One day after the Olympics, guess which of the following happened? (a) Air Canada laid off 1,000 mechanics, or a third of its entire technical workforce, (b) a Vancouver developer announced it sold seven condos during the games worth forty mil, (c) the country’s biggest city, mired in deficit, readies to sell off public parks, and (d) the feds announced the economy’s smokin’ hot.
And the answer is: All of them. And more to come.
As I’ve been telling you for a while, this is a time of volatility and change. The old order (houses, GICs, consumer debt) is ending, while the new order (liquidity, commodities, equities) is being born. This is when things get better and worse at the same time. More people lose their jobs amid rising prices and speculation. The economy expands, but incomes fester. Government expands and contracts at the same time. And most people chase yesterday’s winners – which is why this is the time you absolutely want to be a contrarian.
To repeat from the last post, this is a false economy. It’s pumped on political stimulus, yet creating no jobs, no income gains, but record debt. Hardly the time to be spending millions on glass boxes overlooking (ironically) False Creek.
Now, let’s chat about this latest economic report for a minute. StatsCan says growth was a blistering 5% in the last few months of 2009, above expectations. You can be sure F will be yodelling about it in his budget speech on Thursday.
And where did all this surprising strength come from? Yup, government stimulus, and the housing market – two sturdy economic pillars built of debt. Ottawa’s billions came from borrowed money, forming part of the worst-ever deficit, while the real estate bubble was gassed up on record clouds of mortgage debt.
The government debt, of course, will have to be repaid with higher taxes on consumers, investors and corporations. The orgy of new mortgages – many of them representing 95% of the price of houses recently bought – will represent a semi-permanent drag on consumer incomes, especially because of what comes next.
And that is an end to cheap money. Every economist worth quoting is now saying the same thing: this economic ‘rebound’ will give the Bank of Canada every justification it needs to start in on a string of interest rate increases, starting in about 100 days.
“It raises the probability of advancing a tightening in policy,” says a Royal Bank economist, speaking in a strange tongue.
“This report shouts strength,” said a BeeMo economist, “and increases the odds the Bank of Canada will begin to hike interest rates in July and stay on that path in the following decisions.”
Damn straight. I’d say Carney will be hiking every chance he gets, since he totally gets the fact absurdly-low rates can blow up a perfectly good country. As I mentioned a day or two ago, that’s just what Alan Greenspan managed to do, ushering in a low-rate-induced real estate bubble which ate the American middle class and half the western world with it. And while Carney still maintains we do not have a gaseous, bloated, inflated, elephantine housing market here, he’s ready to pour on the Pepto.
So, back to the day’s news.
The economy grows leading to inflation, taxes and higher rates. Yet incomes stagger, guys who keep airplanes up lose their jobs and cities sell parks.
Look around you. Do the opposite.
Contrarian strategies: Hear Garth here...
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132 comments ↓
So true Garth, looking forward to seeing you in Kitchener.
Something I posted before but needs to be repeated:
every tiny rise in interest rates will rise the carrying costs of governments and consumers alike, it means that the government and people will have to cut spending all to remain even.
more taxes, user fees, all for less
welcome to the new world
“Yet incomes stagger, guys who keep airplanes up lose their jobs and cities sell parks.
Look around you. Do the opposite.”
Get a job at an airline and buy a park?
Conceal nothing, Let the fools search forever.
Were GTA and SO are heading
http://www.detroitblog.org/
2010 is the year of wealth preservation.
Remember everyone…………INSIST ON NO NEW TAXES, CUT GOVERNMENT SERVICES AND SPENDING!!! We need to get back to fundamentals, spend no more that what we take in, AND WITHOUT RAISING TAXES!!!!
NO MORE!
Crying Wolf or Castigating Cassandra?
While people were being lulled into a false sense of security, prominent voices warning of the harsh bite of reality to come were, instead of being listened to, berated and pushed aside by the mainstream media.
Gerald Celente, who accurately predicted the economic crisis of 2008 and who had been warning of a much larger crisis to come, had been accused by the mainstream media of pushing “pessimism porn.”[1]
Celente’s response has been that he isn’t pushing “pessimism porn,” but that he refuses to push “optimism opium” of which the mainstream media does so outstandingly.
So, are these voices of criticism merely “crying wolf” or is it that the media is out to “castigate Cassandra”? Cassandra, in Greek mythology, was the daughter of King Priam and Queen Hecuba of Troy, who was granted by the God Apollo the gift of prophecy.
She prophesied and warned the Trojans of the Trojan Horse, the death of Agamemnon and the destruction of Troy. When she warned the Trojans, they simply cast her aside as “mad” and did not heed her warnings.
While those who warn of a future economic crisis may not have been granted the gift of prophecy from Apollo, they certainly have the ability of comprehension.
So what do the Cassandras of the world have to say today? Should we listen?
Andrew Gavin Marshall
Global Research
LewRockwell.com
…Wow, Chile is another tragedy in process…
Nostradamus jr.
Garth,
I think the building that purports to have sold over $40 million in condos is in Coal Harbour. I believe it is Three Harbour Green which is a stone’s throw from the Olympic flame. Don’t be surprised if a month from now we hear that the buyers did not complete most of these sales. Sounds pretty fishy to me to close deals like this so quickly. Did these people fly into town with pre-approved mortgages or just big bank accounts?
Count me among those who don’t believe interest rates are going to go up very much. I agree that the economy is really crappy and it may be they have to leave them down for a lot longer. In the long run this does not bode well for any of us.
Sidetrip to Ecological Economics … Short read
http://steadystate.org/learn/blog/
From Yesterday … How bad might things get?, Start with ideas 1
…http://www.gwynnedyer.com/
BERNANKE BELATEDLY STARTS TO TELL THE TRUTH
http://www.gold-eagle.com/editorials_08/souleles022810.html
The game will be up by later this year when investors refuse to re-finance commercial real estate (and profligate governments), unless higher rates of interest and some sort of security are provided. The good faith of governments will count for zero. But wait. Won’t higher rates simply put a bigger nail into home borrowers’ and Governments’ coffins? Exactly, so either way the world will be toast.
PETER SOULELES B. Com LLB
Sydney Australia
28 February 2010
GOLD is money after all. That’s right Garthy.
Sweeping changes in credit card industry to benefit not only consumers, but gold bugs too, who’ll be able for first time to charge purchases against ‘liquid gold.’
BOCA RATON, Fla., March 1 /PRNewswire/ — New credit card laws can bring sweeping changes and even “golden opportunities” that could be just what the doctor ordered to perk up an ailing economy.
In particular, Public Law 111-24, the Credit Card Accountability Responsibility and Disclosure Act of 2009 whose major provisions are effective February 2010, provides new legislation pertaining to credit cards which will make them not only easier to understand, but offer a “golden opportunity” for those who want to have a new credit card backed by gold, rather than dollars.
http://www.prnewswire.com/news-releases/new-credit-card-coming-for-gold-bugs–golden-spike-might-be-just-what-ailing-economy-needs-85819387.html
http://www.thegoldbullioncard.com/index.php
“StatsCan says growth was a blistering 5% in the last few months of 2009″ Yahoo!!!
But, where are the jobs? I visit facilities all over Ontario. They’re all on life support. Job sharing. Hanging on.
Great news!! WalMart is expanding in Canada. 35 to 40 new places to buy imported goods made offshore.
http://www.thestar.com/business/article/770260–walmart-canada-to-expand-other-retailers-cautious
I fear opening the local newspaper. It’s always bad news. Another major car parts manufacturer just closed here in Brantford.
http://www.brantfordexpositor.ca/ArticleDisplay.aspx?archive=true&e=2456149
Soon, all that will be left is food industry factory jobs, service sector jobs and Laurier University. If your PhD. is gathering dust and you really don’t want to make car parts anymore. Brantford is the place for you.
Oh sorry, don’t have a university degree. Then you can try to buy a $200,000 house on a $ 12.00 / Hr. factory wages making chocolates, donuts or waffles. Or the $ 9.50 / Hr. the call centre pays. Wow!! with wages like that. What will you do with all that money. Work on your investment strategy? Dabble in hedge funds? Or try to explain to your landlord why the rent is late again this month?
One of my buddies just purchased a complete (Manuals, software, controller) $80,000 welding robot with 500 hours on it at an auction for less than $5,000. 500 hours is considered like new in a manufacturing facility. It’s an amazing deal. To bad he doesn’t have any work for it right now. It seems that was the problem the original owner had too.
Now that the Olympic circus is over for another year, hopefully those athletes will be able to find honest useful work on farms and in factories and at fast food joints so that they can become productive contributing members of society and enjoy the accompanying feeling of accomplishment, rather than just waste their whole lives playing silly games to try to get attention.
Now that the Olympic circus is over for another year, hopefully those athletes will be able to find honest useful work on farms and in factories and at fast food joints so that they can become productive contributing members of society and enjoy the accompanying feeling of accomplishment, rather than just waste their whole lives playing silly games to try to get attention.
Good one Garth,
“Ironically, overlooking False Creek…” Yes you too can buy an overpriced, cramped box in a hi rise so close to adjacent ones, you can hear your neighbors fart, but hey, it is Olympic Village. Please, someone buy these units so that we won’t have a massive debt because we were stupid enough to negotiate a deal with a developer where the city would be on the hook if the funding got pulled. Yes, the funding was pulled and the city was on the hook. These incompetent city councilors should resign, but people are so googly eyed due to a few weeks of Olympic fun that many are oblivious to the long term implications of the debt hangover. I know we are all human. The initial estimate for security was 150 million, but hey the actual tab was only 900 million. Who cares, Sidney Crosby scored the winning goal. Maybe we can hit up John Furlong for a loan-if only we had access to the financial information from Vanoc. But hey, that would be a democracy right? Well, Steve will have none of that…
The 40 mil worth of Condos are blocks from the worst slums in Canada. The Olympic Village is on False creek and right behind you a beautiful Wire rope factory, and built on ground that has been polluted with 3 generations of Beehive burners, that used to pump toxins into Vancouver, that made London Fogs look light by comparison. Mentally unbalanced people thought spending $11 BILLION for a 2 week orgy of Visa and GM, and Coca Cola Capitalism, at is most shameful, was ‘great’. Fools paying $7500 bucks to see a hockey game that means nothing more than a Hockey Player that will get $9 million to play in a Bankrupt hockey league, scored a goal to beat our rivals from the world’s biggest bankrupts, and people go crazy. The Games are staged at the end of a highway where a Bankrupt ski hill is about to be auctioned = and people say ‘wow’.
Is there something in the water that is making people stupid? No = I think it is the same old story. People are thick when it comes to money; and now they are going to literally have to live on their feet – because guess what? British Columbia is bankrupt. It took nearly 40 years for Montreal to pay off the Montreal Games. How long will it be before BC is out from under 11 Billion? Our credit has been downgraded here in Vancouver, and so all the costs of services are going to hit the sky. BUT – you notice that City Managers make nearly $650 thousand, and the city workers, unionized, make 75 K a year to sweep up leaves in Stanley Park. We have a city where we have more child poverty, AIDS, and Hep, than anywhere in the developed world – and yet people still think ” I’m alright, Jack”.
I hope and pray that the sensible blog dogs, led by our intrepid leader here, Garth “The Truth” Turner, can perhaps drill some sense into people.
Faint hope I know.
Tragic is the word that comes to mind.
Walking though the throngs of drunken, happy, Olympic partiers, and all I wanted to yell at them was ” You just spent your Grandchildren’s future – I sure hope you had a great time, on their dime”.
Gordon Campbell makes Gordon Brown look like an economic genius. Incredible. Shocking. Disgusted.
…StatsCan says growth was a blistering 5% in the last few months of 2009….
Yesterdays news.
#8 Nostradamus jr.
…Wow, Chile is another tragedy in process…
Next will be Vancouvers RE market.
You know Garth, before the crash in late 2008 I had a feeling in the pit of my stomach that something big was coming. It’s come back.
I know of several people who, both in the past, and right now owe more on their homes than they can sell it for.
One client had to scrounge up 30k to close on selling his condo a year ago (bought in a bidding war 2 years ago – not thru me!). Another guy I know would need to come up with 50 grand to be able to close on the sale of his house because it’s in an area that hasn’t done so well. (Plus he’s done the ol’ “lets roll consumer debt into our mortgage” trick)
He doesn’t want the house anymore and has been paying the mortgage and not even living there. Despite me telling him to beg or borrow to somehow come up with the cash and sell it ASAP, he figures that NOW he’s going to rent it out and wait for the market to improve. Sadly, I think he’ll be a reluctant landlord for the rest of his life. (This was after I told him that short selling was not a possibility like he thought it was) Frankly, he’s screwed. His other finances are a mess with other debt. All this being said, I suspect he’s going to have plenty of company in fairly short order.
Few people seem to see the parallel between mortgages renewing in a few years here, with what happened in the States when mortgages (sub-prime or not) re-set at higher rates.
Thanks for Money Road. Just finished it and have been re-reading parts of it. Thanks as well for putting yourself out there. Must be very frustrating meeting people everyday that think you’ve gone nuts, when I sometimes think contrarians are the only sane ones out there.
I’d be happy to be part of the Garth Army.
(b) a Vancouver developer announced it sold seven condos during the games worth forty mil,
_________________________________________
Contact that developer immediately and hire him as a pitch man for the city’s Athlete’s Village suites.
Why anyone believes the Government’s GDP numbers is a mystery to me. Any number the government publishes should be taken with a grain of salt and a whole bottle of 100 proof skepticism.
The real way to tell if the economy is healthy is to look at tax receipts, particularly income taxes and the GST. (Property taxes are not reliable because they are detached from income and discretionary spending, although if property tax delinquency is rising that tells you something about what the mortgage default rate might do.)
In the US year over year tax receipts are still plunging, and if they are rising in Canada then I’m a monkey’s uncle.
But the MSM will not trot out the tax receipt numbers with a bunch of fan fair like they do with GDP, because the number is harder to “fudge”.
The fact is that unemployed people, people dependant on CPI and welfare, and government employees do not pay taxes. Since these are the growth areas in the economy right now, it’s hard to see where GDP growth came from other than statistical anomalies of the type the government intentionally employs.
(Yes I know government employees get taxes deducted, but since that money came from the government to start with it just circulates, it doesn’t represent a real gain to the government. What it can do is transfer property taxes to the provincial and federal government, and transfer provincial taxes to the federal government, but it does not represent a real income since some level of government has to spend the money in order to tax it back. If they reduced civil servant tax rates to zero and lowered their salaries commensurately it would have no net effect on the budget, except for eliminating the transfers to higher levels of government. However, if the government were to simultaneously lower all civil servants pay to their current after tax level and stop taxing them, I believe GDP would plummet, as I think the outlays that are taxed right back are currently part of the number. It also has grave implications for the debt/GDP ratio, since with the government currently accounting for over 30% of all economic activity, claiming that taxes paid by civil servants are somehow available to service the debt is also a misunderstanding. The government cannot pay the salaries out of revenue and use the same money to service debt at the same time. It’s a shell game. Only taxes on the private sector can really service the debt and fund government expenses.
Here is a simple thought experiment to prove this point. Let’s say I am the government and you are a government employee. I say to you “here is your choice: I will pay you $100,000 per year, but you have to pay $30,000 a year in tax to me on that money, or I will pay you $75,000 a year.” Which would you take? Obviously $75,000 as that leaves you with $5,000 more in your pocket. And from a purely rational point of view, that works all the way down to $70,001. At $70,000 per year you become indifferent.
The reason, of course, that lowering wages and not taxing government employees won’t work in reality, is because changes in tax rates would then have to result in changes to wages, which would be a nightmare. By grossing up their wages by the tax rate, government employees take a wage cut whenever tax rates are raised just like the rest of us. But then they go on strike.)
“This report shouts strength,” said a BeeMo economist, “and increases the odds the Bank of Canada will begin to hike interest rates in July and stay on that path in the following decisions.”
Damn straight. I’d say Carney will be hiking every chance he gets, since he totally gets the fact absurdly-low rates can blow up a perfectly good country. As I mentioned a day or two ago, that’s just what Alan Greenspan managed to do, ushering in a low-rate-induced real estate bubble which ate the American middle class and half the western world with it. And while Carney still maintains we do not have a gaseous, bloated, inflated, elephantine housing market here, he’s ready to pour on the Pepto.
So, back to the day’s news.
The economy grows leading to inflation, taxes and higher rates. Yet incomes stagger, guys who keep airplanes up lose their jobs and cities sell parks.
Look around you. Do the opposite
********************************************
The growth spurt–like you say–is stimulus and low rate driven–but–now what?
What will keep the economy growing?
A consecutive hike in rates will pull in speculators and drive the dollar higher and kill off exports and would likely have a negative effect on equity’s and also implode housing and commercial RE and put a drag on business borrowing–
If equity’s crash and there is a dash for cash–the demand would also drive the dollar up–
The decrease in lending–the pull back/layoffs from business and investors running to cash–money velocity would drop off–deflation would absolutely scream–
Deflation is what they naively “hope” to stave off–
I say at best they hold steady–or lower–
As for raising taxes in a soon to be revealed–egg shell–economy–look how much good it has done for our southern neighbors–
http://4.bp.blogspot.com/_nSTO-vZpSgc/S4iB-woCx-I/AAAAAAAAH8U/DPE2A4q3JJw/s1600-h/state+income+tax+receipts.png
btw–which of these so called–expert economists–seen this shit storm coming?
Which one of them called this?
None of them–or any of our Political leaders–
In fact–none of them ever admitted–we were even in a recession–but– Somehow–
They all know how we’ll get out of it–
-
Ah, there’re no problems just solutions, eh?
The GDP along with CPI are the most widely used numbers but they may be quite misleading.
Yet for all our obsessing over it, as an indicator of economic health, GDP leaves much to be desired. The Economist once sniffed that the acronym should really stand for “grossly deceptive product.”
The case against GDP revolves largely around its inadequacy in measuring well-being. GDP is often divided by population to obtain GDP-per-capita, a ratio commonly cited when discussing living standards. Yet in situations of growing inequality, GDP falls short — Americans’ median incomes fell in recent years, for example, yet GDP rose. “GDP doesn’t tell you about what happens to the typical citizen,” Stiglitz has said.
Economy: Our dangerous addiction to GDP
Yes, the GDP may be rising while the citizens are getting poorer. BTW, inflation measurements (CPI) have been introduced in the fiat money systems to correct the GDP numbers so they can be compared on year over year basis. That’s why the CPI contains the so called “hedonistic” or quality adjustments. For example, if one year a factory produces a car with drum brakes and sells it for say $10,000, and the next year the plant produces exactly the same car but with disc brakes and sells it for $12,000 there’s no inflation as the new car has value added (disc brakes) so the extra $2000 should count in the new GDP and the “hedonistic” adjustment is right. However this does not capture the fact that it is now more expensive for the end user to buy the car. Thus the CPI on the car is 0% yet the vehicle is less affordable. Moreover if the added value of the disc brakes is $2000 but the car price rises to $11700 the CPI would show as -2.5% yet the car is 17% more expensive.
Seems many are using the GDP and CPI numbers without understanding what their limitations are and how deceptive they may be, especially when political stimulus and housing market are their main drivers.
-
For the first time since the great depression, Americans took more from the government than they paid in taxes.
http://www.washingtontimes.com/news/2010/mar/01/americans-reliance-on-government-at-all-time-high/
BREAKING NEWS:
Australia raises rates to 4% on March 2nd. Prime rate in the 6% range. Result: Housing is still on a tear.
Canada may raise their rate to 1% by year end and to 2% by January 2012. What do you think will happen to housing prices?? Nothing if Australia is any guide.
Although Garth censors some of my posts, population growth is a main factor that drives demand and prices into the stratosphere. The major component being “I” (can’t say the word) into the major cities. That is what Australia and Canada have in common.
Australia’s housing market is collapsing, as defaults soar. — Garth
“The economy grows leading to inflation,” …
That is an interesting comment Garth. Let’s look at China’s magical YOY OY… OY growth, however, today lets strip out all stimulis spending. Now compare this same thing to Canada, also lets strip out the basic nessities of life. Food, Shelter, and Energy. what is left has to be deflationary. Take into account that these numbers are being compared to the same months of last year when the 4th quarter were dismal to say the least. So for the blow hards in office to say that the economy is growing at leaps and bounds is actually a bit of a red herrring. Can some one go back 2 years and compare these number to 2007? or how about 2006? I will bet that it is a push and there was no real growth at all.
Oh by the way, enjoyed your presentation in Langley, and I hope you had a chuckle or two from those articles I left you. cheers
http://www.channelnewsasia.com/stories/afp_asiapacific_business/view/1040930/1/.html
Australia raises interest rates to 4%
What will happen when BOC raises interest rates to 4%?
From VREB http://vreb.org/mls_statistics/current_statistics.html
“The average price for single-family homes sold in Greater Victoria last month was $620,833 down from $644,678 in January”
This price drop was on incresased sales activity. Market resistance?
“. . . the economy’s smokin’ hot . . . this is a false economy. . . . government stimulus, and the housing market . . .”
‘Owzaboud it’s a smokin’ housing stimulus with a false market Government?
Makes as much sense as the spew-frothing F during Parliament (when it’s in session, which is never).
——
Harper said “You Won’t Recognize Canada When I Get Through With It” on Thurs., 27 April ‘06. Guess he meant it.
Garth, please pass this along to JJ, a.k.a. Jumbo Jimbo, the Sumo wrestler. He needs encouragement, as the little bird is running rings around him!
Now something new. Heading into unknown areas — The Lowlight Zone. It will sure screw Harper up if we go our own way.
Hmmmmm. Something’s up at the border.
Soros says he wants the banks nationalized. What a strange offspring!
Real Estate, Real Estate — wherefore art thou Real Estate?
Nice write-up for Vancouver.
Another one on its’ way? And — Scientists also said the same thing after the Boxing Day ‘04 quake / tsunami. They also spouted off about The Goreacle’s alarmist global warming agenda. Yawn.
Looks like the Post Olympic Hangover is about to begin. Spending cuts looming in BC’s upcoming budget.
http://www.theglobeandmail.com/news/national/british-columbia/games-over-bc-hits-spending-brakes/article1486169/
Garth, what do you think of short term bond mutual funds inside or outside an RRSP?
The way I see it — interest rates will only remain low if we are worried about/in a deflationary environment. If not, they will rise. Either way, house prices go down. People who say that interest rates will remain low and house prices will therefore climb do not understand that if interest rates remain low it will be because the economy is terrible. I love when people quote Japan, saying that yes, it is possible for interest rates to remain low for years. Sure, but what was happening during this time. It was because assets were deflating that interest rates were low.
We have created peak debt through trough interest rates and easy lending practices. This will end at some point, but I agree, no one can pinpoint exactly when. To me, the risk of this happening soon is high. As each month/year passes the risk increases. Each person needs to decide when the risk/reward balance is right for him/herself to decide on when to buy/sell a house.
by the way, in the environment I’m talking about with less government, there wouldn’t be CMHC, and crazy mortgages. Maybe home prices could be at the $100,000 range. Divide that by 3, and you get what the average household should earn to own that $100,000 home. Two people making $8 in a household would equal just about $33,300 making a $100,000 affordable based on historic measures.
Suddenly, making $8 doesn’t handcuff people anymore. Yes, I pulled that $100k number out of the sky, but it is possible. Look at a country like Argentina, which is one of the most affordable places in the world to live. They don’t even have mortgages there nevermind government subsidizing homes. Prices of homes are peanuts. If you can afford to buy a home outright, you buy and if you can’t you don’t buy
http://canadabubble.com/bubble-watch/556-vancouver-leverages-athletes-to-avoid-rating-cut-canada-credit.html
note the last few lines:
“That won’t stop Olympic Village boosters from exploiting the condos’ Olympic connection.
“In a perfect world, we’d love to have the athletes’ signatures beside each front door.” Rennie said in an interview. “We’d love to find some sort of ‘Who’s DNA is on your floor?”
There goes Bob Rennie again, trying to find the flimsiest of marketing ploys to suck more people into “owning the lifestyle”
I can just see the front page of the Sun, interviewing a proud new owner of an $1100/sq.ft micromanson: “I pleaded with Mommy and Daddy to invest with me after I found out it was Lindsay Vonn’s place for two weeks.”
Unintentionally funny double-entendre about DNA on the floor notwithstanding.
This is what we need in Canada … Lets get these jobs up North
http://corpwatch.org/article.php?id=15496
This is for all those who think Vancouver is bulletproof …
Peak Oil Impact on Cities, Survival & Culture
http://www.plancanada.com/SSP2_workshop_report.pdf
I have afriend who bought a condo in surrey with 35 % down. she’s 22 probably a 1 bd / 1 bath ranging from 140-150 K
it kinda figures…her mom is a realtor. oh well best of luck to her
but some areas in Surrey are kinda spooky,little lights and lots of bush/ trees
Olympics are awesome for governments, they get to spend money, reward their friends and the same time most taxpayers are more than happy to foot the bill. It’s a politicians wet dream, just look at the smile on Gordon Campbell’s face!
10 million dollars for the Federal tent, some connected company made out like a bandit.
$10 dollars for a pair of made in China mittens that fall apart after the first wash, 3.3 million pairs sold.
It’s hilarious about the Olympic clothing, people spend 2 or 3 times the price of a regular item only to wear it for the two weeks and then most likely never again.
More money towards Own the Podium in the future so we can continue bragging, no problem. I just love making Americans feel jealous about our gold medal count even if we have to go into debt to pay 20 million dollars a year to do it.
All this Olympic spending makes me think about the person that goes out and buys new expensive designer clothing for hundreds of dollars so that they can feel all better about themselves. It’s all good until the credit card statements comes at the end of the month showing that they are still carrying thousands of dollars in cc debt at 20% interest rate. And on top of that they will probably be laid off before the next bill arrives.
It’s like a drunken euphoria that consumes people when misplaced national pride takes over. No amount of reasoning or logic will deter them from feeling good.
Party on Canada!
(c) the country’s biggest city, mired in deficit, readies to sell off public parks.
Wow, what ones? Amazing, parks are a “quality of life” issue for residences and absorb pollution. Guess we don’t need either when people are engrossed in making $$$.
“Look around you. Do the opposite.” Hints? Does Garth mean “liquidity, commodities, equities”? Sometimes I think I’m doing too much of the opposite and end up in the wrong line.
Mike
“a Vancouver developer announced it sold seven condos during the games worth forty mil”
An interesting fact; but, is it really relevant? To carry the mortgage, even at 5/35 & 2% would take an income of $50,000 – per MONTH! That’s 10x the average Canadian family income. The fate of 7 well-heeled buyers of potentially over-priced real estate is unlikely to get much sympathy from even one of the thousand laid off mechanics. I don’t think we need to worry about people who can buy $5 or $6 million homes; the wealthy will always be with us.
The same stimulus driven spike in GDP (I think it was 5.7%) already happened in the US and has been dissected, debunked and dismissed ad nauseum. I would not hang my hat on it just yet as a precursor to higher interest rates.
Who exactly are these interest rate Cassandras that are still worth quoting? Are any of them (other than yourself) not in the service of some banking giant? Do their predictions over the last three years compete favourably with that of a magic eight ball? Do any of them have a scintilla of credibility given their less than stellar track records? You are kidding right?
Sorry to disappoint you (and them) but the inflation has already happened and the odds of nostalgically time warping back to the 1970s are about the same as skipping Winter (see Kondratiev). Commodities, equities? Are we not in a technically driven (translation: no connection with economic reality) secondary wave of a 50+ year mania for these products? Liquidity? Not as long as insolvency remains the underlying issue.
VI Funcanuck here.
One thing that many overlook-especially those who talk about govt wages/pensions is the health care spending.
YEARS AGO I was a mgr in BC Govt and received a presentation by a mgr from the finance ministry.
“IF” health expenditures grew every year at a the same rate due to the “Senior Tsunami”, then ALL OF THE BC GOV’T BUDGET WOULD BE NEED TO BE SPENT ON HEALTH CARE WITHIN 7-10 YEARS.
Think about it. No money for roads, education, environment, policing……the list goes on.
This is pure fact–no political ideology here.
The “grey power” get the votes out and the youth don’t tend to vote as much. Guess who’s interests will be served better?
You think cuts and taxes are bad now? Wait for the “howls” of “entitlement” for health care at ANY COST for seniors.
Even those who have much more money that the generation(s) below them. Much of health care is not “means” tested.
It’s not my intent to ignite an “ageism” debate–I love my mother and grandparents too.
Simply look at provincial expenditures ACROSS CANADA that are devoted to health and you get the picture pretty quick.
In closing, I once read an article years ago re: “what’s the problem w/ 25 year olds?”
Simply put, “there aren’t enough of them.”
Cameron MacNeill, president of MAC Marketing Solutions, a Vancouver-based condo marketer, said Vancouver may need to sell the units for an average of C$1,100 a square foot to erase the city’s exposure.
That compares to an average of C$868 a square foot for the first 273 units that were sold before the global economic slowdown began, according the Bob Rennie, whose Rennie Marketing Systems, is leading the effort to selling housing units.
http://bit.ly/bD7VGx
Also love this peice in the Oylmpic Condo(m)s being sold. ( I wonder if Bobbie is inviting Cameron over to watch the Oscars on Sunday!!)
NEED to sell for $1,100/sqf vs the last intake of $868 to pay off the cities exposure!!!
Ouch! “Lucy! You got some explaining to do!”
#35 Gonzo on 03.02.10 at 1:38 am
The way I see it — interest rates will only remain low if we are worried about/in a deflationary environment. If not, they will rise. Either way, house prices go down
****************************************
House prices going down “is” deflation–
When prices were rising–peoples net worth was increasing–this is inflation–
Inflation is the increase in money and credit supply–
Here’s how rising house prices “acted” as money–
People could see the price values rise “home equity” they used the equity to “buy” all sorts of toys or another home or borrow against it for whatever reason–
These actions drove commerce–increased GDP-drove the CPI higher–increased velocity–goosed sentiment–
If “something “acts” like money–it is money–
So it was genuine inflation–
If house prices drop–the opposite will happen–except faster–as in–defaults–
If the opposite of inflation happens–then it’s deflation–
#14 Industrial Guy
Where did you friend get the welding Robot?
Can you let me know.
I am interested in buying industrial Robots.
Thanks,
mikewen@gmail.com
Scanned condo / small home listings for the west end Toronto yesterday. It seems that there are quite a bit more of them compared to 2 weeks ago. However, people are still asking way too much for either sh!t-shacks (read: aluminum siding, 2-bedroom, 900sq ft post-war working class houses) or way, way too much for condos that you can tell are listed for $100K over what they were bought for 4 years ago. Especially considering the influx of new condos we’re expecting in 2010-11, these people are clearly in a rush.
As for me, I’m waiting until 2012 or 13.
Australia’s housing market is collapsing, as defaults soar. — Garth
*********************************************
Garth- Where do you get this information from? It would be nice to see a current link to back this info up. Thanks
Some observations
1/
…BC Provincial Services (all Provinces acturally) cut backs coming.
Includes the BC Hinterland (all Provinces actually) but not Victoria or Hongcouver Proper (or all major Canadian Cities).
…Future Taxpayer Provincial coffers are geared for where the population is, not to the small towns and villages.
In the not too distant future, Garth and his neighbours, will need to visit TO/London/Guelph to get medical services.
2/
“”Ohio Mayor Seeks To Eliminate Public Unions; Come Senators, Congressmen Please Heed the Call For the Times they are A-Changin’”"
…Above trend continues across the U.S. and will come to Canada soon enough too…
http://globaleconomicanalysis.blogspot.com/
Nostradamus jr.
“”Is it time to eliminate public sector unions?
In the U.S…
The history of public sector unions goes back to 1962 when President John F. Kennedy signed executive order 10988 allowing unionization of the federal workforce. This changed everything in the American political system. President Kennedy’s order swung open the door for the unrelenting rise of the unionized public workforce in many states and cities.
And of course, 47 years ago, the American workforce landscape looked very different. As recently as 1980, there were more than twice as many private sector union members than there were public sectors. Today 51.4% of Americans 15.4 million [union] workers are employed by the government. This is the first time in American history that there are more public sector union members than there are private. So my question is, can we the taxpayers continue to afford this expense?”"
http://globaleconomicanalysis.blogspot.com/
Nostradamus jr.
#15 Circus and No Bread,
Funny you should mention that. The olympic athlete mindset totally boggles my mind. I remember hearing some athlete on the news last year complaining about the lack of funding she was getting as a member of team Canada’s alpine team. I mean seriously, since when was heavily subsidized travel and skiing something to complain about. If the funding is not up to your standards, marry a foreigner and apply for citizenship elsewhere. Guilt trip some other country into paying for your spandex.
“a Vancouver developer announced it sold seven condos during the games worth forty mil”
Not according to someone in the know who left a comment on Vancouver Condo Info.
The commenter states that these units were pre-sold quite some time ago. And, they were ONLY marketed in Asia.
So, another phony non-story.
CHMC expects housing rebound in 2010
http://www.vancouversun.com/business/House+construction+strengthen+2010+CMHC+says/2631606/story.html
Pump up the volume.. Pump it up!!!
House construction to strengthen in 2010, CMHC says
OTTAWA — A rebound in home construction is set to strengthen this year as the Canadian economy continues to show signs of recovery, according to Canada Mortgage and Housing Corporation.
Between 152,000 to 189,300 housing starts are expected in 2010, up from 149,081 units last year, the national housing agency said. In 2011, housing starts will total 156,400 to 205,600 units, it said.
“Canadian housing markets will benefit from improving economic conditions and low mortgage rates,” said CMHC chief economist Bob Dugan. “As well, measures recently announced by the government of Canada to support the long-term stability of Canada’s housing market will help moderate housing activity as some potential buyers will have to save a larger down payment or consider a less expensive home.”
Dugan noted that the existing home market has shifted from a buyers’ market to a sellers’ market.
“The relative lack of new listings for existing homes has pushed some of the demand into the new home market, which helps explain the forecast for higher housing starts activity in 2010, CMHC said.
Average home prices are likely to remain at levels reached in the last quarter of 2009, before rising modestly in 2011, it said.
#21 Joe Realtor
Few people seem to see the parallel between mortgages renewing in a few years here, with what happened in the States when mortgages (sub-prime or not) re-set at higher rates.
Its unfortunate and sad (but nessecary, case and point poster #27)that you still have to state “sub-prime” because you are 100% correct, most Canadians equate sub-prime with some sort of trailer park or inner-city borrower and not people that were using variable and other products with higher resets.
#27 TheTruth
Australia raises rates to 4% on March 2nd. Prime rate in the 6% range. Result: Housing is still on a tear.
The day isn’t over and your claiming the RE market is “still” on a tear? Now thats funny.
How many thousand of sales in Austrailia today?
#30 tran, hcmc
Don’t you know, housing will go on a tear.
Cause its less affordable?
Just ask the smartest self proclaimed 5th grader on the blog, “TheTruth”.
Garth, what do you think is the reason for shortage of listings in the GTA?
“The economy grows leading to inflation, taxes and higher rates. Yet incomes stagger, guys who keep airplanes up lose their jobs and cities sell parks” … Garth
e.g., Stagflation
Regarding real estate, prices will initially lag until inflation exceeds the deterioration of the debt.
Winners
- wealthy individuals
Biggest Losers
- consumers
Central Bank reckless rhetoric is being used to manipulate your economic perceptions, otherwise, inflation becomes a self-fulfilling prophecy.
Post#28 KC heres a bit on China.
” Dozens of skyscrapers sit empty, Well over 60 in Beijing alone.” This was written by Charles Hugh Smith. As always a good read.
http://www.dailyfinance.com/story/real-estate/why-china-cant-cool-its-overheated-real-estate-boom/19371786/
The Original Dave #36
I’m not sure where to begin. Most people agree that taking any economic cues from Argentina is frought with danger. Houses are in fact very affordable in Argentina – if you are a 1st world citizen with cash!
Average Joe Blow in Argentina needs to save the whole shot in order to buy a house! Purchasers withdraw money from the bank (often in US funds) and literally hand over the money to the sellers. If you are the seller you count the money with some big trusted friends watching the other guys in the room. Wages in Argentina do not support people buying homes. Many people save to buy land then build piece meal as money is available.
Clearly, the 100K number comes from the sky. Depending on where you want to live 100K buys a decent apartment in a Buenos Aires suburb or an estate in a smaller city or rural area.
Lastly, comparing a RE purchase in Canada to Argentina while underscoring the differences in standards of living, crime and services, is not comparing oranges to oranges. Argentina has a lot to offer, but it ain’t Canada.
#46 Grantmi
NEED to sell for $1,100/sqf vs the last intake of $868 to pay off the cities exposure!!!
Ouch! “Lucy! You got some explaining to do!”
_______________________________________
Like I said yesterday, it’s not an issue because the “rich Asians” will buy up all the suites.
News from the B of C (Carney) says it all …. nothing changes nothing changes …. Canadians still have their heads in the sand …. cheap money will solve everything> Really?
I also have to say that I do not understand how someone can dedicate their life to prepare for two 20 second runs down some moguls. “I will show the world. I will keep my knees firmly in place, my skis tightly together.” Four years of prep for that? Don’t get me wrong, I’m sure it’s hard, I just don’t understand how it is worth it for anyone. It’s like that movie “Rudy,” where that short guy dreams of playing football for Notre Dame. He dedicates 4 years of his life to practise and then gets 20 seconds of playing time during his last game. Of course this is the point in the movie where the entire audience (especially the short people) is brought to tears by Rudy’s reward for 4 years of determination and perseverance. I, on the other hand, am brought to tears by the fact that Rudy spent 4 years of mortality preparing for 20 seconds of spandex glory.
It remains to be seen whether or not the two weeks of spandex glory will have been worth it for Vancouver and Canada. Although it was definitely worth it for 3 hours on Sunday, I think Vancouverites are going to have an epic case of buyer’s remorse when the schools start closing.
Love the interest debate but I’m seeing more and more of this term, “rate normalization”. Sounds so much better than rate hikes.
A lot like last year whent he buzz words “competative currency devaluation” ran amuck.
March 4th is the day Canadians find out about our “temporary refund adjustment”.
Mr Garth,
I don’t always agree with your alarmist tone but I keep coming back for more. Keep up the good work ESPECIALLY with your gift of selecting the appropiate photo!
OMERs is loading up the cash account expecting fire-sale bargins in the near future.
If rates rise so does our $ and more job losses to come.
Will America ,mired in quicksand, also raise rates ? Will the Yield Curve invert again or will it stay at this record steep spread ?
Who woulda thunk it, they’re trying to create a bidding war (it’s “under” priced and offers presented tomorrow) over a middle-unit townhouse in northern Kanata (45 min. commute to downtown Ottawa):
http://www.realtor.ca/propertyDetails.aspx?propertyId=9175596
No rates increase! This is good for the real estate industry.
http://online.wsj.com/article/SB10001424052748704548604575097422816639734.html?mod=WSJ_latestheadlines
http://www.cbc.ca/money/story/2010/03/02/interest-rate-decision-bank-of-canada.html
Barack Obama lost his bet against Stephen Harper over the hockey game. As a result Barack had to buy Harper a case of Molson Canadian.
Now wait a minute………… should it not have the other way around?
@27 – The Truth – It is not reasonable to expect housing prices to be affected immediately by rate change announcements. People are pre-approved, and before the increase kicks in, people will be rushing to buy (or so Re/Max will have you believe). It would take at least a couple of months before the buyers are affected, and then it would take at least a couple months before sellers realize that the buyers can no longer afford their asking price, and start lowering it. My guess is that a rate change takes at least 6-9 months before it starts having any effect. That is, assuming that income stays flat. If income rises along with the interest rate, then indeed the prices would not be affected at all…
Face it garth! Rates aint gonna go up!
Garth all this talk about the debt and deficits is getting rather tiresome because nothing gets done about the problem. If I could get what I want for my silver then may be I could fix the problem all nice and tidy with the stroke of a pen.
Steven
#46 Grantmi,
$1,100 per square foot. Ouch! I have friends that just sold their Yaletown condo and bought in Palm Springs for under $200 per square foot.
Rennie better get moving!
It’s not about the silly game. It’s about the extreme power of focus and consistency. THE 2 most valuable skills to any employer.
So, be nice, cuz you’ll probably end up working for one of these guys.
In my opinion I would have much more faith in the s whichystem if we had David Dodge as governor of the bank of canada, this business of free money is just going to far,what got the world into this mess is to a great extent low interest rates which have been in effect for too long a period of time eg. since greenspan. Wake up regulators ,this is ridiculous.
Re: interest rates, unfortunately Careney must follow the US Federal Reserve lead. Any significant unilateral hike would result in another spike in Cdn $, which would be unacceptable. The rates will go up by summer, but maybe not by much if US has their way. This is fine, but the thing is history has shown that interest rate trends can be very unpredictable. Today it looks like the US Fed is firmly in control, but the size of their debt and dependence on foreigners makes them vulnerable. The situation can change without warning, literally overnight. If this comes to pass, Canada will, again, have no choice but follow the US lead (upwards). Interest rate hikes could very end up being more sudden, and more dramatic than most people ever imagined.
blacked out sentences /missing emails ?
“The National Archives and a watchdog group sent letters to the Justice Department (DOJ) Thursday demanding an investigation into the destruction of John Yoo’s emails from the summer of 2002, when he and other government attorneys prepared and finalized legal memoranda for the CIA that redefined torture and authorized interrogators to brutalize war on terror detainees.”
National Archives, Watchdog Demand DOJ Probe Destruction of John Yoo’s Emails
Friday 26 February 2010
Jason Leopold, t r u t h o u t | Report
http://www.truthout.org/national-archives-watchdog-demand-doj-probe-destruction-john-yoos-emails57202
===============
“Soros says he wants the banks nationalized. What a strange offspring!”
….didn’t Dell and Soros buy a bank in california (reverse mortgages )
change in foreclosure rules in california
http://www.aroundthecapitol.com/Bills/SBX8_38
No problems here in Calgary, house prices and sales are predicted to rise based on information from CREA and CMHC just published by their whore the Calgary Herald.
WOW!…….this blogs 100% smokin hot today!
Like the sunami’s hit ……and you can’t be held back!
For instance….
# TJ
..”The Olympic Villiage is on False creek and right behind you a beautiful Wire rope factory, and built on ground that has been polluted with 3 generations of Beehive burners, that used to pump toxins into Vancouver, that made London Fogs look light by comparision. Mentally unbalanced people thought spending $11 BILLION for a two week orgy of Visa and GM and Coca Cola Capitalism, as is most shameful, was ‘great’. Fools paying $7500 bucks to see a hockey game that means nothing more than a Hockey Player that will get $9 million to play in a Bankrupt hockey league, scored a goal to beat our rivals from the world’s biggest bankrupts, and people go crazy. The Games are staged at the end of a highway where a Bankrupt ski hill is about to be auctioned = and people say ‘wow’. ”
Doesn’t get said any better than that!
Thanks to all of you today. Garth should be proud.
elle
Whoops previous post should read …#18 TJ
If the BoC raises rates this year, it would be completely 100% opposite to what they have done in past recessions, going back to early this century.
David Rosenberg has written extensively on this, and he has not changed his stance. He admits today that a rate hike is possible, but that would be a total break with past practice.
See the CAD $ fly higher on Carney’s words, just like the AUD $ very time they hike rates. If you want to kill any hope of economic recovery dead really quickly, go ahead, raise those rates.
As I have stated before, I am sure BoC officials are well aware of the situation when David Dodge was Governor and he got blamed for “made in Canada” recession because he kept raising rates. It would be a political risk for the BoC, politicians in Ottawa would probably heed populist anger and move to limit BoC independence. Even a low probability of that happening would be enough to give any Central Bankster pause, they fear loss of their “authority” above all else.
So I remain convinced there is almost no chance of a raise in Canadian Central bank rates, or 1 token 1 at best – until the US Fed starts raising rates, which will be years away from the look of things right now. There is simply no pressure on the US or Canada from Bond markets to pay higher interest rates at the moment, while Greece debt is said to be offered at minimum of 7% interest now or no one would buy it. In a couple years, maybe.
If you remove temporary Government stimulus crack stupidity from the GDP figures, we would not even be talking about interest rate hikes here, and US GDP would be quite negative. Or how about Japan, say no more, 20 years of recession and deflation. Talk of “inflation” is way premature IMHO, it will not be sustained without wage increases. Think everyone is getting a raise and bonus this year?
Others may disagree. Such is life.
Greater Fools buying in Vancouver at the peak of ‘El Nino’:
http://news.nationalgeographic.com/news/2010/02/100212-vancouver-2010-warmest-winter-olympics/
Anyone in doubt of the real estate bubble we have in Canada needs to pay attention to Australia.
Rates at 4% and has still yet to go to return to “normal” levels.
Debt servicing costs are ramping up more and more.
Significant mortgage arrears % does not necessarily drive the prices down. If you look at the 90’s housing bubble burst (27% peak to trough), mortgage arrears were no where near current U.S. levels.
More so, look at the demand dry up as all the people who were planning to buy in 2010,2011 has already bough their house. Now when interest rates rise, taxes rise, mortgage rules tighten the current small pool of potential buyers shrinks even smaller. When the price curve flattens watch as the speculators run for all the exits.
Like any other market watch as supply outstrips demand for a long long time as Canadian balance sheets sink further in the red and less people qualify for loans.
re; yesterdays greek freakout poor goldensacks
http://www.guardian.co.uk/business/2010/feb/25/markets-pressure-greece-cut-spending
JUST WHEN YOU THINK YOU HAVE IT FIGURED OUT
Just released is Feb Stats for Victoria home sales. Scorching sales pace continues with sale of detached homes up about 70% versus January 2010.
But what’s this????
Averages prices for detached homes are down almost 6% from January/10.
Sure 6% is not much of a decline but given the strong sales numbers it is not what you’d ever expect.
Well, dah! It’s gonna cool baby, it’s gonna crash and burn!
http://www.yourhome.ca/homes/realestate/article/773838–toronto-housing-market-expected-to-cool-in-2010
#32,
Harper said “You Won’t Recognize Canada When I Get Through With It” on Thurs., 27 April ‘06. Guess he meant it.
Isn’t that an unsettling statement to hear from one man even though he is the PM? Where are the checks and balances? How can so much “apparent” power be bestowed to one person considering human nature. We are all corruptible, or can be pressured, frightened, coerced, and blackmailed by virtue of the fact that we’re human and we have financial and emotional attachments to family, money, status, etc. And these attachments are the strings that the hidden powers pull to achieve their agenda.
That is why parliamentary systems suit the needs of TPTB; especially ones with compromised, weakened or non existent cabinets. It gives too much power to too few, who are in turn dictated to by non elected groups behind the scenes who don’t answer to the people and view us as a commodity to be exploited on a giant global chessboard.
Let’s hope we start hearing and seeing more about investing in innovation and the economies of the future. We have been pretty terrible as a nation in investing in innovation. We have a solid core of technology and digital media companies in Ontario, Quebec and B.C. This is the future and deserves our attention now.
How dare you post such blasphemy on here. Garth is a time traveler and has gone back over the past 6 thousand years and disproved that gold isn’t money. I now believe him before I would take a mere 6 thousand years of proof that gold has always been money and the Holy water to the Vampiric Banking class
Why is the old order of GIC’s ending if interest rates will increase?
=====================
“Cover pricing is when a contractor bids for a job with no intention of winning the tender.
For example, Company A has been invited to tender by a client, but for various reasons, it has no interest in winning this particular job. However, Company A wants to stay in favour with this client, and stay on its tender list.
So, Company A contacts Company B, which is also bidding for the job, and asks for a ‘cover price’. Company B supplies Company A with a price roughly 5%-10% higher than its own bid. Company A supplies this price to the client as its own, safe in the knowledge it will not win. Company B is happy with the arrangement as it has not given away knowledge of its actual bid.
Why is cover pricing illegal?
The process of putting in an artificially high bid is not a breach of competition law – however, the brief conversation between two bidders which confirms it is sufficiently high not to win is an infringement.
That said, many estimators do not appreciate that cover pricing is regarded as collusive tendering, and it is thought to have been an established practice in the industry for many years.
http://www.contractjournal.com/Articles/2008/04/17/58402/construction-bid-rigging-q.html
Catchword: cover pricing
Filed under: English, Construction & Buildings, Jargon
Part of speech: n.
Quotation: The four-year investigation—one of the OFT’s biggest—centred on a practice known as cover pricing, in which construction firms secretly agreed the prices they would submit during a tender process. A firm that did not want to win the contract would submit a price that was much too high. In some cases, the eventual successful bidder would then reward them with a secret payment”
Hi All,
I wish we had such a leader in Ontario, Canada or Toronto
Please watch this video from 1 minute after advertisement
http://njn.net/television/webcast/ontherecord.html
Here is his wikipedia page
http://en.wikipedia.org/wiki/Chris_Christie
In last couple of years I has read a lot, really a lot to understand present situation and our possible future.
During that time 99% of our leaders from country/state/municipality level were huge disappointment to me.
Remember Harper denying crisis in fall 2008, Remember Harper/Flaherty promising to solve this crisis without taxes or cuts.
Remember their stupidity with GST, 0/40 mortgages, income trust election lie …
Remember McGuinty and his full day kindergarten promise while 25B dollars in debt at province level. Remember his healthcare tax lie.
Remember Toronto major Miller new taxes because he didn’t have balls to stand up to unions.
New Jersey state is bankrupt, they have huge deficits in pensions, health care, schools and transit …
There is no money to support present lifestyle in NJ …
They had to come to brink of financial abyss to elect real leader.
NY, California, Illinois, Michigan, UK, Greece, Ireland, Spain, Portugal, Italy, Latvia,
Lithuania, Hungary, Ukraine, Japan and many more are in same situation and without good leaders.
They telling us USA recession is over.
How come taxes are still going down ?
http://4.bp.blogspot.com/_nSTO-vZpSgc/S4iB-woCx-I/AAAAAAAAH8U/DPE2A4q3JJw/s1600-h/state+income+tax+receipts.png
Loans and leases are still down
http://4.bp.blogspot.com/_nSTO-vZpSgc/S4h65Ontk_I/AAAAAAAAH7s/PzMbYBJ__O0/s1600-h/total+loans+and+leases+Percent.png
Credit is still down
http://2.bp.blogspot.com/_nSTO-vZpSgc/S4h4OheFp5I/AAAAAAAAH7c/75GJIMkRgkA/s1600-h/total+revolving+credit.png
And USA housing is recovering ? What a joke
http://2.bp.blogspot.com/_nSTO-vZpSgc/S4h_jrhlYZI/AAAAAAAAH8M/beedSkydYSU/s1600-h/housing+starts.png
This crisis is necessary unfortunately.
This crisis will try to clean the system and in process produce new real leaders.
At least I hope.
End of my rant.
#15, #16: Circus and no Bread
What do you mean – they won’t get any jobs. The FIRE (Finance, Insurance, Real Estate) economy will grab them up as flack men/women.
So, they don’t produce anything useful? They are the only game in Vancouver right now.
Hi Garth
Gotta ask u when will the government tax all the unreported rental income in the country, after all, the government is trying to find new ways to generate income. There must be many hundreds of millions there.
27# THE TRUTH
BREAKING NEWS:
Australia raises rates to 4% on March 2nd. Prime rate in the 6% range. Result: Housing is still on a tear.
Canada may raise their rate to 1% by year end and to 2% by January 2012. What do you think will happen to housing prices?? Nothing if Australia is any guide.
Although Garth censors some of my posts, population growth is a main factor that drives demand and prices into the stratosphere. The major component being “I” (can’t say the word) into the major cities. That is what Australia and Canada have in common.
Australia’s housing market is collapsing, as defaults soar. — Garth
Garth could you tell me where you got the information that Australia’s housing market is collapsing??
I read a few days ago that it still very strong and that they have eased many rules to allow people from asia to buy real estate. Which is pushing native Australian (if you can call them that) out futher into the suburbs.
Could Canada just copy what they are doing? I see no dip here just leveling off like their
Stats on the Aussie market published here in a blog posting a month ago. — Garth
Garth is right
If you are an owner of any piece of crap house or piece of land that you have been dying to unload… do it now… at least here in Toronto. Take a look at quava.ca Toronto Inventory is record low. I have seen marginal properties go on the market that I would not let a dog live in. Buyers who see the interest rate rise scenario are panicking and buying pretty much anything. These are just dumb buyers of course. But if you have something to sell… might as well give it a shot. Nothing to loose except all that dough on commission from the slacker agent who will pick filet mignon out of their gold chompers with a platinum toothpick from Birks.
Hey.. become a realtor… contrarians
But what happens when the yield curve gets very steep? That is happening now and there are few, if any, precedents. Last week, 10-year yields exceeded two-year ones by 2.94 percentage points, the highest figure since the Federal Reserve’s records for this indicator began in 1976.
http://www.ft.com/cms/s/0/349470be-1fe4-11df-8deb-00144feab49a.html
Garth , any thoughts, Steeper ? Flat ? inverted ?
No rate hikes for another year?
Todays newsletter “Breakfast with Dave” from David Rosenberg.
Quote: “The Bank has never moved rates …
1. With the unemployment rate this close to a cycle peak;
2. The level of real and nominal GDP still below their prior highs, and;
3. In advance of the Federal Reserve.
…
In the early 1990s downturn, it took 3½ years for Canadian real GDP to reach a new peak and the Bank of Canada did not start to raise rates for another nine months after that and actually only when the Fed began to embark on its tightening cycle.
We went back to 1960 and the answer is no, the BoC has never began a tightening campaign with GDP below prior peaks. On average, nominal GDP is 2.3% above prior peaks and real GDP is 1.2% above. As we said above, currently, nominal GDP is 4.5% below its prior peak and real is down 2.2%. This means that we could be talking about the Bank being on hold for another year or more depending on the timing of when the economy manages to not only improve in growth terms but to reach gold medal status in level terms as well.” (end of quote)
IRT #90 Junius
I’ve been agreeing with your posts lately, far too much for my comfort
IRT #18
Just because you don’t like it doesn’t make it wrong. You are the one who sounds mentally unbalanced.
#90 junius Hope in regards to investing is the biggest dirty word there is . It’s to easy for the govenments to live on royalties and stumpage . Then milk the poor and middle class for operating costs through taxes and fees . It’s a no brainer and that’s what we have in Ottawa no brainers . If you want to see how canada treats it’s innovators check out azure dynamics ,a good canadian company that was shown the door . It’s now in bed with ford . It’s still listed in canada though I don’t know why .. The irony for me is that the guy in charge calls himself an economist but then we are the USA’s biggest trading partner . If it wasn’t for oil/gas /electricity we would be one of the smallest . Too bad we can’t grow bananas .
I’m sure Garth doesn’t want to spoon feed us blog dogs.
All the forward looking indicators are easily obtained via google.
Article states that mortgage approval rate has plummeted 40% from peak!!
http://au.biz.yahoo.com/100205/2/2b3ya.html
Of course all the Aussie real estate bulls will say that mortgages don’t matter because all the rich asians are buying 100% cash. Am I right?! /sarcasm
I don’t know if there’s any clearer signal for Aussies to get out while they still can. Look out below!!
The economy isn’t growing anywhere in Canada.
Quebec is our Greece…..94% debt to GDP…..I guess exporting maple syrup, fruit pickers and strippers can only support an economy for so long.
Back out the numbers from the last gasp of the housing “bubblette” then reverse the stimulus math, and we’re headed down the hill like an out of control snow boarder.
What was just counted and trumped up in the REIC paid for “media” was the numbers from the last quarter of 2009 where all the governments stimulus money, rate cuts and scare tactics pulled all the future housing demand from FTB’ers forward, as well as the people who cannot do math and spent money to get the puny HRTC.
It is all a grand fraud…….
And you thought Garth was grumpy today:
http://www.321gold.com/editorials/denninger/denninger030210.html
#83 Got A Watch
You get the BINGO! for today.
We will also buy our own bonds to keep rates low and the dollar down if we have to.
27# THE TRUTH
#96 Peter
“Although Garth censors some of my posts, population growth is a main factor that drives demand and prices into the stratosphere.”
You are wrong about this point.
The main factor is the amount of debt that the Aussie and the Canadian governments can push into the housing markets.
This market is nothing more than a debt fuelled ponzi scheme. Once the scheme runs out of greater fools , it will collapse in a heap.
The people buying now are like those that bought nortel’s stock at 90$. Sure it will go up to 120. But after that it goes to 0 (for the buyer who loses his job and cant make the payments any more) .
Both of the economies are booming based on the commodity ponzi scheme fuelled by china. Once they pull the plug on their infrastructure program we will begin the long slide downhill
# 96
I don’t know but is Aussie media spining the real estate boom like ours in Vancouver?
#83 Got A Watch,
I agree with you. I thought interest rates were going up for sure but I am having my doubts. There is little sign of a real recovery in the economy. I think they should wait until there are real signs of a recovery without the stimulus.
#70 and #73 Jeff Smith,
Won’t you be surprised when Real Estate prices go down even without a rise in interest rates. They are going down in the U.S. and rates are just as low.
Affordability is now the key.
#89 Coho — ” “apparent” power be bestowed to one person . . .”
Hi Coho. Harper never had, and still doesn’t have that power — a minority counts for diddly squat, esp. if a majority of voters show up unexpectedly at the polls and toss the CPC. Don’t forget MPs are elected to serve us, we pay for their travel perks, wages and benefits, etc.
Along with the other link I posted, from an English paper suggesting that Oregon, Washington State and B.C. separate and form their own country “Cascadia” (all of us are broke), it inevitably leads to Calif., Alaska, the remaining western provinces and possibly the territories and Nunavat seceding, and joining Cascadia. Then the war begins for the resources at the Arctic.
Kinda ties in with the eastern European scientist’s or professor’s views that the US will split into six states shortly, although Yellowstone would be a major starting point, accompanied by the SAF and the Michigan fault lines.
Harper, dubya, Cheney, etc., are no more than power-hungry, money-grubbing control freaks of nature (Obama is dubya’s third term, as he has increased the war activity thruout the world, ‘tho he is just a puppet taking the flak).
The one thing that will stop everyone dead in their tracks are the natural events, such as giant solar flares wiping out electrical grids everywhere, disabling satellites (no ‘net or communications of any kind), etc.
——
Japan’s car companies MAY leave the US.
Oh man! If even Mr Wong says housing market will cool. This has got to be the canary of all canary passing out!
http://www.yourhome.ca/homes/realestate/article/773838–toronto-housing-market-expected-to-cool-in-2010
http://www.studiotax.com/en/main.htm
Studiotax – Free Canadian Income tax software
I`ve been using it for a few years and it works well. You can also netfile . Works for all provinces except Quebec.
YES ! Free up to 20 returns.
We have a beautiful country with perhaps the largest wealth in natural resources in the world.and we should be the richest ……our whole future has rested on the management of a few elected and unelected managers most of which were dismal failures in the public sector…now with not even the simplest of qualifications or any basic standards for their positions manage the multi billion dollar tax revenues our tax dollars produce………hmmmmmmmmm wonder why we are where we are and where our future is heading?………..think i’m wrong?? …just watch one session of question period in our parliament………WOW!……….the best liars ,actors,and bullshitters control the stage which decides the future of us all………..amen
I believe interest rates in Canada will be on hold for some time past june. They will not put them up ahead of US Fed. As far as the real estate bubble, the new mortgage rules and HST implementation should put a stop to unqualified people taking on more. The threat of a higher CDN dollar to exports is too much right now to hint at any rate rise.
#100 Hoon,
Hey, thanks for that. No need to worry!
Interesting to see whether CDN rates go up before US. It would be the first time for that, and it would raise the value of the loonie, however inflation is almost at 2%, and gas prices are going higher, so perhaps raising rates will be needed here sooner rather than later. (GTA gas $1.10 liter by May long weekend)
It will also be interesting to see the budget details in a few days to find out by what means, and how much more we will be taxed.
And whats with this documented fraud of the books for Italy, and Greece? (see zerohedge for the documents) I have to wonder if they even know how much they owe.
Also…MLS date I think is Mar. 22, to find out if we can simply pay a fee and list our own house.
And Garth has yet to let us know what it is, we are going to be helping him, help us, fighting for…
#83 Got A Watch
I have to agree with you, however, Garth is an insider’s insider in this particular neck of the woods. Even if it is a “has been” situation. As absurd as it may seem, I think he has a few fingers on the pulse of these politicians.
Garth is correct on the AUS RE market. I’m at the Gold Coast now gaining concensus, will report back later!
#14 Industrial Guy
Nice post. Someone will buy that welding robot off your friend for $500 a year from now and convert it to a robocop.
#23 nonplused
I’m with you on the tax receipts issue. But do you actually think the MSM would prefer a measure that doesn’t lean to obfuscation and prevarication?
Taxes are falling catastrophically in Ontario right now, so McNumbetweentheears should logically be shilling for more spending.
Hope i am not off topic too much but just something i wanted to say….The Olympics…i was very much anti olympics cost etc at this time in our economy..but i must admit now i am a believer..Our Country should stand proud..Vancouver put on a hell of a show! People of all ages are talking about it..everywhere i went today that was the topic of conversation…. it brought me a belief in the youth of today..they made me proud! I have never seen such a display of patronage. They did it with style and makes me happy and gives me hope we really do have new generation coming up that will go out and vote and make a stand and will not tolerate the attitude of entitlements our political leaders have displayed for much too long……..perhaps our future little political “diva’s” will have to refrain from their shoe throwing “f” word slinging self importances and actually have to represent their employers (the tax payers) with respect,honesty and ability to actually perform the duties they were so fortunate to be selected for……….
Garth: I have been following this blog now for some months and it seems that their is some doubt and good arguments made for why interest rates will not go up that soon … as you have been espousing. Any comment or feedback? The more I read … the more I am confused. I must say that I get frustrated when I hear that rates will not go up soon. For me the biggest thing is to see the market come back from pluto and there be enough houses for sale in this ’screw-up’ of a City so I can buy one without lining up with a bidding card. I refuse to buy in this market. I refuse to play RE Broker games. I refuse to stand in line. I refuse to be a sucker.
Regards, FED-UP TO THE HILT!
Of course they will rise this year. There is no doubt. — Garth
Please people…………..it is NOT the Central Bankers with puppets like Carney and Bernanke that control interest rates…….the BOND MARKET sets the direction for rates with everybody else following. The Bankers just want you to think that they control interest rate direction. Countries, Corporations and individuals everywhere will need to continue borrowing and its all that demand for Capital form everywhere that will push the premium or rates charged to borrow money higher and higher and higher. It is a 100% CERTAINTY interest rates will be higher than the previous year as each successive year passes for at least the next 10 years! We will also see DOUBLE DIGIT rates again in about 5 years time!
GET OUT OF DEBT NOW…..OR YOU WILL GET SQUEEZED!!!
TC.
#52 Nostradamus jr.
“”Is it time to eliminate public sector unions?
Ya … so the downfall of the US is because of unions?
Get really buddy.
#31 Left_Coaster
#87 omg
About Victoria house sale price in Feb: average price doesn’t say much by itself. The average price drop in Feb. only means that there are fewer sale of houses over million dollars in this month than the last. That is it.
#120 John M
Thanks for the laugh. I think you meant “patriotism” not “patronage”, which is another thing altogether.
Could OMG’S post of housing sale prices in Victoria dropping 6% in February despite a heated sales market be a harbinger for Vancouver?
Chicken-gut reading: The same scenario has been playing out in our isolated rural B.C. community over the past year, but we’re diving faster this spring. Those few places that are selling (more and more listings coming on tap, including great farmland which NEVER goes up for sale, but fewer and fewer sales) are going for at least a third below asking price. They are still being listed for top dollar, but no one expects to get–or pay–anywhere near that much.
This is unprecedented in the 12 years I’ve lived here, waiting for things to go to hell (so I was off by a few lousy years–I whiled away the time by learning a ton of useful stuff).
Possibly genetic memories of hanging out at Pigeon Park and the soup lines in ’30s-era Vancouver is kicking in. Because the ones who are leaving in a steady stream are the urban yuppies who worked here for decades at middle-income jobs, lording it over the poorly-paid populace, much like the Victorian Brits in India.
They are mostly heading for Vancouver, the greatest place on earth. Of course. Wonder if they’ll get to keep their pensions. Or the houses they’re about to buy there before July. A little intelligence is a dangerous thing, ain’t it?
So, while you navel-gazing city slickers expect the big crash to start in the metro centres and spread outward, I’d suggest the reverse could be shaking down.
Spare at least one jaundiced eye and take a look-see at what’s going on with listings in the small cities and rural communities in your area.
122 TC on 03.02.10 at 9:01 pm
Please people…………..it is NOT the Central Bankers with puppets like Carney and Bernanke that control interest rates…….the BOND MARKET sets the direction for rates with everybody else following. The Bankers just want you to think that they control interest rate direction.
***********************************
The market sets the long rates-that’s true–
What everyone is discussing is overnight rates–which Carney–does set–
Bernanke sets the Fed fund rate–
These do not necessary direct long rates–but–
They “may” influence direction as the short and long spread narrows –
Overnight/FFR are the rates which banks borrow at–
******************************************
Corporations and individuals everywhere will need to continue borrowing and its all that demand for Capital form everywhere that will push the premium or rates charged to borrow money higher and higher and higher.
*****************************************
Long rates could move higher–but–BOC may buy bond yeilds down-going into large re-set periods–(QE)
Will have only a short term effect–
I wouldn’t bet on loan demand driving rates –
If the US is any example–and i think it is–
Lending velocity will fall off–
Risk tolerance has changed–
Banks do not want to lend and–
Smart’ people/business do not want to borrow–into a contracting economy–
They are raising cash now–
http://1.bp.blogspot.com/_nSTO-vZpSgc/S35CVSRnx_I/AAAAAAAAH3c/95_geaVrLc4/s1600-h/Total+Bank+Credit.png
http://sovereignspeculator.com/wp-content/uploads/2010/03/screenhunter_25-mar-01-1055.gif
Lastly, comparing a RE purchase in Canada to Argentina while underscoring the differences in standards of living, crime and services, is not comparing oranges to oranges. Argentina has a lot to offer, but it ain’t Canada.
——————————————
actually, I mention Argentina because there are 3 different high profile people/sources in the past year that have stated Argentina is the best place in the world to live. There are specific towns named with wineries, wonderful climate, very little crime, and the best cost of living people could ask for. Doug Casey, was one of the people that mentioned Argentina and he’s visited over 200 countries in his life. He too agrees. He is the one who brought the mortgages to my attention. Mr. Casey has served me right in the past and I have no problem gobbling up his opinion.
Of course they will rise this year. There is no doubt. — Garth
—————————————
G man or anyone else, if Greece, or Portugal, or Italy defaults and this clobbers stock markets around the world again, people will scurry back into bonds and safe havens. If this is the case, how is it that rates will go up? There was some nervousness in early February in regards to Greece – this still lingers. We’re not out of the woods yet. I’m not sure how people are certain rates will go up with any significance considering the shaky global economy. None the less, even if rates stay the same, real estate prices will be coming down. People cannot finance these debts they’ve incurred.
Ottawa raising % rates will
…Kill whats left of Ontario’s Export Manufacturing Economy.
…Increase unemployment in Ontario and the rest of Canada.
…Allows Garth to write another book titled, “See I Told You So”.
The HST will
…Limit “new home” construction
…but will increase overall tax revenue
…will increase Home Resales and the Home Renovation industry.
…will increase jobs in the Home RE reno/upgrading industry.
Nostradamus jr.
Huh?
Bonds and gics and still the place to be as you’ll see. A deflationary collapse is the only thing i can see taking down all commodity prices with it. Get completely out of stocks and short them. The lone exceptions may be some US R.E.I.T’s.
The pound is down and long term rates up in the UK. Some hard choices coming up (after the May election).
http://www.nytimes.com/2010/03/03/business/global/03pound.html?ref=business
According to the analysis, this is another potential sovereign debt time-bomb. If it goes off the impact has the potential of being much, much larger than current problems with Greece.