So what next? Some, like Roubini or Celente or Schiff, see double-dip recession, depression and deflation. Others, like the Bay Street McOnomists, see a 2010 with robust recovery and repair. It’s a minefield of confliction and confusion. How can average folks possibly know whether to buy or sell, invest or save, borrow or hunker?
Nobody can predict a terrorist attack in Chicago or an invasion of Iran. Spain or Greece might default on its debt. That’s a game-changer, and we’ll all just have to roll with it.
But the future is not completely unknown, at least the factors shaping it. Every person taking a mortgage, buying a share in Google, deciding not to invest or putting their home on the market is taking a risk. We risk losing money in assets that may decline. We risk outliving what we’ve got. We risk being unprepared.
That’s why forecasting is imprecise, sometimes slightly ridiculous, and essential.
So here goes.
Interest rates: Up in July. The jury is out on how much the first salvo will be – maybe a quarter, maybe a half. But that jump in the Bank of Canada’s overnight rate will be followed by a string of other increases, taking the chartered bank prime from 2.25% in January of 2010 to 4% or beyond in barely a year. Five-year mortgages will again be 7%.
Stock market: Sideways. Index fund and ETF investors should expect a volatile, wild ride going nowhere. Smart investors, in contrast – who hold well-correlated securities and sector funds – will do quite well. The broad market indexes will probably end up about where they started – no 50% climb like the once-in-a-generation opportunity of 2009. Those who can see what higher rates, rising energy prices and commodity values can bring, will be happy.
Unemployment: Tenacious. Our blight, and the enduring symbol of failure for politicians in Ottawa or Washington. Time will show that pumping $14 billion into the Canadian car industry was a bad idea, and just how much of the stimulus gravy was washed away without consequence. Far too many people who lost jobs in 2009 won’t be working soon in 2010. Many Boomers won’t work again.
Taxes: Up, silly. The HST comes into play in July for 16 million Canadians, increasing the price of damn near everything by seven or eight per cent. Despite the weasel words of politicians in BC and Ontario that the cost will be offset by more grants, subsidies and nicks, this will end up being a government tax grab, and inflationary. It’s the precursor of much more tax to come.
5/35: Done. Allowing people to buy homes with 95% leverage and mortgages that take an adult lifetime to repay may have seemed like a good idea at the time, but no longer. Combined with emergency post-crash mortgage rates this policy of giving government insurance for high-ratio, high-risk loans just encouraged a tsunami of home ownership by people who didn’t have money. That caused a bubble, and in 2009 alone increased the cost of housing for middle class Canada by more than 20%. If the finance minister has stones, this will soon be 10/30. Let’s see.
Oil: $100 in 2010. On its way to $200.
Housing: Pfffft. Enough words on this topic have already been launched on this blog, but the days of the rate-induced, delusional, debt-drenched housing boom are numbered. Oh, it might stagger on for a few months as buyers rush to beat the HST, the end of the 5/35 and the mortgage crunch, but the whole juggernaut is wholly unsustainable. This is not a stable place to have the bulk of your net worth.
Bonds: Down. As interest rates increase, bond yields will rise and bond prices will fall. Bigtime. The historic rally in fixed-income securities is over, and if you missed it, you were not paying attention. Too late now. If you own a bunch of long bonds, they will soon match your complexion.
America: Bummer. The year will be one of immense disappointment for our American friends. The housing market will not recover, but fall further – maybe 10% or even 15%. The Dow might well finish the year lower than where it begins. Obama’s Dems will probably lose a lot of ground in the midterms. States like Ohio, Michigan and Pennsylvania will swallow what’s left of their American pride and import jobs from China and India (it’s already started). They’ll get factories again, thanks to the cheap US dollar, but not owned by Americans. Unemployment will persist, credit will stay scarce and millions more families will be in negative equity. The US deficit will top $1.5 trillion, and none of this is good for Canada.
Dollar: Par or better. Likely by summer.
Public finances: Don`t ask. In a decade or two your kids will wonder you what the hell people were thinking when they let governments spend money on car companies that would fail, encouraged young couples to pile into debt at the worst moment and burned through hundreds of billions they didn’t have. Did you guys not realize, they`ll ask, it all had to be paid back? You will have no answer.
Gold: Lower, then higher.
Inflation: Higher, then lower.
Depression: Not even close. There’s no corporate or market crumble now large enough – not even the collapse of all derivativies – to turn 2010 into 1932. Governments are too invested economically and politically to allow that to happen, and the amount of global cooperation we’ve seen makes it all but impossible. That’s the good news. The bad news is this decade will be positively glacial compared to the last one. Think Japan.
Boomers: Pass the Cialis, dude. Nine million start turning 65 at the end of this year, just as the economy grows stony, real estate corrects, and tempus fugit. You will not believe what this does to the housing market, starting in 2012. Best prepare now.
Please accept my thanks for coming and spending time with me on this blog during 2009. It is a daily epiphany. — Garth
104 comments ↓
Garth
A little over three years ago, you allowed a discussion and posted letters from Maria and Theo. In one of the posts that came out of those posts, an invitation was extended to the readers to come out on the overpass of the 401 (specifically the Newcastle overpass) to pay respects to our fallen soldiers.
As my life has changed, so has my address. I no longer live in Canada, but I try to follow what is going on re our fallen soldiers. Some of the sites I have visited recently have astounded me with the pictures of so many people on the overpasses and on streets when the processions go by. I am deeply appreciative of all the poeple that line the highways and biways of the 401 to pay respects. I believe the posts of that September maybe opened the hearts of some people at least. I would like to thank you for supporting our troops in this manner. Your blog allowed a discourse that surely helped to build this support for the families and soldiers.
Sincerely
Peter
Haven’t got into the rum yet, but that picture hit the LOL nerve!
Thank you for your predictions, oh great one.
Garth, as a contrarian,you say that RE is finished, but in the Greater Van area prices are , as of the month of December, going through the roof. Taking a steep spike upwards, no question about it. Is this a sign of the end of the bubble, as my financial advisor told me? (Not that I trust him!) Properties that were listed for $750,000 3 months ago, are now being listed for $900,000. Check out the MLS listings for Richmond, B.C. Tear down properties for just under one mil. Unfortunately, I sold a property 4 months ago, thinking I was very smart, and am now kicking myself. Could have listed for $50,000 – 100,000 more than in August. Real estate markets go up and go down, but I am beginning to think there is no end to the upside in Vancouver. People are RE mad!!!! There doesn’t seem to be a limit to what they will pay.
Classic end-of-bubble behaviour, exacerbated by that games thing. — Garth
Garth,
I am hoping you can elaborate on one of your predictions why do you feel gold will be lower, then higher?
Thanks in advance
Thanks for the predictions, Garth. Some are very apparent, others will be interesting to see.
Wishing you and all the ‘dogs’ a healthy, prosperous, and insightful 2010.
Garth – are you suggesting waiting a few years to buy?
Why would 2012 be an important timeframe/year?
Happy New Year Everyone
I agree with most of your predictions.
The July % rate increase might be more of a well known certainty then a prediction : P
Not all bonds are bad just the long ones lol
I humbly add…
Time your stock market investments into the USA with signs that the value of the American $ is actually going to start increasing against the Canadian $. If that even happens this year.
Peter:
A different perspective:
ALL deaths, both inflicted and incurred,by all factions, are mourned in this, and any, war.
If we really want to support the troops,let’s stop misleading them by asking them to “protect” or to impose anything by these means. Time to identify,evaluate and redirect our resources,efforts and support to the many more effective unarmed alternatives,both current and possible.
Peace – for 2010 and always.
Thanks Garth, some pretty good predictions given 2010 is the year of transition to the GREAT GLOBAL RESET.
Bubble has now turned that red balloon into an almost clear one, it will pop, turn many into the poor and lost during the Japan type 5-7 years sideways muddle through.
USD and OIL/NAT GAS good calls.
Any chance of a monetary crisis????
If so, go for silver at is now trading 60x+ less the price of GOLD. In Monetary crisis the magic number is 16x.
The Fed controls the USD and GOLD so look for a stable USD with a run up to 0.85 GOLD under 1000 but thinking of the SILVER lining!
Happy New Year Blog Dogs….
I can’t wait to see what you will dig up in the garden this coming year!
It promises to be a beauty.
Interesting article:
http://tinyurl.com/yduwt4d
I know that it’s American, but after 10 years there is a decline in housing prices on average……..can someone please tell everyone in Vancouver this!?
Happy New Year Garth.
Bill
New Merry Happy and a Christmas Year for y’all (or words to that effect).
Combine these — (1) “Interest rates: Up in July. (2) Taxes: Up, silly. The HST comes into play in July for 16 million Canadians . . . (3) Unemployment: Tenacious. (4) 5/35: Done. Allowing people to buy homes with 95% leverage and mortgages that take an adult lifetime to repay . . .”
There is the Grand Slam Home Run, covering all the necessary bases as the feds. / provinces slam-dunk sheeple into complete submission.
With plenty of those 16 mln. on the dole, EI eventually turning into welfare, let the Spin Cycle Doctors play with glossy words all they want.
Those high-paid “professors” are not in a position to make a call on something they have no experience with, and quoting figures is NOT real experience.
Pounding pavements, knocking on doors and applying for jobs IS the real experience. Been there, done that.
That’s why economists are no better than announcers on FOX telling viewers with straight faces that Iraq has WMD and Sadaam is still alive and living with Big Dick Nixon.
——
#30 Grantmi on 12.31.09 at 11:08 am — Hmmm. Note to self:
No change in mental health habits, babbles incoherently; clearly is of advanced senior age, possibly 100 or beyond. Prognosis: Poor. Avoid like the plague and don’t respond to him / her / it. Needs further assistance at all levels.
Where was the lead pic of Grantmi taken? The surroundings resemble one of the seedy, Victorian-era clubs where Sir Arthur Conan Doyle used to quaff the occasional opium-filled pipe.
——
China is spreading its’ wings and flexing muscles — China 1 / China 2
Latest pix from the War Machine (US) that keeps giving — New Boat — and — Terrorism my Ass!
Taxation is really to fill the pockets of the banks in Canada. If you think about how money gets created there are really two ways it happens in Canada. BCM – bank created money and GMC, government created money (via the Bank of Canada). Here is where you should get upset. The Bank of Canada creates less than 5% of our money, the remainder is created by the banks. The bank of canada act allows the govt to create interest free money… that’s right… interest free!!! Instead our government chooses to take loans from Canadian bank and then pass on those interest rate payments to the Canadian citizen via taxes. No loans come from savings, it’s all debt.
Do you understand the ramifications of what this means? This basically makes every Canadian a debt slave. Physical slavery involved our masters having to provide our home and food. Now via economics we are slaves to debt to pay off our car loans, mortgages, education loans, income tax, property tax etc..
If deflation goes on slowly for a long period a generation will become accustomed to it as it is all they will know in terms of expectations and quality of life and they will ask for no more and be thankful for what they have.
I agree-this is the end of the housing bubble. All the signs are there. A good sign-just when you thought things couldn’t get any crazier, well, there you go. Can’t wait for the damn thing to crash. Cheers to 2010!
I think I recall Schiff saying that the markets are to well capitolised from stimulous for there to be a “W” recession. The stock markets are inflated with debased dollars and that its inflation that has lifted it.
“why do you feel gold will be lower, then higher?”
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
It’s all drug related… I cant understand whay he mentions inflation earlier to his comment about gold going lower. I think Garth thinks he’s to smart for gold.
#4 Concerned Citizen,
Over sold US dollar short term (bull on US) offset long term with US money printing.
Thanks for your thoughts and your willingness to stick your neck out a bit. It would be interesting to see blogs referring back to some of the specifics at times through the year (? quarterly) with mods as you deem appropriate. You maintain your integrity by recognizing that you (and me and many others) didn’t have it nailed in ‘09 what with the continuing rise of RE through the year (albeit qualified by the government’s contribution to expanding the bubble with the hot air of mega-low interest rates and still unrealistically low demands on the part of banks re: downpayment combined with the entrapment into long amortizations).
I wish you and the “blog dogs” a happy and enriching (in much more than just the $ sense) 2010.
And so we take heed, the great Garth hath spoken! Though we are in for a world of hurt, we (on this blog) have been preparing for some time now so we should be in a good position to minimize the pain. I hate surprises and take great solace in knowing what may be lurking ahead. I appreciate your predictions wholeheartedly and they don’t need to all come true for me to remain a believer in the ways of the Garth.
Your blog appeared like a beacon exactly when I needed it. I was so sick of standing alone, carrying my ‘RE is out of control’ torch and I was really starting to think I was the crazy one. I have learned SO much here that I dare say I’m comfortable facing anything short of a full blown Armageddon.
Thanks so much, Garth for your daily dose of wisdom and for allowing us a voice also! I hope you and the blog dogs all have a great year and may 2010 bring those who have patiently waited a nice piece of (appropriately priced) real estate to call home!
If you think we’re following japan… then your prediction of higher rates, lower bond prices, higher gold/oil, and sideways stock market contradict the Japanese experience.
Happy New Year! We are officially embarking on 2010. Everything feels so new and shiny!
I think that the auto manufacturing industry in North America is on life support. China becomes the new world leader in that department. Similar to where Japan was a few decades ago.
Everyone have a Happy New Year.
Garth, have a happy New Year, and I’ll raise a glass to your predictions. Will “normal” ever reign again?
Shut up Eccles!
There is no “R E Bubble” in Hongcouver, the New World’s Order, Financial, Trade, Cultural & Leisure’s Mecca.
…Don’t even ask me about North America’s Paradise, Canada’s most elite Privately Gated Community, accessable by only two bridges and one highway from the North, Hongcouver’s North Shore, where there is no more land to build homes and w/ sooo many pet friendly trails to walk/hike.
…and Happy New Year to all my “Renter” friends, the ones who wish a total collapse of Canada’s R E Home Market, who, regardless of price, could not ever afford to buy their own cemetery plot let alone any kind of home.
Nostradamus jr.
Several year ago I remeber a guy by the name of “Brian Costello” if you remember” Looking After Your Money” saying that real estate was finished and would never rise again . Well time certainly proved him wrong. If and when I retire it is real estate that has made it possible. Would I buy real estate now. No. Will I buy it in the future. Quite likely. I have never lost money in real estate. Yet!. Someone is going to have to clean up after the carnage. I think the term “vulture” has been used. Strange how the eagle ( Goldman Sachs) who instigate the kill are held in high regard, while the lowly vulture who goes in to merely clean up the mess is held in such distain. I like “gleaner ” better.
May everyone be bears or bulls. Not a pig. Happy New Year to all.
Oil above 100$/barrel? Not when unemployment is still skyrocketing…..
Please accept my thanks for coming and spending time with me on this blog during 2009. It is a daily epiphany. — Garth
Thanks for having us.
Happy New Year, everybody.
Nothing changes, nothing changes so with the Winds of War still in full swing and the mint (s) still on overload the middle class will remain in the dark with shovels still in hand.
You load 16 Tons and what do you get?
Happy new year to Garth and the blog dogs.
Garth , I have a question on bonds . When you use the term bond does this include corp bonds or just gov bonds?
The reason for this question is that I have a large chunk of RBC bonds that are step up and mature in 2025. They currently are at 5.10% and can be called each year.They trade near par right now. Are these a hold?
Thanks
Great work this year Garth. Right or wrong (most likely more right than wrong) you help facilitate healthy discussion at a time that it’s needed most. Keep up the good work and all the best in 2010.
Interest rates will push lower this year as you’ll find out January the 8th which is real soon. Unemployment reaching 14 percent in America this year. GDP in America negative one percent for the year in total. DOW 8,000 by year end. Gold 850, silver 13, oil 85 US. Will get a large short sale on Rona in Canada this January the 6th. Looking for the stock market to tank this January the 8th and for most of the rest of the year.
Garth,
I plan to buy more dried and canned food as I have read about the food shortage in 2010 and see no end to the real and hidden economic crisis.
Is 20% chance of depression still good?
Sincerely,
Anybody know if there’s a way to fake a sale on an unsellable property? Say one that’s been on and off the market for several years. Could one enterprising realtor talk a friend or even himself into putting an offer in, with both the seller and the potential “buyer” knowing full well it won’t ever pass inspection or further negotiations in price will never be agreed to?
But in the meantime they’ve increased the profile and visibility of the property by fraudulent manufactured “desirability”?
Are there any safeguards in place to insure realtors can’t play such games? And what would be the penalties, if any, if they were caught?
Thanks for any info.
200 dollar oil? Garth where were you when oil hit 147? Anyhow since then we have insanely borrowing from the future to keep the system stable enough to pay for the 70 buck stuff. If oil goes to 100 you better have kept your squirrel gun well oiled.
Have a great new year, but gee be careful about what you wish for.
As usual you appear to be right on.Hope the new year brings out the best in us all. I appreciate reading all your opinions and forecasts for the future.Many thanks.
Oil: $100 in 2010. On its way to $200.
Dollar: Par or better. Likely by summer.
Gold: Lower, then higher.
Inflation: Higher, then lower.
___________________________________________
well. it’s pretty clear those statements don’t add up.
you should also stop using the term “inflation” and start using “CPI”, since that’s what you’re actually implying.
but i can’t disagree with too much else.
have a happy and prosperous 2010 from Merida, Mexico.
sorry Garth i meant to post this link here rather than the previous blog (my mistake).
The Economist has a useful charting for global house prices (incl Canada). Canada is only 20% overvalued (!?) which i assume is mostly because of the west.
http://www.economist.com/displaystory.cfm?story_id=14438245
#3 Freaked in Vancouver
…kicking myself….
And if market took a turn down you would be the smartest. Isn’t it better leaving the party a tad early?
#30 – In this instance, Garth is referring to government issues in the fixed-income market. Your RBC holdings could be considered a crude version of “bank preferreds”. I would suspect those bonds would trade near par just about all of the time, save for another banking crisis.
Its a recession when your neighbor loses his job……its a depression when you lose yours.
Here in Alberta my business has declined by about 20-30% (high end veterinary medicine)…..we have laid off 3 staff (out of a compliment of 9). If oil prices cannot be maintained now over the 85.00 per barrel mark for long stretches (years) we will see hardship in Alberta unparalleled since the depression.
I fear that while “everyone” expects the oil price to climb…I fear that it will only spike and then fall……economies now have an effective tourniquet applied to their jugulars. Non conventional oils are not sweet crude and the world has hit the wall in terms of hydrocarbon availability. Demand destruction and the export land model are now in the drivers seat.
Garth’s big mistake is a lack of real appreciation (or perhaps its just hard to “sell” investment strategies for such an event) for the downside of the Hubbert peak.
It HAS changed the game now fundamentally in economic terms. Huge money will be made as we slide down the curve but it will not be in conventional strategies (or in baked beans and squirrel recipes).
Interesting predictions Garth. I dissagree with you on the “Depression” prediction. WE ARE ALREADY IN A DEPRESSION!!! It will just take time for more people to realise it. Thats why I’ve said in previous posts “Depressions take time”. Indeed, it wasn’t until 1934-1935 when they started calling that time period a Depression. This is a once in a lifetime generational event that is necessary to reset the excesses and mistakes of the past. History is repeating itself because human nature never changes.
We will ALL be living through a Depression decade! When it’s over we will ALL know, to some extent, what our Great Grandparents went through during the 1930’s. Will we survive? that’s up to each and every one of us! Do we have what it takes to compromise, struggle, adapt,??? Can we re-learn working and living in closer co-operative harmony with each other again instead of “every man for himself” or “sink or swim” mentality? I say, YES WE CAN………….AND WE WILL!!
Good luck everyone.
knucklewalker: “money will be made as we slide down the curve but it will not be in conventional strategies (or in baked beans and squirrel recipes).”
that is million dollar question. what are the strategies that would work on on our slide down from Hubbert peak?
I don’t think there are many.
#41 knucklewalker
((If oil prices cannot be maintained now over the 85.00 per barrel mark for long stretches (years) we will see hardship in Alberta unparalleled since the depression. ))
how much does it cost to extract a barrel of oil in Alberta? what is is the profit margin at $85 pb?
My prediction on december forecast about what the Realtor will say is 100% correct, see Calgary herald today:
“But month-to-date numbers through Wednesday show the Calgary area’s resale price recovery continues, with the average single-family home selling for $451,443 in December, an increase of eight per cent, or $34,000, over December 2008 and a slight improvement of about $6,000 over $444,769 in December 2007…….”
they always emphasis on the good side compare with the 2008 data…what an idiot..
Art and Vancouver RE?
We’ve thus far seen Bob Rennie’s installation of Martin Creed’s “EVERYTHING IS GOING TO BE ALRIGHT” on an office building in Gastown possibly missing the mark.
Now comes a DIRECT HIT from artist Reece Terris, whose work ‘The Western Front Front – Another False Front’ subversively comments on the Vancouver RE Bubble, and wittily uses Construction as its medium.
For images and discussion:
http://tinyurl.com/ykrm7ve
While I agree with the direction of rates, I still think you will be able to get a 5-year fixed rate around 5.5% one year from now. Posted will be close to 7.
Unemployment, slightly lower but still too high. Maybe down 0.1-0.5%.
Between gold and oil, I would also pick oil. Just because there is a more direct use in the economy and it’s consumable. I don’t understand extreme gold bugs that are also real estate bears. If gold goes to $5000/oz due to fiat failure, real estate will be more expensive in paper money. My guess is oil flat and gold down.
Inflation. CPI will surpass 2% narrowly.
Real estate. Up, then down more.
U.S real estate. flat
In 1 year Canadian dollar will not be any higher.
Happy new year.
#44
All early studies pointed to a break even point of 36.00 per barrel in the earlier days of the sands…the “call it shit not peanut butter reality” seems to be much higher.
Part of the current slow down seems to be the result of the credit crisis worldwide…hard for the big majors to access ongoing money flows for megaprojects with the price of oil bouncing all over the map.
It is very very well documented however that anytime the net energy expenditure of any nation essentially passes 3% of its GDP we see recession…ever single time in the USA (where we have good numbers)
It is hard to fathom then how we cannot have a continuous and rolling depression/recession scenario given that oil is capped out now in real terms worldwide.
The chinese/Indian dragons have no teeth (they will never get an internal consumer driven economy going now in a constrained energy world) the fiat money system will of course totter along for a while but its days are numbered.
In short I am not in a position to know what the margins are with regard to a barrel of crude refined out of bitumen…but it damn sure ain’t 36.00 per barrel.
The EROEI ratio at the sands is at the very best 5:1 and probably close to 3:1….that metric will be reflected in the margins increasingly as the fiat, debt based money system fails. The modern system was developed based on an energy metric of EROEI of 80/100:1 (sweet texas pumped crude)…that is FINISHED FOREVER.
The WORLD HAS CHANGED in a bedrock manner.
Re: investment strategies. Well, Honestly…in the short to medium term…..PMs ARE MONEY (Sorry Garth) they are not currency (thats fiat paper)…..the world will run to them because the world doesn’t understand what is happening and PMs are in their mind the investment of last resort….and they are available in liquid terms.
We are in a deflationary environment worldwide but governments (as Garth has said) are all in at the poker table at this point. I am counting on not just inflation but full on hyperinflation in both USA and Europe….I think that Canada and AUS will follow suit.
This event will be followed by crushing deflation when the fiat money printing fails (as it ALWAYS does)
Strategies for strong inflation are the immediate order of the day. This will change after a period of probably 5-10 years as the respective economies implode and deflation takes hold (permanently that is).
The guns, gold and garden supplies investment strategy has some merit in the longer term….hard asset allocation should always be the basis of every strategy.
I am suspicious of the constant mantra of RRSP this and that……as the fiat money system implodes under energy constriction I cannot hazard why governments will not try to access all documentable assets of its citizens….so say 90% tax on all RRSP eligible assets?….and screw RRSP meltdown techniques…if the government needs the money..you will see loophole closures across the board.
Modern 1st world “citizens” just cannot grasp how bad things can spiral when the chips are down….and they are down now folks.
43 Firma,
that is million dollar question. what are the strategies that would work on on our slide down from Hubbert peak?
I don’t think there are many.
Oh, that’s easy … gold or barrels of oil stored in your backyard.
There wil be that $200 (and more) oil when demand beats production, that is, when there is enough driving the real economy to overtake current production and storage. For now GDP in Canada is negative, in the US it is feeble, and to top it off is, in good part, the product of all the stimulus money (that incidently has, through the carry, been indirectly running up the stock market.
If the gov’t makes changes to the 5/35 rule when would they announce it and when would it come into effect?
Love the blog, learning lots. Thanks!
My prediction is that Garth’s prediction will be about 50% accurate, just like all the other economists
Happy new year to all!!!!
#45
Just because the numbers offend you doesn’t mean the realtor is an idiot.
Welcome to twenty-ten.
The US economy will ignite and stock markets will head for bubble territory, up….way up. It is a market of stocks…so if it looks undervalued without good reason buy and watch it pop…pop up, that is. Just watch for the thorns as you pick the roses
Interest rates aren’t going anywhere soon so RE values will remain steady except for Toronto, Vancouver and Victoria. There is a black swan buzzing above Vancouver and his name is Juan de Fuca and he or one of his two cohorts might just drop a plate of unwelcome business on Vancouver and surroundings. Inflated values, fools with money and a risk factor born in hell….go figure.
There are black swans ready to soar in China, Russia, the middle east, Great Britian( soon to be not so great with possible bankruptcy) and, of course, the good old USA. Beware the Ides of March. However, if the birds (black swans, that is) don’t fly we should all have a good year.
Your mission Garth, should you accept it, is the demise of Long Nose and the rebirth of democracy. It beats being a prognosticator.
Happy, happy, happy New year and a special thanks to Mad Vlad for his hard work and research.
re
Hello Garth.
You say gold is going lower and then higher. I think it is true that current market prices have nothing to do with global currency supply divided by gold or silver bullion supply and therefore the prices are infact quite arbitrary and based on the whims of commodity brokers and bankers.
The return to backing the currencies of the world by gold and or silver would raise prices to extraordinary levels far exceeding current market prices.
Only a minority would profit from such a scenario if infact it did happen.
As for government preventing deflationary depression, I think maybe they can make it look that way for a while if they print lots of currency and if they go too far then we have a hyperinflationary depression which leads to knocking so many zeros off the money supply and everyone who has the national currency gets the same zeros knocked off their pay and bank accounts resulting in deflationary depression. Excessive debt breeds excessive currency printing, default or taxation.
As for real estate who can afford it and live at the same time except the middle class who are getting squeezed and the wealthy? I expect that we will see the day when prices are even higher and the number of buyers drops off to trivial number of people followed by a massive price collapse when sellers realize that no one can buy their property at any price except a 1950s or 1960s prices and then may be.
As for interest rates. If the market wants savings to fund economic expansion then rates would have to exceed the rate of increase of the money supply by a good margin and also be as large or larger than the increase in the price of real estate. Saving money must become a paying proposition otherwise you will get less of it. I think we will see the return of mortgages with fixed rates for the full term of the mortgage after the collapse of real estate prices.
After that stability will be the name of the game.
As for boomers no privileges for them. No special status and they should get only what they earn, paid for and in their personal control and posession.
Since the government is in debt big time then people should not expect unlimited or promised benefits to the degree that most people expect. Expect cut backs in the future. Taxes. Well if one must have them then I say keep them modest and very few of them. The primary focus of the government should be to make itself smaller, cheaper and less expensive and intrusive. One percent of the work force and economy would not be too small…… The private sector of the labour force and economy should be 99% or better.
This of course would mean that politics as we know it would have to end for the good of the nation.
Steven
# 46 vreaa
…Thank you for sharing w/ us WFF’s philosophy
“Vancouver R E is ridiculously overpriced”
…But a Van Gogh is worth +$50 million
…an Auto is worth +$250K
…a Wedding ceremony is worth +$25K
…a Diamond necklace is worth +$15K
…a Bottle of Wine is worth +$750.00
Yup, you’ve won me over…I’m selling and moving to Windsor Ont.
Nostradamus jr.
I agree with the predictions on one level but also have differing opinions on several issues. Lets get started. The general Canadian stock market will gyrate from up several hundred points to down several hundred points over the next several years. The Dow will re test 6600 over the next year.
Gold has risen to $1224 oz not based on inflation. It has risen this far based on a flight to quality and a loss in confidence in central banks doing the right thing. Inflation, unofficial is already 7.2% in the States and will rise to 14% in 2010. Gold will go higher as the market forces higher lending rates for debt issues. By fall of 2010 gold will break $2000
The global financial system has just been papered over for the past year. Nothing has been fixed and things are actually worse now because All government debt has exploded. And money supply world wide has increased 11%. Worst case should be 3%. The U.S, U.K, and Europe are insolvent. What will they do for an encore if all this QE only has held things even to slightly down. China just spent 1.8 trillion and have 30 million unemployed. They will have massive inflation also in 2010.
Housing will grind lower for years in Canada. U.S housing will go 20% lower and bump along the bottom for the next 10-20 years.
There will be an official devaluation of the U.S dollar within the next 18 months. 3 old dollars for one new dollar. All currencies will be revalued and devalued against one another. Debt between countries will be defaulted on. The U.N, IMF, and World bank will pose as the saviors and introduce a new reserve currency . Even though this has been planned and engineered ever since the dollar was taken of the gold standard in 1971. People holding cash will take the brunt of the losses with a devaluation. Gold will anticipate this and begin to shoot higher.
There will be civil unrest and revolt all over the world. Martial law will be declared in the states and other countries. We will be left with the U.N as the new world government. The IMF issuing money and credit to the world and manipulating interest rates for its own gain for its private members. A world government of unelected officials will have been established. Tyranny will be the new norm.
Bonds will be a losing investment, commodities will be the new dot com. Gold will reassert itself as the only true store of value. The Globalist private banking consortium will stage a new war in the middle east. They will use its lap dog, the U.S to enforce it. This will cause huge volatility in the oil market.
Until a person accepts that everything happening today is no coincidence then making economic predictions is next to impossible. We are being led down this financial path according to a plan our government has no control over. Carney is just a front man put in place by the true U.S government, Goldman Sachs. Leaders are not elected they are selected then appointed. Ignatieff wasn’t even elected by his own members. He was groomed in the states for years then dropped into the leadership of the Liberal party. The future is more predictable than a person thinks once you take the time to read official U.N documents and IMF press releases. It is only shocking to the people who get their information from the 6 o’clock entertainment session passed off as news.
#41 knucklewalker
Rubin says all in costs are $90.00 bbl.
“In a decade or two your kids will wonder what the hell people were thinking when they let governments spend money on car companies that would fail, encouraged young couples to pile into debt at the worst moment and burned through hundreds of billions they didn’t have. Did you guys not realize, they`ll ask, it all had to be paid back? You will have no answer.”
My answer will be this:
In the name of shameless and unabated greed, people in control of large amounts of money recognized that this would be the last chance for a big feed and unleashed
huge amounts of money in an attempt to further shore up their brethren money-mongers, under the guise of helping the average person, who realized no benefit from this whole charade whatsoever.
Greedy CEOs and their respective glee clubs missed no meals, not even a dessert, and continued to reap pay bonuses in days when the companies they ran were failing miserably, being ran horribly, and they all went begging for corporate welfare. They then managed that money no better than the average crack addict. It was party time for a select few, and in the face of what promised to be a dry decade, they socked away even more riches to see them through, so they would not have to adjust their decadent lifestyle any.
Meanwhile, back on planet Earth, the average person continued to scrape together money for fuel and mortgage payments, if they were lucky enough to still have a job. While a barrel of oil dropped to half of it’s high, the difference at the gas pumps was only a few cents.
Q: In spite of all this, guess who got stuck paying the band ?
A: The guy who already had no money to spare !
Unfortunately, people forget the story of Robin Hood, and how hard it is to hang onto untold riches while the guy next to you is starving and desperate.
People really are animals and we will prove it once again.
Happy New Year Garth..thanks for keeping this blog going..this was another great post. Can’t wait to get the new book in Feb.
The highly leveraged, fractional reserve, fiat money system has begun the end phase in 2007. 2009 was a mere pause on its way to inevitable collapse. The illusion of ever growing debt, outpacing the rate of income/GDP growth persistently and made possible only because enough new suckers were willing to take on new debt (the able part of that equation was totally skewed by gov’t and central bank intervention), will come undone and reveal itself for what it is: A false economy where nominal values of assets and incomes appear high, but adjusted for the excessive growth in credit, are actually much lower..in my estimation, 30-40 %.
It will likely end in high inflation at some point, the only question being how much deflation do we experience before. Expect shocking tax, fee, and other confiscation tactics from your friendly government – in addition to drastically reduced gov’t “services”. This exact same situation is now evident in much of the US at the state and municipal level.
Those stupid enough to engage in the gov’t sanctioned ponzi scheme to get into overinflated housing now, will bear the brunt of the coming tax and rate increases, as well as more recession and high unemployment. God help them. The timing absolutely disastrous..just in time for the wicked storm that is on the horizon. But, deserved it is, for those who have been prudent and avoided the scam have experienced ridicule and no interest on their savings – not to mention the effects of inflation on their purchasing power. After all, the markets rarely ever give the majority what it expects, but almost always what it deserves. The end game will come WHEN our bond market vigilantes make a real appearance at the show…the mid-late 2010 period should see them visit the US Bond market and maybe Canada’s…once the cost of money goes up to reflect the real risk of lending to indebted/overspending consumers and governments, the game will be over. I hope our bond market vigilantes show up tomorrow.
Happy New Year to all – save, pay off debt, enjoy family and friends.
JO
I say again.
- Nat. Gas increases
- Gold increases
- Oil increases
- CDN $ increases
2011 will be reached on January 1, 2011……you always have to have one sure prediction!
“But that jump in the Bank of Canada’s overnight rate will be followed by a string of other increases, taking the chartered bank prime from 2.25% in January of 2010 to 4% or beyond in barely a year. Five-year mortgages will again be 7%.”
First 2 Qs in 2008 the BOC overnight rate was in the %3.5-%4 range and 5 year mortgages were in the %5-%5.5 range. Today the BOC overnight rate is .25, if that gets increased to say %2-%3 by the EOY, could you please explain why would the 5 year morgate get to %7?
Mortgage rates are set in the bond market, and the BoC rate immediately affects VRMs. I expected a healthy yield curve in 2010. — Garth
Thanks for your posts Garth.
So interest rates will go up a bit eh? That is likely to affect Calgary house prices much. There always is ready idiots to purchase houses priced DOUBLE their value.
The only way to own a shack in Calgary is to save up slowly and hope the median doesnt hit $1 million shortly.
It will be funny in the future when people in Alberta(Calgary mostly) have to win the lotto to afford a down payment on a one bedroom condo.
I wonder how many people will then be in favor of the crap that is spewed daily by the news channels and newspapers about the “Silver Lining”.
On a brighter note this reality of TOTAL RIP OFFS in Calgary makes a person take note of anything worth controlling, other than finances and investing: Relationships, skills, hobbies.
There is no magic solution to housing in Calgary except prayer and avoidance of the issue.
Happy New Year Garth and everyone.
If thinking Japan isn’t depressing I don’t know what would be!
Everyone thinks because of the name that the depression was “saddening”, and I suppose for the unemployed it probably was. But for the employed “standard of living” actually went up as prices fell faster than wages. Also, most of the music from the era is pretty upbeat, especially in comparison to dreary grunge rock on the radio today.
Of course if you were a banker the depression was very depressing. But not this time! Blow up the books, get a dynamite bonus! Tax payer funded of course.
Here is another way of looking at:
The modern economy today is based on debt. The problem is, as anyone who has tried to collect tournament fees from parents for a minor sports team knows, most people do not willingly pay their debts. Why would you? There is always some more physically pleasing way to acquire more goods and services with the money. When you pay back debts, you are paying for things you’ve already consumed! What fun is that? Nothing changes. But if you use the money to buy new things….
We are not as a society taught to value debt repayment or saving. That is why household debts go mostly up, the savings rate goes mostly down (the recent US experience a notable exception which I am sure will receive lots of analysis in the future), government debt mostly goes up, etc.
So the debts will not be repaid until something forces us to repay them, like a landlord throwing out a delinquent tenant. Unless the debt can continue to rise exponentially indefinitely, the day of reckoning awaits at some point in the future no matter how much effort all the King’s horses and all the King’s men spend trying to put Humpty Dumpty together again. 2010? Don’t know. But I wouldn’t bet the farm against it, or any year thereafter if we manager to kick the can down the road a little further.
I think Garth might be over confident in his prediction that there are no more systemic risks that can bring about another crash. Many commentators think the problems are now worse, as the “too big to fail” institutions and programs that were propped up by the bailouts are all even bigger now and there’s no indication that anything was fixed, just plastered over.
And if by “Schiff” he meant “Peter Schiff” then his forecast is more along the lines of a collapse of the US dollar, which would appear very inflationary from the viewpoint of western nations, particularly the US itself.
#3 Freaked in Vancouver
you must have missed a couple days on the blog… this post and comments decribe to a “T” what you are talking about…. enjoy
http://www.greaterfool.ca/2009/12/04/van-ity/
My email reply to you seems to get getting caught up in your spam filter.
Nothing in the basement from you. Try again. — Garth
Like Garth says, forecasting the future is difficult.
I feel the same way too, but what I find difficult to take into account is : what about the new financial system that is supposed to be taking shape?
I mean, there is so much out there about it… just read Benjamin Fulford’s blog, or Chris Story’s Worldreport etc… Also, is NESARA for real or not?
These are significant changes if they take effect, and I’m finding it hard to get my footing as it were.
Interestingly, Chris Story has made a small update today, and it actually sounds positive! This is after years of reporting on the alleged corruption that’s been going on at the highest levels of the world governance.
Here:
http://worldreports.org/news/255_official_money_saboteurs__economic_terrorists
I’m sensing positive things ahead for 2010. Hope I’m right!
#3 Freaked In Vancouver
Looks like we have ourselves another great month for RE sales in Vancouver again. I just had a look in my area of Vancouver for listings of 2 bedroom 2 bath places under 10 years old and quite a few listings have disappeared over the last week. Prices for 1000/sq ft is now being applied to places of 850/sq ft. I guess Christmas dinner must have been pretty brief this year.
Happy New Year to all!
#6 taco
Why 2012? Some reasons I can think of…
1. The renewal of 0/40’s (06–08) will be in full swing.
2. The 5/35’s will most likely have ended also
3. The oldest boomers will be 66 and beginning to liquidate assets en mass
4. The interest rate will probably be over 10% and we could see the return of the 18% rates of the 80’s
5. People will no longer assume that they’ll never be unemployed
6. We will have officially acknowledged the current economic stupidity and our culture of debt
7. If prices start to drop today it would take until at least 2012 to find a bottom
The 0/40 trend and the boomers liquidating assets are enough reasons alone – the craziness that has happened in the last 3-6 years is but icing on the cake.
Oh yeah and we’ll also enter the Age of Aquarius.
Garth, gold always goes down and then goes up, check out this 10 year chart of gold.
http://stockcharts.com/h-sc/ui?s=$GOLD&p=W&yr=7&mn=0&dy=0&id=p52268108277&a=102859873&listNum=-2
“Mortgage rates are set in the bond market, and the BoC rate immediately affects VRMs. I expected a healthy yield curve in 2010. — Garth
“
Canadian banks forecast the 5y yield to go up to 3.75 in 2010 just like we’ve had in first half 2008.
5 year mortgage could go up to %5.75 in 2010 (4th Q), chances to get past that value are slim, maybe in 2011 we could briefly see %6, but for most part is going to be %5-%5.75.
The posted rate is now 5%. Dream on. — Garth
Interesting discussion.
If one believes in contrarian investing, the LONG BOND would seem the best bet in 2010. I have not read one single bullish prediction on long term bonds on this blog, or in the MSM.
Everyone seems bearish, myself included. The short trade against the long bond would appear to be quite crowded, just like the long trade on gold was a few weeks ago.
FYI, for Dec. 2009 – Jan. 2010, I’m long USD (DXY index), and long OIL. Not forever, though. If the trend breaks, I’m out. Definitely a traders’ market.
BTW, for those who are bullish on RE during hyperinflation, just look to those countries that have experienced hyperinflation. The RE market is depressed in those countries because it is a debt-driven market.
Low long-term rates are essential for RE. (How much would your house sell for if nobody could get a long term mortgage?) The destruction of the domestic bond market makes it impossible to get a cheap mortgage during hyperinflation. Also, wages would not rise in lock step with inflation (which is usually measured improperly by CPI).
P.S. – Why do the Canadian banks not offer 30 year term mortgages like they do in the US? The banks sell 30 year bonds, and would be able to match up liabilities just as easily as they would for 5 year terms. Would CMHC not buy up 30 year term mortgages like they do the shorter term ones?
Interesting little article looking into the global future, complete with world map and detailed danger zones.
When the article looks deeper into US affairs it mentions that mainly the populous is seen to be a *happy* bunch, that is as long as wage equalities stay about where they are at. However, with the declining workforce, and loss of wages while banksters and high end CEO’s (cough) make and collect more and more bailout and *bonuses* this impairs the working class into trying to keep heads above water. Worth the glance over.
Social Unrest and Global States of Combustibility 2010
http://marketoracle.co.uk/Article16175.html
Why 2012? Mayan calendar;)
#70 Emma: “Oh yeah and we’ll also enter the Age of Aquarius.”
Too late.
Already happened… as per the song…on Feb 14th 2009 for 18 minutes, the moon was in the 7th House, while Jupiter was aligned with Mars.
I feel Canadian govt are things similar like the chinese government does by doing something call “Adminstrative Intervention”…What is the difference between a 10/30 compared to something like 5 % tax for people who flip a 2nd home in China…How we can bring prices down ? I am not seeing what they wants to do will bring home prices down because by doing that, it will take a short squeeze again causing these RE crews to make more money by hijacking homes/condos with higher prices and make sellers more money (like to HST frenzy last year) and kill the new homebuyer with more debt !!! I am not seeing any existing mortgagers get suffered when they rack up so much debt and government is helping them by offering them low rates, low qualifying room (0/40, 5/35), rates at prime (2.25 or lower, some said they only paid 1.25%) and only new homebuyers are suffering ?? When they try to renew maybe 4 or 5 years later, they are already well ahead of the game because they already have 10 % more home equity inside their homes already so where do we see defaults and foreclosures / oversupplies ? I can say we will never see prices going down but keep going up more and more… !!!
Vancouver sales down sharply in December and January will be a train wreck.
It has started. Grab your popcorn, enjoy the show.
You want to understand how bad our banks really are? You want to see some bungling Canadian politicians explain money? You want to see why GOLD and SILVER will explode into the stratosphere? Watch this 10 minute video on why we are going to go broke, we have been cheated and lied to by our CANADIAN GOVERNMENT and BANKS:
http://www.youtube.com/watch?v=U8woOuDjqas
As a long-time bear on Vancouver real estate, I’m interested in who is paying these high prices and why. Among my acquaintances, 2009 was the year of the first time buyer. I am a Vancouver resident and a renter in my early thirties. Around 10 of my acquaintances (all roughly my age) bought real estate in or around Vancouver since Spring 2009. Almost all of them were first time buyers.
Generally speaking, I think the Bank of Canada’s low interest rate policies are the main reason why these people bought. The rate cuts were timely in the sense that they saved the herd psychology from turning negative. Prices only dropped for a brief amount of time – not long enough to cause a rush to the exits. Interestingly, the rate cuts in the US didn’t create enough buying in US RE to stop that downtrend. It seems that there were more willing and qualified borrowers on the sidelines in Canada when prices started to drop here than there were at the start of the US downtrend.
Almost none of the buyers I know had large down payments. None of them, to my knowledge, considered valuation metrics like price to monthly rent multiples, or how much negative cash flow would be if they were to estimate the property’s merits as a rental property. They just got qualified for a mortgage and looked at the required monthly payments (affordable in the short term). I don’t believe that any of these people think that Vancouver real estate could ever go down significantly in the future and stay down for any length of time. Many of them viewed the slight decline in prices we saw in 09 as a generational buying opportunity for real estate. I think many of them had also been impatiently waiting to buy and when prices were down somewhat and rates were down a lot they pulled the trigger. I don’t know whether many of them chose a fixed rate mortgage but I doubt that more than 1/3 of them would have. It is now hard for me to think of anyone I know who has had consistent employment in Vancouver for 5 years and still rents.
I guess that the theoretical reason to lower interest rates in a recession is to promote borrowing and investment so that businesses can easily finance new capital goods, hire people, etc. However, I’ve seen very little of this activity among my group of acquaintances and quite a bit of speculation in asset markets (real estate and stocks). I guess it’s obvious that we are now to a large extent an asset price (bubble) driven economy. Since asset prices are already so detached from fundamentals, it appears that ever-increasing amounts of credit (and willing/qualified borrowers) are needed to keep things going. Good luck with that, Government/banks/BOC. I won’t be surprised at all if government and the BOC do all sorts of creative things to maintain the fantasy of ever-increasing real estate prices despite lagging income for the average person. It’s either that or throw all these recent first time buyers under the bus big time.
The Gov’t can make all the changes they want to the Down Payment requirements, but if they don’t put a stop to the lenders “giving” the DP to the borrowers (with CMHC’s blessing), nothing will change.
Almost anyone can still buy a home with NO MONEY DOWN through one of the major Canadian Banks. They call it their “Cash Back” Mortgage.
http://www.cibc.com/ca/mortgages/flexible-downpayment-mortg.html
http://www.scotiabank.com/cda/content/0,1608,CID10969_LIDen,00.html
Scotia Free Down Payment Mortgage
A helping hand to get started.
Coming up with a 5% down payment isn’t always easy, especially when you still have to cover closing costs, moving expenses, renovations, and all the other costs that come with buying a home. Let Scotiabank pay the 5% minimum down payment on your behalf when you take out an affordable insured 5 or 7 year fixed rate mortgage.”
The bank will give you the 5% down payment if you take their posted interest rate. CMHC even knows about this and charges a small premium on the mortgage insurance for a “non-standard” down payment. It is reckless on the part of CMHC to allow this to take place.
Love your I.D. visuals and your engaging writing style. Agree with lots of what you have to say. Also love to chase some of the blog dog links which can sometimes lead to very out of consensus web sites and articles. All in all well worth the time. Happy New Year.
Re: The end of 5/35
I still maintain that the 10-25% crowd is being unnecessarily elitist and unrealistic. By your way of thinking a landlord should require a year’s rent up front on a 5 year lease. A cell phone company should demand 4 months payments up front on a 3-year contract. The big boys in finance leverage 95 -100 percent, so why not the average Joe?
I don’t know why, other than pure narcissistic elitism, people keep pushing the false idea that 5% caused the trouble in the US or the current bubble in Canada. This is a total lie. In the US, it was liar loans, 35-40 ams, artificial teaser rates and their re-setting, and mortgage fraud (lying about income, etc) that caused it. In Canada, not much different, 0/40, 0/35, 5/35, and for the past year the super-low rates.
Its simply overkill to raise the 5%, wanting to get rid of something that, without all the other factors, contributed zero to the problems.
Yes, ams over 25 are bad. Yes, 0 down might (I say might) be bad. Yes, interest rates are artificially low. Yes, banks are approving mortgages FAR in excess of what incomes can support. Yes, banks approve liar loans without verifying income. Fix these things, but don’t throw the baby out with the bathwater.
If a person can easily afford a monthly payment with a solid provable income and a great credit rating, why should they require more than 5% down on a 25 year am (NOT 30, NOT 35)? The 5% rule did not cause this in any way whatsoever.
If you thing 10/30 will magically solve all of the distortions in RE you are sadly mistaken. It will only be the beginning of land ownership becoming the exclusive province of the priveleged, and further kill the middle class. It won’t stop the RE buying craze as I think there are enough people who will keep buying. It’ll just ensure that a whole bunch of lower income people are left out. Typical conservative thinking. What a perfect excuse to screw the little guy again. Don’t fix any of the things that really caused the problem, but change the rules in favour of those with the greater up-front seed money.
And the tut-tutting going on from many people, who already have significant savings, already have homes, already have made their own huge gains on RE, telling all the renters and others that, oh no, take it from us, RE is bad bad bad, be happy renting, you don’t know how bad it is, all of the responsibility of owning, its all too complicated for your little low-down-payment minds – reminds me a bit of that bad banker on It’s a Wonderful Life.
There ’s no need to do all this predicting and useless worrying about 5/40, house prices going up or down and trillion dollar defecits etc!
The world comes to an end December 21, 2012………. all the former ruling civilizations in the world are telling us!!
Do you think their predictions are better than any on this blog??
#53 Seilfworcehtsa — Thanks. Probably a little easier for me, as I am retired. Only spend a short time surfing, but a scene from the first “Men In Black” film, where T.L. Jones bypasses the m$m, and heads straight for the tabloids is indicative of where the m$m is now, although Auntie Beeb (BBC) did say that al-Quaida is fake.
A few days ago, there was a column in the KDC by a local writer (no website or e-mail address), but the person wrote that “80% of the world is under-nourished or starving, and the remainder are well-fed”.
Combine this with the 50 year or more global cooling cycle that is underway, WW3 is not necessary. Very cold weather kills quicker than warm / hot, as most can absorb a few days of discomfort by adjusting lifestyles, but cold (and freezing cold) is quite different.
——
Could be this is one reason the US has an ever-larger debt — Real Cost / To keep things in perspective, Live Long And Prosper! One can see that depopulation is necessary from the elites’ point of view, as the better parts of the world are filled with rubbish like us! Also, how it was done.
Discounting volcanic eruptions (which give off CO2 or whatever it’s called, and which is necessary for tree and plant life), this is a better understanding of why pollutants fly around — Ships
Good for him! Instigators, perpetrators hate it when the truth about what they did comes out publicly, as it puts them under the full glare of the spotlights.
This also leads to another question: Is Israel planning a repeat of last year, to ethnically cleanse them of the Palestinians?
Because if that is the case, then Israel has new illegally-acquired land, plus the supposed oil bonanza in the Mediterranean. Right now, that is in Gazan waters.
- 7.5%/25 yr to be put in place just prior to the first rate increase.
- rates to increase by May/10
- Unemployment to level off and then start dipping again early in the 3rd quarter
- GDP to continue to fall as exports fall off a cliff
- People will continue to leave Alberta at record pace
- Home prices will decrease by 5% by the end of the second quarter and drop another 2.5% by the end of the year
- Oil will hit around $90 and stay failry level for the year
- Another terrorist attack will take place on USA soil
- Hopefully, Nostrodamus comes back from the dead and kicks his son’s ass for being an idiot.
Hongcouver RE prices may possibly “Double” from here within two years.
…You heard it here first…
Nostradamus jr.
Have another toke. — Garth
“The posted rate is now 5%. Dream on. — Garth”
Oh, the posted rate u talking about, then yes the posted rate could go up to %7 next year (it was that back in 2008 first half, as well). But then the posted rate is much like MRSP prices you can see in about every store, I have yet to see an item have a display price tag equal or higher than the MRSP price.
Worst case %5.75 by EoY this year (for the 5 year mortgage), more likely %5-%5.50.
Come back in a year and we’ll compare. — Garth
Bakody : so with the Winds of War still in full swing
The First World War provides us a picture of a war in full swing. During the Battle of Verdun there were over 1 million shells fired. The movie Passchendaele depicts the intensity of the conflict. There is a certain mindset that equates the First World War to Star Trek – both are science fiction.
Beware of those that promise that such a war will never happen again. They simply wish that it will never happen.
Depression no..
But the cost of many depressions will exact itself over the next two decades. Take a look at detroit to find out what propping up failed companies, large deficits, increasing the size of government and increasing the power of unions does to your economy.
“- Another terrorist attack will take place on USA soil”
Leading to grotesquely disproportionate response with attendant reductions of basic civil rights. People need to man up, accept the risks, and deal with the real stats – even if some nut knocks down an airliner over Oklahoma, you’re still probably going to die of cancer or a heart attack, not terrorists.
Interesting predictions Garth. I dissagree with you on the “Depression” prediction. WE ARE ALREADY IN A DEPRESSION!!! It will just take time for more people to realise it. Thats why I’ve said in previous posts “Depressions take time”. Indeed, it wasn’t until 1934-1935 when they started calling that time period a Depression. This is a once in a lifetime generational event that is necessary to reset the excesses and mistakes of the past. History is repeating itself because human nature never changes.
We will ALL be living through a Depression decade! When it’s over we will ALL know, to some extent, what our Great Grandparents went through during the 1930’s.
—————————
exactly! I’m not sure why people aren’t calling this a depression. We had a credit mania that went bust and now there’s problems everywhere. We’re not seeing normalcy yet.
This recession is different. I agree 100% that in a few years, and in a few decades from now, this era will be looked at as a depression era – the public doesn’t see this yet
#79
the video had potential … but the start gave a totally wrong impression as to the actual content. The start gave the impression that the video was going to be a hyperpartisan political attack, while the actual content implied that there is blame to go around on all sides, and always has been.
Thanks for all the posts and all the best for the coming decade, Garth.
I’ve confined my predictions to Vancouver RE and linked them before here.
—
Great comment and anecdotes, #80 Flavor Fav.
I’ve archived them at VREAA:
http://tinyurl.com/yk95eho
I think if TSHTF in Iran then oil will spike but nothing comes of it AND if interest rates spike, prices in the near term will tank.
They – investment banks and other speculators – have been storing tankers of the stuff offshore. There’s been what appears to be a calculated plan to keep oil in the $70-80 range – high enough for the oil-dependent states to make budget but not so high as to completely cripple any chances of real recovery (though they are certainly slowing it).
http://www.marketoracle.co.uk/Article4902.html
http://bus.utk.edu/econweb/faculty/davidson/challenge%20oilspeculation9wordpdf.pdf
While I agree that governments around the world have too much ‘invested’ in allowing for a serious depression I don’t think that necessarily means that there won’t be a repeat of late 2008/early 2009. A major part of the problem and how/why the crisis came about to begin with was that the entire economy has tilted in favour of what at heart is a deeply flawed ideology – that of neo-conservative, supply-side economics, ‘trickle-down’ economics, if you will.
Right now they’re willing all the battles but in the long run they will lose the war. Why? because the ideology itself is faulty. Look at every economic ‘miracle’ turned disaster – from Ireland and Iceland to the Baltic ‘tigers’. Meanwhile, very little serious reform has actually taken places – just temporary fixes and delaying tactics.
So the worst case scenario WOULD be Japan writ large – have their problems yet been fixed, even two decades later? No.
Garth,
The biggest of all major banks “Royal” is offering 5 year fixed for 4.19%. There’s was a big sign, no need to negotiate. Don’t know where you get your information from, but big discounts are still available.
Has no bearing on where we are headed. — Garth
With yearly trades of the derivatives market in the order of $500 Trillion (yes with a ‘T’ as in ‘ToTally doomed’), which is 10x the world GDP, It’s hard for me to imagine how a collapse, or even a correction in the derivatives market would NOT lead to a depression.
It’s numbers like this that justify why the value of gold continues to push upwards.
There will be no derivatives market collapse. Take off the tinfoil. — Garth
Just finished reading ‘Greater Fool’. In my opinion unbelievably bang on and scary.
Three years ago my wife and I predicted troubles in the economy and were laughed at. We even went so far as to sell our overly leveraged house and started to rent for substantially less than carrying a home. We were really looked at as insane.
I believe we as Canadians haven’t even tasted the hard times yet. 2010 will be a pivotal year and I find it interesting that people can’t see it.
I’m not really sure at the moment what to use as a money saving vehicle let alone a growth investment, but I definitely believe real estate is NOT the place. Perhaps in a few years, time will tell.
Now is the time for saving money, shedding debt, and practising patience.
Keep up the good work Garth, I’m sure you receive a lot of criticism.
“The HST comes into play in July for 16 million Canadians, increasing the price of damn near everything by seven or eight per cent.”
That statement in not true. The HST will only add 7 or 8 percent to items that do not already have PST, which is no where close to being “damn near everything”.
Wait and see. Sales tax changes have turned into a license for retail price increases. — Garth
#39 dd on 01.01.10
“Isn’t it better leaving the party a tad early?”
I remember reading a quote one day from one of the Rothschilds who when asked why he thougth he was so successful, answered with “I always sold too soon…”
Here’s something for those of you who think you know what’s going to happen with the price of oil. A couple of years back a guy named Lindsey Williams predicted that oil would go to $150/barrel and then it would crash to $50/barrel. Everyone of course laughed, but history has as we now know has vindicated this guy’s and his predictions. He has an interesting story to tell…
http://www.youtube.com/watch?v=kA5v9XyWJW0
#58 Dorf said “People really are animals and we will prove it once again.”
My father grew up during the depression and fought 6 years in WWII. One of the things he used to tell me repeatedly was that “The next war your going to fight is going to be in your own backyard.” He was talking about “haves” and the “have nots” and just how barbaric people can become when they need to be.
History has also shown that any time when there a huge and extended divide between the rich and the poor. Eventually, the poor will get what they need by what ever means necessary. I once read a book that described rich people dressing up as poor people so they wouldn’t be slaughtered for their riches… How pathetic…
This is indeed and interesting discussion.
There are many speculations and predictions about what’s going to happen this year on the housing market and generally, the Stock Market.
Some see it positively, some see it the other way around.
The truth is, we can never tell.
Let’s just hope for a positive outcome.