Three or four years ago I resisted going to Calgary. The attitude was just too much. It was hard to show my Ontario DL at the airport car rental desk without getting a comment about living in a ‘have-not’ province.
But, Alberta got over it. Oil went from $147 down to the price of a barrel of shampoo, and the province is now in deficit. They may still drive trucks with nuts, but they somehow seem more delicate.
So, the mantle of arrogance has sifted a tad west, to BC – Beyond Comprehension. And some of the blame has to go to this Olympic thing. As I sat in a popular restaurant Friday night it was hard to get over the fact most people in the upscale joint had Canada hockey jerseys on. Can you imagine that in downtown Toronto? They’d be sent to Guelph.
Local realtors and developers are reveling in the attention this has brought to Vancouver, merrily telling people it will mean (of course) higher prices. And it might. For a few weeks – herd hysteria being what it is.
On the way from the Van airport I stopped to have coffee with a guy who lives nearby. He rents, and has a half million dollars in cash ready for a downpayment. But, he knows if he buys he’ll also end up with a mortgage the same size. So, given the magic of leverage, if prices fall 20% in the next year, he’ll lose 40% of his equity – two hundred large wiped out.
As I told him, things will look different by Christmas, for all the reasons we’ve hashed on this blog. Rates up, the HST in, $1.50 gas, public debt, a mired economy and Olympic hangover. Won’t be pretty.
Meanwhile in Toronto, as a blog dog pointed out to me Friday, there apparently are some realtors who get it. Well, one realtor anyway.
Check out this flyer that Richmond Hill agent Patrick Poirier just unleashed:
Top reasons why you shouldn’t wait to sell your house:
Perfect Time to Sell as Home Values are at their peaks:
* Spring is approaching which is typically when most Buyers start looking to buy. Interest rates are low now making purchasing more affordable, but how long will these interest rates stay low?
* Low inventory of available homes which make it a Seller’s Market
* Starting July 1, 2010 HST will make home buying more expensive creating the current rush of Buyers
* Starting April 19th, 2010 the Federal Government will introduce New Tougher Mortgage Restrictions reducing the number of Buyers
* Time to cash out when the market is ripe and buy back when prices are lower.
Home Values Will Plummet
Home prices couldn’t be more disconnected from fundamentals. In many areas, individuals who make the median income can’t afford a median priced home. For this reason alone, current home prices cannot be sustained.
And, heaven forefend, Agent P even linked to a CBC housing bubble article that quotes this blog. Is there any greater proof that my life’s work is done?
Well, here’s the point: Reality is on the march across most of the land. In the coming four or five weeks you will see a torrent of new listings as wannabe sellers realize the top has passed, and this is the moment to bail. Supply will start to overtake demand, and the price balance will tip as a result. And while some crazed, house-lusty young turks may scramble to buy before rates rise or mortgages get tougher to nail, the path ahead is clear.
Until you get to, oh, Langley.
The crash in BC, being delayed first by disaster myopia and then Olympic meth, could be spectacular. I’ll be telling the crowd that Saturday afternoon in my speech.
Meanwhile let’s buy Agent P a red hockey jersey and a one-way ticket on Westjet. His head may end up being carried down Robson Street on a stick.
But he will be a hero.
160 comments ↓
What kind of a house do you get for 500k in Vancouver?
http://www.thebrowncorporation.com/products/bog-standard
It must be hard for Albertans to be high and mighty when incomes have flat lined and they’ve shed 100,000 jobs in the last year
http://edmontonhousingbust.com/2010/02/payroll-employment-update/
An honest realtor — “Is there any greater proof that my life’s work is done?” — Sounds like an oxymoron, but give him credit for telling it like it is.
“. . . drive trucks with nuts . . .” — Are those numbnuts, or ordinary males (nuts)?
***
Throwstones — links tied together and possible major false flag toward end of June – first two weeks of July. Note the name ‘Rockefeller’.
Emergency Bullcrap Real US unemployment. It is easier to see why depopulation is almost here — Irish, Soviets and Ukranians all lost millions to starvation.
Solar storms are all this planet needs to screw us up!
Recession or Depression? No one knows anymore.
Naughty Word How Canada has changed — “Right out of George Orwell’s “Newspeak”; if the masses don’t have a word for it, they won’t be able to think it! If the masses are forbidden to call Israel apartheid, they won’t think Israel is apartheid! Isn’t dictatorship wonderful?” wrh.com.
LA is just as bad as Detroit.
Headline is good. Another possible reason why Harper prorogued Parliament — the kitty is broke beyond repair.
Any plans to visit Whistler? I hear the the occupancy rates are pretty cheap now the olympics are “all over but the crying”.
Mind you it’s been fun the past two weeks. In the same way a strip club is fun. Til you get the bill. years ago in NYC, there used to be a strip bar called Scores that the FBI closed. They were ripping guys off. Over charge, you know he’s not going to dispute the bill les his wife sees it. Whistler, according to Garths theory on 2nd homes, will be the epicentre of the realestate down-tic.
PS; Intrawest is potentially up for auction on Monday. Largest employer, largest rentor of commercial RE in Whistler. We may longer be the Billion dollar Mall.
Interesting times indeed.
As per inflated housing prices, fallout from the O bomb has spread out as far as the B.C. Central Interior. For example, relatives who recently moved to tiny hole-in-the-wall Lytton for work (scarce there and everywhere else in the B.C. Interior) are telling me that local realtors are banking on Lytton being within a few hours drive of Vancouver, the greatest place on earth, and the Olympics, the greatest game on earth. The realtor mentioned in your blog, bless him, is the exception who proves the rule.
Congrats to Agent P. There are a number of other agents around who get it as well. Typically they are older and have seen a down cycle or two. However no one under the age of 35 in the RE business or in most of the population get it.
I worry for them.
As I’ve said before, the correct macro call was to short China the day after the closing ceremonies in the summer of 2008. We all know what happened after the cauldron was extinguished.
I particularly liked the comparison of the price of a barrel of of oil to the price of a barrel of shampoo. With a true Canadianism, I would write: ‘Beauty, Eh?’
All testicular considerations aside, of course.
Hmmm…aren’t there any foreclosures happening??? Where are the stats for that?
First wave of the boomer???
http://www.theglobeandmail.com/news/national/budget/aging-populace-puts-a-dent-in-ottawas-bottom-line/article1483582/
Have to admit i’ve enjoyed watching the Olympics and our athletes do there country proud, but watching the way people were standing in 6 to 7 hour line ups to buy Olympic clothing or take a 20 second ride on a zip line makes me realize regardless whats being sold be it a house, clothes or a ride on a zip line if enough peeps say its the right thing to do the masses will follow regardless the cost.
for anyone who doubts my previous posts about Canada being merged into the U.S to form a North American Union. This will have dire implications on how to invest going forward, yet not a peep in any of the books flogged on this site.
http://www.theglobeandmail.com/news/national/british-columbia/canada-us-may-extend-security-measures-past-games/article1482766/
Welcome back to Greater Van Garth. We listened to you speak in Surrey last year. We’ve worked hard to be debt free since then. It’s worked. What type of correction do you estimate out here? A 25/35% drop? More? I was thinking a figure of 25% is quite possible…
I guess we’ll see.
Didn’t help that Jimbo Flaherty decided to actually USE the “b word” (bubble), and then goes on to propose legislation which will help throttle back sales even more (from a home seller’s perspective).
I fear they will find him in a dark alley with a home listing stuffed in his mouth.
Can’t wait to utilize your book strategies, thanks for the advice, Greedy, short-sighted Harper must love you!!
So many Canadians are buying in the US right now.
I can’t help but feel that it is too soon for that as prices are still in decline and the US/Can dollar exchange will improve. A lot of these Canadians may find themselves way over their heads once our economy starts tanking and we are not as rich as we think….
Your take Garth?
It hasn’t worked out that way in Australia, which has had effective mortgage rates at around 7-9% for YEARS. I hear that lately they are at 7% – the low end of the scale. However, a friend of mine near Brisbane tells me that Australian governments have strait-jacketed the market for decades by refusing to release enough Crown land for new building. Thus the still roaring housing market despite higher interest rates…
Steve Keen, an out-and-out deflationist, LOST his multi-year bet that housing would peak a couple of years ago…he sold HIS house then!…and house prices are STILL going up.
I rather think that Canada will follow the U.S., even though Aussies are at least as indebted as North Americans, simply because the affordability situation in Canada is so horrendous. And affordability is a function not only of mortgage rates, but also of unemployment, feelings of job (in)security, business climate, price and monetary inflation rates, inflation expectations, real wages and tax rates, etc., all of which are pointing out the unsustainability of today’s prices…
So I’ll just wait. Wait for the magic words: FAILED BOND AUCTION.
I have a feeling in the very future we will be seeing the T.E.A. (Taxed Enough Already) Party Movement (which is really gaining momentum in the United States) spread to Canada. Most people do not realize (just yet) that the debt super cycle we have enjoyed for the last 70 years is over. (The debt fueled party is over and the hangover from it is about to begin)
I think the following photograph says it all.
http://www.flickr.com/photos/paulhamby/3447066741/in/set-72157616783309729/
Instead of 4C and raining sideways, we got the once-in-five-years treat of a sunny, warm February. I was really hoping for the rain, really and truly, because anything else was bound to add to the silliness that is Vancouver real estate.
So, there I am watching a week of stunning sunrises from the Cambie bridge, surrounded by hundreds of visitors at 6am, who flocked up the span with cameras in hand. A local realtor passes and says: “Every time those cameras click real estate goes up $100″.
Sigh. March Madness is around the corner.
- Eric
p.s. And THEN the bloody cherry trees started blooming.
Brilliant!…But now what? Do we wait, then sift through the rubble?
With unemployment so high we should have the time to do so.
#11 The Big LeBowski,
I agree! I think don’t think it was any coincidence the premiers of our nation met with the shared border states, for the first time in history just recently.
With the Green Back losing value, the easiest way to void all debts is to invent a new currency.
How would one invest in such uncertain times. Perhaps it would better to ask WHY one would invest in such uncertain times.
I will stick to Garth’s more recent advice and go with formula ‘L’.
My low opinion of real estate agents was lifted by Garth’s latest blog entry, but then I read this story:
http://www.theglobeandmail.com/news/national/real-estate-agent-who-lost-licence-now-faces-charges-in-murder-plot/article1483778/
I watched your Jan 30 interview with Stirling Faux on Howe Street. You believe oil will be a big mover in the next couple of years possibly reaching $200/barrel. How will this affect Alberta with housing. If real estate prices are out of whack and need to be corrected, how will this play out in a city like Calgary. We saw what happened to housing in this city when it reached $100/barrel. Is Calgary different? It seems like a catch 22.
Rising energy prices = less disposable family income. Unless you live in Calgary and work in the oil biz, this is a negative. — Garth
This couldn’t happen here–
Flaherity has assured us–our banks are role models for the world–
I think–one should have some easily accessible cash going forward–unless of course you believe in how Falherity–with his deep understanding of economics–avoided the credit crunch–
Citigroup Warns Customers It May Refuse To Allow Withdrawals
The image of banks locking their doors to keep customers from making withdrawals during a bank run is what immediately came to mind when we heard that Citigroup was telling customers it has the right to prevent any withdrawals from checking accounts for seven days.
“Effective April 1, 2010, we reserve the right to require (7) days advance notice before permitting a withdrawal from all checking accounts. While we do not currently exercise this right and have not exercised it in the past, we are required by law to notify you of this change,” Citigroup said on statements received by customers all over the country
http://www.businessinsider.com/citigroup-warns-customers-it-may-refuse-to-allow-withdrawals-2010-2
#10 canadarocks69
……….if enough peeps say its the right thing to do the masses will follow regardless the cost.
___________________________________________
It’ll be interesting to see if the masses express outrage in unison when hundreds of VANOC employees start competing with already unemployed Vancouverites for jobs and (IF) the Athlete’s Villages suites yield disappointing sales results (higher property taxes for Vancouverites).
I voted for the Olympics in the 2003 plebiscite but am well aware of its potential hangover effects.
I sold my house in January with a long closing April 30. If TSHTF can the buyer back out? What are the consequences if they do?
Thanks
Did you take my advice and get a big deposit which is non-refundable? If not, you are out of luck. — Garth
ANIMAL SPIRITS
2007
offshore vultures flippers bribery or charity
http://news.bbc.co.uk/2/hi/programmes/newsnight/8034642.stm
Parliament to vote on Vulture Funds bill tomorrow
25th February
The Bill aims to restrict the activities of so-called ‘vulture funds’ – investment companies, often based off-shore, which buy up cheap poor country debts, and then sue for massive profits. It would impede the ability of vultures to recover debts through the British courts from countries which have had debt relief under the Heavily Indebted Poor Countries (HIPC) initiative.
http://us.oneworld.net/article/364800-anti-vulture-fund-legislation-introduced
http://www.jubileedebtcampaign.org.uk/Vulture%20Funds%20awarded%20$20%20million%20from%20Liberia%20in%20High%20Court+5239.twl
Tide turning…?
http://www.yourhome.ca/homes/newsfeatures/article/772390–house-sellers-buyers-balk-at-bidding-wars
17 Eric – Once in five years? We almost always get a
warm sunny week or so in February as a teaser for the
spring. You just never know which week. Of course you
might get a dump of snow too…..
#16 Anon10
The teabaggers in the USA are a bunch of scared, uneducated victims in their 50’s who have lost their well paid manufacturing jobs and have been manipulated by fear mongers like Glen Beck and Sarah Palin. It’s hilarious that they all support the same economic philosophy which is the primary cause all their troubles. Free enterprise is a good thing, but unbridled greed will get you in a lot of trouble. Enron, the banking crisis and the US housing bubble are proof that there still is a place for government in all of this.
The teabaggers all claim they want their country back, but exactly does that mean? Is the present Government of the USA a dictatorship? Not at all, in fact the President of the USA is spending too much time and effort in trying to get the opposing party to be part of his administration. They consider establishment of a Nation health care system in the US the first step towards a Socialist revolution. Our single payer system seem to work well for most Canadians if the National polls are right. Last time I checked , we were still a Capitalist Democracy.
If all the tax reduction the teabaggers demand worked, how do you explain the economic disaster of the Bush Presidency? He provided significant tax cuts and reductions in Government regulations and look what happened. Our Federal Government may have delayed our RE crash by gambling on a rebound in the US economy with our National debt, but in the end someone will have to pay this bill. We all know higher taxes and government fees are coming. The Trickle Down economic theory of the Reagan and Bush administrations doesn’t work. If you’re just the ordinary working guy, whatever trickles down has the distinct odour of urine.
I’m very concerned that The Federal Conservatives have decided to try out this economic theory in Canada. Hard time are coming .. crashing real estate prices, much high and new taxes, reduced services and still tax revenues are going to crash as incomes drop with the waves of Boomer retiring. Geez…. as if we need more bad news.
There is some good news …….. 10 Gold medals so far Go Canada Go!
A short simple explanation of deflation with operating Jaguar plants as an example.
http://www.financialsense.com/Experts/ewave/2010/0226.html
And here in Ontario we are funding V8 dinosaur engines that no one will buy. 750 odd jobs that will cost us 110 thousand apiece. Priceless Ontario Liberal fanatics..
@#16 – Give me a break. The US teabaggers are a bunch of morons duped by the Republican party into fighting against their own best interests. The cognitive dissonance those folks experience is astounding – on the one hand, the value their veterans’ and seniors’ Medicare but on the other feel that government should stay out of managing healthcare. They believe that a public healthcare option means mandatory euthanasia of seniors. They believe that Obama is Muslim and that he is not American.
The tea baggers have been whipped up into a frenzy and being used by cynical right-wing mouthpieces so that the GOP appears sane by comparison.
I can’t believe you take that movement seriously and want to import their principles. Keep walking this path and in a few years you’ll write a screed about how unfair it is to have to pay taxes to pay for public services but still have to wait to get your knee operated on before flying a plane into a Canada Revenue building.
Another local realtor shocked my wife and I. We are renting in a very nice Burnaby hood and went to look at an open house close by. The realtor (lets call him Mr O) looked us straight in the eye and said to us on the way out “don’t even think about buying now, its the worst time ever.” I must have looked confused because he said “don’t worry, I’ll have multiple offers by tonight.” This veteran realtor earned my respect.
I like the picture you posted with this article. Last time when I was in gym I told to gym supervisor who was watching Canada versus America hokey match: “Canada is loosing”, it was just the opening sentence to start chat with him, no meaning attached to that. How fool I was that I choose that sentence, I should have rather said “Canada is going to win”. He immediately accused me: “Are you happy for that?, do you want f..ng Americans to win, do you want to live in that f..ng country, do you want to move down there? I replied : “I come from Slovakia, so whether the Canada wins or loose is not that important to me.” He replied “You are living here now, so you must support Canada ….”. I was speechless, I did not know what to reply, I just listened for ten minutes to his accusations. Almost for one week I felt like vomiting, I had to constantly remind to myself that not everyone is here like that idiot (by the way the gym he is working in is government gym, almost impossible to get a job there without knowing somebody) that it would be stupidity on my side and unjust to many nice people living here if I form general opinion based on that experience.
I vividly remember times back in Slovakia during communists, I can see many similarities with what’s happening here. At that time people would stick out of their windows communist russian flags together with Czechoslovakian flags, nobody was forcing them into that, they did not have to do that , every year we had in Prague “Spartakiada”, kind of mass sport event to entertain heard to forget about real economical problems, everybody was happy. People only woke up in 89th, somehow they learned the naked truth, that all those time they was cheated, that actually the country is not that rich and well to do as communists would proclaim and that we are in great economical trouble, that why they started to revolt and regime has changed, it was not yearning for freedom what caused the change of regime – it was the empty wallet.
Following is not to be meant olympic cheering
Go Canada, go!, I do believe!
I believe that things eventually get better, although it is going to be a great pain.
This weekend in Kelowna they are having the Home and Reno show in Prospera Place. People are being charged ten dollars admission. That would like Home Depot charging admission at the door.
Same for auto, motorcycle, or RV shows, etc. That is why I quit going to them a long time ago.
#32 Libertarian11,
well, I am one Canadian who remembers when Canadians were great without being braggarts, when we walked tall without thumping our chests, when we did not present ourselves as a nation of yahoos, and when we did not salivate when the sports – or any other – industry rattled our chain.
Watching the Olympic coverage now and then, I miss the Canada I knew and loved.
WOWEEWOO! Patrick P …. what balls of steel you have!
What is your real motivation here? Here’s some guesses:
1. You have reached a pinnacle in your life where
money doesn’t matter anymore … only the potential
suffering of thousands of drowning new
homeowners. Your a guardian angel!
2. Your cashing out and getting a piece of that seller
action before heading off to your new hideaway in
the Maldives …. you greedy bugger! (The Maldives?
Not to bright are ya?)
3. You have a sick fantasy of being the RE anti-christ
while a million agents curse your name to the end of
eternity and beyond.
4. You’ve lost your freak!$&@in mind!!
More than my two cents, but god bless you!
http://www.thestar.com/yourhome/newsfeatures/article/772390–house-sellers-buyers-balk-at-bidding-wars?bn=1
He paid $1,107,000, or $8,000 over the list price of $1,099,000.
The google van has an image of the house before reno with the RE sale sign on the lawn!
77 Rivercrest Rd, Toronto, ON, Canada
http://maps.google.com/maps?f=q&source=s_q&hl=en&geocode=&q=77+Rivercrest+Rd.+toronto&sll=43.651781,-79.487406&sspn=0.000836,0.002747&ie=UTF8&hq=&hnear=77+Rivercrest+Rd,+Toronto,+Toronto+Division,+Ontario,+Canada&ll=43.651791,-79.487409&spn=0.000836,0.002747&z=19&layer=c&cbll=43.651883,-79.487446&panoid=ludSx-Z7D_TwusyMhm3BHA&cbp=12,91.28,,0,-1.08
Garth any comments?
There are those of us who still flinch at the memory of some Albertans buying car stickers that read;
“Please God let there be another boom, and this time we promise not to piss it all away”
….and during the Trudeau days, the more mean-spirited: “Let the Eastern Bast…..freeze in the dark”
not a proud time for many Albertans.
this is the moment to bail
Yes it is. Just sold the house in Toronto. Thank God. I keep looking at the hood on MLS.CA A house on Walsh Avenue just sold, I think. When it was developed Walsh Avenue was just another street. Some time in the sixties, Wilson Avenue was diverted down Walsh. No big deal then.
E So many Canadians are buying in the US right now.
I need to pray more often that my brother-in-law does not buy in Ft Myers, Florida. Maybe as part of Lent.
libertarian11 – very good English! Quite understandable.
I am annoyed that native speakers of English don’t do as well.
#17
You are absolutely right! The gods parted the skys and released unseen sunshine for 10 straight days rather than the usual rain and fog. And the cherry blossoms all came out. This despite the negative nellie bears that were wishing and hoping for terrible weather.
Over a quarter million visitors were taken aback by the beauty, and many commented right on cue “oh, everyone will want to move here.” Obviously, the gods are on our side when it comes to real estate.
Looking forward to another 10% pop this Spring, which will make an increase of over 30% in the last year and a half. Hmmmmm….waiting for a 15% “correction” after a 30% increase took place is just a waste of time and rent…..
The Vancouver boom is not over. It is just starting. All it will take is a couple of thousand visitors to buy, and the already low inventory will be eliminated. Sorry bears, but Vancouver will continue to go up and you will continue to be left behind…
Yesterday I went to the local Safeway in Spruce Grove, and as I enter the lobby there are 6 Magazines in the free bins about real estate or home- renos. I grab my cart and at the front of the cart an Ad for a local realtor, I look at other peoples carts and they all have the same ad from one realtor. I get to the check out and the lady in front of me passes me a divider and on it is advertising for two new high end housing developments, I get pass that and get my slip and in the back I see ads and again 2 of the three ads are for a realtor. On the way home now fully aware of advertising I pass 8 for sale signs and 4 bus benches with real-estate advertising 2 mortgage broker signs (2%VRM) and 5 billboards for new developments. Stopped and got my mail and there was 3 postcards for just listed homes in the area, hanging on my door is the Grove examiner which has 20% news, 40% real-estate, 20% car ads, and 20% other ads. Is it any wonder we are real-estate junkies. Where are the ads for all of the other businesses in the area, the only ones that can afford most of the advertising are in the real-estate business.
On a side note while I was at a garage sale last summer the lady had put up 4 makeshift signs to direct people, this brought attention alright a cop dropped by and told her she can’t put signs up on city land and was told to take them down. I asked the cop about the open house signs and such, after getting a confused look and a bit of stuttering he stated that some are different and are allowed. To busy to follow up but it stuck in my mind. I minded the sale while she took her signs down because she was by herself.
Garth et al:
Garth you stated, gas to $1.50 per litre. Good thing you filled your bunker tanks when it was at $0.90 per litre. This is the second time I heard about the $1.50 per litre increase.
This means increases in everything, since in Canada, just about everything we use comes off a truck at the local big box store. This means Joe Average Canuck, takes a hit in purchasing power.
I recommend stocking up your bunker. Get 30 of everything, then you are a set with a good basic meal, for a month or more.
Dollar Sale at No Frills—–Catelli pasta sauce for $1, reg $2.99. Tuna Unico, in oil, the larger can, Reg price 1.89. Canned beans, Cedar, larger cans, Reg. 1.79.
Pasta at Food Basics – Good pasta Imported from Italy, 900 Gram Bags, reg price $1.79, now $1.
Stock your bunker like Garth, and get ready for the ride of a life time. I still think that Garth paints the picture with the Glass half full. If you don’t need some of your excess pasta, you can always donate to the food bank.
#28 Industrial
I agree with your timeline, after Reagan supply-side economics the average worker has received an ever smaller piece of the economic pie. What used to be possible on one income is now difficult with two. Inflation must be strictly controlled and economic theory suggests the best means to do that is to suppress wages.
The rationale used is that taxes stifle productivity, reducing taxes on the highest incomes theoretically will increase productivity and tax revenues- this has never happened (although the middle class assumed responsibility for a greater proportion of gov’t tax revenues)- meaning we were never on the right side of the Laffer curve. Looking at OECD countries there is little correlation between marginal tax rates and productivity.
International trade is also beneficial but much depends on how the trade gains are divided – there will always be losers. Trade theory indicates an equalization of productive inputs – where wages are concerned this means rising wages in China and falling wages in Canada. Hard to raise Chinese wages to Canadian standards. Now through this last downturn even white collar jobs are being outsourced.
People don’t look at the L-T trends and causes, they are easily distracted by hot topic issues that have little to do with their, and their families, long term well being.
We’ll all be highly disappointed if you don’t work the pictoral irony of a Vancouver tsunami warning into your next offering.
Patrick’s just trying to drum up business. The more listings the better.
He probably has another flyer for potential buyers discussing why this is a good time to buy.
Real Estate agents may buy properties themselves to speculate on prices, but for customers it is always a good time to both buy and sell.
#40 popeye the sailor man
Spruce Groves finest driving around on a Saturday morning and policing garage sale signs on public lands????
Were all the Tim Hortons shut or what?? Sounds like they have too many cops out there in SG.
37/Jeannie – Version 2 of the boom bumper sticker was made available over a year ago at the Nisku Inn, just south of Edmonton.
39 Vancouver Rocks
Seriously man did you buy in spring 2009 – because unless you did you are not up 20% – Van RE values are just struggling back to were they were in mid 2008.
(BTW – 2008 prices were already over inflated which is further bubblized by all the newbies that have been pulled into the market by ultra low rates.)
And yes Vancouver and Canada has looked spectacular for the games, but I seriously doubt the media types and politicos that are the main travellers to the games are going to buy houses here?
#36 nearmilton
That Google view photo was taken when the house was for sale – but which time?
I checked and this “no games” house has a bit of a history…
Purchased waaay back in June 2009. Listed at 795k, sold for 677,000. Purchasing agent – Mr. Donia
House was then put on the market in August 2009 for 769k, for “very short time before renovations start”. Listing Agent – Mr. Donia
Taken off the market 10 days later and renovations done.
Placed back on the market in renovated form in November for 1,099,000 – Listing Agent – Mr. Donia
So you see, someone saw the ability to flip a house. Got it for a song. Tried to flip it, didn’t get any nibbles so they renovated it. Put it on the market without “holding back offers”, but that doesn’t mean there wasn’t more than one offer involved.
In fact, the ultimate buyer paying more than list indicates to me that there was more than one offer. Perhaps the owner “wasn’t available” when the first offer came in to look at it, and in the meantime another came in. Happens quite often.
When it rains it pours.
Plus which, one issue I have with the article you linked to is that in my experience, its the owners that want to generate a bidding war – not the Realtor. I like doing my work and pricing things accordingly – not doing it the lazy way – but thats just me.
#19 throwstones wrote: “How would one invest in such uncertain times.”
That’s easy. Gold Maple Leafs if you have the money, silver MLs if you don’t. There is no counterparty risk for physical bullion, it’s cheap to store, it doesn’t have to pay interest, and if you cash in one or a few at a time, the currency is not reportable by the dealer. Conventional oil, food, and other essentials are good for the long term.
#37 Jeannie wrote: “There are those of us who still flinch at the memory of some Albertans buying car stickers that read; “Please God let there be another boom, and this time we promise not to piss it all away””
Unfortunately by the time the next oil boom occurred, the next generation repeated the same mistake.
#39 Popeye wrote: “Where are the ads for all of the other businesses in the area, the only ones that can afford most of the advertising are in the real-estate business.”
I dare say that in Calgary, 99% of all bus-stop benches have real estate ads.
#19 the hundreds of trillions of dollar derivative death star that has be created by the global financial system will be shaken to the core once nation states really begin to default on their debts. I have been posting a debt default scenario for months, just go back and see. Now look at Greece, Iceland, The PIIGS nations, California and about 40 other bankrupt states. By the end of this year many countries will default on their debt. Their will also be official currency devaluations worldwide as just happened in Venezuela and Vietnam. The world reserve currency, the U.S dollar will be devalued 3 to 1 at least. 64% of reserves held by foreign central banks is held in U.S dollar denominated assets. Once the currency markets smell what is in the wind there will be a mass flood of currency into the system as people rush to protect themselves with hard assets such as commodities, gold/silver. A meeting similar to the Louvre Accord of 1987 will be held where nations get together and revalue and devalue currencies against one another.
Until you understand the big picture as to what is being done to the world financial system it is impossible to navigate what is to come. On this site the mere mention of gold bring out the wrath of most posters, but they are either unable to or unwilling to admit to what is going on. History has told us over and over again that when events such as this occur, gold/silver are the go to asset for protection. This won’t be a time to make money in the general stock market, this is a time to be defensive and protect what you have. In the 1930’s the price of gold doubled and homestake Mining, the main gold mining company went for $34 to $630 dollars because few other companies prosper in an environment like what is coming.
All this financial upheaval will be accompanied by another war to distract the world from the massive transfer of wealth taking place from the middle class to the banking class. Over the next year we should experience higher inflation, but eventually money and credit will be withdrawn from the system and will be allowed to collapse. This is when the world will enter a deflationary spiral and a new war will begin. You won’t ready any of this is books offered at Chapters because Governments don’t ever tell people why things are really happening. Yes the public is always given a good reason for why events occur, and then there is the real reason.
Make a note of this post if you like and 12 months from now should show you how accurate it is.
Dr. Edwin Vieira is a constitutional scholar and explains how money works and why this is all happening. Here is a link and about half way down the page is a video
http://www.runtogold.com/2009/07/pieces-of-eight/
#37 ..and do you remember why the “let the eastern ba###rds freeze in the dark” stickers came about?? I do, there was a very good reason and it was Trudeau with his middle finger salute from a departing train, what a class act that fool was.. and the NEP he brought in..he did more to alienate the west than anybody else..I know many establishments where, even to this day, you mention Trudeau and you risk being tossed on your ear..pretty funny..now you would think Albertan’s would have learned from the last great oil boom (ref bumper sticker “promise not to pi## it all away”) but no, not at all, it is even worse..just goes to prove how dumbed down the general population is..
Garth,
Enjoyed your talk in Scarlem very much. One thing that I couldn’t quite full comprehend though — you stated that in general equity markets will rise as will energy costs (oil) and commodities.
Yet we’re at a time of high unemployment + near record debt levels.
So – how do equity markets rise when the already scarce investment dollars have to go first into higher input costs for businesses, and higher costs of living for consumers (therefore even less disposable income for consumption).
Isn’t a combination of high unemployment + high debt coupled with higher input costs a path towards a debt deflation bust?
The money supply is growing but the velocity of money isn’t moving.
#9 Jeff Smith — Good link. See following, as it will (if not already) apply here.
Headline is good. Another possible reason why Harper prorogued Parliament — the kitty is broke beyond repair.
#22 jr — “This couldn’t happen here” — Betcha it will happen a lot sooner than most here even think. Better forewarned and forearmed than to bleat like sheeple.
***
An honest realtor — “Is there any greater proof that my life’s work is done?” — Sounds like an oxymoron, but give him credit for telling it like it is.
“. . . drive trucks with nuts . . .” — Are those numbnuts, or ordinary male (testicular) nuts for brains?
***
The latest readings of the ‘quake in Chile early Sat. a.m. indicate that it was 8.8 and there are tsunami warnings for Hawaii and western US. There was panic buying in Hawaii this a.m.
So there was Haiti (which allowed the US military to grab oil and other resources), Japan’s 7 a couple of days ago on the Ring of Fire and Chile’s. Either the planet is getting mighty pissed at us or the US is in it’s final throes.
When the SAF starts rocking and rolling, it will set off the one running through Maple Ridge (a ‘burb of Vancouver), Yellowstone, the fault in Michigan and sooner or later, Toba will break wind along with Dimona, so The Gods Must Be Crazy!
Throwstones — links tied together and possible major false flag shortly (see above).
Emergency
Bullcrap
Real US unemployment. It is easier to see why depopulation is almost here — Irish, Soviets and Ukranians all lost millions to starvation.
Solar storms are all this planet needs to screw us up!
Recession or Depression? No one knows anymore.
#37 Jeannie
In Alberta there will always be another oil boom, so sit back and relax, it’s just around the corner and it’s called the “Oil Sands”.
#52 Mike rentin’ in TO
The money supply is growing but the velocity of money isn’t moving.
But when or if the velocity of money starts moving…..LOOK OUT, inflation up the wing wang.
Not to worry though, still around 10 years away.
Garth sensors! no different from the MSM!
This is not a site about immigration. Get over it. — Garth
The Globe and Mail is coming around to what I read on Garth’s blog 1 year ago (video):
http://www.theglobeandmail.com/globe-investor/personal-finance/financial-facelift/a-lifestyle-that-suits-her-income/article1481802/#video
in a nutshell Canadians are over extending themselves and when interest rates go up many will sink
#37 Jeannie
Sorry forgot to add the new Cardium oil play in Alberta. Ba Ba Booom….. It’s gonna be big, especially with the reworked royalties coming down the pipe.
Garth
Just finished studing your book. Great stuff!!!!
Count me in on your fight. I’m a damn good
soldier!!!
in Abbotsford listings of detached houses over 400,000.00$ have increased in the last 4-6 weeks from 366 to 510 according to mls. What will happen if this continues for another 30 days? 10 -12 a day. All of last year I have not seen more than 496 listings in this category at any time.
#50 The Big Lebowski,
I have seen Dr. Viera’s video and read some of his work, Niall Ferguson as well. And the link provided regarding the Domino Effect. I understand it thoroughly.
So provided we are in agreement, how much gold should one have on hand?..How much cash? in what currency?
I also don’t see the EURO surviving. Germany would much rather leave the EU, before they pay the debts of others. As a friend German friend told me,
“I here zare is a problem in our europe zone, and people sink vee should evict greece, but i see a better solution, they stay and vee vill leave!”
A Collapse of the Euro will surely ignite another war in europe, may only be a regional war but a war nonetheless. Either way it will not be good for Markets around the world.
Garth what is your position on this?
The mentality is flip houses like penny stocks now.
Don’t marry them, just trade them. You know the pump will end and they will come crashing down.
Hi Garth, FYI, link
IMF Boss Proposes Globalist World Reserve Currency
http://www.infowars.com/imf-boss-proposes-globalist-world-reserve-currency/
Hi Garth, FYI link to artical
Bernanke delivers blunt warning on U.S. debt
‘With uncharacteristic bluntness, Federal Reserve Chairman Ben S. Bernanke warned Congress on Wednesday that the United States could soon face a debt crisis like the one in Greece, and declared that the central bank will not help legislators by printing money to pay for the ballooning federal debt.’…
http://www.infowars.com/bernanke-delivers-blunt-warning-on-u-s-debt/
Hi Garth, FYI, artical
The secret lives of America’s(& Canadian) debtors
http://www.infowars.com/the-secret-lives-of-americas-debtors/
Good to see a realtor who tells it like it is. I have been expecting the bond market to go into a panic in late 2009/by summer 2010. All signs indicate major trouble ahead. March and April ought to be ugly in the stock markets. SP500 will go down to at least 950. Watch for the euro countries to blow. the bond vigilantes are back…it’s about time these politicians get their lesson and for gov’t spending to be cut in the right places. There will be pain, but the debt ponzi scheme and generational theft must come to an end. The next 6 mts will make 08 look easy. Watch the bond/treasury markets, not stock markets. The housing market depends on the bond market.
JO
#39 Vancouver Rocks,
You said, “The Vancouver boom is not over. It is just starting.”
Are you are professional comedian? I mean seriously. Or a crack dealer?
CMHC out of control?
By: Larry MacDonald
A reader launches a broadside at the bubble blowing CMHC:
1. Canada Mortgage and Housing Corporation (CMHC) has been insuring 0% down 40 year mortgages in recent years pouring gasoline on a housing market that was already on fire. Vancouver has become one of the most unaffordable cities in the world as a result of CMHC’s leadership in insuring speculative mortgages.
2. Economic fundamental do not justify house price increases in the last ten years. House prices have gone up an average of 9% a year which is far in excess of 3% growth in incomes and 2% increase in employment.
3. Mortgage debt ballooned from $431 billion in 2000 to $871 billion in 2008. This means in 2008 every man, women, and child in this country owed over $27,000 in residential mortgages. This is 60% more than the national debt for which each Canadian is on the hook.
4. As an Agent of Her Majesty in Right of Canada, CMHC’s debt obligations and guarantees are direct obligations of the Government of Canada. This means taxpayers will foot the bill for up to $340 billion if CMHC tumbles.
5. CMHC has been able to meet the minimum capital requirement by OSFI since 2005 but it still fails to meet the minimum international capital requirement set out in Basel Capital Accord II.
6. Not only the government has failed to rein CMHC’s reckless risk taking behaviour, it has rewarded its management with hefty pay increases of 55% to 70% between 2001 and 2008 leading to a salary and bonus of $514,000 for its president in 2008 (See CN News, March 13, 2009, Top bureaucrat wages ‘obscene’ , By KATHLEEN HARRIS AND PETER ZIMONJIC, NATIONAL BUREAU) which is more than double that of any other deputy minister in the government of Canada. It is even more than the salary of Prime Minister for goodness sake. It is time to trim the hefty salaries of CMHC managers and pour that money into affordable housing.
More on this topic (What’s this?)
11.3 Million Homeowners Now Underwater- The Meltdown Continues (Expected Returns, 2/24/10)
US Home Prices Rangebound (Index Universe, 2/23/10)
http://blog.canadianbusiness.com/cmhc-out-of-control/
#66 Junius
Vancouver or Sydney Australia or some other popular place is similar to Monaco.
I mean, how many French citizens can purchase a home in Monaco? You can virtually be priced out of your own city by foreign purchasers.
Olympics The 2004 Summer Games were held in Greece, and look at them now. An article in the KDC yesterday (Cdn. Taxpayers Federation) had the headline “B.C. govt. spending like Greeks”.
The Bilderberg Group had it’s AGM in Athens spring ‘09, now there are fisticuffs all over. How long before here?
#9 Jeff Smith — Good link. The US Social Security, Medicare are bankrupt, along with ever-increasing deficits / debts.
Further — #22 jr — “This couldn’t happen here” — Betcha it will happen a lot sooner than most here even think. #41 miketheengineer and #50 TheBigLebowski — “. . . protect what you have.”
So true. Gold and silver bars are no use at all, but #49 DaleFromCalgary had it right with coins, which are much easier (esp. silver) to use.
An honest realtor — “Is there any greater proof that my life’s work is done?” — Sounds like an oxymoron, but give him credit for telling it like it is.
“. . . drive trucks with nuts . . .” — Are those numbnuts, or ordinary male (testicular) nuts for brains?
The latest readings of the ‘quake in Chile early Sat. a.m. indicate that it was 8.8 and a tsunami hit Hawaii not too long ago. No reports of any major damage so far, but there was panic buying this a.m.
So there was Haiti (which allowed the US military to grab oil and other resources), Japan’s 7 a couple of days ago on the Ring of Fire and Chile’s. Either the planet is getting mighty pissed at us or the US is in it’s final throes.
When the SAF starts rocking and rolling, it will set off the one running through Maple Ridge (a ‘burb of Vancouver), Yellowstone, the fault in Michigan and sooner or later, Toba will break wind along with Dimona, so The Gods Must Be Crazy!
The friends I mentioed in the last post bought a semi for 825k. They got it for only 45k over list and are super happy to have gotten such fantastic deal.
It IS a nice place. They CAN afford it (with some room for growth rates). Still. Wow.
Now they hunt for a rental condo -quick quick before it’s too late!
They dont get the keys until May 31st. I wonder if the seller is doing a Garth on them?
here it is:
http://www.realtor.ca/PropertyDetails.aspx?PropertyID=9156896
no conditions, 50k certified deposit.
They plan to renovate and ‘hardwood floors are the original so we will likely replace that too…’
Your friends are fools. — Garth
#48 Joe Realtor
Appreciate all the information you provided, that certainly puts a different spin on what was reported in the Star.
Do you think they gave this sh—-t to the food banks or perhaps a food stamp or two.
From the New York Times:
…”Now, federal prosecutors in California have taken aim at the owner of SK Foods, who they say spearheaded the far-reaching plot. The man, Frederick Scott Salyer, was arrested at Kennedy Airport in New York City on Feb. 4 after getting off a flight from Switzerland. He was indicted last week on racketeering, fraud and obstruction of justice charges.
The scheme, as laid out by federal prosecutors, has two parts. Officials say that Mr. Salyer and others at SK Foods greased the palms of a handful of corporate buyers in exchange for lucrative contracts and confidential information on bids submitted by competitors. This most likely drove up ingredient prices for the big food companies.
In addition, prosecutors say that for years, SK Foods shipped its customers millions of pounds of bulk tomato paste and puree that fell short of basic quality standards — with falsified documentation to mask the problems. Often that meant mold counts so high the sale should have been prohibited under federal law; at other times it involved breaching specifications in the sales contracts, such as acidity levels or the age of the product.
The scope of the tainted shipments was much broader than the bribery scheme, touching more than 55 companies. In some cases, companies detected problems and sent the products back — but in many cases, according to prosecutors, they did not, and the tainted ingredients wound up in food sold to consumers. ”
http://www.nytimes.com/2010/02/25/business/25tomatoes.html?em
Invisible Hand is really a Treuhand
‘secrecy world’ shadow banking
Shelley A. Stark’s book, Hidden Treuhand: How Corporations and Individuals Hide Assets and Money
“According to leading banks, designating an account as a Treuhand account alters nothing. The true account beneficiary remains a secret because only the trustee is authorized to use the account and there is no legal relationship between the client and the ’special account’. The clients’ identity is not exposed when making bank transactions because it is the trustee’s responsibility to make money transfers from this ’special lawyer trust account’ (Anderkonto)”.
As result of the crackdown against tax havens, more clients will have to resort to Hidden Treuhand and lawyers services. Already Liechtenstein has sold its Treuhand services to a separate company, quite possible even to itself via Hidden Treuhand. Their business model will no doubt resemble the Austrian one where the registration of foundations and Hidden Treuhand is separate from bank institutions. If foreign tax authorities manage the first hurdle and can provide strong evidence of tax evasion and seek further information regarding bank accounts they will firstly have to petition the cooperation of the Ministry of Finance. The ministry will ask the banks, but to what end? The bank cannot tell them what they do not know.
http://tpmcafe.talkingpointsmemo.com/talk/blogs/flyover_27/2009/07/author-shelley-stark-speaks-ba.ph
http://taxjustice.blogspot.com/2009/11/no-law-no-crime-hidden-treuhand.html
#28 Industrial Guy and #30 D,
I agree with you. The Tea-baggers are a creation of the U.S. far right wing. Yet another manipulation of the lower income, lower educated white population being scared with a raw combination of racism, homophobia, anti-everything and blame someone else. However the anger is very real because so many people in the U.S. have seen their life savings wiped out by greedy bankers and incompetent leadership.
The reality remains that this form of anger is coming to Canada this year. Many people will lose their life savings and find themselves tied to unaffordable mortgages with no way to sell and no way to move forward. Furthermore they will be looking forward at an economic landscape that will be very tough for many years to come.
People will be angry. How they focus it will be a significant feature of Canadian political life for many years.
#67 Ben,
Amen. Most of us Blog Bears discuss this often. A number of Bull Craps pretend the gov’t can keep taking on this CMHC liability forever but it is not true. As this exposure increases it threatens to cut the national credit rating exposing Canada to a variety of problems. Clearly it is one of the reasons why F has tightened the screws slightly and will have to go further in the near future.
#68 RAIN,
Monaco is a principality you can walk across in an hour. Give me a break. Is that the best you can do?
If that is it then you have nothing.
Hi Garth,
I am getting approx 10-13 new listings auto updates for the Tri-cities area near Vancouver EVERY DAY. These are only for SFH…
THREE of them are for a developer on Burke Mtn. who has decided to go the MLS route, since things are beginning to slow.
By the way, I hope those maple leaf-bedecked fans are able to find their flags for this coming Canada Day.
Many of them bother to decorate for Halloween, but Canada Day? Hmm… We’ll see…
I think the bravado of “Junius’ will dissolve long before that of ‘Vancouver Rocks’, along with all the rest of the drooling buyers awaiting the BIG DROP in prices. Who will make money if it doesn’t happen? The droolers? Garth?
#75 junius you said:
“I agree with you. The Tea-baggers are a creation of the U.S. far right wing. Yet another manipulation of the lower income, lower educated white population being scared with a raw combination of racism, homophobia, anti-everything and blame someone else.”
So left me get this straight …a left wing, highly educated white population made this world a better place … you left wing nuts are the equivalent of a nut …as in just plain nuts.
The problem in universal … debt implosion and no one, in power, has the balls to fix it …so this left wing/right wing crap is just that crap …junius, you and your pals have blinders on…seemingly pulling you much to the left and left incomprehensible…of course, imho.
#74 jess — ” ‘secrecy world’ shadow banking”
Aha! The elite again, doing their dirty work while screwing the populace.
Death, however, is the great leveller for each of us!
Forgot to mention the 2006 Winter Olympics at Torino, Italy. It appears that Italy is in worse fiscal shape than Greece, but does anyone notice a trend here? Except for Denver, CO where the citizens balked at having them after seeing the cost.
More ‘quake stuff — an undersea off Japan measuring 6.9.
This as well.
Water going south for profit.
Straight to the point, no BSing. It leads to depopulation via pandemics, food shortages, wars, ‘quakes (see above), etc.
Throwstones — links tied together and possible false flag shortly.
Emergency
Bullcrap
Real US unemployment. It is easier to see why depopulation is almost here — Irish, Soviets and Ukranians all lost millions to starvation.
Solar storms are all this planet needs to screw us up!
Recession or Depression? No one knows anymore.
Naughty Word How Canada has changed — “Right out of George Orwell’s “Newspeak”; if the masses don’t have a word for it, they won’t be able to think it! If the masses are forbidden to call Israel apartheid, they won’t think Israel is apartheid! Isn’t dictatorship wonderful?” wrh.com.
LA is just as bad as Detroit.
How much is the current US deficit?
Japan’s takedown. With Japan looking for friendlier relationships with China and Russia (probably because of the unsustainable US debt load), are Toyota, Honda and a few others part of US interference?
#51 palebird
Talking about bumper stickers… I am still waiting for the… “Don’t Laugh It’s Paid For” ones to come back into circulation.
@ #70 jwkimba: based on the location (right in the middle of UofT), shouldn’t that place be student housing?
Off topic but my goodness, how great are our Olympic athletes! We built the podium, we own the podium! 13 Gold medals; how proud we should be, how proud we should be for our country. Trouble coming in the economy but let’s enjoy this in the moment. It’s likely we will break the record for most gold medal’s won. It’s a good day to be Canadian, enjoy!!
“So left me get this straight…”
You meant to do that…right?
You sound like a bitter fascist, to me.
Rory,
does your attack on “left wing nuts” change the reality of the tea-bagger movement as described by Junius and repeated by you in the first para of your #80?
May I assume that you were of the age of reason and cogent during the years of the recent Bush Administration?
#60… Canada should make out better than the States. On a scale of 10, 1 being the worst, Canada should be about a 6 and the U.S a 3. Our currency should hold up better than the greenback since Canada actually produces commodities , and the U.S stopped producing things years ago. 70% of their economy is based on the consumer spending. What will happen when that stops? But compared to the one true currency that cannot be printed, gold, All currencies have been falling verse gold for the past 7 years. I think everyone should be hold a majority of their wealth in gold/silver related assets, coins , bullion, and mining shares. There is no other safe place to be. There are some Quality gold mining companies in Canada, Goldcorp, Agnico-Eagle, Minefinders. All increasing production so even in a flat gold market their earnings will increase. But flat is not what I predict. Gold during a deflationary depression in the 30’s doubled and during an inflationary episode in the 70’s went up 25x. Its the only asset that performs during both outcomes. The shares during the 70’s increased 40x that of bullion so thats where the real money will be made. Real estate is not where a person would want to be during what is coming. Oil will spike on any news of a new war in the middle east so some oil exposure makes sense, but during deflation will not hold up as well as precious metals. Reality is a bummer but this is a window into reality, not the latest olympic results you will get on the news. Have 3 months opperating expenses in the bank and $1000 at home in your safe, that is just prudent to hedge against any possible disruptions.
#79 Adam Noonan,
Try worry. I am not drooling or waiting. I am very, very worried.
Check back in 10 months. Let’s see then.
77 Junius – check this out:
http://www.numbeo.com/property-investment/rankings.jsp
We can certainly argue that you cant compare NA cities to eastern europe or other locales, but it does show how
home-ownership in much of the world is only for the
(relatively) rich.
Received a great PPS e-mail showing Tibet and the Himalayas in all their glory. The concept of 4WD vehicles are yaks and donkeys. The people wear beautiful clothes. If I travelled, I would go there and Nepal — great places to see and way-out simple lifestyles.
#74 jess — ” ‘secrecy world’ shadow banking”
Aha! The elite again, doing their dirty work while screwing the populace. Death, however, is the great leveller for each of us!
Bush Sr. He called for a NWO during his one and only term as prez.
Forgot to mention the 2006 Winter Olympics at Torino, Italy. It appears that Italy is in worse fiscal shape than Greece, but does anyone notice a trend here? Except for Denver, CO where the citizens balked at having them after seeing the cost.
More ‘quake stuff — an undersea off Japan measuring 6.9.
This as well.
Water going south for profit.
Straight to the point, no BSing. It leads to depopulation via pandemics, food shortages, wars, ‘quakes (see above), etc.
#80 Rory,
When did I say I was left or right? Why are you calling me a left wing nut? How does this advance any sort of intelligent argument?
I happen to think both the left and the right have screwed up. I do give the Gold medal to the U.S. right wing for starting wars, cutting taxes for the rich and financial deregulation. However the left participated in deregulation and have helped fuel unsustainable deficits.
We need to see beyond the old models of left and right or we we are in trouble. Perhaps we can agree on that. However I felt your comments about me were unjustified in your argument (did you make one?).
#88 Taxpayer,
Sure. So why are prices higher in Vancouver than San Francisco where salaries are so much higher? How about Seattle where they continue to drop? Or Toronto for that matter? Affordability takes into account income and other costs.
When you are are the least affordable cities in the world – and Vancouver and Sydney are right at the top – it means that a correction is coming. The only arguments worth considering and when and by how much. This is pretty basic economics.
Industrial Guy, D, and junius.
“It’s just plain odd, but funny and telling all at the same time. Apparently the Brits are going to have their own tea party to protest their own plight of over taxation.
Accordingly, Member of the European Parliament Daniel Hannan is sponsoring a Brighton Tea Party to be held on February 27.
Hannan thinks that Brits have had enough of being raked over the coals as their government wastes tax money at a rate even higher than that of America’s profligate government.”
http://www.therealitycheck.org/?p=11865
Watch the very short video which is posted at the above link. This video went viral on the financial blogs last year. I would think most taxpayers in this country (the ones who do not work for some kind of Government anyway) would say “right on” if they were to see this video.
The downward spiral in the Canadian economy hasn’t quite started yet because too many people are still having a grand old time feasting on cheap credit. When the real pain of the upcoming financial crunch starts, the very first thing that the taxpayers in this country will demand from Governments is that they spend taxpayers’ money with common sense.
#28 industrial guy
While I often agree with your views, I have to wonder if tax reductions would have been the way to distribute stimulus after the 08 meltdown.
I am in no way a fan of the Reaganomics model however, it would seem to me to be more efficient to allow the citizen to choose what to do with the money rather than large scale wasteful govt. stimulus pork.
The tea baggers are all abuzz over a new film blaming boomers for the financial crisis:
http://abcnews.go.com/Business/woodstock-hippies-lead-financial-collapse-film/story?id=9958077
#57 DaBull
Sorry dude, but with at least half the world’s economy/oil consumption (US, Euro, Japan) continuing to deleverage and stagnate a few more years, oil’s on a slippery slope. It may get close to $100 this spring with a little geopolitical help, but fundamentally it’s on a long slow slide back to $50 or lower. Any price around or over $100 further damages an already painful deleveraging process and would further ensure its own decline in the midterm. Oil’s headwinds ‘til mid-decade include a strengthening dollar, supply glut, mid-East over-capacity, more cost-efficient recovery/exploration technologies, numerous super giant fields being discovered and countries like Iraq setting goals of ramping production from just over a million bbl/day to more than 12 million in 6 years. And with all the drilling breakthroughs on US shale natgas, BC & AB’s true bread ‘n butter is in for a real rough ride.
#81 bumpersticker
Yeah that is a great one, make a few people in this “gotta have a new car at any cost” age sit up and take notice
Garth, Let me guess. You’re going to start fighting by organizing a country-wide network of financial advisers, honest people who are on your economic wavelength and will help citizens without gouging and deceiving for profit.
#92 Anon10,
Thanks. This was really my point. I understand the anger of the tea-baggers. That they are manipulated by and somewhat a product of the U.S. right is sad but it does not explain the anger. It is very real and understandable when we have been so badly let down by our leadership.
Whether these people use constructive measures like moving their money to community banks or unlawful acts like the terrible incident in Austin this anger is manifesting everywhere now. We should all be concerned.
#94 OttawaMike,
Random acts of rage. It is always someone else’s fault.
What did Mick and the Stones say, “Who killed the Kennedy’s? Afterall, it was you and me.”
We are all to blame.
Whistler Dude on 02.27.10 at 1:28 am
Any plans to visit Whistler? I hear the the occupancy rates are pretty cheap now the olympics are “all over but the crying”.
So far this isn’t true. I have friends come in from the UK and i’m trying to book a hotel for 20-22 March and the rates are extortionate.
The elite will take whatever measures are necessary to ensure that freedom of speech is a thing of the past.
Probably includes freedom of choice, freedom of thought, freedom of religion, etc. Say ‘Bon Voyage’ to civil liberties — they are going very quickly!
Emergency
Bullcrap
Real US unemployment. It is easier to see why depopulation is almost here — Irish, Soviets and Ukranians all lost millions to starvation.
Solar storms are all this planet needs to screw us up!
Recession or Depression? No one knows anymore.
Naughty Word How Canada has changed — “Right out of George Orwell’s “Newspeak”; if the masses don’t have a word for it, they won’t be able to think it! If the masses are forbidden to call Israel apartheid, they won’t think Israel is apartheid! Isn’t dictatorship wonderful?” wrh.com.
LA is just as bad as Detroit.
How much is the current US deficit?
Japan’s takedown. With Japan looking for friendlier relationships with China and Russia (probably because of the unsustainable US debt load), are Toyota, Honda and a few others part of US interference?
No. 4 gives a better understanding of Harper.
3000 community banks may be in trouble.
For those who think money printing is causing inflation–
It is–real inflation in monetary terms–but it is not inflationary–until it circulates into our economy–
Before we have inflation–the credit market must come back first–
Reason is–they need to “lend” –the only other way–is to give it to us–which would melt the currency instantly–
So–if lending picks up and people are willing to borrow–
We’ll have inflation–
If lending contracts,faster then cash money hits the broad economy –we’ll have deflation–
Hard to see in Canada yet-because we are just tipping overand as soon as the housing and auto and toy defaults start hitting these already “insolvent” Canadian banks–expect into a deflationary lending freeze–
Want to know what’s coming–watch the US–
Too many–are too Canadian centric when looking at the big picture–
The whole planet–must be taken into perspective–
Simple chart of US lending–
Screams deflation–how can it be otherwise–
Tell me inflationists–wtf are you looking at?
http://js-kit.com/blob/FVlV3qHHQcuoDGU741qgYZ.gif
edit for above post–
dunno what happened–fat finger–i suppose–
“Hard to see in Canada yet-because we are just tipping over and as soon as the housing and auto and toy defaults start hitting these already “insolvent” Canadian banks–expect Canada’s banks to engage in a deflationary lending freeze–”
#95 bullybear on 02.27.10 at 10:57 pm <<<<< i agree
The Tea Baggers are angry because they don’t have a clue how they became the victims of the WalMart Economy. Their hero, George Bush told them America was strong. The future was bright. Now the tea baggers call him a Progressive.
The American Dream turned into the American Nightmare. They were the winners. Good jobs, union wages, benefits and a pension plan. They owned nice houses, had money to send their kids in college. Then the floor fell out. Many of the MILLIONS of unemployed workers in the USA and Canada are receiving benefits for the first time in their lives. They’re angry because they are about to lose everything they worked a lifetime for. Some one is to blame. Glen Beck and the loonatic fringe at Fox News gives them an easy target …blame the Fasist / socialists / progressives. Its sure is better than blaming themselves. Afterall, most of them voted for Bush.
91 Junius
“Affordability takes into account income and other costs.
When you are are the least affordable cities in the world – and Vancouver and Sydney are right at the top….”
Please refer to the link I supplied. You completely missed my point. Simply put, real estate in many other parts of
the world is completely unaffordable to the “average”
person living there. Far higher ratios than Vancouver.
Or are you saying “it’s different here”? Must housing be affordable to the ‘average” person? Are you “entitled” to homeownership? Take a look at history. Its only been in the last few generations where owner-occupied housing has become the accepted norm – and thats only in some of the industrialized west.
I’ve seen the booms and busts (3 booms, two busts and counting) and have little reason to believe that will
change. But I find many of the bloggers here angry
because they feel housing is unaffordable, but even a Garth-like 30% correction in Vancouver won’t bring it back to the historical median of 3ish. It would actually bring it more in line with….San Francisco!
Ulsterman the rates I quote are from the last minute club. On Whistler.com if you check in for the next few days (it’s really for Van/Seattle people) you can stay for $134/night in a 4star hotel. I’ll firm up my comments for you. Hotel sales staff say it’s been a weak year with the exception of Febuary- rented by VANOC (the hotel rooms are mostly timeshares and Stratra owned rooms, rentals pay the mortgage). Whistler also had the largest back-tax auction last fall. Hotel rooms we’re auctioned off for half their RE value.
Below is a hot off the wire link. Perhaps they think we’ll all be watching hockey- probably right.
SAM Magazine-Vancouver, B.C., Feb. 27, 2010-Fortress Investment Group and
> > its lenders have agreed to a framework for restructuring $1.2 billion in
> > debt for Intrawest, Bloomberg News is reporting.
> >
> > The new plan is said to call for $1.2 billion of debt to be split into a
> > senior tranche of $800 million and a mezzanine tranche of $400 million.
> > The lenders have set an April 16 deadline to settle the details. It’s
> > estimated that Fortress will also have to inject about $150 million in
> > cash-roughly what it is believed to have raised through recent resort
> > sales (see previous Breaking News reports for details).
> >
> > According to Bloomberg, Intrawest would pay 10 percent interest on the
> > senior debt, and up to 17 percent for the mezzanine debt-well above the
> > rate charged on its original loan in 2006.
> >
> > The news agency also said that investors’ equity in Fortress’s Fund IV,
> > Fund IV Co and FICO fund had eroded to four cents on the dollar as of Oct.
> > 31.
> >
> >
> >
> > http://www.saminfo.com/news/article.php?tid=4438
#93 Ottawa Mike,
I think the reason that tax reductions/rebates weren’t used after the 08 meltdown is that the general public was fearful and uncertain. So the general public would be more likely to take any reduction/rebate and pay down debt or stuff it under their mattress, rather than stimulate the economy by buying stuff, which was what was needed to avoid a meltdown. While paying down debt to the banks theoretically creates additional liquidity for the banks to loan, the banks were equally fearful and not loaning so that wouldn’t help.
http://news.yahoo.com/s/ap/lt_chile_earthquake
http://www.reuters.com/article/idUSTRE61Q0S920100227
http://www.reuters.com/article/idUSTRE61Q0S920100227
The BIG One hit Chile at 8.8 on the Richter scale. Vancouver is long overdue for the BIG ONE.
http://www.businessinsider.com/citigroup-warns-customers-it-may-refuse-to-allow-withdrawals-2010-2
http://www.dilbert.com/strips/comic/2009-01-26/
The right time to buy a house? WHEN THE GENERAL OPINION IS: “REAL ESTATE PRICES WILL NOT RECOVER FOR 50 YEARS” THAT WOULD BE THE “DESPAIR” STAGE OF THE CYCLE.
Australia relaxed foreign investment rules (to buy houses) and prices have been going through the roof in the last year!! SAME THING WILL HAPPEN HERE! You are seeing it already in canada and we have a ways to go. Many interest rate increases did nothing in Australia. Prices detached from incomes. Real Estate and gold will be the only stores of real wealth in the globalized world.
Australia has the same amount of mortgage debt as canada but only 2/3rd the population. Canada’s prices may potentially go up 50% from these levels based on an assumption that canadians can afford the same per capita debt levels.
Welcome to the new world. Prosperity for those who understand it. Links. read people’s comments and you will know what I’m getting at.
http://www.smh.com.au/business/in-the-red-mortgage-burden-soars-to-1-trillion-20100226-p9bs.html
http://www.smh.com.au/business/property/australias-mortgage-debt-blowout-20100224-p1ex.html?autostart=1
I am looking into moving my family to Fort McMurray. I have been working here for 3 years and wanted some sound advice. Everyone around me says to buy but at 600K+ it’s hard to swallow.
Will housing prices come down here in Fort Mac even though we have limited land no other places to live in the short proximity. You advice would be appreciated.
#99 junius
I doubt that I belong to the “everyone is to blame” camp in all seriousness. My reasoning is simply that there are people in Canada that didn’t vote for the powers that be that created this bubble. Some of these same people didn’t buy or sell homes during this period. Nor did they lobby for the want to make monthly payments as cheap as they possibly could whether they were borrowers, bankers or politicians.
In essence, not everyone is to blame. Not all of us are driven by greed and the want for more power. There are innocent folks who do walk among us but if I had to play the blame game now, it would come down to this order:
1 Government
2 banks
3 media
4 lobby groups (AIG, developers, realtors, broker houses, propaganda groups, many of which aren’t even from Canada)
5 Greedy speculators
6 naive, first time homebuyers who have little grasp of how RE values are generated more than anything, by rates and regulations that tighen/loosen credit.
7 naive (and not so naive), propaganda influenced voters.
8 opposition parties that failed to make it an election issue.
This list I’m sure can be expanded on but ultimately, my point is that decisions to even let a RE bubble be formed are top down far moreso than it is, bottom up. Sure, its bottom up but to a much lesser degree.
As an example, Canadians didn’t have an election based on whether or not we wanted a housing bubble in Canada. This was pretty much a decision left for government and supported by our banks and media, left pretty much unchecked by everyone else except for a few blogs and their contributors such as this one.
There are innocent people in all this. If one was to ask the question, “hey Canada, do you want a housing bubble that mirrors in intensity, the one in the U.S?”, my guess is that the majority of Canadians would have said no. Canadians in general were left out of this decision. Even when it came down to elections, with the issue of Canada headed for or becoming a RE bubble, the political opposition was silent. Most individuals who did oppose had their concerns fall on deaf ears because they were up against government/banking policy/mainstream media. Since mainstream media can’t be asked to help (isn’t that sad, they can’t be asked even), who can?
A 12 time (hope that’s accurate Garth) Canadian best seller in the area of real estate perhaps? Who by nature would be the natural leader chosen to help control the damage left behind by leaders left blinded by greed and power, the same old same O that blinds us all, the want to serve only… ourselves?
It won’t be guilty that comes in to clean up the mess the guilty leaves behind. It might not even be the innocent who for the most part neither possess the knowledge or potentially even the desire to come in and control, contain and heal if possible, the damage that has been left behind.
No…. it will likely be the humbled, the redeemed. Those that were once guilty but through service have been set free of its guilt, knowing the value of its freedom, those who literally know better through humility, driven by a unwaivering need to turn wrongs into rights not simply because they can, but because they have to, in order for their conscience to find peace from the days of old when they were once problems to the solution, driven by self interests themselves.
#17 Eric on 02.27.10 at 9:29 am
—————————————-
Rain in February in Vancouver from http://www.theweathernetwork.ca:
2007: 12 cm
2008: 9 cm
2009: 7 cm
2010: 12 cm
You’re either being sarcastic or must have slept through much of February…
Quebec among most highly indebted industrial economies in the world
http://www.theglobeandmail.com/news/national/quebec/quebec-among-most-highly-indebted-industrial-economies-in-the-world/article1484107/
#15 TaxHaven–Wait for the magic words: FAILED BOND AUCTION.
The magic words might come from closer to home than we ever imagined !
We live in a world where everything is go, go, go. A world where a yellow traffic light means speed through instead of slow down.
Prepare for a correction that will soon take place before 2010 is over. Despite the fairy tales Wall Street is telling you about strong corporate earnings, market data, and insider buys, do not succumb to the glitter of green arrows. That’s exactly what they want you to think…so they can dump their profits on you before the next crash.
The Obama administration, with the help of Wall Street, is leading us to believe that the markets have not only recovered, but are ready for growth. Is it really possible to experience what we have experienced over the last 2 years and already be on the road to strong economic recovery?
That’s exactly the mentality that got us into this mess . And that’s why we need to be patient.
Fundamentals, corporate earnings, market data, and historic events can all help us determine and predict what may happen in the future. We’re not saying we can use this information to predict what happens tomorrow, but we can use it to help us predict what happens in the years ahead of us.
We need to look at the road ahead, and not just the road we are on.
Economics 101 teaches us about cycles. Right now, we’re in a cycle of a long economic recovery that could stretch many, many years. Regardless of what we’re being told by the press, we are still in a depression stage as true US unemployment numbers are closer to 20% (see A Hidden Agenda).
The economies of the world are still collapsing:
The Eurozone is in trouble with no sight of what is to follow
Commercial real estate losses could reach 45% this year (see Another Shot at Glory)
81% of the option ARMs originated in 2007 are expected to default, with many ending in foreclosure (see Another Shot at Glory)
Amount of debt per US citizen continues to rise
Slow economic growth and high unemployment, accompanied by inflation from the printing press (stagflation) (see we’re back and its time to prepare)
These are just a few of the signs that will ultimately lead to another correction this year or early 2011.
Our recent stock market recovery since the bottoms of March 2009 to January 2010, reminded us of a comparable recovery during the crash of October 1929. The recovery in market prices, much like ours today, stemmed from government intervention via loose monetary policy, the spending of hundreds of billions of borrowed money, and extremely low interest rates. This helped the Dow recover close to 50% of the losses incurred in the October 1929 crash.
In the past, government incentives gave investors a renewed optimism and sent retail investors flocking back towards stocks, only to see another correction months later in April 1930.
Despite being in a completely different era, we are expecting the same thing to happen again. We predict the markets will correct itself later this year, with debt being the catalyst for our next economic and stock market decline.
Canada is at risk.
Household debt in Canada rose to record levels in 2009, with almost two-thirds of families reporting that they would be in financial trouble if their pay cheques were just one week late, according to a report by the Vanier Institute.
In its 11th annual assessment of the state of the Canadian family, the institute found that average household debt rose to $96,100 last year. That resulted in a debt-to-family-income ratio of 145%, the highest ever, with the level set to climb to 160% by 2012.
Based on our cycle theory, the debtload per household, and a rise in interest rates, we can expect real estate prices to drop significantly in Canada within the next 3 years.
If you ever think you’re overpaying for a house, just remember this one. A 1970’s trailor parked in Yellowknife for only $230,000:
http://www.homelifeyk.com/pdf/618%20Williams%20Ave.pdf
#12 WesternGrit
Remember one thing people from Hong Kong only buy high they don’t buy into falling markets of any type. The same can be mainly said about the Chinese race. When you factor in these two things the fall could be anywhere from 35 to 70 percent. If you look at Alberta apartments and townhouses they fell around 50 percent at many locals in two short years’ time so more than a 50 percent fall is possible in both Vancouver and Victoria.
#100 Ulsterman
I agee with Whistlerdude. I have seen many stay for4 pay for 3 night deals and most places have occupancy after the big O. Maybe you can buy the hole intrawest town at half off.I hear it’s on the blocks next week. Check the west jet site. They have some good deals.
#116 Ben
Presently insider selling is outpacing insider buying by a ten to one ratio. This leads one to conclude the only people buying stocks right now are the US government and the bankers.
#93 OttawaMike “tax reductions would have been the way to distribute stimulus after the 08 meltdown”.
In a word … NO.
Most economists agreed that any tax reductions in Canada would have been used simply to pay down family debt. So, no new spending here and therefore no new jobs…..
The die was cast. We were going to spend alot more on EI benefits anyway. Economic policy in Canada is tied to the health of the US economy.
Direct intervention by the Government did two things. 1. Monies could be focused on areas of higher unemployment (a good policy). 2. The Conservatives could use it to buy votes in the next Federal election (not so good policy).
Anyway, Tax reductions only work if you have a job and employment is the real issue here. Housing prices have only one direction to head as the supply of “Greater Fools” dries up with our new mortgage regulations and the HST arrive on the scene.
As Garth said in an earlier post …fasten your seat belts folks. This is going to be a bumpy ride down.
113 Daystar: Whose to blame? You destroy your own argument. Which, on your list do you have least control of, and which has the greatest impact on personal decisions? It has to be #1 Government. Unless you have put yourself out on a limb….
In the coming weeks and months ahead watch for the sovereign debt crisis to pick up steam as more countries try to renegotiate their debt loads. Already we are seeing Greece, Spain, Portugal, Ireland, Italy and Iceland in serious trouble….with many others in just as dire straights, but currently out of the spotlight.
As the sovereign debt crisis increases and countries are unable to meet their financial commitments we will see the value of long term bonds erode quickly. This will cause various countries to increase interest rates in an attempt to get the finances they need to maintain operations and ‘pay the market’ for the increased risk of dealing with them.
All of this obviously means that higher interest rates are just around the corner. And, depending on how quickly the sovereign debt crisis builds, rates could rise faster than the vast majority of prundits are predicting.
The Euro will probably be under significant duress over the next few months especially and we could see investors run into gold as a protection against falling long term bond prices.
#109 Taxpayer Like Everyone Else,
Fair enough. I think we got our wires crossed.
No, it is not different here but I do think there are some differences when factoring in third world countries that lack a credit culture.
I believe the more relevant state is historical home ownership which hovers around 60%. We are now closer to 70% which is a significant deviation from the norm. This difference was created by cheap credit and understanding this is core to understanding the current bubble.
#115 TheTruth,
You could be right. We might just be dumb enough to open up our foreign investor rules and immigration rules all in the name of saving housing prices. I have read about this in Australia and there is considerable political push-back.
We have already lived through an era of immigration investment rules in Canada that were a terrible disaster. The system was gamed by many unsavoury characters from around the world – drug dealers, arms dealers and third world despots. Even when it brings in legitimate wealth it tends to fuel racism and resentment.
Personally I think it would be political suicide for the party who tried it but we have seen dumber things done recently.
However one also has to wonder at what the impact would really be considering how unaffordable our primary markets are compared to the U.S. Why buy in Vancouver or Toronto when you can buy in L.A., Palm Springs, Vegas or Miami for far less?
#117 Daystar,
Fair enough. However I still believe we share a collective responsibility for this situation because we have not challenged our leaders. The pre-condition for Bad leaders is Bad followers. If we have not been the Bad Leaders ourselves we have been Bad Followers by not doing more.
Our politicians look to score short term points instead of providing long term solutions. Our major corporations seek quarterly profit gains instead of investing in long term innovation. Our financial system crumbles because of risky greed and is allowed to suck the life out of our consumer with more crack debt and our mainstream media is bought and sold by the wealthiest individuals and largest corporations.
Our leaders have failed us. We have failed us.
#125 Industrial guy,
Agreed. There is no room for tax cuts. It can only get worse in Canada.
Just an aside, but… what were the flyers Richmond Hill agent Patrick Poirier spitting out 6 months to a year ago?
# 116 – Ben -”Based on our cycle theory, the debtload per household, and a rise in interest rates, we can expect real estate prices to drop significantly in Canada within the next 3 years.”
Where did you lift your comment from, and why did you not give credit to the original writer(s)? Or maybe you’re just of royal blood. “We”. Cough. There’s nothing wrong with quoting someone else – which part of your comment is your thoughts and which is somebody else, very hard to tell.
Industrial Guy – exactly. Canadians, please don’t bring the brain dead TEA Party movement here. What more needs to be said about a group of people who think Sara Palin is their model great leader of the future. Stupid is as stupid does.
Or maybe it would be a disguised blessing – splinter the right wing vote, ensure we never get a Conservative Government again. At least until ‘Conservatives’ get the Con out of the Party. Disclaimer – I was dumb enough to vote for Harpoon once, but I will never make that critical mistake again.
miketheengineer – Glad to hear you found some work. Good luck.
TheTruth on 02.28.10 at 4:20 am: Australia relaxed foreign investment rules (to buy houses) and prices have been going through the roof in the last year!! SAME THING WILL HAPPEN HERE! You are seeing it already in canada and we have a ways to go.
…
What a bunch of garbage. Canada has allowed foreign ownership of real estate for years. This influenced prices in the desirable places like Whistler and Vancouver. That happened a long time ago.
Do you really believe foreigners will be flocking to purchase real estate in Winnipeg or Regina? hah. How stupid. You can’t compare Australia to Canada.
Dear Garth, Bulls and Bears,
Enjoy the day. I hope all goes well in the big game today and the closing ceremonies.
It will be great to be all together today.
Go Canada Go!
116 PACO…
Are you nuts…think for a second. Fort McMurray 600K. What do you get for that? 9 months of brutal winter, a telephone book 2/3 full of escort ads. Pollution. Dude pick a place somewhere else to rent and let them (the big oil company) fly you in.
I keep reading two underlying themes in the posts and comments of this blog: 1) interest rates up, up and up! 2) ditto price of crude oil.
Do you folks not understand that interest rates are affected by the demand for borrowed money? You know, that dusty old standard called supply and demand? Right now interest rates are low because there are fewer (in fact much fewer) folks interested in borrowing money (apart from those desperate souls who no longer qualify because they have lost their job and/or replaced it with one that pays less and has no benefits).
People who are, for various reasons (speculation, re-financing, job/income loss) desperate to stay on an unsustainable borrowing trajectory will not drive interest rates to the levels many here are envisioning. Prudent people who have not gorged at the debt trough are certainly not lining up to borrow and spend in this environment. Not that mortgage rates won’t be in for a bump for the same reason corporate debt will. But sovereign debt such as US Treasuries and GofC bonds? Don’t count on them behaving like tech stocks. And don’t expect US and Canadian sovereign debt to crash until a very long list of far shakier debt dominoes around the world topples and falls.
Take a look at the bond market of the US long term. Take a look at the behaviour of the bond market in the US between 1929 and oh, say about the early 1950s. You will notice rates stayed low throughout this time and did not really begin rising until the economy had sufficiently healed itself from the effects of the Depression. And no, WW2 did not end the Depression. Equity prices took a full 25 years (until 1954) to recover their pre-crash highs of September/October 1929.
Now on to the subject of energy use, oil in particular. First of all I do not subscribe to the peak oil fear mongering which runs rampant among the oil to $100, $200, $300 crowd. You know the same type of fear mongering that predicted New York City would be buried in horse s**t by 1910. Yes oil will not last forever however there just might be other alternatives (you know, like the ones missed by the horse and buggy crowd in 1890). That said, if you pay attention you will notice that demand is FALLING and has been falling for some time in countries like Scandinavia and Japan (still #2 economic power in the world last I checked). This fall in demand is spreading like wild fire in the developed countries (read largest oil consumers) of the world. And don’t even think about defending China, the biggest commodity speculator on planet Earth. China is hoarding commodities, not consuming them because of internally driven demand. Its population is aging rapidly and not replacing itself. If it expects to sell its hoard of commodities back to the West it better think again because a secular change/return to thrift and austerity is just getting started here. Certainly China’s population is not up to the task of replacing American consumers any time over the next 20 or more years. The only prize I see it laying claim to is the dubious one of biggest commodity bag holder/rube in the known financial universe. When pig farmers are stockpiling copper in their backyards you know the end is near.
But you really need only look to the simple measure of vehicle miles driven in the most auto-centric country on earth to see gasoline demand falling like a stone. Breathe deeply in southern Ontario in the middle of last summer. Notice anything? Where have all the smog days gone? Could it be that fewer smoke stacks are belching here and south of the border? What can it all possibly mean?
I also suggest those of you who have received a “smart” hydro meter read some of the literature accompanying it or provided online. One thing that jumps out is the period of peak power use is shrinking and now seems more representative of a population that stays at home (does not work).
Let’s see. Fewer people working/driving to work. Fewer factories operating at anything approaching capacity that might reflect economic growth or justify building new ones. Less money to spend on discretionary items. Shrinking credit privileges. Fewer retailers open to heat and cool. Less oil, coal, NG, electricity required to produce less consumer goods and build less space in which to sell said goods. Less demand to buy and consume.
Now how exactly does this translate into sky high oil prices and similarly elevated interest rates? Perhaps for a nano second before the immediate onset of a 21st century Dark Age. But in a sustained way? Not without a helluva lot more people working and lifting the mill stone of debt from their shoulders (and yet debt is still rising in this country).
The credit/debt bubble that led to the Great Depression took the better part of 25 years to unwind. What makes you think the unwind of the current bubble (which dwarfs its 1920s baby brother by all measures) , will be any less painful or take any less time to resolve?
#98 bullybear
Think depletion….. Then see what you come up with. All the new oil that is possible to come on stream is not even enough to keep up with current depletion rates.
# 116 PacoReborn
Paco, the good news is that you have a job, congratulations. But you do have a quandary for sure if you are thinking of setting up a home in Fort McMurray. Nothing very ‘homey’ about that place.
One of my ‘kids’ worked in house construction in Ft Mc a few years back, not much for rent and what little there was, cost an arm and a leg. Of course as you are finding out …..to buy, ridiculous.
One solution for the construction guys was a truck and fifth wheel ….parked on the job. However, with a family it is a different story. Can you see (very) long term work ahead? If so, do what needs to be done ……..but wait at least till later this year, and you’ll make a much wiser decision for your family.
good luck.
elle
I couldnt get to langley yesterday. I live in downtown vancouver – and getting in or out of town by car during the olympics is like trying to get out of a warzone.
Bah
#35 Herb –
Watching the Olympic coverage now and then, I miss the Canada I knew and loved
Me too.
During his Olympic holiday, Harper had this to say during a CTV interview.
“Man for man, our team is the superior team but let’s not kid ourselves, the most consistent team in this tournament to date has been Team USA,” Harper said in an interview on CTV..
Don’t overdo the enthusiasm there, Stevo.
He also has winning advice for the men’s hockey team. Would you take winning advice from this guy?
He also had this to say about the short track speed skating:
“That was the most exciting event I’ve ever been at in my life. I think I almost had a heart attack before it was over,” Harper said.
Really? Must be some boring life.
And don’t you need the organ in question before it can be attacked?
anyone else having mls.ca issues with Ottawa? I’m only getting a handful of listed properties?
Bought my house a few months ago and now going to try to sell it before the housing crash starts. Just finshed painting it and will sell it for $50000 more then I paid a few months ago. If I sell it I could make $20000 profits after realtor fee etc. If I can not sell it I will ride it out until I have to go bankrupt and then it’s Canada’s problem and I will leave this country. Many immigrants are doing just that , borrow borrow borrow and then gp bust (if need be) and leave this iceberg of a country to freeze . LO, Canada is be far a stupid country with a stupid people. No one would come here if it wasn’t for the free money , health care and system you can bleed dry. It will be funny to leave this country in financial ruin all thanks to your stupid (smart for me) conservative government who gives people (like me) without money to buy and spend this country to ruin. Thank-you Canada for the free lunch.
Garth,
If I am recollecting correctly, I seem to remember when the interest rates of the early ’80’s were thru the roof for mortgages,loans, that, the regular savings accounts of the day were providing excellent returns(ie 8-12%). Do you happen to know if this the case and could it be again? I spoke with someone at the bank and they said they recall seniors living off the interest from their savings accounts.
#101
((That they are manipulated by and somewhat a product of the U.S. right is sad but it does not explain the anger. ))
Yes, that is the story that the msm is pushing … too bad it’s not the true story.
The largest portion of the Tea Party Movement is libertarian and libertarians are not at all socially conservative. Ron Paul (who won the straw poll at CPAC) is anti war, pro legalization of pot and a lot of other things that have nothing at all in common with the social conservatism. Geez even whatshername Huffington admires Paul.
If politics is war and in war it’s an advantage to know your enemy, then it’s a very good thing that the enemies of the Tea Party movement don’t have a clue what it’s about. On the other hand, the political illiteracy among the people fed by the msm is rather sad.
The one thing ALL the tea partiers, the social conservatives and the libertarians, have in common is FISCAL CONSERVATISM and keeping government out of their face.
Congratulations Team Canada – Gold !! – Men’s & Women’s Hockey
The 2010 Winter Olympics were a smashing success !!!
Now the REAL Vancouver will be revealed : )
#143 Pete
Thank you for that brief glimpse into the psyche of an absolute idiot. You sure have conjured up a real recipe for success.
You are welcome to the free lunch, you need it far more than most Canadians ever will.
And for dessert? How about a swift kick in the ass.
Why don’t you return to your country and send someone back in your place who actually has a soul.
Now the “debt” of Vancouver will be revealed, the budget has exceeded the original 9 times. 6 billion. Wow!
#143 Pete
It is a sad state of affairs isn’t it? The Liberals kicked this whole “free everything, come live in Canada, greatest place on earth” nonsense off and it has been steamrolling over everybody for the last thirty or so years..but it would be politically incorrect and insensitive(so unCanadian I am told) to call a spade a spade..
Bottoms_UP: anyone else having mls.ca issues with Ottawa? I’m only getting a handful of listed properties?
yeah , notice that only houses in Hull / Gatineau are shown.
Olympics Men’s hockey: Canada 3, USA 2 in overtime!
#138 DaBull on 02.28.10 at 12:51 pm
#98 bullybear
Think depletion….. Then see what you come up with. All the new oil that is possible to come on stream is not even enough to keep up with current depletion rates.
<<<<<< the same factors that brought the price down are still here and escalating…so whats going to drive it up?? There is no present shortage of oil even without the tar sands (which i might add in my opinion are only a move by the oil companies to drive up the price of conventional methods which produce a barrel of oil for less than $10)…the world will not tolerate the destruction of our environment by dirty oil such as the tar sands…harper will …obama won't!! The oil companies played a large part in the destruction of the world economy and are still playing a large part with overinflated prices…it will not be tolerated much longer IMO……….people are angry and getting more so daily.
Canada Gold in OT
F’n A!
#42
anyone else having mls.ca issues with Ottawa? I’m only getting a handful of listed properties?
*******************
I’m experiencing the same situation. Either all the properties have sold which would be amazing or there is something wrong with the site. I did drive around my nieghborhood today and the houses that were for sale recently, have now all been sold.
Lots of Greater Fools out there I guess! This is too much to believe!!!!
#138 Da Bull
I agree that depletion rates could have become a problem without new and more efficient EOR technologies (and of course if the world economy kept humming along at it’s previous pace). However with all the improved recovery techniques (CO2, thermal, N2 injection, etc) not only have depletion rates fallen, but the EOR’s have allowed billions of barrels in decades old wells that previously couldn’t be recovered, to now be produced. If you’ve followed the oil price cycle over the past 50 years (as with any product cycle) high prices have always revolutionised efficiencies. Completely agree that ‘peak oil’ will eventually become a problem if alternative energy goes to the back burner again like oil’s last supercycle. But the production peak is still a long ways off (with full consideration given to global depletion rates). This last year is nothing more than a speculative technical bounce. All equities/commodities follow the same historical pattern at this stage of the cycle. Anyway, not like it’s going to fall all the way back to $10 per barrel again like ’98, but it’s certainly going have a challenging decade – at least until advanced economies finally bottom out and then slowly rise up to meet all it’s spare capacity.
Snugglebumz! You do have beautiful thighs, and as my nipples are exploding in constant delight pleeze keep fondling my bum!
Not only did Manchester United beat Aston Villa 2-1 in an exciting Carling (League) Cup final at Wembley Stadium, London this a.m., the hockey team did us proud as well — a great two-fer!
——
#116 PacoReborn — What goes up must come down, as sure as night follows day.
Hang in there and rent for a year or two. As long as income is coming in to pay the rent and other expenses, stay out of the market for now.
It already has begun correcting itself, and the wave is getting larger.
——
Consider the geopolitical locations of Haiti and Chile. The US is now controlling Haiti (under the guise of helping), with oil and minerals quite plentiful, but China and Russia have signed a number of trade deals with various South American countries *no hidden agendas or invasions).
So — Proof is right here, which leads to . . .
Connection between Haiti and Chile ‘quakes? Check map.
Cyber war, soon to come to a country called Kannaduh!
#143 Pete
The definition of a loser!
My employment situation or lack thereof, is about to go from bad to worse.So….
I DON’T CARE IF THEY WON MEDALS!
Especially when I have to come up with more tax money for $20,000 per player(medal incentive, tax deductible or not).
JOBS, JOBS, JOBS. !!!!!!!!!!!!!
ITS NOT UN-PATRIOTIC..ITS THE REALITY OF POVERTY STARING ALOT OF CANADIANS IN THE FACE, SO WHY SHOULD WE GIVE A SHIT ABOUT SUPPORTING THE $2.5 BILLION DOLLAR 5 RING CIRCUS?
# 70 Rain wrote….
“”"Vancouver or Sydney Australia or some other popular place is similar to Monaco.
I mean, how many French citizens can purchase a home in Monaco? You can virtually be priced out of your own city by foreign purchasers.”"”
…That can’t happen to Hongcouver…
Hello all,
…Garth is right…when interest rates rise…Toronto and Southern Ontario will be the only safe place to live.
…Higher interest rates will support Southern Ontario’s Export Manufacturing Industy.
…A higher Loonie is good for workers looking for jobs in Southern Ontario.
…A higher loonie means Ongtario citizens on E I can be confortable to know they can travel to Paris or Monaco and see their holiday budget stretch to their advantage.
…Canada will be the only G7 to raise interest rates.
…Garth keeps gaining followers who are selling their homes, agreeing that this is an inflationary bubble.
Nostradamus jr.
137 robert on 02.28.10 at 12:39 pm
I keep reading two underlying themes in the posts and comments of this blog: 1) interest rates up, up and up! 2) ditto price of crude oil.
Do you folks not understand that interest rates are affected by the demand for borrowed money? You know, that dusty old standard called supply and demand? Right now interest rates are low because there are fewer (in fact much fewer) folks interested in borrowing money (apart from those desperate souls who no longer qualify because they have lost their job and/or replaced it with one that pays less and has no benefits).
*************************************
Supply and demand controls interest rates?
Sorry–your wrong–
I do agree about short term rates staying low–but not for your reasons–
How come rates were low–all through the great credit expansion?
Except–when Greenspan tried to prick the bubble–by raising rates–
Credit demand had never been higher–”because”–
of low rates-
The banks could borrow at 1/4 % and lend at 5-6% because this made the lending spread attractive–
Why did the long rates–not–follow the Fed fund rate higher when Greenspan made 17 consecutive rate hikes–when he tried to prick the bubble/slow down borrowing? (the conundrum?)
Because–Traders/debt buyers–control long end rates–
All based on risk assessment–
If they see a growing risk of defaults–they will demand higher rates–
This is why the Fed printed 1 trill and bought Treasury’s–for the sole reason to keep long end 10 and 30 yr rates low–because–that is where mortgages re-set and high rates would have increased defaults–
This has short term effects at best and cannot last forever–
Long end rates will be set at the market–
But–it is not people borrowing–that set rates–
Speculators/”the market”–sets long rates–
Not borrowers–
In fact–you have it all assbackwards–
The Fed/Bank of Canada–set overnight and short term rates–
This can also be currency driven–ie-devaluation–
Raise rates–the $ up–
Lower rates–$ down
Low rates “entice” borrowers–to take on risk–ie–buy houses
High rates “scare” borrowers and turns them into savers–
So–the ingredient your missing in your lecture–is–
“The market”
House prices are falling–interest rates–be damned
The Fed/BOC manipulating rates–in either direction has an influence on borrowers–
Borrowers are at the mercy of rate fluctuations during re-sets–
When fear hits the markets and a sell off occurs–Treasury’s become a safehaven play–yields will fall as the price of Treasury’s are bid up–
When greed is in the market–Treasury’s are sold off and yields will climb as the price value decreases-
Your right about the demand for US debt—viewed as a lower risk–in comparison to most–so–
rates are not skyrocketing–as long as US default risk remains low–but–in the end–the market will prevail–
CDS’s shows US as least risk–
http://4.bp.blogspot.com/_FM71j6-VkNE/SbnEjCCMQDI/AAAAAAAABX0/fgFbsfq2pZ8/s1600-h/sovchart3.jpg
*****************************
Oil–
I also think it will go lower from here–because of demand destruction–for awhile–
Then up–because of eventual supply destruction–and–Peak oil–