The most arresting thing about F’s budget?
F, of course. Check out that makeover. And just to think that under his new rules, Botox treatments are no longer tax-deductible. Where the hell did he get that idea?
On a more serious note, if that’s possible, is what this little federal exercise means. The budget is political, not economic. It sets the scene for an election this year (I told you 2010 would be a tipping point), in which F&H plan to get a majority. That will pave the way for the real budget, which is 12 months away – the one that could declare a debt emergency, ‘temporarily’ hike the GST, impose an income surtax and slash spending.
At that time, we’ll be well on the way to $600 billion in debt, be adding tens of billions more a year, have higher loan and mortgage rates, an army (still) of unemployed and a cascading real estate market. Ontario and BC will have had the HST for eight months, provincial taxes will be higher in most parts of the country, and we’ll all be chuckling about the summer day in 2010 that a SFH in Van hit a mil.
Just imagine how you’d feel if you were the greater fool who bought that.
All this is way more likely now that F spent less time on his fiscal plan than his hair. The country has gone from a healthy little surplus to a mastadonian deficit in the course of three years. According to the Parliamentary Budget Officer, a dude with a real set, given the aging population and the economic prospects, we could have a structural deficit now of $20 to $40 billion for as far as the eye can see.
So, budget 2010 was an early chance to do something about it. Turn off the spending tap, start working on a plan to deal with a world in which there are just two workies for every retired (a few years ago, there were seven people working for every person drawing a pension), and scale down government. Instead, federal spending increases by a billion, another $19 billion will be spent on stimulus stuff and there is absolutely no long term plan. Just rhetoric. Grecian Formula. That kinda stuff.
The implications should be obvious. The housing bulls who come here to take a dump are living on borrowed time. Those of our relatives and work colleagues who have mortgaged and borrowed their way to granite countertops and boy toys will regret it. Young 5/35ers will understand that leverage = risk. People with their money in the wrong place (like bond funds, for example), or with their net worth stuffed into one asset (like their house) will wish they’d heeded the Lessons from The Bunker. Those who think tax avoidance is unpatriotic will learn fast.
By delaying the inevitable, F makes it worse.
Kind of like fleeing your age.
165 comments ↓
However, there are some on this site that say $1M for a SFH in Van is just the start. People from around the world will flock here. But we know that real investors will head to where the housing in undervalued.
“”The budget is political, not economic. It sets the scene for an election this year (I told you 2010 would be a tipping point), in which F&H plan to get a majority. That will pave the way for the real budget, which is 12 months away – the one that could declare a debt emergency, ‘temporarily’ hike the GST, impose an income surtax and slash spending.”"”
Garth
…Uhmmm, you forget to add that Protectionism, renouncing foreign debt owed by Canada and Nationalizing RRSP’s comes before raising interest rates.
…Ottawa (CMHC) is in a 50/50 partnership with Canadian Homeowners.
Nostradamus jr.
Exactly the cowardly stuff we’d expect from a minority government with no cajunas.
Keep those kids spending on megapurchases so they have nothing left to drive our consumer spending based economy. It justs gets more surreal.
MSM still cheering real estate with wreckless abandon and clowns on here telling us that we have an intergenerational housing market now with 35 million people in an absolutely massive country. Wow, it justs gets better.
Garth,
Seriously, are you bitter? Like this comment will be posted..wishful thinking on my part.
As a conservative, quite so. I expected more. — Garth
No pain! No Rogaine!
Can someone explain to me the difference between buying into a bond fund and buying some individual bonds?
I was under the impression that the only risk with bonds is credit risk (the company going under) as long as you held it until maturity. Is that not the case with bond funds? I see that bonds might reduce in value as interest rates go up, but does that matter if you intend to hold them to maturity?
The budget is shameful and deeply manipulative. I agree 100% that the Cons are headed to polls to try and gain a majority before the double dip recession in the fall. I had hoped for more but did not expect it.
I am reminded of that inspiring video posted a few days ago that had the new governor of New Jersey Chris Christie. Reality is leadership in this age. We don’t have it here in Canada.
Here is the full text of Christie’s speech.
http://www.nj.com/politics/index.ssf/2010/02/chris_christies_speech_on_budg.html
>As a conservative, quite so. I expected more. — Garth
Eh? Obviously i havent been keeping up – last i heard you’d changed sides to the libs?
I have always been a fiscal conservative. — Garth
Garth,
Simple to everything.
Start your engines and call an Election.
I think Harper will pull the plug if evryone votes against the Budget.
I voted consrvative so we wouldn’t be in this.I know something had to be done about the economy but bailing out auto industry won’t help.I didn’t mind Martin’s work as finance minister,we had to do the tuff stuff,now it’s blown and then some.I was willing to suffer as a taxpayer to get out of the hole but now I’m pretty frustrated we’re way worse off.I remember well the nineties.I don’t want to leave my kid this mess I’m only 36 and the future doesn’t look great.Garth your book must be popular hard to find ,but got the last one and it was a good read.Thank’s for helping keep me sane and educating people.Bulls or bears we have to agree,this is bad for all of us and our kids.Who is the alternative though?Iggy won’t get my vote and as much as I like Jack our views are quite different.I’m gettiin that bad feeling I had in 93 when I was just starting out but now I know a lot more and it is not comforting.
F isn’t worried about doing anything, all he has to do is click his new shiny shoes and the Wizard of Oz will take care of the mess.
Won’t the stock market, particularly equities, take a dive once the bubble starts to deflate? Given that, that is exactly what happened to the US equities when the US’s housing bubble burst.
Do the liberals have a position on mortgages / personal debt?
The tourist who came to Van for the Olympics may like it here, but when they try and find a decent paying job, unless they are doctors, good luck to them. Toronto and Calgary have much more of an industrial base, more head offices and a better job market.
I’ve been here for 15 years. I mistakenly didn’t buy 5 years ago and now am fed up with waiting. The transit infrastructure in this city is horrible. Unless you work downtown or are on a sky train stop, you have a terrible commute. It’s one thing to visit here, but living in a small box downtown for 400K or driving an hour each way to work so you can buy a house is not worth it.
Have to agree–especially since you didn’t say rates were going up–
Flaherity looks like he does–because I’m sure-someone else–has to dress him–
Have not heard one intelligent comment from him–ever
Have never seen any of his calls- close to target–ever
A liar or a buffoon ?
Both–but if I could only pick one–it would be # 2
Garth, are you thinking there is any likelihood of a Conservative majority? I know Iggy is ineffective, but I’d consider leaving Canada if this ultr-right wing sociopath gets a majority. Then his true colors will manifest. If after prorouging twice and lying to us about the deficit and economy people are stupid enough to vote him back in, then I’m not sure I want to live among these people.
Peter Schiff (Bull Moves in Bear Markets) — “If we were to lose our reserve status, the free market would force a devaluation of the dollar to bring our account into balance. That would be the equivalent of forcing an out-of-control vehicle to stop on a dime.”
There’s talk of US dollar devaluation hitting America in the not-too-distant future.
Garth et al, any thoughts on what impact a US dollar devaluation (say of 50%) will have on Canada? –thanks
F looks like Donny O now : )
Garth, just finished unloading $600,00 worth of Harley Davidson motorcycles at my part-time job. You know when Harleys are shipping like that to Calgary, Edmonton and points farther North, that the Oil & Gas bonuses are right around the corner.
How does the hype of the Olympics? It turned out quite good…
Frankly, I could care less if people keep on buying houses. They are buying with emotion, not brains and therefore will not listen to reason no matter if it comes from people like Garth or close family. I will have no pity for them when the party is over.
I’m not the smartest guy in the world but I do know that people, in general are fairly stupid and tend to believe what they hear, read and are told and don’t bother to rationalize a situation. They act before they think.
As for an election, I can see it coming. I’m confident that as long as this country continues to allow regional parties to run in Federal elections, we’re going to have minority gov’ts.
Looking forward to seeing you in Saskatoon, Garth.
When I heard the budget plan over the radio today I couldn’t believe my ears.
Solving debt problems with more debt? Another YEAR of spending?
The more I hear about the government spending the less motivation I have to increase my career qualifications for better earning power. What’s the point when taxes are just going to steal it all away? More and more money needs to be funneled from the working stiffs in the private sector to the mounting healthcare costs and excessive, bloated government workforce. It’s simple math. You can’t argue with it.
WOW a wage freeze??? How much does that really save? It should be a wage CUT if anything. Government salaries should reflect what is happening in the REAL world.
I was laughing my head off when they mentioned that the budget is built on wage freezes, cost cutting and “forward looking” INCREASED REVENUES.
Yet they fail to say what increased revenues!! Where are they going to magically get these increases? From the minuscule number of privileged private entities that that are awarded government subsidies? From the magical foreign investors in the telecomm industries? Give me a f*****g break!
Honestly, the main message of this budget is just this:
“Don’t worry about this next year of unbridled spending. After we win the majority, we will make damn sure anyone still working for the next 10-15 years is just going to pay for it. ”
Then I heard about Mayor Miller’s comments looking for more handouts from the Feds. I love Toronto but this city needs to learn how to run a balanced budget. There’s 15 million saved from snow removal this year and we STILL want more money?? Do these guys even use accountants?
How much more proof do we need that the current system does NOT work. Public servants are not working for the public anymore. Human nature is to be selfish and fend for yourself. Anyone that ends up on the inside knows how cushy it gets and immediately feels the need to protect their lifestyle. They think that as long as the masses are pleased with breads and circuses(and rising house prices) they won’t be noticed for taxing everyone to oblivion to fund their overvalued assets. I don’t mind paying more taxes if it is efficiently adding value to society and the economy. But I know that it won’t be because they’re too busy adding more debt servicing costs and spending gobs of cash for an extra 2% boost in FALSE temporary GDP output. There will be virtually NO permanent jobs being created with this additional spending.
Sorry for the rant but I’m just getting more and more frustrated that all I have to look forward to is MORE taxes and less services. I’m just starting out my life, 2 years out of school and this is what I walk into. I realize that I’m lucky enough to have a job right now when so many are unemployed or stuck doing sh*tty dead-end work. I really do wonder how the f*** does someone as stupid and incompetent as Harper get into position to lead one of the greatest nations in the world. How does he have a job and not my neighbor? Life truly is unfair.
I was hoping for a budget with more teeth. The only 2 things that I thought were decent about it was:
(1)
The elimination of all remaining tariffs on machinery and equipment on production inputs. Which will be a shot in the arm for Canada’s manufacturers. It will lower costs, save on paperwork, and improve productivity. It will make Canada the G20’s first tariff-free zone, and as such is likely to prove an attractive incentive to locate a plant here. This may promote increased labour productivity among manufacturers, but also increase competition for equipment manufacturers based in Canada.
(2) The part about the extra 17mil to train future Olympic athletes. Only because I knocked my beer over and rolled in laughter. You just can’t buy that kind of comedy. I muttered a few #!?@ words after that.
I compared the whole event to that of buying a lottery ticket. Now, I know that I am not going to win, but still can’t resist the allure of “maybe this time!”. Then the results of “sorry sir, not this time”. My response is always the same it seems. “#@!”
The only way I can rationalize the rest of this budget is while in a drunken stupor. My way of supporting the economy. Time for another beer for me…. no more for them and get their keys. They are obviously had a few too many already.
I was disappointed with the budget as well. It’s so amazing because every time I pick up a paper or turn on the news I hear how the economy is picking up and supposedly we are through the worst of it.
I received a notice from RBC Visa today and they said to expect interest rate changes come June ‘10. I’m supposed to watch for more info in my March statement. Can’t wait!!!
Anyways we are booked to see you in Kelowna. I’ve been reading your latest book and I have thoroughly enjoyed reading it.
Oh I do have to add a “Thank you” to Garth for writing his book.
I went out to buy it as soon as I could to prepare my finances and start preserving the dollars that I work hard for.
I completely understand that the next 10 years will bring more taxes and volatile sideways markets. Buy and hold is absolutely dead.
People, tax avoidance will be absolutely tantamount to getting ahead in the coming years. This is one of the most risk averse investments you can make with absolutely exceptional returns.
Another thing people need to think about is energy conservation. This is also a very high risk averse investment. Garth touched on this in his book but basically it’s obvious that energy is going to be a high priced commodity and waste will be a luxury in the coming years. If you take the initiatives to learn how to conserve as much energy as you can in your household now, you will effectively increase your wealth through daily savings especially when energy prices start spiking. It reduces your reliance on an increasingly unstable grid and increase your level of independence from the “establishment”.
This HST will squeeze the middle class so hard and most of them don’t even realize it yet. They’re too busy watching HGTV and American Idol. They do not figure that it will increase the cost of their natural gas bills, gasoline costs etc etc by 8%!!! Can people at debt-to-income ratios of 1.41+ really afford 8% increases across the board on all these essential services/products? Even their cable/satellite bill!! I guess we’ll see in July…OOooh boy. This won’t end well.
Jumbo Jimbo in action!
Botox4Brains Drag Queen F iz inn da MOOD!
“The most arresting thing about F’s budget?” I submit: “The most brilliant propagandist technique will yield no success unless one fundamental principle is borne in mind constantly — it must confine itself to a few points and repeat them over and over”. — Joseph Goebbels
Look for the CPC mantra of “buy, stimulate the economy, get re-trained in new McJobs (sorry, REAL jobs and the CPC will NEVER tax Income Trusts)”
“. . . F spent less time on his fiscal plan than his hair.” — That alone is the crux for the worldwide fiscal meltdown. TROTW wasn’t able to cope without Jumbo’s flatulence (err, hot air and leadership skills). .
Say H&F’s plan unexpectedly backfires and they lose 12 seats? Still a minority, but laid-off workers will be AS MAD AS HELL AND THEY AIN’T GONNA TAKE IT ANYMORE!
If the CPC does get in with another minority, the economy (which is already known as the Edmund Fitzgerald — sunk) takes a major nosedive, and then Canada becomes the US of foreclosures. Toss in WW3for good measure and we have martial law here.
So H&F eventually resign, Iggy and Layton have become so despised by voters and are toast, no one knows who Elizabeth May is and Canada has no captain at the helm. Sure made a really good choice to quit, Garth!
Obama’s land grab from the Americans, but the last sentence of the first para. can be applied to the CPC here: “. . . we now learn they’re planning to increase their control over energy-rich land in the West.”
Mebbe it is time for the western provinces, the territories and Nunavut, along with Alaska and several other states to move really quickly to separate and enjoy ‘Cascadia’! Jon Stewart (early) is really funny!
Curious to see what the figure is for Canada.
Five second clip, shot over Hungary where Soros was born. Does HAARP have anything to do with this?
Sadaam had at least a dozen doubles. Apparently (no proof yet) the real McCoy is still alive, kicking and causing trouble.
Interesting to see what happens over the next decade or so.
Debts and deficits are not the only things that are spiking quickly!
That unemployment won’tbe going away. It’ll become STRUCTURAL. And it will be that way until salaries, benefits, pensions and the size of government come down.
Basically, until standards of living come down enough for Canadian labour and Canadian products to become competitive internationally again.
Please don’t repeat that stuff about “Who needs exports? Who needs capital inflows?” again. When a government has to borrow endlessly to fund a $600b deficit, they’ll be on their hands and knees BEGGING investors to buy their crap.
We’re facing decades of slow-to-no REAL economic growth. Forget that manufactured GDP trash…we need REAL growth in societal wealth: in goods, resource production, exports at prices high enough to fund Canadians’ social safety net, McMansion, two-TV, two-car family lifestyles…
Never mind that most of the world doen’t live like that: at least THEY are more-or-less DEBT-FREE.
Oh, so we can “stimulate domestic demand”? Sort of like, er…Cuba? Or the Soviet Union? Or pre-1978 China? When everyone is selling houses, decorating services, nail salon services, bridal showers and dog grooming to one another, the same money just goes around and around, faster and faster…but where does the wealth come from, Canadians?
Eh? Can’t hear you…
Ok, here goes. I’m a GIC-fugee with 450K$ in low interest, go nowhere but down cash, small amounts in long term bonds, a little leftover in a dotcom that burped, some bullion, nothing more to speak of. No debt, a reliable car that ticks along and renting in the housing market in Van Isle with no intention of joining in the RE circle jerk. My dilemma is where to go with my nest egg and dodge the crooks and thieves that are constantly being uncovered : Madoff, Thow all the way back to Boesky, Milken and co. and the rest of their ilk. What a world…
As a human being you should have expected more. The biggest problem in the world right now are are these artificial dividing lines between “conservatives” and “liberal”, just look at the US to see just how much this can fuck up a country.
The biggest problem with H&F is that they are trying to do the same thing here in Canada.
Well of course it’s an election budget, it’s an election year! My prediction was, let me look here, that the opposition would vote down the budget and force a spring election. Looks like old Idiotingnaff hasn’t got steel balls swinging from his hitch receiver, so he’s going to “vote against this budget, but not in sufficient numbers to bring down the government”. What kind of talk is that? If the budget is that bad then one should vote against, damn the consequences! So it will be up to disgruntled Tories to bring it down. Garth, you should still be wearing blue and sitting in the back benches, your moment is going to pass by without you!
Ok, so I misunderestimated the Liberals to wimp out, but it’s not over yet. Maybe fall. Maybe the rest of the Liberals have more pick up trucks. Maybe Harper is forced to call it himself. It’s coming sometime this year.
No worries about the retirement part. The predicted ratio of 2 workers for every retiree will fix itself as the retirees discover that they don’t have the money and must flip hamburgers.
Thursday in British Columbia…
The Insurance Corporation of B.C. donated one half of a billion dollars to the government to help them with their deficit spending. All other crown corporations will follow suit, because, well they just have too.
If you think that your money is safe, give your head a shake.
That is all, carry on.
#2 Nostradamus jr.
…Ottawa (CMHC) is in a 50/50 partnership with Canadian Homeowners….
Ummm. Same with Washington and the US citizen. That is more like a 90/10 (W, US Cit) partnership. Look where that has got them.
Brilliat, Garth, brilliant!
You have WAY more followers, in far-flung distant lands (e.g. South Africa) than you think!
Go Garth go!
Like Garth, I too expected more out of the budget to balance the books, address rapidly growing deficit issues (ie, raise taxes), try to help the savers while balance those in debt. What happend to running a country? What happend to fiscal responsibility?
We badly need a new gov’t that can do for the people rather than for themselves. A Canadian Tea Party.
If the majority of Canadian RE isn’t in a Class A bubble then Wrigley’s doesn’t make crewing gum.
Mike
#4
I am no either party, but I am bitter with what ever is going on right now !!!
(The budget) It sets the scene for an election this year (I told you 2010 would be a tipping point), in which F&H plan to get a majority. That will pave the way for the real budget, which is 12 months away – the one that could declare a debt emergency, ‘temporarily’ hike the GST, impose an income surtax and slash spending.
The Liberals, NDP and the Block are afraid to bring down the Government. The Conservatives are afraid to call an election. The time to fix the budget is now.
Amigos:
All of the RE bear analysis on this blog make total sense. However, the trend is the friend and real estate continues to climb astronomically in the GTA. A 25 acre soybean field with a 4000 sq ft house in rural Milton, on Derry Rd. just sold for $2.5 million. It was previously purchased in 2008, after being on the market for 2 years, for $1.2 million. 100% return in 2 years. This is Niagara Escarpment Protected designation, with Greenbelt, and Natural Heritage desiganation overlays. No potential, of severances or development. The house is 12 years old. Nice view though. RE just keeps climbing, with no economic basis for doing so.
#28 robert
While we do share some things in common in addition to our screen names, must I now start referring to myself as the “original” robert?
Moderator??
A 100% sure thing for a Reform/Conservative Majority and the MSM is now 100% in his corner eating out of his hands. To-day they care more about O’Canada than bread and butter or jobs … even their jobs. The Stimulus will flow to shore up close riding and tax dollars to 10%ers and housing Greater Fools will gamble believing this is their last chance. AND ALL CANADIANS WILL PAY THE PIPER
The reason RE keeps exploding is due to the system being able to continue making cheap money available to enough people who want it. The demand for mtg debt is high, which makes these gov’t “stimulus” tricks appear as if they’re working. Don’t be fooled, this will change eventually. The mere word “stimulus” is a crude joke. Borrowing money and spending it now at the expense of younger taxpayers is a fraud. All they are doing is pulling demand forward. There is no real stimulus. If the markets remain elevated into early 2011, watch for the serious issues to occur 2012-2015.
The entire ponzi scheme / false economy will be over in a flash when the bond markets eventually give gov’ts the middle finger.
JO
#36 45north on 03.05.10 at 6:40 am
“The Liberals, NDP and the Block are afraid to bring down the Government. The Conservatives are afraid to call an election. The time to fix the budget is now.”
Agreed. The way I see it, Iggy is waiting for the Conservative government to implode on their record; unfotunately they keep finding creative ways to make themselves look good in front of a generally uninformed electorate.
#6 LS – I was going to launch into an explanation of interest rate risk, market expectations, yield and duration, and then I remembered there’s a much better explanation available. It’s called “Money Road” by some decrepit biker-polititian-journalist hack who lives in a bunker
and is available at Chapters book store, or you could just buy it on line right here – look in the right-hand margin of this page.
90 TheTruth from yesterday
Nice reply, it would seem possible if you compare Canada to China or India (heavily over populated) or any 3rd world counry (with princes and pesents).
However Canadas politics and economic system is much more like the UK or America…specifically America (you know, our 300000000 person neighours to the south). Here you own land by purchasing with cash or debt and you pay your cash or debts buy working and earning$.
I agree that in some time real property here will realisticly increase in value, but there will be cycles when people can not service there debts just as in the United States.
Choose your comparisons carefully and use myths!
Cosmetic surgery is no longer tax-deductible?
Instead of completely axing this item, the government should’ve reduced the amount that can be deducted as this industry is one of the few growth ones in Canada. With baby boomers aging and young people struggling to find respectable jobs due to outsourcing/more competition, cosmetic surgery is more popular than ever.
The government (regardless which) needs to understand how serious economical problem we are facing. We need a courage to address it with all means available. It might be painful but is asolutely necessary.
By delaying to do what we must, keeping the RE bubble alive and not starting to solve the problem NOW
- we will pay much more in the future.
And possibly run out of time, creating suffering for generations to come.
Government needs a vision and courage to do what is right. People will understand and respect that. There is no time left to play a game of politics. We need to save the Country. We need guts to do what is needed.
“Kind of like fleeing your age.”
Hmm…no grey in YOUR hair/beard either, I see!
How DOES one do it?
You obviously have not met me. — Garth
The comments about F. personal appearance take credibility away from your views. You have something intelligent to offer. References to personal appearance ain’t intelligent- or kind.
My wishes; Teach by example. Resist the urges of the blog dogs.
to all readers,
garth is no “voice of reason”.
hes a speculator on the future economy.
no more – no less.
his predications are vague and timeless.
if anyone is reading this blog (with the hope of gaining some financial wisdom) i have 1 answer for you; look somewhere esle!
IF GARTH was any good-he would still be in politics.
keep on printing your BS.
Did we really expect anything else from this budget?
I liked MacKinnon’s cartoon
http://thechronicleherald.ca/toon.php
and Aislin’s one too
http://www.montrealgazette.com/opinion/editorial-cartoons/index.html
Garth:
Latter Day Flaherty …..
or
Present Day Flaherty ….
Either … Or … the phrase “lipstick on a pig” comes to mind !
There seems to be a disconnect that nobody is mentioning with regards to the hoards of Boomers that will be retiring soon. This seems to be written in stone and is not just opinion anymore but an actual fact.
Garth, you’ve pointed out many times before how the vast majority of Boomers do not have adequate savings to retire when they hit 65. How is it that we should all expect a huge drop in government tax revenue from retiring Boomers when most of them can’t even retire anyways!??!!?
Are Boomers going to take the hit and retire on time at 65 and live in relative poverty? I say relative because their standard of living will still be quite good, just not the 5 or 6 bedroom house in the burbs that they’ve enjoyed these last 25 years.
Or will they continue working past 65 and into their 70’s, not only because they can, but because they have to.
Won’t that mitigate this scary huge drop in tax revenue that everyone it seems has accepted as stone cold fact???
Hello Garth.
For the crime of putting Canada into debt the government of canada should be arrested and imprisoned in a labour camp permanently.
This business of warning of a 600 billion dollar debt is not a warning but a proud statement of a policy objective. The same damned thing occurred when Brian Mulroney formed a government and its happening again. This is all true and its unacceptable.
I demand an eternal prohibition on government debt and borrowing on pain of death or a life sentence of hard labour untill death.
To me democracy ,communism and the new world order is the work of satan and I want it all to stop!
I swear by god that canada’s government does not know or give a damn about moral and fiscal conservatism and are just there to get well paid by mucking up the works by ruining the morals and finances of the country. Time for a regime change!
Steven
Sorry if posted previously (cool gadget showing government income and expenditures, note the decrease in financing the public debt over the years–but as Garth has warned, this will likely reverse course over the next 5-10):
http://www.theglobeandmail.com/news/national/budget/a-10-year-timeline-of-revenues-and-spending/article1488651/?cid=art-rail-budget
Can you believe our country has spent over $300 billion over the past 10 years just to finance our debt?!? Debt is a killer!!!!!!!!!!!!
Quantive Easing by world governments goes against the grain of higher interest rates.
If one believes QE is inflationary, then buy Gold.
Nostradamus jr.
The USA is trying to bury the NAFTA agreement while
F paints rosey pictures of our economy as fast as the crayon in his chubby little hand can churn them out.
Sooner or later the bully from the south take his lunch money.
#46 Sandie on 03.05.10 at 9:26 am
The comments about F. personal appearance take credibility away from your views. You have something intelligent to offer. References to personal appearance ain’t intelligent- or kind.
My wishes; Teach by example. Resist the urges of the blog dogs.
****************************************
I agree with you–why worry about–what the asshat looks like?
His flaws are much more then “skin deep”
If he wants to be an Elvis imitator–what the hell–
It’s only Politics after all–
I mean he did say–
If anything nasty rears its head–he would “act”
I guess he musta seen a snake or somethin–cuz–
it’s definitely an act–
Tick tock Tick tock
March 4 – Malaysia’s central bank unexpectedly raised rates by 25 basis points from the record low of 2 percent on Thursday, becoming the first in Asia to unwind rate cuts put in place during the global crisis
http://malaysia.news.yahoo.com/rtrs/20100304/tbs-southeastasia-economy-rates-7318940.html
derivatives to hide debt ,arbitrage regulations, and accounting rules…
“A Tobashi scheme is a financial fraud where a client’s losses are hidden by an investment firm by shifting them between the portfolios of other (genuine or fake) clients. Any real client with portfolio losses can therefore have their accounts flattered by this process. This cycling cannot continue indefinitely and so the investment firm itself ends up picking up the cost. As it is ultimately expensive there must be a strong incentive for the investment firm to pursue this activity on behalf of their clients.
In January 1992, Yamaichi executives resorted to such a tobashi scheme, setting up a separate company called Yamaichi Enterprise which opened an account at the Tokyo branch of Credit Suisse. Depositing ¥200 billion in Japanese government bonds, the Yamaichi subsidiary then used the dummy companies to generate profits for clients while eventually absorbing losses of ¥158.3 billion. A separate scheme using foreign currency bonds resulted in losses of ¥106.5 billion being hidden in Yamaichi’s Australian subsidiary.
In August 1993, Japan’s Ministry of Finance inspected 47 financial institutions for tobashi, all of whom denied the practice. In December the MoF asked for reports from all 289 brokers on tobashi activity”
http://en.wikipedia.org/wiki/Tobashi_scheme
Read Satyajit Das article he wrote in the Financial Times, London for more enlightenment!
#8 blobby on 03.04.10 at 10:58 pm
>As a conservative, quite so. I expected more. — Garth
Eh? Obviously i havent been keeping up – last i heard you’d changed sides to the libs?
I have always been a fiscal conservative. — Garth
Changing sides to the libs doesn’t (shouldn’t) change someones core values, but then that’s the problem with this generations political worldview. We have morphed into a society where there is no longer a middle ground, there is only left and right. This can be seen here, the US and Europe. The middle has been chased out of politics and only the devoted ends remain with their hands on the reigns.
Gone are the days where a right leaning or left leaning politician joins a party that has a lot of their beliefs but in the end votes their values.
Instead they are drubbed out for not supporting the party and the leaders every decision in one big groupthink.
I don’t support half of what the current cons believe, I don’t support half of what the current libs believe, so neither has any interest in me because I’m not devoted enough. (well okay that’s wrong, they want my vote, but then they want me to shut up and go away till the next election)
Individuals seeking tax reductions are not un-patriotic, quite the opposite, they are very patriotic. Not giving the government more than they should have forces them to be more responsible with our money, spend only what they have and within their means. If they don’t, they risk losing the next election.
I’m not so sure the CONServatives will have a walk in the park in the next election and gracefuly prance their way into a majority … not gonna happen.
The revenuers will be looking to increase tax rates on anything that moves from 2011 to 20??. We will see all income tax rates increase across the board. Senior’s RRSPs could be the tax man’s mother lode as we all get pushed into these higher tax rates. Income splitting for seniors can change at the drop of a budget so forget about doing those oh so sweet income splits with your significant other.
At 57.5 years and (semi) retired, I have started winding down some of these RRSPs, on my terms, while I am still allowed to income split. The taxes bite but I figure that it is a case of take a few smaller tax hits now or potentially get crushed later.
No one will feel sorry for a “rich” senior cashing in thousands of dollars of RIF/RRSP’s when the country is going to hell in a hand basket and desperate people are rioting in the streets.
Garth!! O’ Sage one!!!
Where the hell is all this Government’s revenue coming from in the next 4 years?
You’ve work there… is this hocus pocus forecasting or what.
http://bit.ly/adlTQu
The fundamental problem remains that our gov’t still does not understand – or pretend to understand – the depth of the current recession. Their first plan of attack was to offer the consumer more debt and hope we could spend the economy back to recovery. Now it is to make some easy cuts, hold some gov’t wages and keep spending into deficits on the hope it will recover.
This is not a plan. We need focused spending on long term job creating and cuts that bring an end to the structural deficit.
No help coming from the left. NDP are clueless and Iggy never ran for politics to be a tough budget man. This is the conservatives element and they will not be displaced until it is clear they have dropped the ball AND there is an alternative. Clearly that day is a long way off.
US job numbers continue to be terrible. No sign that unemployment is going down. Really no sign this recession is even starting to ebb. Long, long way to go.
http://www.calculatedriskblog.com/2010/03/employment-report-36k-jobs-lost-97.html
Ok, I see your true colours Garth. I’m out.
oops
Sorry Garth
I thought Jr’s comments were you.
Like what the G&M said yesterday about the covered bond market?…
“The government says it will introduce legislation setting out a framework for covered bonds, debt instruments that banks issue that are backed by assets such as mortgages. They are similar to Canada Mortgage Bonds, except that in the case of covered bonds the mortgages remain on the banks’ balance sheets and they do not carry Ottawa’s guarantee.”
Full article: http://www.theglobeandmail.com/news/national/budget/focus-shifts-from-banks-to-consumers/article1488118/
The response:
http://www.coveredbondinvestor.com/news/cibc-prices-usd-2-billion-covered-bond
http://www.dbrs.com/research/231029/canadian-imperial-bank-of-commerce-global-public-sector-covered-bond-programme/dbrs-assigns-ratings-of-aaa-to-cibc-covered-bonds-series-cb3-and-series-cb4.html
Any thoughts?
We spend alot of time on this Blog talking about Real Estate as if it was the economy. We get so caught up in the potential ups and downs as it relates to our personal situation we sometimes forget what a small part of the actual economy it represents.
Great article on this from the WSJ:
http://blogs.wsj.com/deals/2010/03/03/mean-street-dont-be-brainwashed-by-the-housing-cult/?mod=patrick.net
It was a weak budget but no suprises there. No one government is going to get a majority, things are too shakey right now. Thats why Harper proposed this weak, watered down budget and thats why Iggy will not vote it down.
Truth is that middle class is really hurting right now, all across the country. The steel belt in Ontario is starting to rust, Quebec manufacturing base is done/ Eastern areas are just scrapping by and Western Canada is still trying to recover after the price of oil dropped.
Well have to wait and see, the only thing that I can see causing a confiedence motion in the upcoming weeks is the reform to the refugee system that is being proposed by the cons.
It is needed but we have seen the Con;s really push to hard to the right in the past, if they try that again, the Libs and NDP will vote them out and we will have an election. I really can;t see any hot topic other then that bringing down the govt.
Libs/NDP have always been at odds with the Cons regarding immigration policy as immigrants constitute a large portion of the base for Libs/NDP.
For people on the blog. do not look to govt’s for fiscal restraint, its not going to happen, look at your personal finances and budget accordingly, adhere to the principles in Garth’s book, take advantage of tax stragedies while they are still available.
In a few years people will be paying a lot more for basic services- property tax/food/water/gas/hydro/cable etc.. just to maintain their current quality of life. This does not bode well for the “consumer economy” or our service based economy.
Didn’t think I’d ever appreciate something Tom Flanagan said, but it happened yesterday, when he compared Harper’s budget approach to St. Augustine’s “Please make me chaste, Lord, but not just yet.”
In Harper’s case, he obviously will attack the debt and expenditures, but not until after he is re-elected, hopefully with a majority, on the platform of having prevented a crisis and being the only one able to do so in future. Can’t impose pain on the electorate until then.
In Ignatieff’s case, “We will give people an alternative” – but not until the sheeple have felt the pain of Harper’s failure to deal with debt and expenditures and throw him out in disgust.
Ah for a PM or LOO Chris Christie, misemployed as Governor of New Jersey in Canada’s hour of need!
Re 28
You need to get an advisor from all 3 different pillars. Make sure every company you deal with is representing a real company that is Federally regulated.
Life insurance companies pay higher GIC rates and they have Seg funds. That is a mutual fund with guarantees.
Another benefit is you can buy life insurance right from the source instead of a watered down product offered by Banks; F& I guys at car dealers, CC companies,or no- medical TV insurance.
Mutual fund reps will sell you all sorts of mutual funds that do not have guarantees but they do have a cheaper MER.
These people sell esoteric products, so its posible that one out of 10 ideas presented will be a complete loser.
Alternatively some of the ideas might be golden.
Banking sector is critical for loans and strategies involving borrowed money. They also have mutual funds/GIC and life insurance that they make alot of money on.
So I would split your money up with all 3 people. Within 2 years you will know who is good and who is not good. Then you adjust your money accordingly.
Negotiate a no load sale so that your money is free to move without penalty. A good advisor will contact you every 3 to 6 months to give advice.
Excerpts from Jim Flaherty’s budget speech (with Super-Expert Analysis)
Flaherty: As I rise in this House today, our nation is at a crossroads. Some would urge us to turn at this crossroads. Experience tells us this would eventually lead us backward.
Super-Expert Analysis: Wait… what? If you turned left at a crossroads, how would you wind up going backward? You’d have turned left, not around. (Who wrote this speech? My Dad? My Dad has a terrible sense of direction. You’re supposed to be retired, Dad. Why are you confusing Jim Flaherty?)
IRT #34 Mike(Authentic)
You say to solve the debt problem by raising taxes and then say we need to start a Canadian version of the Tea Party? Aye carumba.
#48 molson cdn on 03.05.10 at 9:27 am to all readers, garth is no “voice of reason”.
Molson.. you icehole!
If you drop a bomb in someone else’s house… at least have the courtesy to light a match!!
It’s easy for you to spew crap from your fingers but with nothing constructive to back up YOUR views or YOUR web site to debate Sr. Garth!
Back to you school books BOY!!
(Sorry Garth! Couldn’t resist!)
F was an idiot when he was Ontario Finance Minister, and he is still one. Which only proves his boss is one too for hiring him, to try to get some votes in Ontario. Ability to (mis) manage an economy was not considered.
Dumbest Budget in Canadian history. Lots of problems, but no solutions till next year. ROFL.’Alice in Wonderland’ looks sane compared to Ottawa. They call Stevie an “eCONomist”… good thing he is one, or we would be having big Budget problems. Err, wait a minute.
CONservatives have run the largest deficits in Canadian history. They should change there name to LIEberal. Truth in advertising.
Iggy does not look electable to me either, so it will be another Harpoon Government. I just hope this nation can survive another few years of CONservatism.
Garth, You said bonds will do bad. What about Investment Grade Corporate Bonds ?
Why not Gold? Why India, Russia and China also have plunked down billions of dollars in GOLD?
In you new book have your discussed equities one should be buying, say someone who is 40 yrs old.
Garth, this is pretty sad.
I used to drop your name when talking to people about the future of real estate in Canada. I said I believed that you would eventually be proven right, but I was so wrong.
Many people told me to simply take an across the board survey of financial forecasts from the banks (which although not disinterested, are historically rather conservative in general), and stop reading this blog so much. As I’m not a finance expert, they said I was being manipulated by an author and that I should have plunged in some time ago.
So I waited out buying real estate in 2005, 2006 on my own accord as I thought I wasn’t ready. In 2007 I saw the US start to wobble, and then later started reading your blogs.
My God! It’s 2010. I have been waiting, the market has been endlessly strengthening, I was ready to buy in 2009 but you confidently asserted that there was more downside to come. we got a +20% downside by the end of the year!?!?!
UNREAL. My friends have added hundreds of thousands of dollars of net worth in 4 years, while I continue saving in my scrawny apartment and will have those same hundreds of thousands in DEBT when I buy. And meanwhile, you have not been right about real estate, not then, not now, and probably I’m beginning to think never as I watch your books branch out into other topics, covering more ground while home prices continue a steady ascent and you find greener pastures.
I’ve had it Garth. Poking fun at Jim Flaherty, who despite what you say, is steering an economic recovery in Canada that is pushing home prices permanently out of my reach.
You have been so wrong, I don’t know how you keep going–there are people out here listening to you that are now the butt of jokes..
Other than selling books, what motivates you to keep saying the same things over and over again in front of facts that are making a fool of you and me and all the rest that thought there was a housing bubble in Canada? If prices crash in 2013, will you consider that a victory? By then, it would take a crash MUCH WORSE than the US for people like me to afford housing at the values you recommend in your book. And I am a professional making above the median wage.
It amazes me, that you can continue this way…
You are free to ignore me. Millions do. If your friends are picking on you, then show them – plunge into debt. — Garth
#48 molson cdn on 03.05.10 at 9:27 am
to all readers,
garth is no “voice of reason”.
hes a speculator on the future economy.
no more – no less.
his predications are vague and timeless.
if anyone is reading this blog (with the hope of gaining some financial wisdom) i have 1 answer for you; look somewhere esle!
IF GARTH was any good-he would still be in politics.
keep on printing your BS.
——————————-
wow. I can feel your anger through my screen. Crack another one open to relieve the tension.
Like I say (cause its worth repeating over and over), this Conservative government has done everything in its power to create a RE bubble through the ease of credit (CMHC regs) in a major effort to create a wealth effect aimed to literally buy a majority government with our own borrowed money.
You all like the increased value of your homes, no? Feel good about this government? Americans felt the same way when they voted GWB a second time… until interest rates rose 5.5% within 6 months and their great Republican credit expansion was over to be replaced by their “great credit contraction”, a major recession and mortgage backed security defaults that took the rest of the world with them.
So I gotta ask. Y’know, with this “great Conservative credit expansion” (its truly unprecidented, the size of the credit pie Canadians have swallowed over the last 4 years) coming to an end as interest rates are set to rise here, where is this “projected” new revenue going to come from by government? (if I can crib a link from Grantmi for a sec)
http://bit.ly/adlTQu
F’s so called cuts aren’t going to get us there. And this “projected” revenue can only come through increased taxes. Readers…. we are at the very end of a 20 year credit cycle that went into overdrive flat out over the last 4 years thanks to a grossly negligent, self serving government. When interest rates rise, it will take a big bite into Canadian incomes. Thats what interest rates do, chip away at earnings and take home pay. Canadians will be lucky if the GDP doesn’t shrink going forward into what will become Canada’s unprecidented “credit contraction” over the next 6 to 7 years.
Where is this revenue going to come from? Its either raise taxes or cut spending or both and this bunch of sorry assed Conservative misfits did neither. Sorry, but the GST ain’t going to grow in the tough climate of a credit contraction… and the liars who fed us yesterdays budget know it with their projections. How does it make you feel to be bald faced lied to by your elected officials? (now try imagining them getting rewarded with a majority for it)
Elizebeth May could run circles around these guys and thats not saying much. (anyone get Jack Laytons take on “there’s not enough money being spent on housing, we need jobs” line yesterday after what Canada has seen in RE by this government? I thought only Republicans and their so called Canadian spinoff bums up here could come up with this one, talk about naive)
The Libs better get it together for a change, its only been 4 years (and they can start by getting better players on the field. If John McCallum is the best they’ve got fiscally, they’ve got issues) We’ve got a lobbyist (who never even worked for Canadians) running this nation ok? The grotesque credit expansion Canada has gone through over the last 4 years is a plan that is at least 5 to 7 years old. The plans this government has if they win a majority are at least as old if not older and I don’t believe there is one Canadian patriot who would ever adhere to it.
And is there an election coming? Not without support in the polls for the Libs. I can’t see Michael being that stupid unless he gets that organized and supported but one thing is certain. Its a current minority government that has set the stage to increase foreign ownership and control of Canada’s uranium, airlines and wirelesss telecom sectors. Canada’s banks are next and as a consequence, every single RRSP holder is now required to ask whether or not this is good for their RRSP long term futures. AECL is a crown corp that the Cons have literally run into the ground and now want to sell off. There are definite lines being crossed here that warrant an election regardless of outcome now and if there aren’t major stands being taken to educate voters by the Libs/NDP/Greens/bloc, then they too will be just as responsible for Canada’s downfall. In case they haven’t figured it out yet, its called standing up on guard for thee.
As young guy(25) I’ll tell ya right now we’re screwed. We’re going to get taxed to death. As soon as the HST comes I’m done buying anything in Canada.
I work at one of the airlines, and I was just informed by the CRA that my parking spot at work is going to be a taxible benefit, going back to 2006. Thats the increased tax revenues everyone was wondering about. The best part of it was the market value they are going by are the absurd GTAA parking rates. Theres no other way to get to the airport either because these dummies never thought ahead and built an infrastructure. Which brings us to our next problem; These clowns aren’t fit to govern anymore. Theres no distinction between any party, they are all neo-liberal a**holes. Anyway Garth I got your book and I love it. I knew there was something wrong with housing before I found your blog, but it was nice to finally have someone that knows economics to reinforce my belief. I’ve heard all the same cliche’s “buy now or buy never” , “it’s different this time” lol all from people that just signed a 5/35 death sentence. Theres alot of underemployed youth, it’s hard to imagine any more young first timers that are going to be able to sustain this circus. I’m not looking forward to this crater that is going to be left behind. Might be bigger than the one that killed the dinosaurs.
#53 Nostradamus jr. on 03.05.10 at 9:59 am
Quantive Easing by world governments goes against the grain of higher interest rates.
If one believes QE is inflationary, then buy Gold.
*******************************************
QE is a proven failure–note–Japan–
18 years of printing and they couldn’t fight off deflation–
It wont work here either–
If I thought inflation was coming–i would sell gold and buy RE–
Gold is not a performer during inflation–
**************************************
#64 Sandie on 03.05.10 at 10:43 am
Ok, I see your true colours Garth. I’m out.
***********************************
oops
Sorry Garth
I thought Jr’s comments were you
****************************************
what could it all mean–i wonder–
Sandie–
Can you name one instance–where Fahlerity has been correct–on the direction of this dieing economy?
Can you name one policy he has proposed-that will fix this runaway train?
He is an incompetent FM–
Totally clueless about the events that are unfolding–
Not sure if you have kids–but–if you do-
Fahlerity–is not–their friend–or yours-
We can split hairs about name calling–which i agree– accomplishes nothing–but–lets stay focused on the big picture and what our FM is doing and the horrible negative effects it will all have on the future generations of this country–
Then maybe a little fun–with “skin deep” and Fahlerity trying to “flee his age” really isn’t worth the huff-
*************************************
The golden years–
I cannot see-
I cannot pee–
I cannot chew–
I cannot screw–
Oh my God–what can i do?
My memory shrinks–
My hearing stinks–
No sense of smell–
I look like hell–
My body’s drooping–
Have trouble pooping–
The golden years-have come at last-
the golden years-can kiss my ass–
@76 – It was mentioned here before, but you should always form your own opinion – not just take what others, including Garth – have to say. The media, banks, your realtor, and your friends will all have different opinions, and you should just make up your own mind, just like they have done.
The way I look at it is this: I can buy a house now, spend 450k, and spend 35k a year carrying a mortgage @ 5/25. Or I can rent, and spend 18k a year.
Over the long run, renting is not a good solution. But, I asked myself a simple question: what are the odds of a major correction over the next 5 years? Pretty high, I think. I don’t base it on anybody’s opinion, but I use what I read in various media (including this blog) to form an opinion. My gut feel is what I’m going on here.
If I wisely invest the difference between rent and mortgage during those five years, I will be able to save up $90k @ 5%rr. If the housing market does not crash, the 450k house that I want to buy will probably be worth about 530 – 550k in five years. Guess what – I will save up that difference anyway in those five years, so not really a big loss if I get it wrong.
If I get it right, that 450k house will be worth around 360k in five years. So I stand to “save” $180k in those five years. What do I stand to loose? Not much…
Most people call me a nut. It’s stupid paying other people’s mortgages, etc. And I agree, it’s stupid to pay another person’s mortgage for 25 years. But over the next five years, it may just be a smart bet…
Some newspapers are starting to get it. Windsor Star’s editorial cartoon pretty much details this budget.
http://www.windsorstar.com/opinion/editorial-cartoons/index.html
Dalton decides to drive an axe through into the hearts of small business, but on the flip side Labour is happy.
http://www.windsorstar.com/business/Minimum+wage+rise+March/2645921/story.html
Re: #66 throwstones
Just to bring up the crux of these articles:
“The government is phasing out…the Insured Mortgage Purchase Program, through which Ottawa had effectively bought more than $60-billion worth of mortgages from lenders. ”
“investors who buy the covered bonds will be able to claim the underlying mortgages or other assets”
So….basically we’re now looking for foreign capital to prop up the mortgage market…
“Covered Bonds are supported by a diversified collateral pool of first-lien prime residential mortgages insured by Canada Mortgage & Housing Corporation (CMHC) (the Cover Pool). CMHC is rated AAA by DBRS in its capacity as Agent of Her Majesty in Right of Canada.”
WOW more CMHC backing?? How about laying the risk where it belongs? On the backs of banks!
Can any bond investors comment on whether these bonds are even attractive to foreign investors and why? With so many nations capital starved. I can’t see how these bonds would garner much attention. Not to mention the chances of defaults increase when interest rates starts normalizing. Even with the backing of CMHC, who would want to bother investing in a bond based on repayment of overvalued assets?
The liberals knew if they refused to support this budget and went to election that Flo-max-moment-Harper (hahaha Garth that still cracks me up) and crew would get their majority hence they let it go through. They are gambling that the economy turns south so the liberals can point the finger at the Tories and gain leverage in the next election. Cheers
to “76 Take_a_breather” on 03.05.10 at 11:39 am…
Hey T.A.B., remember, you’re the one steering your own financial ship! Take responsibility for your actions or you’ll get nowhere in life.
If you previously chose to take a bearish view on Real Estate, but have since changed your opinion (mistake, by the way), don’t blame Garth.
In any event, if you listened to everything Garth was saying, then perhaps you picked up some energy, commodity and high yield stocks last spring, so you should be doing fine about now, right?
<<<<>>>
Nice.
Garth, you don’t understand. I can no longer afford the debt. Does that makes sense? Which means I can not afford a house, and probably never will unless I can double my income.. in a recession. Meanwhile people I know bought houses at HALF the price I would have to pay now.
People like me are not buying houses, like you say, because we can’t afford them. For the life of me, I don’t know if it’s inheritance, stock market gains, rich speculators or immigrant professionals or what.. but many people (not me) DO afford it. But you are not figuring out why that is.
I’m the guy that was told NOW OR NEVER 5 years ago… and lo and behold it came true.
But you don’t acknowledge how your predictions misfired, nor the risks of NOT buying. Like now, I don’t imagine you’ve yet even considered that for the next 4-5 years you are going to be wrong.. so likewise you don’t discuss the risks in listening to you.
Well, I am your first official casualty. Sure, I certainly take responsibility for listening to you as a central part of my decisions… my fault I know. But it would seem obvious now that you were wrong, I was wrong, and you might need to recant, and explain in detail WHY you were wrong. But you don’t. You spend more time trying to explain how strange almost magical forces somehow conspired to keep natural processes (your predictions) from acting. They didn’t. Your analysis is flawed, either by methodology or by assuming your personal real estate history rhymes or something like that.
Anyway, I’m really unable to trust your opinions anymore. I’d love someone to give me a reason how anyone could take a prediction from early 2008 that has been so cataclysmically wrong for me and my family and still keep following your blog. To me, it would take nothing short of blind, cult-like faith.
You need to get something right for regular people to sell books to them! Just one man’s opinion!
one more thing Garth that hopefully you can post about in the future is the BOC and interest rates. I understand that they advertise that they operate independently etc but I don’t believe it at all. What sway do industry/lobby groups (thinking exports) have over BOC interest rate decisions? These groups must know that raising rates could increase the value of the dollar versus US dollar etc, could their influence force the BOC to keep a lid on rates in the hopes they see the Fed tighten first? THanks as always
B
#76 Take_A_Breather,
Read the article below. If you still feel like jumping in feel free to jump away. Just don’t say you weren’t warned.
http://www.canadabubble.com/bubble-watch/576-the-cult-of-home-ownership.html
Ouch! this is going to leave a mark!!
************************
Fannie, Freddie Ask Banks to Eat Soured Mortgages
March 5 (Bloomberg) — Fannie Mae and Freddie Mac may force lenders including Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co. and Citigroup Inc. to buy back $21 billion of home loans this year as part of a crackdown on faulty mortgages.
That’s the estimate of Oppenheimer & Co. analyst Chris Kotowski, who says U.S. banks could suffer losses of $7 billion this year when those loans are returned and get marked down to their true value. Fannie Mae and Freddie Mac, both controlled by the U.S. government, stuck the four biggest U.S. banks with losses of about $5 billion on buybacks in 2009, according to company filings made in the past two weeks.
http://bit.ly/b9O5Jr
Re: #76 Take_a_breather
Wow people like you make me sick.
Does your mother tell you when to wipe your ass as well?
All Garth is doing is monitoring the trends and making observations. He is confident in his analysis and presents his view to the world with facts to back it up. It’s up to us to do our OWN research and compare our research with his and see if the ideas correlate. If they do, then just keep following up! If there is a reason why the trend is still rising and the asset is still overvalued…what the hell can you do?? Yell at the market?? There’s no freaking point! The market does what it wants to do. I can’t understand how people don’t see that. If you can’t wait for normalcy to set in or the price point you’re looking for to arrive, then just buy already. Stop depending on others to dictate your actions!! In other words, stop being a damn sheep because if it’s not Garth and this housing decision; your financial ruin will come from following another financial blog to the T. Lesson learned: think for your bloody self!!
Does he say that he is 100% correct all the time? NO he never claims that he is a fortune teller.
Trying to time the bottom when you “desperately” want to live in a home for personal satisfaction is akin to grabbing the cake and eating it too.
The world we live in can be unpredictable at times. Did the best economic minds of the world expect interest rates plunging to essentially 0%?? It had never been done before!! If you were so concerned about being priced out you should have just bought when the market had softened drastically a short period after the GFC!!
Stop waiting for people to tell you when to buy!! You’re not entitled to any insider knowledge that will allow you to profit large sums of capital gains!!! SO STOP WAITING FOR IT!!!
DO YOUR OWN ANALYSIS!! If the asset is not worth it to you then do not buy it!!!
Everything presented to you in this blog and its comments are up to you to interpret whether it is correct or not. If you’re following a GPS and then there’s a damn chasm that opens up in the middle of the road right in that moment do you still follow the damn GPS to your death?? NOOOOO
Cheers Gary!
Trade War with US Part II
Bill Introduced to Kill NAFTA
William B. Cassidy | Mar 4, 2010 10:53PM GMT
The Journal of Commerce Online – News Story
Trade| Government + Regulation| North America
http://www.joc.com/government-regulation/bill-introduced-kill-nafta
Let’s see F’s smile today. Throw that budget out.
No newspapers have picked it up yet?
What do you think Garth!!!
#76 Take_a_breather on
hi there,
I have similar thoughts but even then the price vs rent was not inline…there are just crazy now . for a van 1 bed t/h is 299k you do the math say $600/ month rent
it will be equivalent to 42 year of rent that is before maintenance /tax /utilities
when i sold in early 2006, 40 year homes were 560 -600 k. now they are like 680-720 k. i have reservation of my decesion but it was also based on family problems…
but what are u going to do. In all my readings…I never heard of aan asset class that went up and never went down
but in the meantime, i made a few stock purchases and over all …year after year my gains covered half and sometimes most of my rent. being a contrarian is very hard that what most of us here are doing.
but i think of all the people whom made it big whether in business or intellect like einstein, mandella, buffett or other names i can’t recall. THey thought outside the box and sacrificed lots to get where they are. They suffered set backs, losses probably ridicule in lot of ways but through hard work , committment they succeeded.
i keep trying ..buying value as opposed to emotion, Will there be a correction…i don’t know anymore. But It doesn’t mean I quit trying . There are other ways to become financially independant not just real estate.
i can blame garth but it doesn’t change my situation. he tells us canadians are in record levels of debt… wwith historically low interest rates. there will be more taxes and less services. All this is reaffirmed with multitude of news articles.
judge for yourself. take care of your health…that is something money can’t buy.
i hope this gets posted
#84 Renting in Rosedale.
I understand what you are saying. I did do OK on some investments taking a cue from Garth, but those are not leveraged at all, and I didn’t PLUNGE right in at March… why would anyone have done that? Doesn’t anyone remember Garth in March 2009 and xurbia?!!??!
All I have is a modest gain, against some pretty nasty losses in 2008, I’m basically back above water.. If I’d have bought a house, in 2007 instead of waffling I’d be WAAY WAAY better off. I’m not a gambler by the way, so why would I be trading stocks in order to afford a house?
What a contradiction in my opinion. For all the stress managing stocks, learning about finance big and small… all to have close friends laugh all the way to the bank and have never WORRIED about it. It’s just sad and pathetic and I have quite a few years now to sop up the mess, and hope for the best.
I feel like those people that lost a fortune in the tech collapse.. except my loss is from shorting. Ridiculous!!
Anyway, thanks for the advice to the few people that responded constructively. I won’t be reading this blog much anymore, but thanks to those who had some real opinion to share!!!!
#76 Take_a-breather
I understand where you’re coming from. I’m as frustrated as you are in that I have been waiting, and waiting and……
The difference is that although I agree with much of what Garth preaches on this blog, I came to that threw my own conclusion. And I’m feeling that perhaps I’m going to have to admit I was wrong. But the facts remain that this market is not being driven by good, strong fundamental economic principals. It wasn’t 3 years ago, and is even less so now. But this is what has always driven economists mad, the human emotional component that is not based on any principals that cannot be measured, therefore cannot be predicted. But you have to make your judgements on the information that is available. Robert Shiller who is regarded as one of the foremost experts in the field would tell you everything about this market says stay away. Is he a fool too? No, he’s giving his best advice based on the information available. At the end of the day, thats all any of us can do.
pardon my lack of editing (through not threw)
# 76
Your post almost had me in tears. Could you provide a phone number so that we can call in and donate money to improve your sad existence? Or maybe you can produce a Sunday morning infomercial with pictures of you in your miserable apartment set to the sound of Sarah Mclachlan’s “Arms of an Angel.” That would definitely tug at my heartstrings. Suck it up princess. You are living in the kingdom you built for yourself.
why have cdn gov’t bonds sold off so hard this week? (yields rising)
Oil – hmm, I suspect it will be a tad bit more expensive to fill up going forward.
TheTruth on 03.04.10 at 7:32 pm Wow, did i ever touch a nerve.
What I’m getting at is it appears Real estate in Canada and Australia is getting permanently detached from incomes because it is an intergenerational asset with intrinsic value. People born and raised in Canada may think that is delusional but values brought in with immigration are different.
Its been the case in China and India for many generations. There, working people and educated people can never buy land. It’s priced way too high for them and has been like that for a long time. Servants live in a house on land provided my their employers and may have more education than them. This has led to socioeconomic segregation based on who owns land. People with land in India who haven’t even worked for generations have lived the best lives. Is that fair or make sense? obviously no! But it is getting like that here as is evidenced by the existence of this blog. Sooner or later people here will resign to the fact of high prices for the foreseeable future. That is how it happened there and how it is happening now in Canada.
Social stratification based on land owners and non-landowners will happen in Canada. The Fiat money system has created so much money over the last couple decades and it needs a store. Real estate is bought and held. A value shift has occurred whether you like it or not.
—-
Please explain why this is not happening in the USA.
# 76
There is nothing more entertaining and idiotic than someone who points the finger at others for their own inability to act. Take responsibility. You chose not to buy. Your friends chose to buy. You lost out. Tough..Time to look at the present, fella. Live in the now. Soooo…smart guy…Feel free to buy tomorrow…I will make you an offer 20% below in 2yrs. Riiiight, you and your friends will be on your yatch compliments of your HELOC of never ending appreciating equity. Take a look at the charts…if you have ever done any sort of intelligent investing – you can see the chart is almost parabolic. If you think you are buying low…go for it…see you on the other side. I enjoy renting…its a hell of deal as far as I am concerned. And if you weren’t such a momo, you would have likely rented a beautiful home so you don’t feel like you are losing while you wait…but am sure you decided to rent at Fingerpoint Cres. right at the intersection of Notmyfault Ave. Grow up.
If you don’t like what Garth is saying…don’t buy his books
If you don’t agree with what we are saying…feel free to bypass this site…there’s enough of you land-ho lemmings to find many a new home.
And if you feel now is the time of bargains…buy…but clean the dribble off your chin and go waah to an audience that cares.
Warmest Regards
#76……you are utterly clueless about what constitutes “net worth”….it is only “worth something” when you actually sell it….
Your friends that have added hundreds of thousands will of course now lose hundreds of thousands…because the market is overvalued……if you want to buy real estate..buy a business that can prosper as the economy heads into the outhouse of historical precidence……
also – check out the front of Canadian Business magazine this month…its actually starting to sink in (maybe)
http://www.canadianbusiness.com/canadian_business_magazine/index.jsp
right or wrong…Garth is trying to help by offering years of his experience. If you don’t like paying less taxes and getting that advice…don’t take it.
#76 Take_a_breather on 03.05.10 at 11:39 am
I’m not sure where you’re living but in 2005 there was lots of RE for good prices. At this point prices are too inflated, with the rates being so low I can see why people are buying, but the problem is that they wont stay low forever.
#100 ferd “http://www.canadianbusiness.com/canadian_business_magazine/index.jsp”
Wow, the title…. “Why buying a house is a bad investment” is point blank, in your face, unbiased truth Canadians need to read and hear.
10/10 for that post.
Mike
Take_a_breather:
Actually, Garth was right. The real estate market started correcting in late 2008. If it was not for rock bottom interest rates thanks to our government, I believe we’d currently be in the middle of a US style correction.
As an aside, my real estate broker admitted to me yesterday that things are just not right out there. He’s been in the business 30 years.. He said this is reminding him of the late 80s.
#99 Knucklewalker,
Exactly. The number of times I have heard lately about how much unrealized money people have made in their homes just blows my mind. When the air gets sucked out of the bubble their heads are going to spin for years. Sad, really sad.
Hey Garth… since you’ve become a publishing house of your own so to speak, I have a proposition for you. I’m thinking of writing a book on the worlds RE bubbles over the last 20 years, the governments and central banks that conspired to create them, what has happened to their nations as a consequence and what the future has in store looking forward. It’ll be a great read for bond investors, homeowners, voters and people who just like to be… smart.
The word “bubble” should be in the titles somewhere, I’m thinking, it becoming a rather popular word these days and most naturally, it will need final editorial approval from yours truly, I would insist on it.
Have you ever thought of taking on a ghost? Think it over. I’m quite serious about this.
#85 Take_a_breather ” I can no longer afford the debt. Does that makes sense? Which means I can not afford a house, and probably never will unless I can double my income.. ”
And if somehow you won the lottery and bought a starter home, if you couldn’t afford it at your decent job, your decent income, how do you think the house “investment” you somehow bought will appreciate when NO ONE ELSE in your position could possibily afford to BUY IT OFF OF YOU?
Thing that make you go hummm….
Mike
#76 Take_a_breather on 03.05.10 at 11:39 am
—————————————————-
Dude (CON bot or whatever you are):
Garth was right–he told people to buy real estate in this little book in 2002:
http://www.amazon.ca/Little-Book-Real-Estate-Wisdom/dp/155263518X/ref=sr_1_4?ie=UTF8&s=books&qid=1267816575&sr=1-4
Regarding his current outlook, he is warning us of what’s to come. He will be right, it’s just a matter of time.
And, regarding buying a HOME, go ahead. He’s never advocated not buying a HOME, but has provided advice for real estate INVESTORS.
#100 ferd on 03.05.10 at 1:48 pm
———————————————
about a year ago the headline was the opposite (it was discussed on this blog, and read something along the lines of “Now could be the best time to buy real estate”)
Kitchener1- Last article post#91
Please don’t lump Waterloo with Oshawa, Pickering,
Barrie etc.
Waterloo real estate is hot so I don’t know where you are getting your info. The houses that are sitting are overpriced. Even in a hot market nobody wants to overpay. I have friends looking to buy and everything they look at gets snatched before they have time to make an offer. Very little inventory in Waterloo under $240K (single family homes). Even move up homes are selling quick. In my area there was one house that went up for $699K and sold the next day. Stop being so negative.
#72 Hoon “You say to solve the debt problem by raising taxes and then say we need to start a Canadian version of the Tea Party? Aye carumba.”
Not the American version of the Tea Party, a Tea Party meaning a new party (or minority party, like the Alberta Rose) who could get elected because the 2 obvious choices have left millions wanting. See the point?
Yes, taxes need to be raised AND gov’t spending needs to be cut. If you were in debt by 147%, what would you do? Cut expenses right? I would.
Higher taxes helps bring more money to quickly kill the debt interest. Unless you would rather pay it off in 100 years (if ever) at interest?
Mike
Wow, one of the minions sees the light and tries to leave the herd and the rest of the minions tear him to shreds. Shame on all the bears, emo boomers, Garthaholics, and juniuses for that.
#99 knucklewalker
I am not utterly clueless about what constitutes net worth. It is the value of assets minus liabilities. If you’re house is worth X, it contributes X amount to your assets. You can argue about how to arrive at a fair actuarial value of X, but you seem to think that because it’s not paper or funny money, that is has no value.
WRONG. You are deluded.
You are talking about capital gains.
I know a lot of people with aggressive headstrong personalities post here thinking that either everyone should be type A like them, and consider themselves capable managers of their financial futures. Fine. History and studies often reveal people think they have above average driving skills… obviously, this is gonna be worse for roll your own investors.
But I think a lot of people who come out criticizing me are existing in a class of people that don’t constitute the average (or more aptly median) Canadian. Maybe they worked hard to get there, maybe not, silver spoon what have you, doesn’t really matter the past.
Basically, I would bet that where they are now, when buying and selling a HOME is a simple market trade or speculative move, that they have extra cushion that I for one do not have.
Then this is all sideshow to you, as you regularly have portfolio returns that most people don’t have as a salve for an trauma to the ego after getting real estate WRONG.
Whatever, say I’m a crybaby. Doesn’t matter. The fact is Garth and many of you have been wrong for a long time, and I’m simply calling it. It’s pretty shameful record is all.
Like I said, if Canadian real estate crashes in 2013, will you be satisfied at your investing prowess? If your money was where your mouth was, you’d be fired from your job based on the lost potential returns years ago.
Oh well, thank you to some for encouragement where possible; I’m actually now just working and hoping again. One day.
#22 Gary
If I were your age just 2 years out of school, I would consider moving out of this country for a few years and getting some good experience and maybe coming back or maybe not depending on how things track. This may not be the country for you or my kids as the huge financial burdens here will not allow you to live a good life of your parents. It’s a tough decision to leave but it may give you a much more lucrative option than staying here, buying an overpriced house and being taxed to death when you’ve got excellent potential in other countries. I had plenty of opps to move overseas and I never took them but, looking at where we are, I begin to re-consider what at the time were good decisions when we had a little backbone in government. Good luck to you and sorry to be a little unpatriotic after the gushing that went on at Olympics (which don’t get me wrong, I was all over it).
#98 Ferd – couldn’t have said it better myself.
89 Gary
Holy crap! I thought I was reading one of my own alter ego monikers I hadn’t met yet, lol!
“The world we live in can be unpredictable at times. Did the best economic minds of the world expect interest rates plunging to essentially 0%??” – Gary
I didn’t see it coming. I saw a recession coming and voiced it often from mid to late 07′ on, but I didn’t see rates heading to zero in so many nations but then, it makes sense to do so considering the debtloads these nations are burdened with coinciding with a U.S. change in government. Too many new and old debts needing to be refinanced, also needed a big break in debt service charges to give governments breathing room from wreckless credit expansions.
What I see going forward is rising interest rates from here on in world wide with stagflation in North America and inflation running higher in Europe. Inflation is seriously tied to currencies as the loonie will atest. A higher loonie means cheaper imports creating a modest inflationary cycle at best. And since the loonie has been rising for the last 15 years or more, thats exactly what we’ve had.
I see the loonie taking hits though from inept government policy (unsustainable deficits, credit expansion) and as a result, pressure on the loonie, rising rates and inflation is around the corner caused directly from a falling loonie. The big question mark is what the U.S. dollar does in the near, mid and long term. I think the U.S. dollar will strengthen in the near term (Euro uncertainty) and fall in the mid and long term (unsustainable debt, deficits, quantative easing). When currencies fall, inflation hits debtor nations hard and it has hit the U.S. hard in this last decade.
I’ve been thinking this for a while now that we need a serious public debate about what kind of loonie policy Canada should take going forward. Currently, we are trying to keep the loonie below par and its wise in the near term but this might not work in the mid to long term with the U.S. dollar dropping the way I think it will. All of Canada needs to be on the same page with this, understanding the risks to both high and low dollar policies. The best leaders unite nations toward one common general goal, good will and a well laid out plan that everyone can understand, if not follow. To me, the fact that there has been silence on this over the last few years with the dollar coming so close to parity is simply another example of failure at the highest leadership levels. Our current government quite simply takes its cues from the U.S. (and their corporations) these days. The government that replaces the current bums we’ve got has to be all over this one with a made in Canada policy that serves Canadians first and foremost.
#76 take a breather…
I feel for you- however buying a home for your family should be done when you and your partner are ready to do so not by looking at websites forecasting the future.
The way I see it you have 3 options for housing. Live in your parents basement rent free, go rent an apartment, or go buy your own home.
Why didn’t you buy in 2005 if you could afford it then. Back when we were buying a home in the late eighties, the interest rates were 10% and I don’t remember saying to my husband that we should wait until they drop to 4% until we buy a home. If we did that we would be waiting 20 years. Nobody knows what the future holds or where you are going to be tomorrow.
Have the confidence to make your own decisions and you will prosper.
Jeff Rubin has a pretty slick take on the situation. Garth, have you and the Rubinator having coffee talk lately?
…record low interest rates and record high deficits, is not a marriage, that will last very long…
http://watch.bnn.ca/thursday/#clip272676
I’m just reading Garth “Retirement Guide” from 2001. He had recommended to buy houses back there. So his advice back in 2001 was correct. Real Estate market was balanced then. We came to Canada in 2000 with little money for a downpayment. We put one bid for a condo on Quebec Avenue near the High Park in Toronto (2 bdr) 230K and we were overbid. Condos at Finch/Yonge (Byng, Pemberton, Doris, Lorraie, Bishop) cost around $230 back in 2000 but we didn’t like the layout, they were tiny with cheap kitches furniture and appliances so we didn’t buy. If we had enough money for the downpayment back in 2000 we would have bought.
#14 – #16 Tom
Grass is always greener elsewhere…but is it really?
Nostradamus jr.
IRT Mike
Well, you said Canadian Tea Party, implying a model of the Tea Party currently in America. They stand for extreme anti-tax. So to say raise taxes and then say start a Canadian Tea Party garners a chortle from me.
#109 Cory
The Waterloo market is the only “hot” market in the region. I had friends list their house in Feb and it sold it 6 days for 99% of asking. But thats only true for SFH, townhomes and semi’s just linger on the market.
Thats one thing I hate about this region, Waterloo is supposed to be so great and awesome and kitchener is “dirty” when in reality its only about 10km that seperate the two and one could drive in Waterloo and not even notice. In a few years its all going to be one city anyway.
Only reason Waterloo is more expensive then Kitchener/Guelph/Cambridge is that there homes are much newer and you don;t get the run down shacks listing for 175K because there are none (except the student ghetto).
by the way RIM and most other tech companies do not pay all that well when compared to Toronto or even the GTA, they pay less. Guys working in the factory at RIM are making 36-40K and even programers are getting 45-50K where as in GTA they would be making upwords of 60K. RIM does have a higher then industry average turnaround (or at least they used too)
Post #76 Take a Breather. So do you think that the economic landscape is changing for the better? You must realize that timing is everything in real estate, (okay location, location, location.)
Take a hard long look at things, what are you going to gain by jumping in now?
You missed the run up, why didn’t you buy in early?
This is always a cycle up down, up down.
There must have been a reason , what was it?
Garth started to warn of this a few years ago, did you glomp on to it because it met your views, and you felt that you would be proved right?
That then you could do an end run around your friends and be seen as a genius?
Are your friends smarter than you? Are you locked into a massive debt? Can you afford to live well on what you make?
Some people are able to go their own way some can’t.
This financial story is unfolding on a daily basis, it is far from over.
Take what you learn here, along with some critical thinking and make your own desicions.
Sometimes you win sometimes you don’t.
Learn from it.
Your post to me is like picking up a hammer to pound a nail in and smacking your finger, and then blaming the hammer. I watch young guys fly into a rage when that happens, then ask them which is smarter the hammer or you?
#76 Take_a_breather
WAH!
#115 Daystar on 03.05.10 at 2:46 pm
I’ve been thinking this for a while now that we need a serious public debate about what kind of loonie policy Canada should take going forward.
Our current government quite simply takes its cues from the U.S. (and their corporations) these days. The government that replaces the current bums we’ve got has to be all over this one with a made in Canada policy that serves Canadians first and foremost.
*************************************
Our $ policy is already scripted for us–
We live in a global regime of competitive-floating currency’s–all linked–which means–
We have really no control over our own $–other then short term interest rate adjustments–
We are in a sense–pegged–to the USD–within a loose trading range–
We cannot stray too far-or the leash tightens–
We cannot control our trade flows with the US–
We “must” have trade in Canada–as major exporting country-which means a high dollar is a drag on trade–
Those who think China can or will-pick up the slack–are badly mistaken–
We are in a–global competitive currency devaluation–
If the US prints 1 trillion –we must print an equivalent amount based on GDP–
Would be interesting to hear-how-we might decouple from this–
The tail (Canada) does not wag the dog (US)
“For years, Wal-Mart ran some of its North Carolina income through a series of companies that existed only on paper to get the income back in a nontaxable form.”
http://www.newsobserver.com/2009/06/11/70587/tax-dodging-schemes-targeted.html
http://www.nytimes.com/2009/05/30/business/30delaware.html
…”At the center of the dispute are legal entities known as Delaware holding companies, which have been around for decades but took off in the 1990s, when accountants began pushing them aggressively. Corporations are allowed to establish these shell companies in Delaware, as well as in Nevada and Wyoming.
Typically, they then transfer to these subsidiaries ownership of things like trademarks, patents and investments. Delaware does not tax holding companies set up to own and collect income from such lucrative intangible assets.
The parent companies of these shells usually pay royalties to the Delaware subsidiaries to lease back those assets. By doing so, they can claim income tax deductions in states where they actually do business. The shells also funnel profit, tax free, back to their parents, in the form of dividends and loans.
Some corporations have abused the system. Before WorldCom collapsed in 2002, it shifted $19.4 billion in intellectual property tied to “management foresight” to a Delaware holding company. ..
Sorry Garth – hope no offense was taken with the conservative/lib post. I was genuinely interested and making sure i had my facts straight.
It’s funny that the current government is called “conservative” at the moment though isnt it? As very few of their recent actions have actually BEEN conservative…
Ah well.
Dr. Mike Burry betting against the US RE market in 2005:
http://www.vanityfair.com/business/features/2010/04/wall-street-excerpt-201004?currentPage=1
Daystar your commentary is succinct and on target as always.
“we need a serious public debate about what kind of loonie policy Canada should take going forward. Currently, we are trying to keep the loonie below par and its wise in the near term but this might not work in the mid to long term with the U.S. dollar dropping the way I think it will.”
As you said, the long term picture could potentially be that the U.S. dollar keeps spiraling down as more and more debt problems emerge in their economy. Their debt levels are astronomical! If we marry ourselves to a spiraling economy insisting on keeping our dollar lower than theirs where does that bring us? Down in the dumps with a failing country and a burgeoning debt load that is only getting bigger as more boomers retire.
The truth is that the U.S. is entering a new age in economics and sentiment. American consumers are no longer planning on overspending at boom levels of 2001-2006. Housing will not bring them out of this recession, auto sales will not, CHINA will not (they just pulled the brake on spending). Credit is contracting and will probably keep contracting until all the bad debt is flushed out and paid out by American tax payers. This will take decades. Canada needs to come to this realization.
But I fear that this budget reflects their belief that U.S. consumption levels will revert back to unsustainable rates; and we will latch onto that growth. Too bad they’re dead wrong.
We should break out from our dependence on America once and for all.
It is my belief that we need to build diverse local communities spread outside metropolitan hubs. We’re too obsessed with the compulsion to group into huddled masses and make money from low value added services and products.(also to sell higher to the next greater fool based on speculation) Economies CANNOT thrive on zero-sum financial markets. It’s actually a negative sum market when you consider fees and taxes. Retail is also a dead-end sector with smaller and smaller margins as more items are purchased online. Housing does add some value to an economy but there’s obviously a limit when you take into account the available pool of responsible borrowers. The further past this limit you get the more you set up the economy for a crash on risk excessive leverage/speculation.
If the government encourages new settlements with diverse industries(to prevent local crashes) we spread out across the nation build upon core values: Houses as a shelter not an investment, land used for food, renewable energy infrastructure, superspeed telecomm infrastructure. Canada could become the poster child for building MODERN sustainable communities if they introduced subsidies for it. That is definitely something that I would be willing to be taxed for because new forward looking jobs with growth potential would be created. By leveraging the know-how and lessons learned(financial and technological) from early adoption we could broker our knowledge/technologies to nations that would need this the most as energy prices get increasingly higher. Moreover, developing nations will hit a wall sooner or later because they’re building so fast without regard to efficiency and waste. They’re ruining their own ecosystems. They will definitely hit the wall in growth very soon at the current rate they are going at. That type of value-add service/product would have incredible growth opportunities as we move forward into a new peak-oil age. This is of course and arm-chair, back of the napkin solution that I’m proposing but the direction we are currently going with lower-than-USD policy is NOT going to work mid to long term. Let our dollar rise to build revenues in Canadian investments. Dip into debt with true value-added spending and the mid-long term growth potential will hopefully bring foreign investors to fund our debt. That’s what investors are looking for!! Growth potential!!
“Tax exiles want all the benefits of an advanced society, without paying for it to keep going. There’s a technical definition for this in the natural sciences: a parasite.”
http://taxjustice.blogspot.com/
=========================
In all of Greece — a country of 11 million people — only 3,125 people declared incomes more than $280,000. “Everyone who can avoid paying taxes does,” says Georgakopoulos. “The only ones who don’t are the ones who can’t — wage earners and pensioners whose incomes are taxed at source.”
Widespread evasion feeds the Greek attitude that only the stupid pay taxes. Little wonder that Greece’s tax revenue is among the lowest in the European Union
Read more: http://www.time.com/time/magazine/article/0,9171,1958721-2,00.html#ixzz0hL7Yivdk
http://www.independent.co.uk/opinion/commentators/johann-hari/johann-hari-the-worst-thing-about-ashcroft-is-that-his-behaviour-is-legal-1916391.html
112 # take a breather
“Oh well, thank you to some for encouragement where possible; I’m actually now just working and hoping again. One day.”
you and me both… just trying to survive. If it corrects …we are not going to gloat. We just going to the neighbour hood pub….order a pint and be glad for what we have
Re: #113 OnlyTheBankersLaugh
Thank you so much for the great advice and commentary!
I definitely have considered moving away and declaring non-residency. However a very simple reason for NOT doing this is that I’m recently engaged and my fiance is not the type to just uproot and go. Even if i explain how shitty things are going to get she wants to stay near friends and family. We were both born and raised in Toronto so everyone we know is here. I knew this when I asked her to marry me so it’s not like a surprise. We’re both not huge spenders but seeing what’s coming down the line really doesn’t seem fair. Juggling house payments, retirement, child rearing, RESP, holding down a job just seems like a government-run rat race with no end in sight. Bailing on a country that I love and want to help change is also a bit of a deterrent from taking off as well, even if I was single. But most people don’t want to hear about future problems anymore. They just care about the here and now and what the next iPod features are. Things won’t change until everyone wakes up to all this shit that’s going down the tubes.
The one thing that I think is such a shame is that the Great Financial Crisis could have been a blessing in disguise for a HUGE paradigm shift and to start a new system. But the self-interest groups were able to prop up the current system with corrupt accounting/debt. They just kept everyone smiling by kicking it further down the road for an even more painful unwinding later. It’s like watching a extremely slow motion car wreck that you’re helpless to stop.
What can we do, Garth?!?!
#117 SMW,
Yup. The academic discussion about rate increases is now over. They are going up.
http://watch.bnn.ca/thursday/#clip272676
Chris L,
havn’t seen you around lately, but if you still hang out here…. thought you would be interested to know that the house at 89 Milson has been renovated and is back on the market FSBO at 325k.
http://news.guelphmercury.com/News/article/509010
http://www.propertyguys.com/properties/42653-guelph-ontario-single-family
molson cdn
And keep on living with your head in the sand.
#112
chillax dude….if you want to buy a house go do it….I will rent and watch…and yes I am an extreme type A…I was a millionaire by 32yrs….and lost it all to a divorce…one learns stuff
http://www.doomers.us/forum2/index.php/topic,63104.msg960704.html#msg960704
On a more serious note…does anyone on here know what year that $1.00 US dollar new debt has NO effect on GDP?
and you sillies are worried about the Canadian housing market
…..learn personal combat skills and how to grow a good zucchini!
#99 knucklewalker
I just want to say thank goodness you’re back – I thought you’d deserted us dude and it wasn’t a good feeling!
Take a Breather !!
I feel for ya.
You come to this blog looking for help and BAM, the dogs blast you.
Do what I do. Come here , read , listen and learn stocks, ETF”s, mutuals or whatever.
I have learned a great deal here. Everyone has their own opinion and yes sometimes it may be harsh.
Just live within your means, and MONEY doesn’t buy happiness but it sure makes things easier .
Take care—don’t leave. Stay and educate yourself !!!
Would this be an indication of slowdown in mortgage business in BMO?
TORONTO, March 5 /CNW/ – BMO Bank of Montreal’s new five-year fixed rate mortgage is available to all Canadians with the lowest rate at 3.75 per cent. Whether you are a first time home buyer or want to switch your mortgage with no transfer-in fees, BMO provides clarity to help make the right financial decisions.
The new mortgage:
<>
Interesting read, Fixed mortgage rates should tick higher next week. Canada 5 year government bond is up 18 basis points. http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2010/03/yields-catapult-higher.html
#131 Gary — “What can we do, Garth?!?!”
Start a new political party. The present bunch of aliens make The Rhinocerous Party look a valid alternative.
Anything beyond The Rhinos is a step in the right direction!
——
There are American Tea Parties; some chatter about Cdn. tea parties. This is Moscow’s first tea party. First para. is interesting.
This may be the new one-world currency, courtesy of the UN. What happens when all the gold and silver runs out? Barrick said a while ago that gold was almost gone. Hence tungsten-filled bars.
Never mind the govt.’s fuddle-duddle fudge unemployment #’s, this probably also applies here as well. And this.
Earlier I mentioned that citizens are as mad as hell, and aren’t gonna take it anymore but the comment from wrh.com is better:
“If any government gets into debt without the consent of the people they have no right to demand that the people help them get out of that debt.”
These two, in one way or another, are probably linked together — War Is A Racket
Yesterday a 6.4 off Vanuatu; today a 6.8 off Sumatra plus aftershocks of 6.0 in Chile. Whole lotta shakin’, rattlin’ and rollin’ going on!
Recognize the names? Buffett, Turner, Gates and others. They want to fondle our bums!
Global Warming? 50 ships were stuck in ice in the Baltic Sea, and 1,000 or so passengers were rescued by other means. The same organization (UN) who started this hoax is the same one introducing gold and silver coins.
Do I sound skeptical? Maybe onto something! On the subject of myths.a
#129 Jess…How can you read such rubbishy statist government-loving claptrap as TJN??! Avoidance/evasion is an absolute imperative now! Not just for the individual, but for the economic health of the country.
One commenter above mentioned his parking space at work was going to become a “taxable benefit” going back to 2006! Can you believe how desperate government is now? Every new imposition, every new law, rule, regulation and requirement kills jobs, silently and perniciously. Destroys competitiveness, discourages people from trying to start up new business.
All those regulatory and tax hoops to jump through. Why on earth would anyone start an enterprise in Canada (or the U.S., or Europe, or…or…) now?? Just the paperwork alone is daunting.
Something has to give. Unemployment will rise and rise, businesses will close, public employees will keep their snouts in the trough and prices of essentials will move up. Those are mathematical certainties.
The Canadian dollar – indeed all currencies – will simultaneously slide in terms of purchasing power. These new taxes will just speed it up…
“All this is way more likely now that F spent less time on his fiscal plan than his hair.”_Garth
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Garth, he has no hair that grows, it’s a rug. Cant trust a politition thats got something to hide. He’s got balls though to keep playin’ this game with a massive housing bubble looming.
It’s so obvious. Sigh, denial.
Here we go again….should be some amazing buys here for the right people..if the past record is any indication…….By CBC News, cbc.ca, Updated: March 5, 2010 5:47 PM
Crown asset sales coming this year: Flaherty
Crown asset sales coming this year: Flaherty
Canadians will likely hear within a year that certain Crown corporations and assets are going up for sale, federal Finance Minister Jim Flaherty says.
Flaherty made the revelation in a pre-taped interview with CBC’s The House to be broadcast Saturday. He was asked by host Kathleen Petty about the potential sale of Crown assets as a way to tackle the deficit.
“There are some opportunities there for some privatization of businesses that one questions why the government is in them anymore,” Flaherty said. “So we’ll look at those and I expect that in the next year we’ll be able to make some announcements.”
The finance minister didn’t specify which assets could go on the auction block but indicated it would not be limited to real estate or other tangible assets but include privatizing some services and Crown corporations.
133 Pwing on 03.05.10 at 5:03 pm
Chris L,
havn’t seen you around lately, but if you still hang out here…. thought you would be interested to know that the house at 89 Milson has been renovated and is back on the market FSBO at 325k.
http://news.guelphmercury.com/News/article/509010
http://www.propertyguys.com/properties/42653-guelph-ontario-single-family
Thanks, I’ve been watching to see if it would hit MLS. So he’s 150k in now with maybe 50-100k in renos so he’s got about 75k back end now if he’s able to sell full price. The way the market it going he may just fetch it. He looks like he did a fair job at his reno just from the pics. No idea if the smoke will rear it’s head or not. I’d say it’s not a horrible return if he gets it sold. Very little inventory right now, in fact record lows.
I’m always around, read every day and as many as the comments as I can. Just don’t have a lot extra to add so I just keep quiet.
132 junius on 03.05.10 at 4:52 pm
#117 SMW,
Yup. The academic discussion about rate increases is now over. They are going up.
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Rubin doesn’t take into account the high possibility that a sharp sell off in equity’s would drive treasury’s higher which would stymie any plans on rate hikes–
Also–what kind of economist–would advise people to hurry up and borrow–into a deteriorating economy?
He says–the “best way” to get out of this is–stimulus—
In other words–borrow money to pay debt-
If i remember correctly–Rubin was calling for $200/bbl oil for last year–
Rubin is an Inflationist–and dead wrong–imo–
#76 Take a breather
Guess what…WE’VE all had our screw ups(some people admit it, some people don’t-FACT) I for one have….Get over it and move on….
It’s whether we learn from those mistakes that matters… and hey if your friends are going to jump from a bridge because their so called equity takes a s@#t kicking, in a while are you going to jump too…Have some patience already….
Who knows in a few to 5 years maybe you can buy 5 for the price of one.
I don’t think you should turn your back on this blog either. It’s a great source of info, but keep an OPEN MIND to all and other information out there. Don’t stop learning. Learn not only from your mistakes but other’s as well. Then….make informed decisions. Then….have the courage and conviction to stand by YOUR decisions. You’ll earn more respect that way, than just by being a “homeowner”
P.S. We ALL come into this world with nothing and we ALL leave with nothing….Don’t forget to ENJOY the JOURNEY…It isn’t all about things….so lighten up amigo and carry on
I had posted this listing on this blog a couple of weeks ago in amazement that they were asking $499,000, I see it’s now down to $459,000….also listings in my “hood” just jumped 10% in one week!
http://www.realtylink.org/prop_search/Detail.cfm?areatitle=Vancouver%20West&ARPK=37,44,36,26,10105,41,21,32,30,28,23,33,22,39,24,43,29,40,34,853,31,35,42,27&ComID=&agentid=&MLS=V806812&rowc=47&rowp=41&BCD=GV&imdp=&RSPP=20&AIDL=26&SRTB=P_Price&ERTA=false&MNAGE=0&MXAGE=200&MNBT=1&MNBD=0&PTYTID=1&MNPRC=200000&MXPRC=900000&SCTP=RA
#43 CTO
We’ll see who turns out to be right. Don’t hate on other peoples opinions; this tells a lot. Just share your ideas.
So.. who’s Dee and who’s Dumb???
http://bit.ly/bVLwoh
#97 Prairie gal
Canada has a much higher rate of immigration than the US. Canada’s immigration destination is primarily 2 cities. Guess which ones? CONCENTRATION!
Somebody on this blog mentioned that our two cities are world alpha cities with regards to immigration or something like that…no time to look up something we already know.
Sydney is up there to and guess what? High concentration again.
For the record, I’m not trying to convince anyone to buy. I have researched the topic to death and have come up with my own conclusions… and that is RE isn’t going down anytime soon in Vancouver or Toronto (I’m not concerned with other cities as they may or may not go down) . Nothing on this blog has convinced me otherwise.
#150
Actually the US has higher immigration than the Canada. Also, Toronto and Montreal receive the highest numbers of immigrants, followed by Vancouver, and its been like this for years. These are facts.
151 DearTruth on 03.05.10 at 9:29 pm
#150
Actually the US has higher immigration than the Canada. Also, Toronto and Montreal receive the highest numbers of immigrants, followed by Vancouver, and its been like this for years. These are facts
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And that’s not counting the 40 million or so illegals in the US that also lust–for houses–
141 TaxHaven
“Every new imposition, every new law, rule, regulation and requirement kills jobs, silently and perniciously. Destroys competitiveness,”
…Did you ever watch someone die from the result of inhaling asbestos ?
#105 – Daystar
Why even think about writing a book about bubbles when one already exists that is a classic: namely “America’s Bubble Economy” By Eric Janszen et al:
http://www.amazon.com/gp/product/047175367X
for an overview you can read the still relevant Harper’s article:
http://www.harpers.org/archive/2008/02/0081908
151 Dear truth
Vancouver has more foreign born residents than Montreal
http://gstudynet.org/gum/Publications/Immigration%20and%20World%20Cities.pdf
#151
Canada and Australia have higher immigration per capital than USA.
And most of new immigrants to Canada are in just a few cities.
One more thing, Toronto and Vancouver attract large amount of Chinese and Indians, and they like invest in hard assets. I am from China.
Real-estate is still overvalued, but less than Garth state. The price increase of house less than crude Oil.
Why Garth still keep saying Oil will shot much higher but house will go much lower?
151 dear truth
Heres another:
http://www40.statcan.gc.ca/l01/cst01/demo33a-eng.htm?sdi=population%20growth
BC has yearly immigration equal to 1.0% of its population. Ontairo 0.85%, Quebec 0.59%.
Now Garth has said in the past that immigration is not
a significant contributor to the RE boom. But it is a
significant contributor to population growth, especially in
Toronto and Vancouver (the “major” portion according to
a statscan report). These people do need shelter,
whether they be rich or poor, owners, renters or living with family. Just try to imagine the effect on RE if there
was no immigration.
@Kurt. I read money road, I didn’t see any comparison between bond funds and buying individual bonds… I guess I’ll look again.
Hey Garth,
The federal budget suggests a “standardization of mortgage prepayment penalties”. What does “standardization” mean?
All is not bad with F’s Budget, if Canada can have lower corporate taxes than our competitors in the G7. The Ontario Government was on track to have the lowest corporate taxes before F spoke, so in combination with F’s announcements, there is some cause for a bit of hope.
Of course this assumes the deficit(s) can be dealt with as easily as F assumes. That’s a big if, with Dalton McDumbo in Ontario trying his best to (mis)manage the economy. But still, let’s be fair, Canada is well ahead of so many other (basket case) nations, so that we rate about 25-30th on global risk rankings. We are the safe haven compared to many places. The CAD $ is almost as good as gold. I said almost.
Freezing wages etc for 5 years sounds good, but if we are in an era of deflation, that is still a raise. Global credit contraction continues, whatever the headline news says. That has not happened since the 1930’s if that, some metrics show we are worse off now. China, the demand driver, is tightening credit, and trade tensions over the Yuan value will only get worse if they do not revalue it, a low probability event.
Canada could be in position to attract business, as the US States are going in the other direction: higher taxes. So we could benefit, over the intermediate term. But that would have to work with a lower CAD $, it’s too high right now to really pump exports. The bind the BoC faces, if they even talk about raising interest rates somewhere in the distant future, the CAD $ soars. See AUD $.
btw I did not mean to suggest in my past comment(s) that real estate investment is bad always. Like everything in life, it’s the timing. You know, buy low, sell high. The real estate market moves in such big waves that it is not really that hard to time. For those who say “you can’t time a market”, you’re just too slow. Real estate moves at glacial speeds most of the time, except like now when we are at the peak of the blowoff mania. +20% per year in Toronto GTA is the classic sign.
I have had family owned properties that over time paid for themselves, more or less, though there was a pretty large amount of sweat equity. Tenants are difficult, but if you can deal, it can work out well. Provided you bought at the right time, like 1997. 2007, not so much. It’s all in the entry price – if you buy near the low, everything else takes care of itself.
If you bought before 2001 or so, you will probably be alright, unless you were Mr Re-Fi. If you owned the commercial rental units from way back and they are all paid off, who cares. Still, municipal taxes are going to be flying higher now. It’s the guys who bought in the last few years of the boom who will be worst hit and first to go underwater. Double up if you got into ‘creative financing’.
I would not want to be an owner of a commercial rental property with a big mortgage these days, unless your tenants are good as gold, and who is. If they bail and you have to carry those payments…
#151 Dear truth
Oh please! Canada has a higher PER CAPITA immigration of any G7 nation. and it’s concentrated in two cities. GTA and metro Vancouver.
Nice try though trying to compare absolute numbers! Don’t insult others on this blog.
#154 Punnoval
The Harper link is quite prohetic and well worth the read. Link. I’ll look into the book in question to see if it has an international view concerning bubbles a well. Thanks for the time and advice