE=200&MNBT=0&MNBD=0&PTYTID=5&MNPRC=200000&MXPRC=900000&SCTP=RS

#158 Watched Bubble Never Pops on 11.01.09 at 9:11 pm

#153 Claudius Emeperor

“the average house hold income for Toronto is less then 80 k, somewhere around 74-75. Stop the manipulations my friend.”

Speaking of manipulations, thanks for citing a source.

#159 Christopher on 11.01.09 at 10:04 pm

do not buy a house for 1 year! just say no to realestate and do not buy for one year at any price! all together now say no to realestate and no to debt and we will sink this ship all together now,Go team! this will be so much fun!!!!!!! The greatest sport No! easy to say easier to do!

#160 TheBigLebowsky on 11.01.09 at 10:46 pm

#131 Evangeline
The Federal Reserve act of 1913 transfered the power of issuing money and credit to a private bank with private shareholders called the Federal Reserve. From that point forward the control over the U.S dollar and hence the world reserve currency was doomed.

#161 JET on 11.01.09 at 10:49 pm

#156 Watched Bubble Never Pops:

According to this the 2006 median income for Toronto was $51,200: http://www.thestar.com/specialsections/vitalsigns/article/703740–toronto-a-city-of-disparities

According to this, the 2006 median income “in and around” Toronto was $75,829: http://www.cbc.ca/canada/toronto/story/2008/05/01/tto-census.html
(referencing the census, the article also said incomes had been dropping)

Watched or not, a bubble is a bubble. Even “watched bubbles” eventually pop.

#162 Confused on 11.01.09 at 11:25 pm

Hey Garth,

Just took a quick glance at your site and really like it. I am still confused as to what is inflating this bubble. In Calgary, after the CMHC increased its budget and floating rates dropped to 2.5%, house prices are rising rapidly (coincidently, so is unemployment). I have been waiting two years for the RE bubble to burst and so far it has not – do you have specific time frames on when you think this actually will happen?

I also noted there is confusion between family/household income; according to this report:

http://www.rbc.com/economics/market/pdf/house.pdf

houses in Calgary are more than affordable; of course, this is based on “household” not MEDIAN “family” incomes. Household incomes includes that of renters! So if you have multiple renters your “household” income can go up by at least 80K making houses here very “affordable”. The last report by stats-can that I can find was from the 2006 census and back then the median household income in Calgary was just under 90K. I have not seen any other reports since; if someone can post a link to more recent stats by a reputable source that would be great.

http://www40.statcan.ca/l01/cst01/famil108a-eng.htm

P.S. Please don’t blame Realtors, I get really irritated when scape-goats are used to subvert personal responsibility; Realtors do not create bubbles nor do they force people to buy or sell houses. Individuals make this choice of their own free will.

#163 LB on 11.02.09 at 12:03 am

I watched Mark Carney’s report to the Senate commitee , beginning to end. A not insignificant point, that I don’t see mentioned on this blog, was his statement about the Government/BOC (re)establishing regulations requiring Canadian banks to increase their capital ratios. Will THIS be the catalyst for banks to quickly raise interest rates, which Mr. Carney hints at? Will this also finally illuminate publicly which of our Big 6 is the weakest link, positioning it to fail?

#164 Taxpayer like you on 11.02.09 at 12:36 am

160 Confused

Heres another great statscan link. You can pick your province or town, owners or renters, mortage or no mortgage.

It would seem to indicate the “renter” households have
far lower average/median income than “owner”
households, so your logic of multiple renters doesnt seem
to work.

http://www12.statcan.gc.ca/english/census06/data/topics/RetrieveProductTable.cfm?Temporal=2006&PID=96272&GID=838045&METH=1&APATH=3&PTYPE=88971%2C97154&THEME=81&AID=&FREE=0&FOCUS=&VID=0&GC=99&GK=NA&RL=0&TPL=RETR&SUB=814&d1=4

#165 Confused on 11.02.09 at 8:37 am

162 Taxpayer like you

Thanks for the link, however, I don’t know how to interpret the stats, they are from 2005 and the owner/renter incomes include incomes of persons 15 years or older who live in the house (not the additional rental income going to the owners) and there are no indications of the house price or ownership (I want to see if the more expensive primary houses are likely to have more renters).

In addition, in 2005 prices in Calgary were reasonable – a $200K house was considered expensive. In 2007 house prices jumped 50%+ (a 0% interest rate, high gas prices, a huge net migration and a severe shortage of labour helped this). Back in 2005 renters were not necessary – now I’m not so sure. I don’t have median family income stats for 2009 but I do know layoffs are increasing and high-paying jobs are becoming scare (the oil&gas companies are suffering). When the average/median house price is hovering at $400K+ and the median income is not rising and jobs are becoming scare I would think a housing correction is overdue (unless, gas prices increase in which case the interest rate can do whatever it wants as the jobs will be back and Albertans (including me) can once again begin reckless spending :) ).

Garth, I may be wrong here but so far despite all the doom-and-gloom and my hoping – prices in Calgary are rising (no it’s not Realtors bending the stats; houses are selling for more money) – could it be that I’m the only one in this city living in a recession? When will this end?

#166 Bill-Muskoka (NAM) on 11.02.09 at 8:52 am

#147 Evangeline

Well, I can tell you have the hook, line, and sinker swallowed fully. Yes, the terrible forces are out to get you. Here is a clue to reality:

1. The year is now 2009-not 1950

2. You were equipped with a brain (allegedly) so try using it.

3. Those you follow are the real enemy of democracy and freedom. You, however, are most welcome to have freedumb, but keep it away from me. Like Putin said ‘We don’t want your form of democracy!’

4. Realize that several ‘institutions are now in decomposition: 1. The Roman Catholic Church based Paulianity, not Christianity; 2. The Funnymentalist Evangelical Movement; The Far Right political movement.

Perhaps you have personally witnessed the death of a creature? I have, including my fellow humans. The death throes are usually accompanied with violent convulsions due to the nerves firing off random impulses.

Please observe Fox (Faux) New’s convulsions of rhetorical mindlessness. You may wish to send flowers. I suggest using FTD (Fox Television Demise).

Have a nice day and keep watching Fox, because you need your daily fix or hate.

As to my own interpretation of news you could not be more wrong. I use multiple sources of all different political bias, and then apply a thing called research, historical origins, and experience before I accept any so-called news. The difference is I know bigotry, hatred, and racism when I see it. I also do not believe any news organization does a proper in-depth research of issues.

Yes there are Pro-Left and Pro-Right news agencies. I still believe the responsibility of a journalist is the tell the people the Five W’s-‘Who, What, When. Where, and Why.’ Few news organizations do that anymore.

To see what that is like try reading Al Jazeera online. In depth research of serious issues, not mere quips and sound bites. I suppose you think they are the enemy too because Fox told you so? You make a great Sheeple. Baaaaaaaaaaaaaaaaaaaaaaaa!

#167 CalgaryRocks on 11.02.09 at 10:02 am

of course it doesn’t bother you at all that CBS, NBC, ABC, CNN, etc. are every single one of them shills for the Demcraps. One alternative voice out there and you get your knickers in a twist. It is laughable.

Well I used to watch it but then I figured out I was being manipulated into believing things that were false. Constant innuendo, exagerations and character assassination take a toll.

So now Fox news makes me puke. I find it irritating and transparent propaganda. This has nothing to do with the leaning of the other stations.

#168 Taxpayer like you on 11.02.09 at 10:46 am

163 confused

Yes it would be better if the stats were more recent. Its
kinda like finding out you were right then having to wait
five years for verification.

I probably mis-interpreted your post at 160 a little. The rental income for the owners should appear under their household/economic family income, thus appearing twice as both income for the renters and landlords. Yep, confusing. If the landlord is a company, I’m guessing it only appears as hh/ef income if it pays out a wage or dividend to stockholders.

#169 RJD on 11.02.09 at 1:10 pm

DaBull has been drinking DaCarneyJuice

#170 West Coast on 11.02.09 at 1:53 pm

“Real estate market in recovery: CMHC”
http://www.cbc.ca/canada/british-columbia/story/2009/11/02/consumer-housing-starts-cmhc.html#socialcomments

…Some days I just don’t know why I read the cbc news blog. It has become a sick combo of tabloid journalism and market hyping. At least it looks like most commentors on the story are catching on.