Are Boomers to blame for the mess ahead? A pile of people thought that’s what I said yesterday. Discrimination. Ageism.
But actually, no. I count Boomers among my friends. True, many of them are now on life support. Others don’t get out much this time of year since the snow shorts out their scooters. But they’re fine people. I mean, despite the drool.
In reality, our aging population and the big Boomer housing dump ahead are not the major hurdles real estate investors – and the economy – face right now. The giant health care and tax crisis is probably two or three federal governments away, hitting us with a vengeance around 2020. That will be when today’s desperate twentysomething first-time homebuyers are approaching middle age, with 95% of their net worth in their houses, 10% mortgages, no liquid assets and looking at a phased-in 70% marginal middle class tax rate.
Stop shaking your head. It’s coming.
The blame will not belong to health care-sucking seniors, but rather to the crew who were running the joint in the aftermath of the 2008-9 financial meltdown. They blew it. (But you don’t have to.)
Every government in the country is spending more than it’s bringing in, which means massive borrowing from the future. Borrowing now means more tax and less spending later. We’ve seen this movie before. It gave us the GST.
If employment had soared as a result of the billions spent, if factories were reopening and the private sector economy was rebounding, the public debt might have been worth it. But in reality, this economy will come off government drugs barely alive and stay flaccid for years. In the meantime, we all pay more.
Mistake one.
The other head-up-butt macroeconomic policy plop comes from the geniuses at the Bank of Canada. By mindlessly clinging to dirt-cheap interest rates, they oversee the creation of a private debt balloon as dangerous as the public one. As I outlined briefly below, Canadian households have never owed as much as now. Consumer and mortgage debt is off the chart. Incomes have stagnated. Inflation’s coming back. Gas is a buck a litre. And, of course, the price of middle-class shelter is outpricing the middle class.
Sure, F finger-tightened a few nuts on the mortgage rules last week, blowing off some no-money property virgins. But that does nothing to address the real threat – that absurd rates have allowed more a debt binge. That’s aggravated the Canadian financial disease, which is the accumulation of net worth in a single asset – the house.
Here’s a good example. In Vancouver, now more demented than usual, a piece of junk SFH costs nine large. Not far from neighbourhoods full of them, the No.2 guy at the BoC was speaking yesterday at a financial conference.
“At the moment, we are certainly seeing a certain amount of the recovery in the Canadian economy coming from the housing sector” Paul Jenkins said, apparently sober. “I would certainly not say we are looking at a housing bubble.”
But all Paul had to do was look out the window, a little to the north, to see Bubble City laid out before him. He knows it’s there, of course. But this is politics, not economics. Mr. Jenkins and his boss Mark Carney must surely know what happened when The Maestro tried the same tactic.
For the first half of his 18-year rule as head of the US central bank, known as the Fed, Alan Greenspan was a cautious, steady eddy kinda guy. He bobbed and weaved with economic cycles, moderately adjusting rates and money supply, and avoiding disaster. But in the second half, he presided over the two greatest and most destructive asset bubbles in America’s history. The dot-com bust wiped out $2 trillion in wealth, and they’re still collecting bodies from the housing crash.
Greenspan allowed both to form due to lax regulatory oversight and, most significantly, too-cheap rates. In fact, the US real estate bubble could end up destroying the States for a generation or two, throwing it into unrepayable public debt after hollowing out the net worth of the middle class. By refusing to act address the bubble with higher rates, lest he look bad for weakening the whole economy, Greenspan ended up blowing the entire wad.
There’s only one reason a house today costs 20% more than it did a year ago. Or that untold numbers of young couples are now dangerously leveraged. Or that average families can’t afford average homes. Or that the legacy of these times will be debt, not equity.
Mark. Dude. It’s time.
Note: The ‘duck’ photo originally illustrating this post was clearly too graphic for many. It has been replaced as a consequence. — Garth
141 comments ↓
This is all bad new, bears, but please tell me someone rescued the ducklings so I can sleep tonight, I have two showings on my condo tomorrow!
“At the moment, we are certainly seeing a certain amount of the recovery in the Canadian economy coming from the housing sector” Paul Jenkins said, apparently sober.
Garth, you crack me up. I find your site to be one of the most level headed sites around regarding Canadian Real Estate. Your arguments are very sound and logical. I don’t know how anyone can reasonably argue against your position on real estate.
I am a Condo owner in Toronto. I am planning on selling before April 19 and rent and then wait for the festivities to begin.
People talk about supply and demand. Demand was also high in the US right before the crash. I remember reading something from Robert Kiyosaki he said something to the effect that he knew it was time to get out of real estate when the cashier at the grocery store was handing out real estate cards. Yup, demand was really high and we all know what happens with artificial, governmet induced demand.
The opening act will not be federal revenues or health care short falls. It will be municipal funding crisis.
The generous defined benefit plans of the municipal workforce has been thrashed out here ad nauseum but the infrastructure spending will be the first show to drop over the next 5 years.
Look at the condition of our roads, bridges, water and sewer lines. Politicians have been building community centres and arenas because they want to get elected while our basic “hidden” infrastructure crumbles. Cities are running continuous budgetary shortfalls and we will soon be looking at mass service cuts or double digit property tax increases. Most Canadian urbanites, unfortunately will choose the latter.
I was terribly annoyed with Greenspan during the late ’90s – even then it was obvious that he was blowing bubbles. It’s obvious that MC is blowing a bubble, but like the Greenspan RE bubble, he’s got help. If Flaherty is unwilling to shut it down, the BOC should act. If that crashes Ontario, that’s Flaherty’s fault for creating a systemic risk for political gain, not Carney’s.
One poster last blog had it right “L” LOL = lack of leadership . I put it … there is not enough guts in ottawa to make a package of wieners .
First time buyers being led by mother government into the sewer of debt.
“. . . despite the drool . . . But this is politics, not economics.”
Ha! There’s the difference — boomers and politicos both drool, but for varying reasons.
Economists (and those who have a basic understanding of life in general) scratch their heads, wondering how the hell we got into this mess (greed). Moreso, how can we get out of it?
Everyone on this blog has plenty of ideas, but the best two? Don’t be a duck, and stay outta politics, ‘coz it will screw one something awful.
——
Anyone listened to the CPC Action Plan commercials on the radio? There is new wording, to the effect that “these programs are in place to help you”.
In other words, the economy stinks, the politicos KNOW that people KNOW (as well as us bloggers), and there is not a single thing that can or will be done to prevent the slide downhill from happening.
Canada — So Long, Farewell and Goodbye!
——
The Goracle Speaketh. Pay no attention — he is full of hyperbole.
Interesting, but the comment from wrh.com is better: “And the Federal Reserve, which was never intended to be the banking system for the US.”
The Domino Effect.
Citigroup heads off into the sunset with customers’ money (seven day withdrawal notice soon). Comment by wrh,com: “Folks, it does not get any plainer than that. The Federal Reserve is getting ready to slam the door on YOUR money.”
This probably ties in with the preceding, and it does show time is quite short now.
Evidently, not all is happy in Europe. Nostradamus Jr. is right again (as well as The Old Man).
This would apply to the Soros link prior. The EU is folding its tent, packing up and going elsewhere.
The heading need only be glanced over — it’s easy to figure out the rest.
You may remembre that Greece ran out of fuel a couple of weeks ago. Now French unions are warning people they will run dry shortly, so it is easy to understand why the planet is fed up. Unfortunately, the elite will have won, because everyone will be fighting among themselves.
We don’t exist anymore!
The real crime in my mind is how the gov’t kepts trying to stoke the economy by addicting us to more and more debt. No job creations programs. No attempts to improve economic productivity or innovation. Nothing for green energy or other important industries. Just deal more crack through cheaper debt financing.
This is the real crime and it is large.
The great deleveraging draws nigh. Don’t let investors like Andrew from the previous post pull your leg people – falsely claiming he’s making thousands in positive cashflow per month on his investment properties. We’ve been holding 100+ properties (at times) over the past decade and even in some of the highest appreciation, wage growth, and lowest vacancy areas of Canada, many still barely cashflow. Heck, even our remaining 20+ suite multi’s often have negative cashflow years (new roofs, boilers, etc). Considering we intially paid as little as 25k/door for some of them along with the economies of scale received on utilities, insurance, etc…trust me anyone who bought in the last five years (especially single family – even if they have multiple suites) is about to experience some very challenging years. Newbies never consider all the costs associated with investment property. I`ve talked with many who don`t even include a vacancy allowance when trying to calculate if a property will cashflow.
And for the people who think there`s no control over stocks, you simply don`t know enough about stocks. Once you learn a particular stock`s trend channels, fundamentals, etc…along with how indices, currency movements, put/call ratios, etc affect it… they`re one of the lowest risk, quickest in-and-out ROI`s going.
I’m bummed about the ducklings too…
Since momma duck was so shortsighted the orphaned ducklings had to grow up fast and fend for themselves. Flap forward with mom on her last wing, she asked for help, the ducklings gave her what last bit of bread they could afford, but remembered how she led them astray and decided they too wanted a life so decided not to work to feed her. Momma had to fight for her life in the same harsh way she forced her ducklings to.
Don’t pressure The Man Garth, lovin my 1.35% vrm and the bunkers paid off in 3 more years…
As for those buying now at these inflated prices, especially with 5/35’s….stupid is as stupid does….
With tonites picture Garth has subliminaly pointed out the world’s next phase….the “culling” of our overpopulated planet.
Nostradamus jr.
Great analogy in the pictures to what’s being done to the young, etc., but, C’mon Garth, that’s too much! Freak’n photog couldn’t have stopped it?! I know, another analogy…
just Increasing that 1%
It’s a slow day in some little town.
>
> The sun is hot. The streets are deserted.
>
> Times are tough, everybody is in debt, and everybody lives on credit.
>
> On this particular day a rich tourist from back east is driving through town.
>
> He stops at the motel and lays a $100 bill on the desk saying he wants to
> inspect the rooms upstairs in order to pick one to spend the night.
>
>
> As soon as the man walks upstairs, the owner grabs the bill and runs next
> door to pay his debt to the butcher.
>
> The butcher takes the $100 and runs down the street to retire his debt to the
> pig farmer.
>
> The pig farmer takes the $100 and heads off to pay his bill at the feed
> store.
>
> The guy at the Farmer’s Co-op takes the $100 and runs to pay his debt to the
> local prostitute, who has also been facing hard times and has had to offer her
> services on credit.
>
> She, in a flash rushes to the motel and pays off her room bill with the motel
> owner.
>
> The motel proprietor now places the $100 back on the counter so the rich
> traveler will not suspect anything.
>
> At that moment the traveler comes down the stairs, picks up the $100 bill,
> states that the rooms are not satisfactory, pockets the money & leaves.
>
>
> NOW, no one produced anything and no one earned anything. However the whole
> town is out of debt and is looking to the future with much optimism.
>
> And that, ladies and gentlemen is precisely how our governments are
> conducting business today!
>
Garth,
I think that the young buyers will be the biggest winners from the mess that appears with the collapse of the Canadian economy due to the housing bubble. F did not increase the min down for government insurance because of politics (read votes). For politicians votes are more important than the future of generations. When the debt crisis hits Canada as it hit USA, the government will cover the banks with taxpayers insurance and will become the owner of the same homes it insured. Since nobody will want houses in that situation, the government will let young buyers live there and pay what they can afford. In that bad situation it will be better to let them live there than get nothing for the insured property. Plus you get votes of course. So, the biggest losers as always will be the responsible people who cared about their debt, people who saved money, since the CHMC insurance will be paid out by their saved money through taxes. This happens when politicians carry about economy, when voiceless MPs sit in parliaments, when biased economist judge about the economy.
You’re right-the US will never recover in today’s world economic conditions, neither will Canada after the real estate collapse happens here. Real estate can not be a basis for economy. It’s exports, tourism. Building and renovating homes is a consequence of having exports and bringing money in the country. Building and renovating homes is a result of a good economy, not the opposite. All these years it has been the opposite. It ended as it ended in the US. The same is going to happen here. It’s the rule of the economy. There is no way out. The economy is a science with its rules. If you play politics with the economy (as with the climate) and try to go against those rules, you end up badly. May God help us in the years to come.
From last thread–
#131 Sam on 02.22.10 at 5:19 pm
btw–Gold–can you show me something else that’s into the 10th year of a bull market–
YES “HOUSING MARKET” – Wake up!
The herd is in gold?
You can’t be serious–the herd doesn’t even know how to spell gold–
THE HERD CAN”T SPELL “HOUSE” Either BUT THEY WANT THEM MORE THAN GOLD!
****************************************
I see your as confused about the RE market as Andrew–
I said gold is in a “bull market”
Housing is in a “bubble market”
Those that can’t see it–are as clueless as Fahlerity–
All we are is ducks in the wind.
So, the mother duck is Flaherty/CMHC, and the ducklings are 5%/35ers?
The metal sewer grate in the picture probably goes for about $50k in Vancouver (it qualifies as a parking spot, right?)
On a separate note, anyone planning out some Preferred Share / Dividend investing (such as those reading Money Road) should check out the G&M:
http://www.theglobeandmail.com/globe-investor/investment-ideas/features/portfolio-strategy/rising-inflation-set-to-shake-up-sleepy-preferreds/article1474803/
http://www.theglobeandmail.com/blogs/markets/are-dividend-investors-about-to-be-disappointed/article1477280/
Tasteless photo
Boo-urns
Chillax Chris….
Daddy Duck called 911 and fire, ambulance and police rolled and saved the day, much the same way they would come and help your mom…
but maybe not you!
I agree with the blog with regards to the U.S . They have been sucked dry by the Vampiric bankers and private Federal Reserve. Its now Canada’s turn as well as Europe to be taken down. All by design I might add. This is no accident. The bankers are after world Government run by them, but to get it the old system must be destroyed. Its as good ol Greenspan use to say when he was head of the fed, yet not many people understood his saying, “Creative Destruction.”
Canada is such a richly endowed country; it has everything(almost, maybe only weather).
Why must Ottawa resort to deficit spending
and inflating the RE bubble? RE asset appreciation
doesn’t help Canada or Canadians.
What Canada need is jobs………plenty of it…and
foreign reserve accumulation(via exports).
A big chunk of the US “unrepayable public debt” is due to the past 8 years of unrestrained and counter-productive military spending.
Garth,
The photo of the mother duck looking through the grate at her either dead or doomed chicks has me quite disturbed!
Thanks!
Remember that Mommy Duck and Pappa Duck were enabled big time over the last 30 years. They then became the enablers for generations behind them.
If RE is an emotional thing as described, emotions are about to turn sour for all. You must prepare yourself for this stage as the culling begins.
7 Nostradamus Le Mad Vlad
the dominoes, i was going to post that same article and caption it… Hey vlad, hear is something you will like,… dang mate we are on the same wave today…
incase anyone wants to read an indepth look into what is an eye opening debt/default reality… hit #7 post and read domino effect.
cheers
As funny (and sad) as that photo is, it does reflect on how people (and ducks) learn: trial and error. We aren’t as smart about how things are going to turn out as we think we are. However, hind sight is 20/20. I hope they were able to rescue the ducklings. And throw in whoever it was that sat there taking pictures instead of directing mom away from the grate.
70% MARGINAL MIDDLE CLASS TAX RATE???? ARE YOU FREAKIN’ SERIOUS????? Not that I would rule it out, politicians will pander to whoever has the largest voting block, and that is and will be boomers for a very long time. But tax rates are already killing the economy now, at that rate it will come to nearly a full stop. Basic necessities only, people building their own stuff by hand rather than working to pay for someone else to do it, that sort of thing. The underground economy will be bigger than the aboveground economy. Same as in the Depression.
There is some room tax wise to tighten up loopholes for the rich and make everyone pay the same rate, which would increase revenues significantly but not enough to save our bacon. But the economy cannot function properly at current tax rates, which are already destructive to capital formation, let alone rates 60% higher! People will just quit working and “live off the land”.
It looks like Green Day, (a generation Y band) may have been somewhat prophetic with their song “Holiday”. For those of you not in touch with the younger generation this was a hit off their “album of the year – Rolling Stone” American Idiot. The gist of the song is that the proper response to the Corporatist – Welfare – Warfare state is to drop out. Don’t work, don’t join the army, don’t help perpetuate the lies.
But I still disagree with one of Garth’s basic thesis, or at least what I think he’s assuming: The debt will be paid back, or at least some attempt will be made to do so. I think all government debt is eventually defaulted on. It’s default that lies ahead, 70% tax rate or not.
As Winston Churchill once said, “The Americans can always be counted on to do the right thing, once all other options have been fully exhausted.” Canada will follow suit.
It might be time for Mark to roll, but he won’t. Same as he didn’t all the other times it was time for him to roll. The rich are buying hard assets. They will have the hard assets at the end whether we get deflation from default or inflation from printing money to buy the debt. Either way, their relative economic status will come out roughly the same.
So it still remains to be seen if leveraging a house is the right decision. If we get super inflation, yes. But the experience state side seems to indicate that the money printing will only allow the government to continue borrowing; they aren’t going to print enough to cause our (I mean you and me, not the rich) assets to balloon again.
If you have a spare hour or so, this Peter Schiff vid is well worth watching (and covers many of the themes Garth covered above, but in an American context):
http://www.youtube.com/watch?v=EgMclXX5msc
T minus…
#13 Nostradamus jr. — “….the “culling” of our overpopulated planet.”
Except for the four western provinces, certain states — Dakotas, Iowa, Montana, Alaska etc. — you’re right.
Check out the population stats for the Eurozone – too many squashed into too small an area, like sardines. Gonna blow.
The elite love it.
——
The writing is not only on the wall, it’s everywhere where it can be scribbled.
Check out the comments at the end, esp. the first one. The story is fairly good.
May be something or nothing, but it goes hand in hand with the preceding. “Lyndon LaRouche warned that circles in London, including former Prime Minister Tony Blair, are the real potential architects of this “doomsday” scheme. It is those in London, who are desperate over the collapse of the entire British System, who may be contemplating an Israeli breakaway ally attack on Iran, that would bring on a planetary dark age.”
Mentioned a few times how the cycles are changing (as they should). Says it here in mumbo-jumbo doublespeak.
There’s Something About Real Estate!
Time now for the sun to send forth a giant solar flare and we will all be KFC Original with fries and gravy, Yellowstone and Toba to erupt, belch forth and combine them with a few ‘quakes.
Then St. Al can appear on David Letterman claiming it was all a big joke, no harm intended!
That is one smart duck. At least she had the sense to turn around to see what all the fuss was about. Oh well, it was neither that or Sylvester.
>#1 Grannysweet on 02.22.10 at 9:51 pm
>This is all bad new, bears, but please tell me someone
>rescued the ducklings so I can sleep tonight, I have
>two showings on my condo tomorrow!
Don’t worry about the ducklings. Obviously Garth doctored the photos. No freakin sane mommy duck would lead her broods into that kind of mass suicide.
Monbiot over in the UK takes on the Ultra rich tax avoiders.
http://www.monbiot.com/archives/2010/02/22/bleak-havens/
That’s a sad picture
The G20 members use to meet once every year or less. Now they are scrambling around like rats on a sinking ship meeting every couple of months. Not to mention all the secret meetings they have been holding in far flung northern locations, all hardly reported on by the corrupt prostitute mainstream media. Is this how our finances should be handled, in the shadows controlled by unelected private bankers? this is hardly democracy and we need to be worried about more than just the price of the local debt shack.
The GST was revenue neutral. Being the former minister of national revenue, one would think you would know that.
You don’t pay off a $40 billion deficit with a revenue-neutral tax. — Garth
They are all blowing it. Governments, Bankers, MP’s, MLA’s, economists, organized realtors/developers and media, all of them acting in naked self interest is what is ultimately the largest factor for the massive unprecidented credit expansion Canadians have seen today and will dearly pay for tomarrow.
Just as an example with healthcare (is it off topic with a RE blog? Nope. Healthcare costs take a bite into disposable income and thus, effects mortgage affordability and ultimately, RE values which effect everyone’s well being and economy as a whole so I’ll give it some time today as its unlikely that others will).
For the last 4 years (and then some) we’ve had a federal laisse faire approach to health care leaving the provinces to deal with public health care provision which fails to address what I believe are the healthcare’s four largest issues all Canadians face (lack of universality in terms of patient cost and service for paying for public healthcare throughout Canada, a lack of doctors in all of Canada’s provinces, lack of provincial budget accountablity in healthcare spending for federal approval, increased toxicity levels in both imported/exported foods):
- Concerning doctor shortages, virtually all the provinces have doctor shortages due to the lack of investment by both feds and provinces to recruit Canadian students into becoming doctors that remain in Canada upon graduation. I believe we need federal grants and student loan incentives that come with “first 10 years work in Canada” contracts to make sure students are financially attracted to take their university education here but stay in Canada for a decade as a result of educational funding by the feds. Currently this “minority” government has no political will to deal with this long term systemic problem of doctor shortages other than to say they will when an election comes near. (Other than reducing the educational standards doctors require to meet in order to contract work in Canada, there are no cheap quick fixes. The larger problem stems from politicians not facing blowback from addressing healthcare issues for years, perhaps a decade into the future. political lack of accountability on a federal level most certainly adds to the problem as well as deficiencies in leadership).
We need a more regulated national healthcare program that ensures:
- doctor shortages are being addressed.
- provincial budget spending is properly accounted for across Canada.
- the cost of healthcare is universally equal across Canada. (currently it isn’t and standardizing costs at this point is a pipedream as a result of provinces holding too much power with the administration of health care and health care costs, as well as provinical historical debtloads and differences in provincial transfer payments that have to be factored in), but my point is that it isn’t a goal for Canadians and it should be. All Canadians should be treated equally in Canada at a number of levels and currently when it comes to cost and service by public service that differs from province to province, we are not)
- Food and drug inspection and safety standards have faced deregulation in area’s of meat inspection, as well as attempted changes to food manufacturer labelling and toxicity tolerances of both imports and exports within federal departments, void of new laws being passed into effect. Such changes have had negative consequences. Attemped new laws, Bill C -51 & 52 were flawed bills that may has well been written by corporate lobbyists (which, in most ways, they were). The opposite needs to occur for Canadians to improve their health going forward. We need a “for health”, not “for profit” approach which in the end, will reduce the costs of healthcare.
- epidemics need to be taken far more seriously. diabetes is now an epidemic. 1 in 5 natives have diabetes.
- obesity is still literally a growing problem.
I fail to see how the Canadian government now or in the future can deal with the health care issues of today without dealing first hand with the general health of Canadians overall and it begins with the acknowledgement that while Canadians are living longer in general, they aren’t living healthier. We have to admit the systemic problems currently created by a lack of tougher regs in toxicity testing and safe, acceptable limits of toxins within our four key government departments:
Agriculture and Agrifood Canada, Fisheries and Oceans Canada, Health Canada and Industry Canada… before we can begin to improve the health of Canadians through the increased quality of foods that end up on our plates. And again, we need to address our chronic shortage of doctors going forward. Quite simply… nothing has been done. (other than reduce the standards doctors need to adhere to in order to practice in Canada from other nations in an effort to meet this shortage. Such standards need to be more clearly outlined at both federal/provincial levels)
Outside of the CBC (and they haven’t done much as of late) the media stays eerily silent on these issues even though cancer within the digestive systems and sex organs are skyrocketing well beyond numbers that are expected to grow through earlier tumor detection which predicates that increased toxins in food/drug sources are a growing issue).
After looking at the last 4 years of governance and introductions of Bill C-51, 52 content (and not much else) as well as the lack of action in other issues such as the disappearance of pink salmon and other salmons off the west coast and deregulation resulting in listerious outbreaks, I would have to give our current federal government an F concerning how they’ve managed health care to date. Will the costs of healthcare rise as the overall health of Canadians declines not simply by age but by diet factors related to government agenda’s that favor manufacturer profits over food safety through looser federal regulations? The question answers itself and the consequences of higher healthcare costs means quite simply, higher taxes, less disposable income and as a consequence, falling RE values over time.
Are you kidding us on yesterdays advice in the comments to prepare for $5 or $6 k a month for nursing care as an octogenarian. Why not put a little aside for a nice diamond tiara or mid range Rolex to be buried with as well.
Most would be better served with a plan to pre-sell their wrinkled corpse to a dog food company. Get out of the golden horseshoe man.
To say you are preaching to an elite minority would be an understatement.
Post if you dare.
My father (Alzheimer’s) required 24-hour care for the last four years of his life. It cost $8,000 a month. My mother required full-time nursing assistance for the last year ($6,300 a month) of her life. A 39-year-old disabled reader of this blog, who used to make $100K a year, now requires $5,000 a month in private care (not paid for by the public system), and is erasing his savings doing so with no prspect of working again. Your comments are as out of touch as they are repulsive and uncaring. — Garth
Astute readers of the link I posted in a previous comment about a duck rescue would see that it is actually a different sewer grate. I only spotted it after I posted here. Google revealed to me that duckling rescues in sewers are seemingly reported with some frequency.
Here’s a link which confirms the actual rescue of these ducklings:
http://www.building-hardware.com/2009/08/05/watch-out-for-drains-ducklings/
(tear jerker alert – it reveals the censored photo in question).
You can all rest assured and start your workday now!
@ Daystar #15
Regarding doctor shortages you don’t get it.
Provincial governments control exactly how many students enter medicine to be later hired by the state monopoly. It’s called a planned economy, just like in the USSR.
There is no shortage, it’s intentional and it’s called rationing. And it’s going to get worse before it gets better unless the system gets freed some from government control and politics.
In fact I beleive welfare states will become (even more than they are now) fiscal hells and service (including health) decaying hells.
As a consequence new markets will open to attract retirees, probably in emerging countries, that will offer low cost services and low taxes.
I barely have to edit my comments to make them work for the new photo:
“The in the picture probably goes for about in Vancouver”
Although, now I’m sensing some kind of “Euro being squeezed by debts” theme with the Peugeot in the picture.
ah – the html tags ate my comment: “The parking space in the picture probably goes for about $500k in Vancouver”
It looks like Flaherty agrees that many Canadians could be better planners of their financial future.
http://thechronicleherald.ca/Business/1169014.html
http://www.financialliteracyincanada.com/eng/index.php
I wonder if they’ll use the “Money Road” as a text.
Garth, do you see a 70% MTR as practically locking one out of their RSP? Is your tax avoidance strategy still going to meaningful?
RRSPs can be drained without tax liability. It’s in the book. — Garth
I, for one, like duck. mmmmmm, tasty!
Sorry, I didn’t see the picture.
If I was uber-rich, I would be quite displeased with the government and our debts/deficits. Imagine driving your ferrari under a bridge just to have a chunk fall on it. Or, hitting one of those monsterous pot-holes along the 401…or, waiting 12 hours for healthcare….oh, wait a minute, if money wasn’t an issue I’d just get private health care and go to the US for treatment…
Chaostrology on 02.22.10 at 11:38 pm
Chaostrology
“Chillax Chris….
Daddy Duck called 911 and fire, ambulance and police rolled and saved the day, much the same way they would come and help your mom…
but maybe not you!”
You really think 911 came to save the ducks? Sounds like magic thinking to me errr, positive thinking, guru type stuff. The reality of nature is that we all take care of ourselves, especially when it takes number one to help number two (i.e. everyone else). While number one struggles it worries not for number two.
Generation Me can barely hang on right now and we are watching our entitled parents suck from the trough. We wont work for them, period, because WE CANT! Boomer refuse to retire.
#21 NotAnIssue,
Sorry but you are wrong. I do read David Rosenberg and he is not a bull on Canadian Real Estate. Quite the opposite.
We are at the end of the cheap credit era. Clearly the gov’t will keep the interest rates as low as possible but they cannot go any lower. Meanwhile price increases have taken away most of their initial stimulus effect in the Canadian market.
The coming rule changes, the HST, Property tax increases, higher energy costs, flat job market and all the other indicators point south. Remember that it only took 5% of the homeowners getting into trouble in the US to pop their bubble. We will be there and worse in Canada by this fall.
The Economic Conference Board of Canada predicts that, as a consequence of the 750 billion spinoff dollars generated by the 2010 Winter Olympic Games, BC will lead the country out of the economic recession!?!?
The other day I overheard a REALTOR say that prices in Kelowna are poised to take a hefty jump higher in the coming months as bidding wars have returned indicating demand is outstripping supply!?!?
This bus is being driven by a raving lunatic. I give up…
That might have been $750 million spin off dollars not billion…
$770 million
http://www.torontosun.com/money/2010/02/22/12986071.html
I missed the duck photo.
Can anyone provide a link?
Paul:
In your story, EVERYBODY produced something and/or added value to the local economy, except the tourist.
You’re telling the story of the settlement of a debt, but you’ve missed the part where the debts were incurred, which is where the production and value addition take place.
Hello Garth
The statement below says a few things.
There’s only one reason a house today costs 20% more than it did a year ago. Or that untold numbers of young couples are now dangerously leveraged. Or that average families can’t afford average homes. Or that the legacy of these times will be debt, not equity.
That being real estate prices go up 20% per annum.
Sometimes more sometimes less and next to interest rates at banks its impressive enough to set off a long term orgy of real estate speculation. One of the big problems is that your typical working man is earning between 10 and 20 dollars an hour without raises due to market forces needs a minimum raise of 300 to 500 percent to meet the challenge of real estate price inflation. You see the problem. If employers are going to hold the line on pay rates then either real estate prices must collapes or you will have a society of under paid men who can’t live , buy houses and start families in canada. Canada will slowly become extinct or at least greatly diminished when it comes to white canadians and possibly all ethnic groups.
Basicly the problem is that 25 year +- chance to breed that can get sabotaged by low pay and extreme housing costs combined with a hostile legal climate in respect to straight mens rights and freedoms.
Real can of worms to deal with wouldn’t you say?
Most people just don’t believe there is a problem or don’t want to believe the problem exists.
Just wait untill there are too few workers around to pay for pensions and health care through their taxes.
Steven
NEW YORK (CNNMoney.com) — Home prices fell just 2.5% during the last three month of 2009 compared with the fourth quarter of 2008 – USA
_____________________________
Home prices go up 20% last year – Canada
______________________
Question:
What is wrong in Canada?????????????????
Case Shiller – both of the lads commenting on CNBC this AM extremely worried about where the market could go!
Government removes stimulus, Fannie Freddie or rates make a move, it’s going to get worse than you could have ever imagined.
Note: The ‘duck’ photo originally illustrating this post was clearly too graphic for many. It has been replaced as a consequence. — Garth
HUH??? that duck photo was a perfect example of the mess we are heading for. We all know what happened to the ducklings… they became gator food and serviced the underground monsters…. LOL
cheers
Grath fess up 1949 makes you one of the Boomers too. Drooling? Life support? Come on your scooter is a Harley.
Takes one to know one.
R U serious? — Garth
Too bad you changed the picture – I was waiting for one of our usual suspects to blame the victims!
Two good reads for today:
http://market-ticker.org/archives/1993-How-Long-Before-You-Wake-Up,-Politicos.html
“Yes, I know all about the stock market rally from last March. I know all about the claimed GDP “improvement.” But I also know that we got both by adding more than $2 trillion in debt to the United States – or roughly 14% of GDP – over the space of the last 18 months. That’s about 10% of GDP annualized, and incidentally, a 10% GDP contraction is the common economist’s definition of an Economic Depression.
So let’s cut the crap – we are in a Depression right now. We are pretending we are not, just like you can pretend you didn’t really lose your job so long as your credit card does not reach its limit. We have been in that depression for about 18 months and there is no evidence that we will exit it, as we have yet to find a way to pull back the deficit spending without an instantaneous collapse in the economy.”
And from Jonathan on household debt:
http://americacanada.blogspot.com/2010/02/national-bank-says-that-canada-is-in.html
2 items related to prior posts. First, Life Insurance: For almost 50 years (49 actually) I paid into a life insurance policy. A side benefit was a signed contract which allowed participation in profits of the company. All those years the money accummulated in dividends which were re-invested as guarenteed cash and extra death benefits. Now after a number of buyouts and other changes in the original company (Prudential) “guaranteed” disappeared from those benefits. Very reluctantly I cashed out, even though the company (Sun Life) verbally stated they still guaranteed them they did not put the word back in. A Prudent move ??
The second item relates to #39 today: While I agree with most of the comments we appear to blame every one else for our poor health and sky rocketing health care costs, (as with debt, real estate/financials etc). When will you learn; grow your own or at least eat locally grown food, and remember, energy in, energy out. Period. The BBC program, ‘The morals of Obesity’ (title?) explored it further.
Sorry for skirting the main topic of the blog; real estate is a side issue for me.
#9 Bullybear – what he said.
I too have some experience in for-profit rental real estate, in fact I grew up with it, as my Dad was a landlord. I remember at a very young age going to “help Dad” do maintenance.
Anyone who is claiming that their experience over the last 5 years, during the biggest Boom ever in real estate, will be repeated indefinitely into the future – go ahead, double down, buy some more real estate. Best of luck with that, you’ll need it.
Being a landlord is like any other business. Some periods are good, followed by the not so good. You have to have enough cash and equity to weather the downturns, when “cash flow” is flowing away from you, tenants stop paying the rent then vandalize the unit, the Bank calls about how your equity is questionable and your loan might not be renewed, the furnace dies, the roof leaks, the wiring starts sparking, the tenant uses his unit for a growop etc etc etc.
The same issues confront larger multi-unit properties, but the numbers are so much bigger. New elevators, repairing the parking garage, new boiler and piping – the costs can run to millions very quickly.
Which is why I sold all rental properties years ago, and would never go back to that business. You have to buy the properties very cheap, at the bottom of the price cycle, just to insulate yourself somewhat from the inevitable costs down the road. If you can put up with all the grief for 20 years, the tenants will have paid off the mortgage for you, and you will probably be dead from the stress by then or shortly thereafter.
It’s a tough business, that looks easy to those who have never seen the wrong side of the business cycle. Hint: rents will fall as so many vacant properties hit the rental market, while consumers ability to pay is reduced, financing is tighter, while fixed costs don’t go down – and I am not even mentioning higher interest rates here. The only way to survive will be to have a large equity cushion that will enable cutting rents and cover the increased churn and vacancies.
Personally, I would rather dig ditches for a living by hand than be a professional landlord again. That reflects 50 years of family history in the business in. The day I sold the last property was a happy day.
What happened to the ducks?
Musings from a VI Boy (usually public under “Funcanuck”)
Is it too late for towns/cities to engage in “green development” or “sustainable growth?” Much has been written–city of Toronto has a green development strategy.
Do the terms “urban sprawl” come to mind–paving over prime agricultural land,…….? I heard once that when land is expensive, you build up. When land is cheap (like water), you build horizontally.
Couple this w/ the mindset of “bigger is better” and you have “McMansions” and suburbia (not in a good way).
This is a factor in the housing market that I think is associated (co-relation not causation folks) with supply, demand, and pricing.
TAXES: Much has been written on this blog re: taxes at the local level going up. I recall somewhere reading that 83% of the services that a typical BC’er or Canadian receives is provided at the local level.
How can local gov’ts keep on affording new roads, sewer systems, water systems, schools, and other infrastructure when they sprawl?
There’s also other demands for services (frequently by people who don’t want to pay) like sidewalks, crosswalks (the fancy ones w/ flashing lights), …the list goes on.
Then there’s bonehad decisions by local gov’ts. The Fed. of Taxpayers don’t always have it wrong when pointing out wasteful spending.
Nanaimo Conference Centre comes to mind and I’m still po’d by the taxes on this “one” centre tacked onto my two houses over 23 years. I suspect the City will extend that as once they get a taste for taxes, they are reluctant to let go.
There are many factors associated w/ the housing market and how it affects other things-some good but many bad.
I thought I’d throw in a few things. Don’t get me wrong though folks. Canada (especially Vancouver Island) is a great place to live and we’re very lucky people (I am after all “Funcanuck.”)
With all the liabilities, environmental & financial, that Millenials (and their children) will have to pay for, it’s pretty hard for me to see how Boomers are not going to be despised by the younger generations.
Boomers will still be the largest demographic group for decades. They have two choices: (1) turn democracy into a tyranny of the majority and continue burdening their young or (2) suck it up and take some of the sacrifice. Interesting times are ahead.
Quote from Steven
“Just wait untill there are too few workers around to pay for pensions and health care through their taxes.”
—–
I, for one, plan on shirking as much tax, cpp & EI as possible over the rest of my considerable life. Either from working under the table or bartering for goods.
Personally, I don’t feel like participating in this ridiculous system where the rich keep getting richer and the poor, poorer. This is modern day slavery and I will not participate.
I will participate in local communities, markets and currencies. I also attach value & wealth to tangible items; ie sheep, vegtables & bullets but NOT gold, how about silver instead.
Humans are living far beyond our means and if you believe that we can continue to live like this without major change then i’ve got news for you. We live in a finate world.
For the love of all that is good people! Calm down.
Here’s your Duck story:
http://www.queensu.ca/security/graphics/2004/ducks-without-security.html
Google is your friend.
There are many other reports of ducks being rescued from the drains.
Hell this picture even made Snopes at one point.
Now back to your regularily scheduled housing crisis talk.
Banks at risk of going bust tops 700
By David Ellis, staff writerFebruary 23, 2010: 10:28 AM ET
NEW YORK (CNNMoney.com) — More than 700 banks, or nearly one out of every 11, are at risk of going under, according to a report published Tuesday.
The Federal Deposit Insurance Corp. said that the number of banks on its so-called “problem list” climbed to 702, its highest level since 1992. At that time, the agency red-flagged 1,066 banks.
——————————-
Where to keep cash safe?
Under pillow? in mattresses?
56 Prophet on 02.23.10 at 9:47 am
Question:
What is wrong in Canada?????????????????
***************************************
Obviously a comatose population–
Geezzuzz i can’t believe we’re in such disagreement over this housing bubble—
One look across the border 3 years ago,should have given everyone the perfect setup to bail out or at least not to jump in–
I’m sure-there will be people like Andrew and Sam who point out the price gains of the last 3 years–
Guess what?
Unless you sold–those gains will be wiped out in the 1st year of this bubble pop–
Ride it to bottom guys and weep–
Your big egos are going to get you slaughtered–
“It’s not the smartest or richest who survive–
It’s those that can see and will adapt to change the fastest”
21-not an issue
–so this fire is not made of kindling,it’s good solid Canadian pine burning in that fireplace…….
Pine is a very soft wood and burns very quickly–gives off heat for a relatively short time and quickly turns to ash
your analogy using pine to stoke the housing market fits well—–it got hot for a short time and now it is slowly burning out and is turning to ash
Yup, the emo boomers on here love to mock 20- and 30-something couples for being fools over 5/35 mortgages. Boomers are the ones who have setup the financial hardship they mock my generation for. Your DB pensions and a lifetime of smoking cigarettes is a tax tsunami. Worse, they are the greater fools who vote conservative.
IRT Junius
I agree with you for once. (post #8)
1) 70% marginal rate on the middle class!!! What middle class?
2) Population levels adjust to the maximum sustainable and the level is dynamic. Easter Island is worth a study.
3) The universe is unfolding as it should.
4) Knowledge is expanding exponentially….wisdom is stuck in neutral.
5) The simple answer to excessive debt is to raise taxes and debase the currency.
6) This too shall pass.
It seems each generation wants to blame another for their woes. Its about accountability and responsibility.
Or as I have heard it put another way.
“I’m a loser because my father is an alcoholic”
when if fact
Your father is an alcoholic because your a loser.
$8,000 a month still numbers well above average.
I found all writers intend to use extreme cases.
My examples come from real life. And life is extreme. — Garth
Wish houses in Kelowna were up 18% over last year! Things are down 8 – 10% on sfd and worse on condos.
Modern “economics” is total bullshit based on voodoo and “junk science”., or as they call it “the science of being wrong.” This is one of the root causes of our current crisis – we are led by morons waving “MBAs” like they knew what they were talking about. As if.
Deathbed of Keynesian Economics Will Be in U.K.
“Feb. 23 (Bloomberg) — The U.K. has produced notable economists over the years, but John Maynard Keynes, the guru of government intervention, was one of truly global significance.
So it may be fitting that the U.K. will also become the deathbed of Keynesian economics.
Britain has been following the mainstream prescriptions of his followers more than any developed nation. It has cut interest rates, pumped up government spending, printed money like crazy, and nationalized almost half the banking industry.
Short of digging Karl Marx out of his London grave, and putting him in charge, it is hard to see how the state could get more involved in the economy.
The results will be dire. The economy is flat on its back, unemployment is rising, the pound is sinking, and the bond markets are bracketing the country with Greece and Portugal in the category marked “bankruptcy imminent.” At some point soon, even the most loyal disciples of Keynes will have to admit defeat, and accept that a radical change of direction is needed.”
Save the economy – kill Keynesians on sight. Every University “Economics Dept” should be closed, and every Professor fired. For all the disservice they have done to the real world economy outside their delusional ivory towers.
I’m off to Rome, Italy tomorrow for a long weekend, I’ll report back on the economic situation in Italy. (PIIGS).
Mike
Prediction…
As London will be the epicentre of revolt/chaos in Europe before the 2012 Summer Olympics begins there….
…New York, Toronto and Vancouver will capture their banking business.
However Vancouver will remain the “safest” of the three.
Nostradamus jr.
You told it like it is or was, the best yet !
From first hand knowledge I can tell you all that prices in Toronto have leaped seemingly more than 20% because when we were looking I remember the prices for certain areas… now they are minimum 100K more in most cases.
In some cases it is closer to 200K which comes closer to 30%. Fortunately some of these are sitting on the market as buyers adjust to getting gouged big time. I see no chance for this to re correct until something monumental happens. A stock market correction might do the trick but they are coasting on vapours.
Hang on for a bumpy ride over the next 5 years plus.
This ain’t over by a long shot.
# 67 – disenchanted dept free
I am assuming you meant “debt” and not “department”
I think that you have summed up the attitude of the Gen Y people very well. I do not think that Gen Y will be willingly paying for the costs that the boomers have and/or will rack up. The game will change over the next 10-15 years as Gen Y moves up the age chart.
I own 3 rental buildings with 3-6 units each and I’m actually renewing a mortgage next month on one. I was thinking about refinancing it to possibly purchase another building. But when I checked MLS I was shocked at the prices. How can anyone have neutral cash flow with those rents/expenses ratios?
I’ve learned a few things the hard way over the years. I think every year I’ve looked since 1998 someone has predicted the crash of the real estate market. I’ve also learned that in real estate investing cash flow is King. Also to include ALL expenses in your analysis and don’t count on appreciation for ROI. Don’t forget accounting for property management. I don’t do toilets. Oh and make sure the rents are true market! I could go on and on
But just by slowly paying down mortgages and increasing rents when you can you will be good long term. If the market does take a dip I have the cash flow to keep the properties at a higher interest rate. In fact I would like a dip so I can rebuy assuming I have enough equity left to refinance still.
The one nice thing about investing in rental properties is you see where the money goes and have SOME control over that . With stocks I don’t have any control over the CEO’s partying it up like the own the companies.
Garth et al:
Not sure if anyone else mentioned it. Citibank, sends notice to all customers, 7 day notice required to remove money from their Bank account.
Looks like the SHTF is starting for some in the USA.
Mike
http://money.cnn.com/2010/02/23/news/companies/fdic_list/index.htm?hpt=T1
Is canada safe from this mess in the south?
Of course this is correct. If we had more doctors then it would be more expensive to pay them. Therefore the gov blames it all on this so called shortage.
Maybe when we need health care we can use a Vet. There’s no waiting for dogs and cats to get their surgeries.
To Nostradamus Jr.
Banking business in Vancouver? Are you kidding me? NOT a financial centre of any importance. Totally unsophisticated workforce re: finance unless you’re speaking about venture exchange pump and dump. No cap mkts expertise. No advisory that I’d pay a penny for. Not even a secondary market like Chi or SF.
Stick to your aphorisms, Carnac the magnificent.
“Cash bonuses for Wall Street bankers rose by 17% to $20.3bn…..
For most Americans, these huge bonuses are a bitter pill and hard to comprehend,” Mr DiNapoli said.
“Taxpayers bailed them out, and now they’re back making money while many New York families are still struggling to make ends meet.”
The average taxable bonus on Wall Street rose to $123,850 in 2009.
Those paid at three of New York’s biggest investment banks – Goldman Sachs, JP Morgan Chase and Morgan Stanley – rose by 31%, according to the Comptroller’s report.
Last month, President Barack Obama said that multi-billion dollar bonuses taken by Wall Street bankers were “shameful” while taxpayers bailed out their industry.
The president said their actions “were the height of irresponsibility”.
Well Mr President, I would just like to say that if you know this is the height of irresponsibility then choosing to do nothing about it sets a whole new standard in the ranks of being a useless turd!
The smartest man is and idiot if he chooses not to teach, the strongest man is weak if he chooses not to use his strength, the wisest man is a fool if he chooses not to enlighten and finally the most powerful man is the weakest when he chooses not to use his power.
The Cheese Grater
On the subject of dismantling “quantitative easing”, interesting post by David Rosenberg today:
http://www.theglobeandmail.com/report-on-business/real-test-for-markets-is-still-to-come/article1477865/
In a nutshell: the central banks are in unchartered territory. Previous attempts (in the 30’s and Japan in the 90s) are not encouraging. Maybe this is why Mark is hesitating? The thing is, the longer BoC waits, the greater the risk.
If you thought I was just ranting there about economists:
Greenspan Wins Dynamite Prize in Economics
“Alan Greenspan has been judged the economist most responsible for causing the Global Financial Crisis. He and 2nd and 3rd place finishers Milton Friedman and Larry Summers have won the first–and hopefully last—Dynamite Prize in Economics.
In awarding the Prize, Edward Fullbrook, editor of the Real World Economics Review, noted that “They have been judged to be the three economists most responsible for the Global Financial Crisis. More figuratively, they are the three economists most responsible for blowing up the global economy.”
The prize was developed by the Real World Economics Review Blog in response to attempts by economists to evade responsibility for the crisis by calling it an unpredictable, Black Swan event.
In reality, the public perception that economic theories and policies helped cause the crisis is correct.[<---!!!!!]
Alan Greenspan (5,061 votes): As Chairman of the Federal Reserve System from 1987 to 2006, Alan Greenspan both led the over expansion of money and credit that created the bubble that burst and aggressively promoted the view that financial markets are naturally efficient and in no need of regulation.
Milton Friedman (3,349 votes): Friedman propagated the delusion, through his misunderstanding of the scientific method, that an economy can be accurately modeled using counterfactual propositions about its nature. This, together with his simplistic model of money, encouraged the development of fantasy-based theories of economics and finance that facilitated the Global Financial Collapse.
Larry Summers (3,023 votes): As US Secretary of the Treasury (formerly an economist at Harvard and the World Bank), Summers worked successfully for the repeal of the Glass-Steagall Act, which since the Great Crash of 1929 had kept deposit banking separate from casino banking. He also helped Greenspan and Wall Street torpedo efforts to regulate derivatives."
All Keynesians of various stripes. United in incompetence.
re # 21
thanks for the laugh buddy!
your own reasoning defeats your conclusion
its ok, you are just a little more deluded than the average Canadian, but you’re alright – just go out and borrow some more to buy houses with – you’ll make a fortunte! LOL
IRT #83
Bullets and bartering is hardly the attitude of Gen Y. Thanks for the laugh though.
Pol-Can: I regularly read Market Ticker, it is very informative and I love his rants. I wish AmericaCanada posted more often. It’s so galling that our gov’t is acting so similar to the the US gov’t, while claiming all the while that Canada is in better shape, and that our outcome will be not be the same. We are so affected by what the americans do ( like buy american policy), and also what’s going on in Europe will have a big effect worldwide. All the more reason to act sanely and not be in denial!
To Nostradmus
I worked for what used to be called “The Office of the Senior Vice-President of the Bank of Montreal” in Vancouver when Vancouver actually had a few almost Head Offices. BMO, and all the other banks, shipped the various senior departments back east in the late ’80s, early 90’s. Those departments are never coming back to Vancouver – capital costs of locating here and trying to get staff to come here are just too much. The last 10 years or so that I worked for BMO, the bank actually had to buy houses for senior management to live in because noone wanted to commit their huge salaries to real estate (of course, looking back, it would have been a good move).
http://money.ca.msn.com/investing/news/breaking-news/article.aspx?cp-documentid=23507096
We don’t have a housing bubble, no sirreee!!
Even the honorable, “Paul Jenkins, senior deputy governor of the Bank of Canada”, said so. Who are you lowly blog denizens to claim other wise. Go get a good education before you open your mouths. Canada’s housing market is healthy. We are different here in Canada, it’s just different.
Sorry Garth, but claiming that governments borrow from the future is just dangerously wrong. All borrowing comes from the present. Someone has to pay in the present for the spending you borrowed, even if it’s not you. Who is paying for Canadian governments? The Chinese? The Europeans? Nope, just the Canadians.
You pay back in the future only if your intention is to pay back. If your intention is to default, then who cares? Like you said, it’s politics, not economics. And politics says loot everything that isn’t nailed down before the ship hits the iceberg and starts to sink. It can’t be turned around.
No one will care for the baby boomers in old age. They dug their own grave, let them lie in it.
I am not sure if rates will go up this aggressively:
http://www.financialpost.com/most-popular/story.html?id=2602124
It really seems as though we have bought it forward, in regards to RE. Amazing how some think RE will go up forever.
A lemon market will be produced by the following:
Asymmetry of information, in which no buyers can accurately assess the value of a product through examination before sale is made and all sellers can more accurately assess the value of a product prior to sale
An incentive exists for the seller to pass off a low quality product as a higher quality one
Sellers have no credible disclosure technology (sellers with a great car have no way to credibly disclose this to buyers)
Either there exist a continuum of seller qualities OR the average seller type is sufficiently low (i.e. buyers are sufficiently pessimistic about the seller’s quality)
Deficiency of effective public quality assurances (by reputation or regulation and/or of effective guarantees / warranties
http://en.wikipedia.org/wiki/The_Market_for_Lemons
http://en.wikipedia.org/wiki/George_Akerlof
Post #21 Not an Issue. Read this from the Automatic Earth. Read paragraph 4. About Albania. Actually read it all. I was doing a small job downtown this morning and the fellow renting the space was from Albania. He said to me you Canadians are being sucked right in, I saw this happen in my old country, why don’t the Canadians get it he asked me? After a long and interesting talk with him, I had to concede that we’ll have to experience it to understand it. I won’t get into what he told me about things that happened, everyone is queasy over the ducks. http://theautomaticearth.blogspot.com/2008/11/debt-rattle-november-26-2008-from-top.html
77-not an issue
testy–testy—sorry don’t own a cottage and never have
that’s the first time i’ve ever been called a nerd–many other names but never a nerd—so little you really know
not many around that are predicting for the next decade like you–a little “common sense” goes a long way
and peter schiff was right
unraveling the truth
The public can now see for the first time how poorly the securities performed, with losses exceeding 75 percent of their notional value in some cases. Compounding this, the document and Bloomberg data demonstrate that the banks that bought the swaps from AIG are mostly the same firms that underwrote the CDOs in the first place.
http://www.bloomberg.com/apps/news?pid=20601109&sid=ax3yON_uNe7I&
Mr Flaherty will be known in history as the person that crash the ecomony and destroy the middle class because of his idiotic policies.
#93 Hoon
Its all we’re going to be left with.
On another note:
http://www.cbc.ca/health/story/2010/02/23/life-expectancy-canada.html
great, more debt on the way.
My bank is offering me a 5 year floating rate note with fixed rate 3% for the first two years and capped between min 3 and max 7% to the 3months USLIBOR for the year 3, 4 and 5. Am I having a good deal?
#42 pbrasseur
@ Daystar #15
“Regarding doctor shortages you don’t get it.
Provincial governments control exactly how many students enter medicine to be later hired by the state monopoly. It’s called a planned economy, just like in the USSR.
There is no shortage, it’s intentional and it’s called rationing. And it’s going to get worse before it gets better unless the system gets freed some from government control and politics.” – pbrasseur
But there are shortages of doctors right now in 8 of of 10 provinces according to the last MLA I talked to (a few days ago) and it is affecting services. As a consequence, provinces are being forced to drop their standards placed on the credentials of doctors who have taken their training outside of Canada just to get them at all. The problem quite simply is that doctors make more in the U.S. and some parts of Europe which temps doctors trained in Canada to practice there.
While its true that the provinces control enrollment, the feds could still obviously do more not only to encourage more students to enroll in medicine financially but most obviously through contracts that are designed to keep graduates in Canada once they graduate.
Doctor shortages are not something the provinces can fix by themselves. The incentives to boost the numbers of Canadian students trained in each province by provincial governments to address issues in doctor shortages aren’t there when one acknowledges where they end up practicing which is in this case, other provinces or outside of Canada altogether. The feds need to step up and they’ve done nothing for decades now.
“In fact I beleive welfare states will become (even more than they are now) fiscal hells and service (including health) decaying hells.” – pbrasseur
Are you implying that Canada is a welfare state because Canadians have a public healthcare system? (thats an inflammatory description of public service if thats the case) Do you think that way with other forms of public service like education? Have you ever looked at the European models of healthcare for cost effective service?
“As a consequence new markets will open to attract retirees, probably in emerging countries, that will offer low cost services and low taxes.” – pbrasseur
Do you truly believe that Canada’s future is one where seniors need to fly out of Canada for diagnosis and treatment? Do you believe this is the functional solution to our problems, if someone gets sick and needs serious care, that they should buy plane tickets and get service in another nation? If you’ve got a minute, could you site just one example of a nation with less tax burden and at the same time provides low cost health care to give us an example of what you have in mind?
I think I saw the housing bubble movie before in the states.
#95 Vancouver Old-timer
“”BMO, and all the other banks, shipped the various senior departments back east in the late ’80s, early 90’s”"
….Washington will at some point be “voiding” all of it’s foreign owed debt/CDO’s…when that happens i wouldn’t want to be living anywhere East of the Mississippi or Manitoba’s border.
…Western Canada is North America’s & Asia’s food basket.
Nostradamus jr.
re #21
Two words – liquidity trap. Best to understand what it means before you’re confused later this year why real estate prices are falling without much rate pressure.
Have people heard of this Bloom Energy that was on 60 minutes?
Is it a scam? It has some pretty big backers: Colin Powell, EBay, Google. No stock symbol yet… I’m trying not to buy as soon as I get a chance.
What do people think?
link to the 60 minutes video on Bloom Energy:
http://a11news.com/2892/60-minutes-bloom-box-video/
#65 disenchanted dept free & homeless 30 y/o
Hello there. I think if you are able to obtain gold and or silver in any tradeable physical form you are doing as well or better than the current crop of financial super gods. If you have any gold at all you are better off than the bank of canada. I understand they rid themselves of their gold years ago. Therefore it is only human gullibility and confidence that supports the value of the canadian dollar as well as the value of all other fiat currencies. I’d say that’s a very risky situation indeed. If you see gold or silver for sale some where by all means buy what you safely can and quietly
squirrel it away. Thats my opinion FWIW.
Steven
Just like Garth has been saying
“Markets will be volatile”.
After steady run up, markets down again 150pts, and what do the astute economists say?
“I think for the most part, consumers and businesses are still quite frightened, having experienced a near-death experience over the last two years,” said Irwin Michael, president of I.A. Michael Investment Counsel Ltd. and manager of three ABC funds.
Is it a confidence problem, or do they just have NO money and are nor prepared to go in debt again?
ALL OUR ECONOMISTS SEEM TO THINK IS MORE DEBT WILL GET US OUT OF OUR DEBT DROWNED ECONOMY!
ARE THESE GUYS FOR REAL!
number of listings are up 20% in february from january.
#75 Got A Watch
Save the economy – kill Keynesians on sight. Every University “Economics Dept” should be closed, and every Professor fired. For all the disservice they have done to the real world economy outside their delusional ivory towers.
Well said. However in Cantada making that a reality would include the government and politicians. Under existing law that constitutes treason ,sedition and insurrection. The goal is admirable but I would advise action after getting the laws changed first. Garth what does it take to do a regime change the legal way or the hard way? Some frustrated souls here need wise council.
Steven
there are a lot of Garth posts about bummers and Real Estate prices, but Garth constantly is avoiding immigrants and Real Estate prices.
Probably because he afraid not to be politically correct.
Immigrants is the important part of RE Canadian scam – they have very important role – to be a victims.
I suggest you find another blog, with lots of tin foil. — Garth
#72 Hoon on 02.23.10 at 10:54 am
Yup, the emo boomers on here love to mock 20- and 30-something couples for being fools over 5/35 mortgages. Boomers are the ones who have setup the financial hardship they mock my generation for. Your DB pensions and a lifetime of smoking cigarettes is a tax tsunami. Worse, they are the greater fools who vote conservative.
IRT Junius
I agree with you for once. (post #8)
……………..
The average boomer didn’t set it up. They lived within their ‘times’, followed the rules and tried to do their best for their children. Each generation wants their children to do better and achieve more than they did. It’s just human nature. We don’t have children, but we do have young nieces and nephews, and we certainly wish the very best for them and, a BIG HOPE, is that we may be able to leave something for them. It wasn’t the ‘citizen’ boomers who brought in 0/40 and then 5/35 mortgages, it was the current government. And, we certainly don’t support this government.
#107 West Coast on 02.23.10 at 4:10 pm
Have people heard of this Bloom Energy that was on 60 minutes?
Is it a scam? It has some pretty big backers: Colin Powell, EBay, Google. No stock symbol yet… I’m trying not to buy as soon as I get a chance.
What do people think?
Yes, I saw the 60 Minutes video a day or so ago. Check out
http://www.cbsnews.com/video/watch/?id=6228923n&tag=contentMain;contentBody
but then look at the comments.
I’m not sure what to make of it, but at least researchers are working on alternative energy instead of ’some’ governments sticking their head in the sand.
#107 West Coast..
Bloom Energy looks good. There are lot of new tech. companies are working on new energy technologies. America still attracts world best talent including Hockey. I hope our universities, research, quality of immigrants can compete with USA.
My father (Alzheimer’s) required 24-hour care for the last four years of his life. It cost $8,000 a month. My mother required full-time nursing assistance for the last year ($6,300 a month) of her life. A 39-year-old disabled reader of this blog, who used to make $100K a year, now requires $5,000 a month in private care (not paid for by the public system), and is erasing his savings doing so with no prspect of working again. Your comments are as out of touch as they are repulsive and uncaring. — Garth
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Garth-
This is a very interesting “real life ” comment. With so many Boomer parents in this situation and soon the boomers themself, do you know of any “quality” long term care or home care, publicly traded companies?The numbers you quote look like there may be an excellent opportunity to invest long term.
Some manditory reading here folks:
“Assessing the Illusion of Recovery” by Andrew Gavin Marshall
http://www.globalresearch.ca/index.php?context=va&aid=17736
I have never read a single article that ties all the threads together so well as this one. His take on events up until now is (in my opinion) spot on. Is take on where this is all heading will be popular with the squirrel hunting crowd, but it is difficult to find flaws in his reasoning.
Sadly, the vast majority of people lack either (1) the intelligence (2) the education or (3) the sheer will to read and comprehend an article like this. They have created the perfect system. They can rob us and enslave us in broad daylight, and we don’t care.
Grath fess up 1949 makes you one of the Boomers too. Drooling? Life support? Come on your scooter is a Harley.
Takes one to know one.
R U serious? — Garth
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Kinda, what is your definition of a boomer?
Date wise
I think I have everything pieced together, but the underlying factor is Goldman Sachs. Here’s the link to the creation of the Federal Reserve in the US (which later countries would use as their model for themselves). Forget the argument about the conspiracy theories on this topic, but focus on how the financial systems work. For example, you deposit $1000 and from that the bank can lend out $10,000 and other juicy tidbits. Just scroll down and start reading.
http://www.bigeye.com/griffin.htm
The banks had so much money to spent and try to become to rich, but in the end the Banks used this and gambled it away and lost and they were thrown life preservers from the Feds. (wish they could do this to me if I was unsuccessful at my gambling adventures: thankfully I don’t gamble that much except $3 – 5 dollars on 6/49 or Lotta Max. But I could be blowing my wad at a Casino where my losses were covered with taxpayers money in the event I lost).
Anyway, too much going on to write it all at the moment. One only needs to read the news to see the influence Goldman Sachs has on the world; Media, Greece, Politics, etc., to see that the whole state of affairs is more complex than one could imagine.
Goldman who was one of the key players in the Federal
Reserve in the early 1900’s when it was devised and is also the key player in the world’s finances today. Actually, that entity probably controls most of the world today when you think about it. You don’t bite the hand that feeds you!
Thank you Danforth #39 now I can concentrate on the offer I am getting tonight on my condo, one day listed,three showings and this is in SW Ontario! Not in a hurry, open house this weekend.
Here in BC, the cost of long term care facilities is based on your ability to pay (ie. your previous year’s notice of assessment). The lowest income bracket allows you to pay approx $30/day for public-funded nursing home. However if your income is a bit higher, or if you opt for private nursing home, the cost can double/quadruple/or much more.
I work for Vancouver Coastal Health on a medical unit where the average age of patients is 75+. There are lots of them who simply cannot return home (even though they desperately want to), whom we have to arrange assisted living / nursing home for.
I believe 24 hour one-on-one home-care costs much more than nursing home as well. I’ll have to check with the social worker for the exact pricing details.
As an aside, some Think Tank is proposing “Sharp, quick rate hikes needed”
“That would boost the key overnight lending rate from its current rock-bottom 0.25 per cent to 4.25 per cent by the middle of next year, assuming eight increases.”
Would be interesting if that really happens.
http://www.cbc.ca/money/story/2010/02/23/interest-rate-hikes-cd-howe.html
Post#118 Gregor Samsa
Wow, what a read, was a grind but I read it all.
How many people do you think would understand that piece?
Thanks for posting that link.
Read it Blog Dogs, whether you agree or not its interesting.
For what it’s worth in regard to health care costs:
My brother-in-law’s great-aunt is 90-ish, her health is starting to fail, and she requires 24×7 coverage . She refuses to be put in a care facility and instead has decided to fund her own care and will live at home.
Since we’re talking about around-the-clock help, the monthly tab is slightly over $14k.
Of course, there is a bit of chagrin in the family because the inheritance is also being blown at that same rate…
RE:energy box
Good example of Elegant Simplicity. Bring it on.
#118 Gregor Samsa,
The article is long and though-proking but it does suffer from being sweeping it conclusions. I don’t think it is fair for you to say people lack the intelligence or education to understand it.
These are very complex issues. However I think your third point is most important – most people lack the will to think for themselves.
#110 C.T.O
Former Head Of Morgan Stanley Research And Global Strategy Slams Equity Rally: “It Is As Finite As The Excess Liquidity From QE”
.
.
Of course, the insider game between financial institutions and the central banks can go further. But we do not want to be a part of it because it is unsustainable.
.
.
.
http://www.zerohedge.com/article/former-head-morgan-stanley-research-and-global-strategy-slams-equity-rally-it-finite-excess-
#94 Future former Canadian on 02.23.10 at 2:04 pm
Sorry Garth, but claiming that governments borrow from the future is just dangerously wrong.
No one will care for the baby boomers in old age. They dug their own grave, let them lie in it.
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You say this is not borrowing from the future isn’t necessarily about “money”–
I do agree a default is coming–but–
What we are really borrowing–is–future production–
The juice money foe homes/autos and all the enticing little stimulus goodies–are sucking future production (jobs) back into today–
Example–
People who likely would have waited for a few years to buy a home/car or governments paving highways that could have waited and whatever other useless-make work projects–used this money to try and keep spending velocity from collapsing–
These are future jobs and materials that wont be in demand in a few years–
This is the sorta shit that cause prolonged depressions-
Keynesian economics at its finest–
“borrow and spend”
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No one will care for the baby boomers in old age. They dug their own grave, let them lie in it.
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Blame the boomers?
Is this jealousy? cuz–
you missed out–on the “summer of love”
You have to understand man–It was a “happening”
http://www.youtube.com/watch?v=ylLdszMHkLo
Most people don’t have a problem biting into a drumstick yet are disturbed by the duck picture. Go figure!
#27 kc — That was a good link, and with another poster saying there are something like 700 US banks pushing up the daisies through this year (and continuing further), plenty of other things unexpectedly happening, it sure is nice for us to be retired and debt free.
I remember in 1981 when The Bank of Nova Scotia wanted us to renew at about 19%. We cashed in all our investments, bank accounts (had $400 left over), put everything together then got the monkey off our backs.
Was it worth it? YOU BET YER ASS! Then RRSP saving time.
——
#71 Sielfworcehtsa — Except for one sentence (4 – Knowledge is expanding exponentially….wisdom is stuck in neutral.), which I view differently your post is a good one.
Wisdom comes from the higher spiritual regions (none of which can be physically described), and flows to the lower psychic ones (heavens, planes, levels — whatever you choose to call them). These can be spoken of.
Knowledge stems from the Mental Plane, the fourth heaven where all the mind stuff starts from and the mind is an adequate to good servant, but that’s all. Each has their own POV.
——
#105 Nostradamus jr. — “…Western Canada is North America’s & Asia’s food basket.”
The one thing that can prevent that is the climate. If the sun withdraws any further from us, it will be damned cold — recall the Russian prof. a few weeks ago who said that earth could be on the verge of another ice-age, so then we would all be toast.
——
Iraq Part Two. This happened a few years ago, and all that’s changed is to turn the record over. The only difference this time is that Russia and China will flatten America and Israel.
Crisis? What crisis? Yes, we have no bananas but there are plenty of other taste-testers!
What recession?….technical perhaps?…Bubble?–no!..well perhaps but no drastic measures needed..things are different in Canada zzzzzzz…well that’s pretty much what the people we have in power governing our future have been saying–for a few days of popularity and hopes for power they have quite possibly destroyed the future of a generation (perhaps more than one)…….Well now another 9 billion is going to be pumped into the economy in the “name of infrastructure”…….well at least a whole lot of new community centers and revamping of old ones—we have one in my small community–a cool 2 million! (sure hope it is used more than the last one which was about once a month)..after voicing my objections i was told that our community needs a fallout shelter in case of a natural disaster,such as a tornado….hmmmmmm and its being built on top of a hill
. I understand in Alberta almost a billion was spent on Northland’s hockey rink in Edmonton and Stampede park in Calgary………id really like to know how many more “infrastructure” such as this there are……while jobs are disappearing with little thought of creating future long term employment and revenue. I do not pretend to know the answers but i DO know one thing when countries thousands of miles away are importing huge amounts of our raw materials..using these materials to make products that used to be manufactured here and are paying the huge costs of shipping them back thousands of miles to us and we can not compete something is wrong ..and i think our tax dollars would be much better spent finding some solutions to this problem..which is squeezing the life out of our economy…than spending our tax dollars on showplaces for vote buying schemes. I sometimes wonder if it is too late? One thing i am sure of is if the powers that be continue on the course we are on we are doomed.
Wow…these days I am always wide eyed with the wonder of just how incredibly clueless folks can be. We will endlessly debate the sequence of arrangements of the deck chairs on the titanic while the ice looms large in front of us and the sound of impact reverberates throughout the collective hull of our vaunted civilization.
Urban real estate collapse, stagflating economies worldwide and the mesmerism that makes otherwise bright people actually give a sh… about snowboarders in vancouver, are all symptoms of an unstoppable and inevitable decline in all human endeavours.
To actually believe that “health care” costs in 20 years will be financially within reach is to fundamentally misunderstand what exactly is transpiring at this stage of history. In 20 years it is not only possible, but in fact probable, that “health care” as it is currently practiced will not even exist. If you 40 somethings actually think that MRI or even someone holding your bedpan will be available in 30 years is sadly laughable……cause it will not be.
Frankly speaking why would you even think that you are so special and so deserving to expect it??…
Most of you will just die…plain and simple…if lucky, you might have morphine available…if not…to bad…..
The systematic decline in world energy supplies is crushing and inexorable…and that means the end of all modern health care…such as it is……
For many of you (and I count myself among you) the best to hope for is tincture of henbane poured into one ear if in the end it just hurts to damn much……
People in Canada are soft and spoiled and utterly clueless about how life exists for most of humanity and the entire natural world……
If there is one thing that most of you need to cultivate to help ease your transition into the REAL future…it is to nuture a sense of the tragic…..and to stop treating the world as though it was made for you….cause it was not and we are about to find out just how damn hard life really is……
#2 real estate spectator.
the same advice was given on this blog one year ago. in TO if you took that advice and sold, if your house was worth the average, you would have lost 80k.
#115, #107: Bloom Energy
Ballard power was going to save the automobile industry – we’re still waiting.
In the interim, maybe you should consider Black Light Power – Combustion Engineering even invested millions in their infinite free energy. see
http://en.wikipedia.org/wiki/Blacklight_Power
or:
http://www.blacklightpower.com/
hey, maybe you got some $$ for some cold fusion (even!)
#118, #126: A. G. Marshall
Global Research is an interesting site but AGM doesn’t say anything that Michael Hudson hasn’t said better:
http://www.kpfa.org/archive/id/58530
most of his written articles are also on global research.
If you want graphs (and lots of ‘em) you can try:
http://www.itulip.com/forums/showthread.php?p=146070#post146070
good readin’ (and listenin’!)
http://www.calgaryherald.com/Report+finds+plunging+office+rental+rates+Calgary/2603200/story.html
Plunging office rental……
#131 john m on 02.23.10 at 8:24 pm
using these materials to make products that used to be manufactured here and are paying the huge costs of shipping them back thousands of miles to us and we can not compete something is wrong ..and i think our tax dollars would be much better spent finding some solutions to this problem..which is squeezing the life out of our economy…than spending our tax dollars on showplaces for vote buying schemes.
**********************************
Good post–very important subject–
I don’t think we need to spend/waste– any tax dollars figuring out the solution–
It’s as simple as it gets–
We have a massive wage discrepancy between the West and China/Asia/India–
They work for 30 cents/hr–in poor conditions–with no benefits –
We all know what we have–or had–
This is the solution–
It will be forced on us–anyway–by the market–
Although it will be fought by unions and governments and people–
All the way to bottom–
Global wage arbitrage–a meeting of competitiveness–
Somewhere ahead of us–
At much lower wages-and production costs–
This would be easily doable–but–
We have governments printing money–
Taxing us–to pay for–them–to target falling prices–
Which if they left alone–would actually “help” the economy–because people could “afford”
If we just stayed the hell out of the way–this would work–
The market always wants to bring fair wages and prices–to the people–
The free market is a very efficient “pricing mechanism”
Governments “try” to stop/control this–
with their asshole– Keynesian playbooks–
Yes–lots would lose–lots are “supposed” to lose–
This is what the market does–It “teaches”
This is what makes Society’s great–
The “opportunity”–to succeed and fail -
http://www.youtube.com/watch?v=jkok1Z4WJuY&feature=PlayList&p=14643F06D49E86C6&index=0&playnext=1
#135 tran,hcmc on 02.23.10 at 9:44 pm
http://www.calgaryherald.com/Report+finds+plunging+office+rental+rates+Calgary/2603200/story.html
Plunging office rental…
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Yep and the Encana office tower-is under construction– (highest west of Toronto)
Insanity blowoff–extra ordinary popular delusions–
i have been reading this blog for the past 5 months and have come to the conclusion that the ones that have been in real estate for a long time and are complaining about investing in real estate, must have no clue what they are doing.
all my properties cash flow. always have and always will. why you may ask? because i have purchased properties that are and will continue to cashflow no matter what the interest rates are or how the market is.
if you do not know how to properly buy & finance a rental property than you should not invest in rentals at all. This gig isn’t for you.
do i think the market will correct? yes, but i don’t really care because i invest for cash flow and will not be selling anytime soon.
most first time real estate novice investors and some of you here that have been in the game for a while (but still haven’t learned much) continue to make the same mistakes over and over.
one of the most common mistakes is that most of you look to mls for current listings. did you know that 90% of the good properties never make it on mls? and if the odd one does make it out of the realtor’s office and land on mls, that a smart investor would have an offer to purchase in place the same day?
I could go on and on about the mistakes novice investors and some so called long time in the field real estate investors make.
while most of you worry about interest rates, bubbles and all the negatives to buying now. my partner and i laugh while reading this stuff, as you are the types of people we buy from.
never fixed a toliet or had to deal with any challenges in 21 years. i leverage people that are better at doing that stuff than me.
great reads on this site but see that most here don’t know much about real estate investing and tax advoidence. if any of you are paying more than 16% tax on any income (don’t care if you make $500K or more) you need to seek out a better accountant.
most of my wealthy friends make much more money than i do but are taxed twice as much because they don’t think like the rich do. they will always be upper middle class and never reach it to be very wealthy.
rich business men wrote the tax code and the working middle class are paying dearly. hope this gets a few of you thinking…………..already bought two properties this year and look for more. i hope to see a correction as well, so that i can find better deals. if you can take one thing from this post, please stop looking at mls listings, thats where they list the junk most of us don’t want. god bless canada!
Wouldn’t the government be better off going after inheritances more thoroughly before going into heavy additional income taxation?
Something you have to pay for after you’re dead isn’t as bad as something you have to pay for while you’re alive and kicking.
Unless the problem is that there won’t be enough people dying in time for this to work.
“The GST was revenue neutral. Being the former minister of national revenue, one would think you would know that.
You don’t pay off a $40 billion deficit with a revenue-neutral tax. — Garth”
Correct. And measures such as a 3% surtax on income tax were proposed in 1986, then removed years later:
“Mr. Speaker, in 1986, the previous government introduced a 3-per-cent general surtax — a tax on tax — in order to help bring the deficit down.”
- Paul Martin, 1999 Budget
The point being that you should at least be honest when presenting facts, and not skewing them to favour your arguments.
Renting is a choice I made. If prices come down to where it is cheaper to buy, then I will buy. If prices never come down, I will just buy a sail boat and eat Mangoes on a beach.