The spoiler

On the job, he’s a hero. Knocking down flames. Ripping into wrecked cars. Pumping life back into limp forms. But without a helmet or a fireman’s aura, he’s no action figure for his family.

Sammy lives in a major Alberta capital city that begins with E, has a $450,000 house with a $325,000 mortgage, three daughters, a quad, a stay-at-home wife, no savings, a sled, no TFSA, no RRSP, no educational savings plan, a boat and, at 46, plans to retire in nine years.

“Got it made,” he told me. “Don’t need to save. Have a pension.”

Indeed he does. It will pay $3,250 a month at age 55 – at which time he’ll have two daughters in university and a mortgage of about $300,000. In other words, he’s cooked. Assuming mortgage rates are normalized by 2020, his monthly should be $2,300. With insurance and property tax, about $2,800 – or more than his entire after-tax pension payment. As for food, gas, clothing, cable and his kids’ tuition, there’s always a few shifts at the the Wal-Mart on Mayfield NW.

But that’s not the real problem. It’s Sammy’s other houses – all three of them. Brand new, bought in the burbs from a builder for $325,000 each two years ago, now worth $285,000 on a good day. Total down payment for all three: $48,750. Total mortgage debt: $926,250. Total annual rent: $59,400. Total carrying costs: $52,200. Total equity: zero. In fact, the smoke eater’s in negative equity by $71,000 and with any vacancy or mortgage rate increase will also be in negative cash flow. Un. Mitigated. Disaster.

So, I asked, why the hell did you do it?

The answer was what you’d expect: (a) Real estate’s safe. (b) All the guys were buying. (c) The bank gave us the money.

So here’s the question: How does society keep financial numbnuts like Sammy from destroying themselves? Are we not on the same path of subprimordial mortgage excess that helped hobble the US middle class?

Of course we are.

And whatever arguments the real estate pumpers and Garth-baiters on this site throw up, there is one overwhelming reason why residential real estate as an asset class is so fried. It’s debt. And the ultimate blame for that (beyond the greed of the banks and the horny hormonal S&G lust of the masses) rests at the little Size 8 brogues worn by the one they call F.

Were it not for this guy, the 35-year-long mortgage would not exist and, quite possibly, down payments would be a more sensible 10%. In other words, if Sammy had to shell out almost a hundred grand for those houses, and be unable to rent them for enough to cover costs – even at generationally low loan rates – he probably would have an RESP for his daughters today.

Of course, I still recall the day when – as an MP on the House of Commons Finance Committee – I was the only one in the room who choked at F’s demand that we rubberstamp new rules allowing 40-year amortizations and 0% down payments. My little hissy fit was enough to cause Parliamentary hearings into the possible ramifications of bringing a US-style credit orgy to Canada, but it wasn’t enough to stop it. Those theatrics were sufficient, of course, to help get my sorry ass booted out of Stephen Harper’s caucus.

As you know, the 0/40 madness was hastily retracted within two years, but not before the foundation for a housing spiral had been built. Even so, replacing it with 5/35 financing was no real improvement, as today we witness young couples mobbing builders’ sales trailers to buy palaces with pennies, or watch as unsuspecting borrowers take an amortization that will mushroom their interest are perpetuate their family debt.

I mean, look at this. Even the bankers are recoiling at the size, scope and threat of the current debt Goliath.

TD CEO Ed Clark simply says current lending practices are “not a good thing” while his counterpart at BeeMo, Bill Downe, says tighter lending rules should be in the next federal budget. Adds Clark: “These are exactly the things that government should be doing.” Both are making the case for a return to the 25-year amortization.

As they should.

After all, it’s in the naked interests of bank shareholders to stymie a HouseAgeddon in Canada. We’ve all seen what a debt-induced real estate meltdown can do to the middle class to the south of us, destroying family equity, kneecapping consumer spending, creating structural unemployment and taking the financial system to the brink of failure. Until the feds address this, along with widespread zero-down housebuying, liar loans and cash-back bribes, we’re headed for the same rabbit hole that swallowed America.

I know F worships unfettered capitalism, manifest destiny and social Darwinism.

But there’s a greater good. And heroes to rescue.

259 comments ↓

#1 Dorothy on 12.10.10 at 11:17 pm

I don’t see the 35 year am on a principle residence as being as much of a problem as the 5% down. If they increase the down back to the 10% it used to be, they could still allow the longer am as a way of helping young people to still have an affordable payment. However, the long am should only be available for principle residences, and any property bought for speculation should be subject to 25% down and a maximum 15 year am. That way it should be possible to keep overall prices in check without rendering it totally impossible for first time buyers to get into the market. Because I believe it is the speculators, far more than the first time buyers, that helped create the inflated prices we see today.

#2 Thaya on 12.10.10 at 11:20 pm

Hi Garth,
I really enjoy your blogs, everyday. The human thinking is always the same. Big banks and the politicians are here to lie to the public in order to fulfill their personal agendas. There are many average citizens that totally agree with your writings, and many people are going to suffer.This is something that has not been seen in Canadian real estate history.

Keep writing these phenomenal entries,

Thaya

#3 celine on 12.10.10 at 11:28 pm

particularly inspired tonight Mr. Turner.

#4 Chances on 12.10.10 at 11:29 pm

What do you figure the chances are of the Conservatives further tightening CMHC rules?

#5 Sam on 12.10.10 at 11:30 pm

Fantastic story. Now what is Sammy’s plan with his three lovelys?

#6 T.O. Bubble Boy on 12.10.10 at 11:35 pm

ah – Mr. F and his infinite wisdom…

http://www.bloomberg.com/news/2010-12-10/flaherty-says-u-s-growth-not-canadian-dollar-is-biggest-risk-to-outlook.html

“Canada’s government will use regulation, if needed, to thwart any asset bubbles that may emerge if the Bank of Canada is forced to maintain interest rates low, he said.”

So, based on that comment, the only bubble Canada has ever seen was an Income Trust bubble?
(no, I don’t count changing 0%/40-yr to 5%/35-yr as bubble-thwarting policy change)

I guess you could also say that we have an “accurate economic forecasting” bubble, since it’s pretty obvious that F has been doing his darndest to be as poor of a economic forecaster as possible.

#7 Toronto McMansion on 12.10.10 at 11:41 pm

Can somebody please state:
(a) the dates between which 0% down, 40-year ammortizations were available?

(b) when were 5%, 35-year ammortizations introduced?

(c) the rules for second/investment homes changed?

It would be interesting to see when the typical 5-year period expires for these mortgages.

#8 Patz on 12.10.10 at 11:42 pm

A tale of two cities: Vancouver and Seattle. Vancouverites think sunshine beams from all orifices drawing wealthy Asians to our shores ready to drop the bucks necessary to keep the RE train rollin’. Along comes The American and shoots that story right in the ass!

I once worked for a wonderful little company called Digipen. They taught computer graphics and game programing. Their grads scored big jobs in the games industry. The founder’s vision was to become a university. Would’ve taken a decade here, if it could have been done at all. He packed up moved to Redmond and within two years had full university certification. It is now Digipen University, the only one of its kind in the world and Seattle scored it when Vancouver had it to lose.

Meanwhile back in Vancouver when Christy Clark announced her bid to become leader of the Liberal Party and thus Premier she had two supporters standing there with her—Bob Rennie and Peter Wall. (Big RE types for any of you not lucky enough to live here.) Gosh, wonder what her agenda will be?

To Cookie Monster who’s just discovered Ayn Rand meet Alan Greenspan her biggest fan—’nuff said! Oh, and ooops, she’s dead and so are her ideas.

#9 Ayn Rand on 12.10.10 at 11:43 pm

Many of the firefighters I know of work at other jobs – landscaping, own small businesses as they are working 24 hour shifts for about 7-9 days of the month. That is, they earn a second income. Just saying.

I find it extremely hard for a family to save for retirement and RESPs when there is a stay at home parent. Nice to aspire to (staying home for the kids) but hard to make it all work out in the end.

#10 Timing is Everything on 12.10.10 at 11:46 pm

Garth – So, I asked, why the hell did you do it?

Greed.

#11 Basil Fawlty on 12.10.10 at 11:54 pm

I would like to ask F, where does unfettered capitalism end and sheer stupidity begin? It was only a minority and the crash of the US banking system, that saved Canada from F & H’s excellent adventure of deregulating our banking system. Not to mention the trillions in unfettered government capital being paid out worldwide to the socialist hoards that make up the banking executive class. This includes the over $1B that is Canada’s share of the Ireland IMF banker bailout. F would not know unfettered capitalism if it bit him in the arse.

#12 Al on 12.11.10 at 12:01 am

I’m still waiting for the Real Estate Market to fall in the GTA. All I see are “SOLD” signs and no “For Sale” signs !

#13 tiger_baby on 12.11.10 at 12:03 am

Hard working innovators whose work improve our lives are always appreciated, and the difficulties of being a small business entrepreneur are well taken; but unfortunately these do not apply to a great deal of capitalists, and the claim that capitalists can lay claim to all the good things we have is outlandish. (In addition, much of these modern capitalist endeavours are not possible without fractional reserve banking, which you seem to despise so.)

There is a reason why it’s called capitalism and not innovation-ism … etc. For capitalists, being innovative and productive is only a means to an end. The end, of course, is monopoly, as it provides the best ROI, or any other indicator that are used to judge a business by capitalists. That’s what capitalism is in practice, finding the path of least resistance to more capital. It often includes innovative activities such as finding loopholes in laws and regulations, lobbying to influence democratic representation, cartel price fixing, and if they can get away with it, monopoly.

While we are all concerned about the issues that our government has (which there are many), there are probably as many (if not more) problems in private enterprises. You do not see them as much simply because they are considered “cost of doing business” and are often swept under the rug without outside people noticing. That’s why you see companies doing “well” one week and bankrupt the next (private enterprise is also great until you run out of other people’s money).

I find your capitalist paradise of people doing best they can and get what they deserve eerily similar to the proletarian paradise described by others … neither of which seem to give the darker side of human nature the attention it deserves; and that, no matter what system is in place, is the real root of our problems.

#14 CTO on 12.11.10 at 12:12 am

11 Al on 12.11.10 at 12:01 am
“I’m still waiting for the Real Estate Market to fall in the GTA. All I see are “SOLD” signs and no “For Sale” signs !”

Agreed, Same here…

#15 Bill Grable on 12.11.10 at 12:16 am

I think that BC deserves a leader like Christy Clark.
Vapid. That would be a great word.

Pink Shirt day aside – this woman was whining that she was going to miss a ‘paycheck’ – for her sacrifice (*please) running for leader, without even running for a seat.

*The people get the Government they deserve.

#16 WordNerd on 12.11.10 at 12:19 am

Garth
The last time someone used ‘manifest destiny’ in a sentence in N.America in around the 1940s!

I demand that you tell your readers what planet you are really from! Because only an alien from outer space, who last visited around the 1940s (…remember Roswell?), would return back to Earth in the 2000s and assume humankind’s vocabulary hasn’t changed!

But it has changed my dear spaceman – and you have been exposed (like a screened airline passenger) as a result! We now use word expressions like LOL, LMFAO, MZT, : ), : (, etc.

So why have you really returned to Earth?? and more importantly – where is the real earth-born Garth being held?? Please don’t say “in F’s basement”… he deserved better than that :(

#17 Greg on 12.11.10 at 12:20 am

The Real Estate Market in the GTA continues to due poor. All I see are “For Sale” signs and very few sold signs. Is it any wonder that sales in the GTA fell over 20% in june, July , Aug , Sept , Oct and a drop of 13% in November. The RE industry and realtors are working overtime trying to spin a crashing market.

#18 dark sad person on 12.11.10 at 12:22 am

And the ultimate blame for that (beyond the greed of the banks and the horny hormonal S&G lust of the masses) rests at the little Size 8 brogues worn by the one they call F.

As you know, the 0/40 madness was hastily retracted within two years, but not before the foundation for a housing spiral had been built. Even so, replacing it with 5/35 financing was no real improvement, as today we witness young couples mobbing builders’ sales trailers to buy palaces with pennies, or watch as unsuspecting borrowers take an amortization that will mushroom their interest are perpetuate their family debt.

I mean, look at this. Even the bankers are recoiling at the size, scope and threat of the current debt Goliath.

TD CEO Ed Clark simply says current lending rules are “not a good thing” while his counterpart at BeeMo, Bill Downe, says tighter lending rules should be in the next federal budget. Adds Clark: “These are exactly the things that government should be doing.” Both are making the case for a return to the 25-year amortization.

As they should.

After all, it’s in the naked interests of bank shareholders to stymie a HouseAgeddon in Canada. We’ve all see what a debt-induced real estate meltdown can do to the middle class to the south of us,

**********************

Do you really believe F “knew”what the outcome would be?
Geezzuuz-i cannot believe you think that-

F hasn’t got or ever had a friggen clue-
Neither has H-
C does-he knew-he could see-
Where in hell was Ed Clarke when the US blew up?
What was he saying then?
Why is he only saying it now-after 3 bloody years of watching the US come undone?
We could see it as plain as day-

I disagree with the premise that Banks are recoiling at the size of the Debt run up-
They are rubbing their hands with glee-
Taxpayers have Cashed them up and all they need to do is hand the debt to CMHC and wait for everyone to go broke and what better position is there at the bottom of a Deflationary crash-then being loaded with the only Money available-

This is a Bankers wet dream if there ever was one-

#19 TaxHaven on 12.11.10 at 12:23 am

A)”Those theatrics were sufficient, of course, to help get my sorry ass booted out of Stephen Harper’s caucus.”

Don’t worry. For some utterly inexplicable reason – except perhaps the great number of deluded fools, still in work, out there – the current bunch is even more popular now:

http://www.vancouversun.com/news/Stephen+Harper+Conservatives+move+ahead+political+rivals+poll/3960144/story.html

As a former Canadian resident long gone, this puzzles me. WHO supports them? Which group is it whose income and well-being are still so rosy? Ruralites? Suburbanites with mortgages? Who? Perplexing.

And it gets REALLY depressing when one looks at the alternatives as well…

And FORGET thinking 10% down is hardship. 50% down would sort out the men from the boys, owners from ersatz renters.

And, Garth, the very existence of central banking is, well, SOCIALIST, for want of a better word. The money supply should be limited by SAVINGS and nothing else. There is no way whatsoever that Mr. F. can consider this social Darwinism or unfettered capitalism…

#20 Prem on 12.11.10 at 12:24 am

The Brampton Real Estate Board STILL hasn’t released september sales as well as october , November . Brampton RE is crashing hard as nothing is selling. Word is sales are down over 60%. I wonder when the Enron numbers of sales comes out? Anyone buying in Brampton is stupid unless they low ball 30-50% below asking.

#21 Diffrent on 12.11.10 at 12:24 am

They all might be headed for cliff, but the lemmings are still running–the 40 year old house near us in Delta listed for 589,000 and sold a week later (two days after the open house) for 600,000. Lots of SOLD signs popping up now too.
Looks like the seller’s strike worked.
Sorry Garth.

#22 Patz on 12.11.10 at 12:27 am

Where to? Every day brings more examples of volatility: Ireland imposes austerity, British students riot over fee increases and scare the crap out of Camilla PB. If there isn’t a run on the banks there certainly is on Xanax by nervous investors wondering where to put their dollars, dinars and euros. The UBS (United Banana States) sets new records to the down side every day. Where’s it all going?

According to a post at the Automatic Earth it could be to war.

Financial distress brings social unrest to the party and they’re damned sure gonna dance. So while Greece, Britain, Ireland and lots more to come are imposing austerity in an attempt to stabilize their finances the social element is heating up in direct proportion. But on the UBS side of the pond austerity is off the table, so far, not poverty mind you, just government imposed belt—tightening.

Are there enough residual animosities, financial turmoil and social upheaval to come to bring the guns out in Europe for another round? Dunno. But it’s possible. How many countries could be seriously racked by citizen anger? A lot I bet.

So while Europe gets torn apart, what will Amurica do? Again dunno. But according to the writer at TAE they might just be trying to forestall the kind of unrest that is growing in Europe with an eye to coming in at the end for the big clean up just like WWII. Kind of intriguing.

One big point he makes is that war is very effective at quieting dissent and getting everyone (most everyone) on the same page.

If you’re interested it’s at: http://theautomaticearth.blogspot.com/

#23 tkid on 12.11.10 at 12:33 am

OMG, the jibjab is awesome!

#24 Junius on 12.11.10 at 12:35 am

#7 Patz,

Well done. Thanks for the laugh!

#25 kitchener1 on 12.11.10 at 12:38 am

Somethings gotta to give very soon.

Trust me when I tell you that the finance dept as well as the Boc and CMHC all have various computer models that will run thru scenerios to see potential outcome(s).

They will take the best of the worst case scenerio. I dont beleive that CMHC could handle anything over a 15% decline in price or a BoC rate of 5% or more.

The banks are being very disingenious. I had friends that worked for banks, one of them worked for one of the ones mentioned by Garth. Back in those days they were pushing 40 year olds mortgages like nobody;s business. To the point were employees/mortgage brokers were lambasted for not giving out 40 year mortgages..

Mortgage brokers were getting a higher commission for selling the 40 years then 25 year mortgage. So really, they are full of crap too.

Im going to go out on a limb and go ahead and predict that come the 2011 budget, ammorts will be going down to 30 year if not 25.

#26 tiger_baby on 12.11.10 at 12:38 am

oh I forgot today’s food for thought:
what are the effects of constant money supply in an environment where both individual productivity and the number of individuals are increasing significantly (eg. over the last few decades)?

#27 Alberta Boy on 12.11.10 at 12:39 am

I have had three people in Edmonton tell me in the last two weeks that they are underwater on their recently purchased condos. One is a nurse that I chat with on the bus and two others are students at the U of A. One of the students recently bought a condo by the University. He told me that the developer has gone bankrupt and most of the units are sitting empty. He is 22 and sits on the condo board. He is stressed. The other student said the builder of his condo in Bonnie Doon is also going under. Now is a great time to buy a condo in Edmonton………NOT!

#28 Kevin on 12.11.10 at 12:39 am

Don’t forget about higher yields in the bond market which will crank up fixed rate mortgages. I wonder if governments, cities and consumer will get their spending in check by themselves or with help from the bond vigilantes.

http://saskatoonhousingbubble.blogspot.com/2010/12/bond-vigilantes-could-they-make-their.html

#29 Guy_in_Regina on 12.11.10 at 12:41 am

The bank CEOs’ statement is akin to a crack dealer telling you to smoke less crack, because they’re afraid you’ll die and not be able to buy ANY more crack at all!

Seriously, it’s amazing. Who makes out like bandits on 35 amortizations? Why, the banks of course, since these contracts ooze interest. These statements show that the banks’ urge for self preservation has overtaken their greed; and, of course, banks are arguably, and probably, the greediest organizations on the institutional landscape!! Oh my.

If this is what they’re saying in public (which is basically a slap to F’s smug face), imagine what’s going on in the boardrooms! They must be scared sh*tless!

A post on RESPs would be appreciated.

#30 april on 12.11.10 at 12:42 am

Al #11 and CTO #13
Not so.

#31 20% er on 12.11.10 at 12:46 am

The 40 year amortization was sheer insanity. Assuming one dies at age 82 and buys a home at age 35, that leaves you with 7 years of mortgage-free living? At that rate why bother?

I’ll tell you why…because the banks would get 40 years of interest. And the king report to the banks.

Wanna see what a proper real estate crash looks like? Check out Ireland’s ghost estates:

http://www.planbeconomics.com/2010/11/26/update-irelands-ghost-estates/

#32 Devil's Advocate on 12.11.10 at 12:48 am

#163 McLovin on 12.10.10 at 10:09 pm
… Its serious enough for the board to be launching a full investigation into how the numbers were reached. Further, it has been picked up by many people in Kelowna and that board has received “dozens” of inquiries. They will not be able to bury it.
I have been telling you that things seem much much worse than the “official” stats have been saying. We now know the official stats are a lie and prices are at least 5% lower than posted. I continue to stuck to my belief that Kelowna is ground zero for the crash and prices are down 20% for houses and 30% for condo’s from the peak.
It will be hilarious to see what BS excuse the Realtards come up with to justify the restating of a year’s worth of stats.
Garth you really should look into this and perhaps do a bit on it.
Kelowna is in a power dive!

I garner from your comments that you have come to rely upon those published statistics? Published statistics which have not supported the contention that the housing market is ruin thus far and you are begining to doubt their authenticity. Would you prefer that they be manipulated to serve your purpose?

If you would like to see the real, raw, un-manipulated stats McLovin feel free to email me at [email protected] with your specific request and I would be happy to oblige. I’d even go so far as to sit down with you in front of a computer connected directly to the MLS database and verify those numbers as authentic.

#33 JB on 12.11.10 at 1:03 am

Is this Edmonton?

#34 Nostradamus Le Mad Vlad on 12.11.10 at 1:05 am

-
In fact, the smoke eater’s in Un. Mitigated. Disaster.” — As are a host of others, primarily because they could not be bothered to take note and see what was happening throughout the world.

Although it’s not too late to sell the three extras (even for a loss), after paying a lot of debts, he will be a little better off, and he will probably have to stay in the workforce for sometime longer than expected. The best laid plans of mice and men . . .

“. . . that will mushroom their interest are perpetuate their family debt.” — Mentioned before that that is what the elite want — to have sheeples in perpetual, never-ending debt, passing it from one generation to the next.

At some point, people here will have no choice but to follow the lead of the Icelandic citizens — simply refuse any help from the IMF, change currency if necessary, take Gandhi’s non-violent approach and refuse to co-operate with the so-called authorities.

India gained its freedom because the Brits. walked away. Banxters here must eventually do the same. No one has power over us unless we allow it.

“. . . we’re headed for the same rabbit hole that swallowed America.” — Esp. if Harper calls an unexpected and unnecessary election, when the economy is in such a shambles, the last thing people want is another CPC debacle.

Better to leave the provinces run themselves, be responsible for their own debts and base income tax rates according to their debts / deficits.
*
Trillions Certainly did not end up in my bank account!

Europe With last night’s link from the Daily Mail saying it is a matter of when the Euro sinks, chances are it is not too far off.

Monsanto – A quick way off this planet!

Dems pull another rabbit out of the hat. Rad Mabbits or Had Matters?

China has chosen to stand with North Korea.

The Revolution has begun! Why? There is nothing left to lose!

Suberranean Bunker Akin to Garth’s, but is drilled into granite and can withstand nuke attacks.

Bond Bull over? And Commodity Investors.

Politics If hyperinflation does happen, it will be politically motivated by the elite, who no doubt will profit handsomely from it. Link in.

2:08 clip ReMax’s Cdn. forecast for 2011.

#35 Dave in Victoria on 12.11.10 at 1:06 am

#12 baby tiger
WTF?

#36 Cookie Monster on 12.11.10 at 1:21 am

I know F worships unfettered capitalism, manifest destiny and social Darwinism.
—————-
Government mortgage insurance and control over the rules for mortgage lending and interest rates are pretty far from unfetter capitalism. Or are you being sarcastic?

#37 Aussie Roy on 12.11.10 at 1:43 am

I may have said this before but its worth saying again.
The easy way to ensure people cant get in over their heads with debt, is for the banks to use a valuation on every property based on its potential rental income. The current valuations done by looking just at recent sales in the area is what can lead to over priced housing. Of course this would curb lending and the banks wouldnt like it.

Of course if the above was adopted its not possible to blow up a house bubble as prices are based on the assets income producing potential. If people wanted to pay above this valuation, thats fine just let them use their own cash to pay for the difference between value and the price.

I think most people here can see prices are driven by credit and emotion but value is driven by wages. Lets base the price on its value and the emotion can be paid for with cash.

#38 dark sad person on 12.11.10 at 1:51 am

12 tiger_baby on 12.11.10 at 12:03 am

Hard working innovators whose work improve our lives are always appreciated, and the difficulties of being a small business entrepreneur are well taken; but unfortunately these do not apply to a great deal of capitalists, and the claim that capitalists can lay claim to all the good things we have is outlandish. (In addition, much of these modern capitalist endeavours are not possible without fractional reserve banking, which you seem to despise so.

*******************

There is nothing really wrong with FRB-
We do need a Credit Market-
But there does need to be actual Reserves and a locked limit on the leverage ratio-
None of that exists today-
There are no Reserves and there is no set ratio-
Credit has been extended far beyond Resreves (savings accounts)
Credit has been extended and leveraged/CDO’s/CDS’s/GSI’s far beyond total World Money Supply–

I agree with CM–
Let the Free Market work-
Let the bodies float-
Anyone that thinks Governments or Fed Bankers can or should control and direct the Market is a misguided fool–
Only the Market can price-only the Market can correct this imbalance-
In the end–the Market will blow them away and move on-it cares not one bit-what we or they think-

#39 nonplused on 12.11.10 at 2:03 am

Woah! I wasn’t planning to post much till the new year but I have time right now and this story was amazing.

First off, good post Garth, I know the same story is sweeping through the teaching profession right now, only it was condos. It seems, when combined with this story, that perhaps civil servants have decided that having a nice stable income and solid retirement fund isn’t enough. They wanted to roll the bones and become rich! Along came all those financial seminars that basically taught everyone to lever up and buy houses to rent out. But I could never figure out where they were getting the money because I thought you needed 30% down and no insurance was available on a spec home.

But this guy was able to buy $1mil worth of real estate with $41,000 down??? How in the heck did he do that? What kind of moron banker would lend in that situation??? Is CMHC actually backing spec homes now? They must be.

I work with a lady who told me that during the dark days of the down turn (2008), she was really worried because if she lost either her tenant or he job she was screwed. And she only has one house and one condo and nearly 50% equity in both, but she wouldn’t have been able to pay both mortgages in either case.

Your fireman friend is closer to doom than he thinks. All he needs to do is loose a tenant and the quad and sled are going to go cheap. And if everyone is buying their own house, doesn’t the rental market come under pressure?

But Mr. Fireman isn’t the only guy who’s doing it. My own landlord has at least 4 properties I know of, of which 3 are just for personal use. But he’s probably ok, I imagine this one is the only one with a mortgage. But why do you need 2 vacation properties? He’s got a good job, but not that much better than me. Although he’s been at it longer. It all looks like huge carrying costs to me. Can you imaging paying property taxes and utilities on 3 properties? I’ll stay in a hotel or drag my trusty travel trailer along.

Sure, the extra gas and the camping fees are a bitch, but it’s got a TV, a toilet, a microwave, and it costs a lot less a year than property taxes all in. And next year we plan to hook up with a group that dry camps on crown land so the camping fees will be gone too, it’ll be just fuel. How much? Mileage sucks with the trailer on, about 12 mpg. But I only get 18 without it. So it turns a $200 round trip into a $300 round trip. You aren’t going to pay for property taxes that way even if you drive a Honda Leaf to the cottage. If a Leaf could get there, which it can’t unless it’s on a trailer, behind my truck, and I’m getting lower millage because I’m hauling the thing.

We are so screwed. Low interest rates and the lack of lending standards have distorted decision making so much that there is no way we will survive a return to historical norms for interest rates. As soon as rates go up, we are not just screwed, we’re doomed. And they will go up. They never stay the same, and they can’t go down. And as The Bernanke has found out, you can’t cause inflation to fix the problem any more like they did in the 70’s, because if you print the money the inflation happens in China not the US. Don’t think he’d thought that one all the way through but that is the way it turn out. No amount of money printing in the US (or Canada) will cause domestic wages to rise until Chinese wages are basically equal, so we’re screwed. We can’t even print our way out until, well, we get paid like the Chinese. No think you on my part, bring on the deflation and raise rates.

#40 Jane on 12.11.10 at 2:22 am

Heroes? They get paid to sleep, cook, and do volunteer work (show the truck to students, etc). They show up at the local Safeway buying groceries, er, checking building safety codes, each morning. They get paid to work out. And they consider themselves experts…due to their extensive six week course, and get paid as much as police and paramedics. They have the time and are rested enough to hold a second job easily. And they are a bunch of hose headed knowitalls. But they are heroes, and I guess heroes can go done in RE flames too. My heart breaks. No really, it does.

#41 EJ on 12.11.10 at 2:38 am

“So here’s the question: How does society keep financial numbnuts like Sammy from destroying themselves?”

Well, once upon a time, it was by having something called “lending standards.” Now that those have been thrown out the window, you can see what happens. This guy is a prime example to point out when people make the outrageous claim that we have better lending standards than the US. Someone needs to do some digging in these situations, because according to the CMHC, they wouldn’t have covered a debt ratio this high. According the banks, they wouldn’t have financed this much. Did Sammy tell some fibs in his application (with a broker’s advice perhaps)? Is CMHC not telling us something? Are the banks BSing? Who’s lying? When this all falls apart, people are going to be in for a shock when it turns out everything they thought they knew was a lie.

“Johnny’s in the basement
Mixing up the medicine
I’m on the pavement
Thinking about the government

Walk on your tiptoes
Don’t try “No-Doz”
Better stay away from those
That carry around a fire hose
Keep a clean nose
Watch the plain clothes
You don’t need a weatherman
To know which way the wind blows”

-Bob Dylan, Subterranean Homesick Blues

#42 Utopia on 12.11.10 at 2:53 am

“TD CEO Ed Clark simply says current lending practices are “not a good thing” while his counterpart at BeeMo, Bill Downe, says tighter lending rules should be in the next federal budget. Adds Clark: “These are exactly the things that government should be doing.” Both are making the case for a return to the 25-year amortization”. —-Garth

Wow. I read it here first. Did they really say those things? I can hardly believe it and yet if that is the case then there is some hope after all. It means the Banks are paying attention to many of the worries expressed so frequently on this site.

#43 Nogg on 12.11.10 at 2:59 am

To put Sammy’s situation another way: Can you imagine anyone thinking it would be a good idea to go out and borrow almost $1 million at 4% interest in order to invest the money for a 5% return?!! Ridiculous.

#44 InvestorsFriend (Shawn Allen) on 12.11.10 at 3:46 am

Sammy made his own bed.

Let him burn in it.

I see a bankruptcy and possibly a divorce in his future.

#45 Last Man on 12.11.10 at 3:53 am

I got an idea for this guy — Light three matches.

#46 Schwarzen's Eggers on 12.11.10 at 4:00 am

The story of an individual’s financial folly is interesting, but unfortunately has little bearing on anything else.

If Canadians think that the U.S. is a mess, they are partially right. However, if they visit Los Angeles, CA they’ll realize that they still need a few million dollars to get into a few neighborhoods down here.

Unfortunately, declaring that Canadian real estate is ‘unsustainable’ AFTER a global real estate downturn pretty much guarantees that Canadian homeowners have little to worry about.

The phrase is called beating a dead horse.

It’s already dead.

Seriously.

No. Really.

#47 McLovin on 12.11.10 at 4:19 am

DA – Did the fake stats you’ve been using for the last 12 months crash your Blackberry?

Your silence is odd. Here is your chance to show us all what an upstanding Realtor who loves his life thinks about the board lying to the people and cooking the numbers.

#48 smartalox on 12.11.10 at 4:40 am

@ Ayn Rand: having one paren stay home with the kids is only really effective if it avoids the cost of full-time child care. After the age when the kids go to school full time, there isn’t much reason to stay home (except perhaps in cases of disability, or full time elder-care)

@ Toronto McMansion: CMHC rules ‘tightened’ on April 19, 2010: minimum 10% down, 35 yr. amortization on the principal residence, 20% down required for a second home.

#49 The Original Dave on 12.11.10 at 4:56 am

I don’t see the 35 year am on a principle residence as being as much of a problem as the 5% down. If they increase the down back to the 10% it used to be, they could still allow the longer am as a way of helping young people to still have an affordable payment. However, the long am should only be available for principle residences, and any property bought for speculation should be subject to 25% down and a maximum 15 year am. That way it should be possible to keep overall prices in check without rendering it totally impossible for first time buyers to get into the market. Because I believe it is the speculators, far more than the first time buyers, that helped create the inflated prices we see today.
———————————————-

the 35 years is just as bad as the 5% down. The longer the payment period, the smaller the payments. The smaller the payments, the more people are interested in purchasing. The more people interested in purchasing the higher the prices, the higher the debt levels etc.

If we required more downpayment money and short ammortization periods, the dollars we have saved would go a lot further. If we required 20% down (i know, sounds crazy) a lot of people wouldn’t have that downpayment amount and prices would have to retract. The same goes for ammortization periods.

#50 objectivist on 12.11.10 at 5:43 am

Patz, your grasp of Ayn Rand is so superficial it’s ridiculous.
Greenspan was an adherent – 40 years ago! – when he was as big a gold bug as ever existed.
Yah, well, times change. Greenspan became a pump-primer that helped usher in the real estate bubble.
His late-career shenanigans have about as much to do with Ayn Rand as I have to do with the price of tea in China.

#51 Mark in Edmonton on 12.11.10 at 5:48 am

Good article. It shows how so many people have become Real-Estate speculators in Edmonton. I know a realtor who had a client who bought 4 investment units to rent out in 2007. This month all 4 have hit Foreclosure status. He said about 50% of his dealings we speculative purchases.
I hope the greater populations realizes “F” created a housing bubble with his own “subprime mortgage” version 40 year nothing down (changed to 35 year to make it look like he was correcting someone elses mistake), wild property speculation (just like the states) and massive debt, shrinking the middle classes of Canada!

#52 David on 12.11.10 at 5:54 am

Garth you know very well that federal politics is about getting elected, then getting re-elected, and not much else. Then, come 8 eight years, take your pension at the door and go back to the real world.

As far as policy goes, its just a game of Musical Chairs (sorry….Seats!). As long as a stupid policy wins votes and doesn’t blow up on your watch, in it goes. Anything for a vote!

Yes, they all know that mortgage debt will quite likely blow up in Canada…..eventually. But as long as the music plays until they’re each vested for their $150K lootbag, they don’t really care about that.

Now, the bankers ?! Well, their loans are all insured by the CMHC…. so this ‘warning’ stuff about personal debt levels in Canada is really just vague posturing and reputation-protecting. They simply don’t want the bad press about them, that they were totally asleep on the issue, when the time fianlly comes….”But we warned you…we did!”

Greater Fools? Right now, there’s none greater than us.

#53 Aaron - Melbourne on 12.11.10 at 6:14 am

Fire fighting is typically a firefighters SECOND job.

Their defined benefit pension (superannuation as its known here) has the nickname “The golden handcuffs” – after 30 years the income multiple is something like 8.6 times final salary.

I was privy to a conversation this week between two fairly senior officers discussing retirement – A was encouraging B to go now as B had maxed out and was sitting on $3m of property. B insisted he would serve out another year – salary $120k AUD and add another $20k to that in unnecessary yet structurally enshrined union overtime. B also referred to his significant sick leave and long service balances which could be used to draw a salary without needing to work for another year.

At that level they don’t fight fires either. Its significant downtime, a little administration, and a lot of retirement planning with almost no accountability for their whereabouts or output.

Insider knowledge of a very corrupted industry.

#54 SafetyBear on 12.11.10 at 7:25 am

Only himself to blame. The albatross of three sure thing investment properties bought from the builder – the only ones guaranteed to make a profit it seems – have wiped out the actual equity he had in the principle home.

Now he’ll be cleaning floors at 90 whilst his children curse him for their lack of further education.

And he’ll deserve it.

#55 Cow Man on 12.11.10 at 8:03 am

Garth:
I look forward to every entry you scribe. Your points all make sense and should be heeded by all buyers. However, real estate is hot again in Owen Sound. A number of homes that languished for 6 months sold in the last two weeks. No “reduced” or “new price” stickers. The owners held out and the buyers succumed to the desire to be owners. Does not look like any real estate correction here. The local Real Estate Board continually reports month over month price increases. I don’t know what it would take to turn it back to “normal”. Homes should be selling at a discount to their replacement cost; as they should depreciate. They are not! Thank you for your efforts to say buyers from themselves.

#56 Frank Bendermere on 12.11.10 at 8:14 am

The Bank of Canada said Thursday the risk of a shock to Canada’s financial system increased over the past six months — led by sovereign debt worries and widening trade imbalances — and warned record household-debt levels are “likely to deteriorate further” in coming quarters as wage growth stalls amid a slowing recovery.

The central bank said household indebtedness — among the key domestic risks governor Mark Carney has identified in the past year — is reaching a point that warrants banks to use “some caution” when issuing consumer loans.

http://www.cbc.ca/fp/story/2010/12/09/3951741.html

#57 Habbit on 12.11.10 at 8:22 am

Good day eh! Part of the problem is capitol has no loyalty. In our global economy it moves to where the lowest costs of production are. Never mind labor laws, enviromental regulations,wages ect. Combined with the corruption at the highest levels Enron,Bre X, fraudulant advisers, Prime Ministers accepting cash in envelopes and forgeting to declare it… it goes on and on. It seams the acceptable norm now is it’s OK as long as you don’t get caught and if you do you’re still fine cause they has to prove it! Hi OJ! Working people are busy putting food on the table and don’t understand how the system really works. They put their faith in the nice lady at the bank who more often than not tells them to put their meagre savings into mutuals or GIC’s. We here in Canada have the highest mutual fund MER’s in the world. Much of the returns are thus going back to the advisors and the fund companies. With the stagnation of real wage increases that has been with us for some time the little guys are taking it in the teeth. As the real jobs are being exported to lower wage areas we keep our economy going by lending the poor slobs gobs of money no? Meanwhile back at the ranch corporate leaders are receiving grotesque bonuses stock options for marginal performance. Sweet! The old folk that have saved in their lifetime and don’t understand how things work see their GIC’s and fixed income pummeled. Ethics are taking a back seat to greed. The house and money pumpers are brainwashing many into debt slavery to be sure. Some have the opinion that our time here is short so borrow baby borrow! Have the good life while you can. You can participate in the great American dream all the while your job is going elsewhere. The people in authority are looking out for…themselves! There is no doubt the fox is minding the chicken coupe. Government leaders move to the boardrooms when they are out of office and vise versa. Those at the top have a moral obligation to society to ensure all citizens are protected even from themselves. This is not happening. Look at the native bands here. All the csah funnelled to the top and absolute poverty elsewhere. The system is designed this way. It’s the mob runnning the show there. Extreme example but better to have the lower levels on alcohol and drugs. Much easier to control the wealth. Until we get back to honesty,integrity,loyalty,ethics, morality ect we will not move forward. No new government policy will save the day. When enough people here are pushed to the limit with little to loose the shit will hit the fan and the integrity of our system will be in jeopordy or possibly collapse. We are all responsible. We need real grassroots changes in our politics and now. This will not end well.

#58 David B on 12.11.10 at 9:00 am

Say it isn’t so!

…..It’s Sammy’s other houses – all three of them. Brand new, bought in the burbs from a builder for $325,000 each two years ago, now worth $285,000 on a good day. Total down payment for all three: $48,750. Total mortgage debt: $926,250……..
————————————-

On a another front look how a yachtbroker writes knowing how the big boys with toys ( some of course worth far more than Real Estate) would react if they though they were told the truth wrt market.

[email protected]

#59 David B on 12.11.10 at 9:01 am

Addendum to above:

Should read “Not told the truth”

#60 Alliston on 12.11.10 at 9:09 am

You can be a contrarian or a victim the choice is yours. Oh Sammy, go buy “Money Road” and stop hangin’ with the Sheep!

#61 Moneta on 12.11.10 at 9:25 am

nonplused on 12.11.10 at 2:03 am
Woah! I wasn’t planning to post much till the new year but I have time right now and this story was amazing.

First off, good post Garth, I know the same story is sweeping through the teaching profession right now, only it was condos. It seems, when combined with this story, that perhaps civil servants have decided that having a nice stable income and solid retirement fund isn’t enough
————-
I’m in Ottawa and I have trouble meeting someone who does not have 2 properties, one being a condo.

Many don’t bother to sell the condos when they shack up and just buy a new big house.

The downsizing is happening but still a trickle. Mostly because utilities are eating into the family budget. A new neighbor, mid-30s, was forced to sell his big McMansion out in farm country and move to the burbs. Next thing I know, he’s living in his rental (another house) while renovating the new downsized house!

I’ve been reading the financial facelifts in the G&M for years and if you go through the last 5 years, you will see a large number of civil servants loaded with real estate debt, doing the landlord thingy.

But they’re not speculating… they’re in for the long term. LOL.

#62 Ronaldo on 12.11.10 at 9:32 am

http://www.bloomberg.com/news/2010-12-09/homes-in-u-s-poised-to-lose-1-7-trillion-in-value-this-year-zillow-says.html An the beat goes on……coming to a town near you I had to laugh over the headline in the Friday Globe and Mail about Carney’s concern over the debt level of Canadians.

Heck, last year at this time he and F were concerned about the same thing and one of the CEO’s of the big banks was also expressing concern. Was it all just for appearance sake to make the sheeple believe they are really concerned or just a feeble attempt to cover their butts for the mess we are in and pass the blame on to the ignorant souls they are destroying.

I note that mortgages are still available for 2.15% and the 5 year fixed is still lower than it was a year ago at this time. Maybe what needs to be done to stop the banks from lending to the greater fools is to put an end to the tax payer funded insurance (CMHC) on mortgages that these institutions are giving to people with “no money”.

These guys need to look in the mirror and see who is causing the problems and not blame it on the greater fools. There will never be a shortage of greater fools since most of the population is totally ignorant of what is taking place out there but thanks to you Garth, you are reaching at least a small percentage of these fools.

As for you stating several times over the last couple years that the TFSA is one of the best deals that the gov’t has come up with as a wealth creation tool, I totally agree. You also mentioned at a speech in Kelowna and another in Nanaimo that I attened that the TFSA is not a place for GIC’s or interest bearing investments yet I am willing to bet that 99% of those with a TFSA have their money parked in such vehicles.

Yesterday, I decided to cash in on my winnings from the TSX and TSX Venture since February of 2009 when I first established my TFSA. Up 141.84% over 20 months. Your right when you say that you need to be diversified. I accomplished this by first investing in one of the bank stocks and a junior miner back in Feb 09 and then into various other investments including, income trusts, producers in oil and gas, potash, gold and silver, iron ore, copper, zinc, copper, platinum, coal, etc. It’s been a lot of fun. I believe the next big move will be in copper stocks since the latest news that J.P. Morgan, the same people who have been accused of manipulating the silver prices over the past many years, have now purchased 1/2 of the copper supply of the London Metals exchange. An obvious move on their part to corner the copper market. Interesting times ahead indeed.

I continue to enjoy your blog and your humor and hope to see you here in Nanaimo again in the near future. Keep up the good work.

#63 BrianT on 12.11.10 at 9:33 am

Patz-Yes, but it does help the warmongers if the domestic population is swallowing their propaganda. Currently, the propaganda machine appears to be leaking oil, which is why controls on the Internet are such a priority.

#64 Bill ( Peterborough) on 12.11.10 at 9:34 am

Re # 17 dark sad person

I disagree with the premise that Banks are recoiling at the size of the Debt run up-
They are rubbing their hands with glee-
Taxpayers have Cashed them up and all they need to do is hand the debt to CMHC and wait for everyone to go broke and what better position is there at the bottom of a Deflationary crash-then being loaded with the only Money available-

This is a Bankers wet dream if there ever was one-

*******************************************

And so we begin the demise of the middle class. Wonderful.

All the bankers won’t be laughing so hard when the sheeple/people wake up and see what has happen right in front of their own eyes, while they walked around blinded by all the materialistic glitter which they accumulated through further debt.

All through the conditioning of the controlled Medias.
Pity.

http://www.youtube.com/watch?v=1Dj7p3h03qQ&feature=related

#65 Bill ( Peterborough) on 12.11.10 at 10:08 am

Re # 25 Tiger_Baby

oh I forgot today’s food for thought:
what are the effects of constant money supply in an environment where both individual productivity and the number of individuals are increasing significantly (eg. over the last few decades)?

*******************************************
IMO : Fuedal system.

What has been happening in first world countries is the further devaluation of currencie’s through mass printing of more currencies; backed by nothing tangible. This in turn gives the people the sense of false prospertity by increasing further credit /debt based on printing said currencies, NOT PRODUCTIVITY BASED.

Basically the first world countries for the most part sold themselves out to credit/ debt, while decreasing productivity.

Where productrivity has increased is in 2’nd & 3’rd world countries, while still labour rates have remained pitiful.

By the way for all you sauvy investors who chose to invest in the 2’nd and 3’rd world countries say 10 or so years ago, and further helped to expidite the wiping out of our middle class over hear shortly. Thanks. ( Idiots)

Instead of trying to staighten out our economic mess over here you chose to ignore it and invest in slave labour , for the most part.

So what we are seeing is further debt being incurred on the middle class, through credit of fiat currencies.

The funny thing most people/ sheeple don’t get it.

The Banking Cabals print more fiat currencies throught the world, at no cost to themselves, charge interest to those countries who in turn lend it out to the people/ sheeple who spend it, getting further in debt.

Now heres the real eye opener. Most of this said printed currencie/s is done electronically, again at no cost to the Banking Cabals. WILD.

Only logical out come of above is a fuedal system.

Throw in a few more wars, famines, man made disasters along the way as a smoke screen and the funny thing is that we will ask the Elite to save us from our self destruction. ( Created by the Elite, with the usuall twist of blaming each other)

Truth is stranger than fiction.

#66 Moneta on 12.11.10 at 10:14 am

So where is the incremental housing demand coming from…

http://www.calculatedriskblog.com/2010/12/under-35-living-with-parents-vs.html

Blue line is probably peaking in Canada.

#67 CTO on 12.11.10 at 10:19 am

Garth

I clearly see a problem with Canadian societies financial decisions and there is so many fundemental reasons to see a fall coming.

Unfortunatly, the overwhelming Canadian media is winning at the game of propaganda for there clients (real estate and banks).

I see no logical sound fundementals in any of the press releases and they seem to fly in the face of our Knowledgable Central Bank that is sternly warning Canadians of too much debt, but the media prevails.

Two years ago I confidently told my wife and her family the real estate market will be negative by the end of 2008, then 2009. I still believe it to be true at some point in the next 2-5 years but i have to give in at some point.

She wants to move up to a bigger house this spring/summer, however i believe that the fools are great enough in this city to keep blowing this bubble for another year or to then i think there will be a terrible crash for C anada as rates start to rise in ernest around the world.

I foresee a reasonable recovery for other countries already hit hard in about 2 years but it is clear Canada will NOT be with them on the raod up.

How do i make my wife happy and hedge my bets? I/ we have lots of savings and an existing house in TO burbs nearly paid for.

#68 Leanne on 12.11.10 at 10:30 am

#22 tkid on 12.11.10 at 12:33 am
OMG, the jibjab is awesome!

—-

I always knew Garth had an inner rock star. For those who missed it, check #165 in yesterday’s comments.

#69 BrianT on 12.11.10 at 10:34 am

One less guy around to tell tales-Confucius said-Three men can keep a secret, as long as two of them are dead http://www.nypost.com/p/news/local/manhattan/bernie_madoff_son_andrew_found_dead_41QZ5xHZ2Ifq2IBmRtZgLK

#70 Jerry on 12.11.10 at 10:34 am

How will you know if you like Kipling if you’ve never kippled? Here’s a few stanzas to tie together fireman, burns, and idiotic investment ideas…..

Then the Gods of the Market tumbled, and their smooth-tongued wizards withdrew
And the hearts of the meanest were humbled and began to believe it was true
That All is not Gold that Glitters, and Two and Two make Four
And the Gods of the Copybook Headings limped up to explain it once more.

As it will be in the future, it was at the birth of Man
There are only four things certain since Social Progress began.
That the Dog returns to his Vomit and the Sow returns to her Mire,
And the burnt Fool’s bandaged finger goes wabbling back to the Fire;

#71 T.O. Bubble Boy on 12.11.10 at 10:52 am

Another wonderful piece of F wisdom.

Dim Jim tells Reuters that Europe should follow the US approach from 2008 and put a lot more money towards bank bailouts… I”m sure that bank bailouts would go over well in Greece and the UK and other places that are in the middle of cutting benefits, raising tuitions, etc.

(interesting that he didn’t say “follow Canada’s lead and bail out banks that didn’t need it”)

http://blogs.reuters.com/chrystia-freeland/2010/12/10/canadian-finmin-tells-europe-to-follow-u-s-example/

To his credit, he was able to explain why tax cuts for the Top 1% in the US won’t provide any significany stimulus to the economy.

#72 Ret on 12.11.10 at 11:07 am

#1 Dorothy Re: Speculators

I agree with you but how would financial institutions identify the “speculators?” I don’t think that the banks really care anyway. Robo-approve all applications before they decide to take their business elsewhere!!!

Every flipper and renovator on my street in West Hamilton has said that they were fixing up the house for their son, daughter or (fill in the blank) ________.

The student house slumlords are also batting 100% as chronic liars.

#73 David B on 12.11.10 at 11:21 am

What is interesting, and note, when the house of cards starts to fall on real estate all sorts of cache starts to flood the markets. Here in Nova Scotia’s sailboat capital “Chester” many of the home listed are long time American summer homes who had been passed down from generations. Garth mentioned a viper once and that is peanuts compared to array of big boy toys that fall with Real Estate. Cash is indeed King even when in the market for a supperyacht listed at 5 million @ 50% …. so just how would y’all offer Sammy for his holdings when the crunch comes?

Hint, I would not touch them at 50% …. Why you ask?

Downpayment, closing costs, mortgage costs, fixer upper costs, and/or selling/renting costs and a whole bunch of sleepless nights.
——————————

Merry Christmas

#74 john m on 12.11.10 at 11:22 am

“Of course, I still recall the day when – as an MP on the House of Commons Finance Committee – I was the only one in the room who choked at F’s demand that we rubberstamp new rules allowing 40-year amortizations and 0% down payments”. …………. i remember very well that day Garth and look where we are now—things could have been different..you were the only honest representative of the people in that room surrounded by a bunch of incompetent sheeple.

#75 Incubus on 12.11.10 at 11:26 am

This guy Sammy will not be able to retire in nine years. He will lose everything and will have to work until 65 in order to survive.

#76 Got A Watch on 12.11.10 at 11:32 am

“You should never make assumptions about Ottawa less than 30 % of the people who live in Ottawa work for the Government, The majority yes, but rembember Ottawa still has lots of High tech.”

Well, I have been to Ottawa many times. Each and every occasion, I met only people who worked for the Federal Government, or ‘contractors’ or ‘suppliers’ to the Federal Government, or their wife/husband/SO does, or son/daughter…..even University/college students working part-time in bars told me their goal was to graduate and get a job with….the Federal Government. Most people will recognize a gold-plated gravy train when they see one, and try to get on board.

The number of people who I can discern in Ottawa that are not directly, or indirectly, drawing their paycheck from the Federal Government is….maybe 25% of the population, at a guess. And whatever job they may have probably wouldn’t exist if the ‘National Capital’ weren’t located there. Ottawa would be a small town with no significant local economy if it wasn’t for the luck in having the Federal Government located there.

I am not opposed to ALL Government, just the bloated, incompetent, high-cost/no result Government we have. We could regulate most key issues, and administer the few things that really need it, with about 20% of the current Federal employee head count IMHO.

The farther down the chain and the further away you get from Ottawa, the more relevant the Government is to you as a citizen and resident. Local Governments provide fire/emergency services, pay for policing, plow the roads, contribute to education etc. Provinces pay for health care and emergency services, inefficiently yes, and education and a few other necessary areas that need to be funded. But in general provincial Governments suffer the same failures as the Federal: bloated, high-cost, inefficient and mostly useless.

In order to help return the economy to a sound footing, on that basis, I would get rid of 80% of the Federal workforce, 60% of the Provincial, and 40% on the local level, almost all of those bureaucrats. There would be no need for so many , if our laws were more clearly written, and Governments did not have an addiction to ‘mission creep’ where they always try to expand their areas of authority and responsibility.

We could probably scrap 80% of the laws currently on the books and replace them with simplified updated versions written in plain language. Replace the current income tax system with a ‘flat tax’ system with no deductions or line item calculations that has a postcard with 3 lines for a ‘return form’. Etc.

The current structure of our Governments only leads to further economic deterioration, and a shrinking economic base. The more they raise taxes, the less they will collect. Entrepreneurs and innovators will simply relocate to a place where they are not stifled by ‘Big Government’ and all it’s mutant offspring. Or just go Galt, robbing the Government of the tax revenue they crave – “starve the beast!”.

#77 Northern_dirt on 12.11.10 at 11:44 am

#47 smartalox

Its still 5 percent down not 10… Its only when you refinance that you are now only able to refinance 90 percent instead of 95..

The 20 percent on a second, or investment property is true, up from 5 percent…

#78 Devil's Advocate on 12.11.10 at 11:46 am

#46 McLovin on 12.11.10 at 4:19 am
DA – Did the fake stats you’ve been using for the last 12 months crash your Blackberry?

Your silence is odd. Here is your chance to show us all what an upstanding Realtor who loves his life thinks about the board lying to the people and cooking the numbers.

I’d be happy to McLovin, however I have a history of being misunderstood on this blog so I will not post here what those “real” stats are. I would be happy to provide those “real” numbers in a form and manner deemed reliable by the recipient to anyone interested. Just email me at [email protected] telling me who, what, where, how and when. But beware, you might not like what you see . On the other hand you might be pleasantly surprised.

#79 BDG-YYC - Back in Kansas on 12.11.10 at 11:49 am

@ #1 Dorothy … :-)

But Dorothy … we are all in Kansas now. And that Kansas-snort has clouded your thinking. You know like the time you were D.D. out joy riding in your VW Bug with your buddies, Tinnie, Lionei, and Scarie, and they were reefing thier brains out and you couldn’t see out the windshield for all the smoke … and you thought it would be a great idea to pull that cop over to ask for an escort home, and when he asked you for your drivers license and you couldn’t find your purse ’cause good ol’ Tinnie was sitting on it … and …

Well … your 10/35 – 25/15 solution says you don’t actually realize where we really are … but its O.K. you won’t be going home anyway ….

:-)

#80 Alberta Boy on 12.11.10 at 11:50 am

#38 Nonplused,

“We are so screwed. Low interest rates and the lack of lending standards have distorted decision making so much that there is no way we will survive a return to historical norms for interest rates.”

You nailed it there my friend. Loose lending and low interest rates have totally warped the average person’s perception of debt. I watched my parents work hard for twenty years to finally pay off their $80k mortgage last year (they were paying anywhere between 5% and 13% on the place over the years). My dad is a policeman. There are other young guys who work with him that carry mortgages in the $300k range. Have police wages increased 4X in the last 20 years? I think not. The only thing that is making this sort of leverage “affordable” is rock bottom rates and long amorts. The number of factors pointing to a dismal future for RE is staggering.

#81 Live within your means on 12.11.10 at 11:58 am

Was curious to see how much firefighters earned in our municpality (Halifax). Leven 4 (probationary) is $33,560. Level 4 is $67,118. plus a comprehensive benefit pkg.

A niece’s husband (firefighter) built houses on the side. Turns out the guy who built our house (and lived in it for a couple of yrs) was also a firefighter and built others on the street too. Thank goodness we decided to redo our siding and windows this summer. The guy graded the land improperly and our contractor told us the sills were so rotted out in a couple of areas he was surprised it hadn’t fallen down. The house is about 30 yrs old. I don’t understand as the other homes on the street that he built were graded properly. You’d think he would have noticed it, even if he hadn’t graded it himself. Now we’re left with a trench around 3/4 of the house. Contractor suggested we slice a french drain in half and run it next to the foundation at least 8 inches below the current grade. We’ve still got to figure out how to hold the soil back so it won’t look too bad. I thought we could put some heavy duty landscapers cloth on top of the french drain and then put pea gravel on top.

DAN IN VICTORIA – if you read this, any suggestions would be much appreciated.

#82 Devil's Advocate on 12.11.10 at 12:10 pm

“The only thing that is making this sort of leverage “affordable” is rock bottom rates and long amorts. The number of factors pointing to a dismal future for RE is staggering.” Alberta Boy

There are countries in the world which have long had far, far longer ammortizations than we in North America. And interest rates, ultimately, are a consquence of the economy more than an influencer.

I wonder if it is more the consequence of a shift in the mindset of consumers, expecially that of North American consumers from where this phenomena seems to have most originated, that has caused the bubble you imply has a “dismal future”?

Think about it… Are the greater fools not ultimately responsible for their own irresponsibility?

An education is a bargain at any price. But given the opportunity you are far far better to learn from someone else’s costly mistakes.

And that is all I have to say about that.

#83 tran, Calgary on 12.11.10 at 12:30 pm

http://www.calgaryherald.com/business/Fingers+crossed+2011/3962156/story.html

Calgary will turn around in 2011. Really?

#84 Porteño on 12.11.10 at 12:31 pm

Garth. F does NOT worship unfettered capitalism. If he did he would NOT have bought up all those loans on the banks books in 2008 in order to give them room to lend more. That is NOT unfettered capitalism. That is a distortion of capitalism.

#85 Live within your means on 12.11.10 at 12:34 pm

#60 Moneta on 12.11.10 at 9:25 am

Hi Moneta

I have old friends in Ottawa but haven’t been in touch with them for several years. They bought an older, small home close to Tunney’s Pasture in ’71 or so and did a few renos once it was paid off. Then they bought a condo nearby and rented it out & sold for a profit. Bought a SFH in Kelowna and rented it out for 10 years to same tenants. Not sure if they have since sold it. Last I heard they sold their house near Tunney’s P and made a killing on it and bought a free hold townhouse in Kanata. They’re DINKS and retired so they spend lots of time at their cottage in the Gatineaus and like to travel. They were always good money managers and probably bought and sold at the right time. Plus, both had good paying jobs with pensions. Timing is everything. Must get in touch with them. She and I were roomates in Ottawa. BTW, dates are from memory so may be off by a couple of years.

#86 Winnipeger aka frozen wasteland on 12.11.10 at 12:41 pm

some examples of price drops in the PEG! The market is starting is long slide back to normal….. Note the property taxes on these homes—-very high and about to go higher $

78 BRENTCLIFFE Drive , Winnipeg R3P 2B5 Area: 1M MLS® #: 1022601
Nghbrhd: Linden Woods Schl Div: W7/Pembina Trails
Tax Amt: $5,945.65
Type: RD Liv Area: 222.97 M2/2,400 SF Tax Yr: 2010 Status: Active
Use: Fin Bsmnt: Ed Tax: $2,787.12 List Price: $459,900
Style: TWO Lot Front: 17.98 M/59 F Imprv: $.00 Org Price: $474,900
Yr Built: 1989 Lot Dpth: 36.58 M/120 F Spc Lvy:

#2

86 Brigantine Bay , Winnipeg R3P 1R2 Area: 1M MLS® #: 1021120
Nghbrhd: Linden Woods Schl Div: Winnipeg #1 school divsion
Tax Amt: $4,650.90
Type: RD Liv Area: 195.38 M2/2,103 SF Tax Yr: 2010 Status: Active
Use: Fin Bsmnt: 78.04 M2/840 SF Ed Tax: $2,168.47 List Price: $399,900
Style: SP4L Lot Front: 15.85 M/52 F Imprv: $142.29 Org Price: $419,900

#3

70 MUSGROVE Street , Winnipeg R3R 2M5 Area: 1F MLS® #: 1019270
Nghbrhd: Charleswood Schl Div: W7/Charleswood
Tax Amt: $4,800.26
Type: RD Liv Area: 222.97 M2/2,400 SF Tax Yr: 2010 Status: Active
Use: Fin Bsmnt: Ed Tax: $2,232.25 List Price: $369,900
Style: TWO Lot Front: 23.16 M/76 F Imprv: $.00 Org Price: $389,900

#87 BrianT on 12.11.10 at 12:55 pm

#70TO-Big surprise-that is ALWAYS the solution-simply give more taxpayer money to large financial firms and this will work out well for everyone. I think the sheep ar slowly starting to realize that this guy and every guy just like him doesn’t work for us-that is why when he leaves this position his chances of landing near the top of a large financial firm are about 100%. What he is doing right now will determine how much money he makes later-that is the bottom line.

#88 dark sad person on 12.11.10 at 12:58 pm

#63 Bill ( Peterborough) on 12.11.10 at 9:34 am

And so we begin the demise of the middle class. Wonderful.

***************

http://www.youtube.com/watch?v=2nTcDU73gLs

#89 Love this Blog on 12.11.10 at 12:59 pm

#67 Leanne,

Thanks for directing me to Garth’s rock star career. I LOVE it!

#90 realpaul on 12.11.10 at 1:03 pm

I have mentioned that the outrageously compensated civil servants were skewing the real estate market in several locales…..expectantly I expect the response to this truth to be as equally denied today as it was when I mentioned it the last time.

“Why save…I’ve got the pension”.

In BC we have hundreds of thousands of these parasites in the public trough. An increase in the numbers making more than 100K p/a over 20% flooding the system with new unfunded liability for the taxpayer.

Who’s going to pay the tab when property value assesments are cut in half and the bill is still spiralling upwards by union contracts holding the taxpayer at gunpoint?

#91 Debtisforever on 12.11.10 at 1:08 pm

Good story. Unfortunately, this guy sounds like people I know. I think there are too many of them to count. Too much real estate, too much debt, no money.

#92 Live within your means on 12.11.10 at 1:12 pm

#63 Bill ( Peterborough) on 12.11.10 at 9:34 am

Dust in the Wind – Agree with a commenter – good one to play at my cremation.

#93 Because I know on 12.11.10 at 1:23 pm

Jane 39 and Aaron,

I don’t post often but feel I have something valid to contribute. I am a Fire Fighter, and it happens to be in a big Alberta city and in fact it may be the same one that our example comes from. In response to some of your concerns.

Last week our Paramedic trainers put us through an on site Obstetrics review at the fire hall BETWEEN calls. Ever been the only expert on site for a baby delivery in a suburban kitchen Jane?

The week before I participated in a professional teaching course as I am responsible for delivering the training that allows every one of our members to drive an 80 000lb ladder truck through snowy traffic without killing anyone, and setting it up in the middle of the night to try and prevent another McMansion on a zero lot line from burning down yet another entire new neighborhood. It is a very rare week that we are not actively training on the job.

We are paid fairly for what we do, that I will not argue. You can judge for yourself if we are overpaid or lazy:

By my 5th year, which was a number of years ago I would conservatively say that I responded to:

*Dozens of actual, “my house is burning down” incidents (ever been inside a burning pile of wood chips and glue Jane?

*Hundreds of messed up medical aids (60% of our work) dealing with every fluid you can think and often to an old age home full of nurses who watch us work.

*at least 40 codes (as in grampa just hit the deck 10 minutes before Christmas dinner). Ever done CPR on an elderly person while the whole family watches Jane?

*Countless vehicle collisions (ever jumped in the back of a wreck on the highway to hold the head and neck of a drunk driver Jane?)

*Suicides. I don’t add them up in my head because I don’t want to remember them.

*Countless “Man down” calls. We are constantly called to half frozen unfortunate souls that call our streets home. We don’t judge them, or anyone, ever, we just what we can, every time.

Truth is Jane that we do work out “at work” and I do it all the time. Most of our customers are very thankful of this fact when they get carried down the stairs of their walk-up by two of us. Every lifted an unconscious obese leaking patient Jane?

I work 10 hour days and 14 hour nights. Sometimes it is busy and sometimes it is blessedly quiet. Much depends on if you work in McMansion suburbia or an inner city area. Bottom line though is that I work 42 hours a week, and make the same wage as a teacher.

Let the blog dogs decide.

PS. Oh, and Garth is right, too many Firefighters (and people in general) in Alberta have poorly thought out spec property investments.

#94 GregW, Oakville on 12.11.10 at 1:31 pm

Hi Garth, fyi some may think this sound interesting.
BIG IDEAS airs on TVO every Saturday and Sunday at 5:00 pm.
http://www.tvo.org/TVOsites/WebObjects/TvoMicrosite.woa?bigideas

“With passage of time many leading lights came to proclaim that rationality and irrationality exist as polar opposites. Reason apprehends reality as it really is while un-reason is nothing but projections of wishful or fearful emotions.

One person for whom there was no clear line between rationality and irrationality was Sir Isaac Newton.

This weekend…” (see link)

#95 Bill ( Peterborough) on 12.11.10 at 1:32 pm

# 41 Utopia

“TD CEO Ed Clark simply says current lending practices are “not a good thing” while his counterpart at BeeMo, Bill Downe, says tighter lending rules should be in the next federal budget. Adds Clark: “These are exactly the things that government should be doing.” Both are making the case for a return to the 25-year amortization”. —-Garth

Wow. I read it here first. Did they really say those things? I can hardly believe it and yet if that is the case then there is some hope after all. It means the Banks are paying attention to many of the worries expressed so frequently on this site.

****************************************

Both of you got to be kidding , right.

First the banks screw us over and then tell us that they will tighten up their lending practices.

WTF X 2 . They created the problem. Now after screwing most of the middle class in poverty through controlled corporations/medias telling them to “Keep up with the Jones”, while wiping out the rest of the prudent middle class through taxation in the upcoming
future we are going to “Applaud ” them for realizing what they tryed to do did not work.

Nobody can be that mentally challenged to believe this, can they ?

If you choose to believe this , you are saying we have incompitent retards running our countries, which doesn’t say much for the rest of us for swallowing this ” Horse Shit”.

Truly Dillussional.

#96 Timing is Everything on 12.11.10 at 1:42 pm

#44 Last Man

Ha! Good one…But we shouldn’t laugh. It probably did cross Sammy’s brain cell.

#97 insider_trading on 12.11.10 at 1:47 pm

TD and BMO are playing the game of
CMA (cover my ass). They are letting us know
that we borrowed too much because they know
something that we dont.

Perhaps their latest internal
reports are showing that the Canadian housing
ship is about to hit an iceberg and there is no way to
avoid it.
So when it does hit and begin to sink they can turn to
us lemmings and tell us “See… I told u so”.

In the meanwhile they have collected their multi million
dollar salaries and bonuses and gotten into their golden
lifeboats and sailed into the sunset, while we sink under
the burden of our debts.

#98 GregW, Oakville on 12.11.10 at 1:50 pm

Hi Garth, fyi (nice bear picture.)

Putin Slams West for Wikileaks’ Assange Arrest
http://www.infowars.com/putin-slams-west-for-wikileaks-assange-arrest/

“The arrest of WikiLeaks founder Julian Assange for sexual misconduct illustrates the hypocrisy of the West about democracy, Russian Prime Minister Vladimir Putin says.

In the strongest comments to come out of Russia in the latest WikiLeaks saga, Putin also took aim at the U.S. for the cables, some of which had derided Russia a “mafia state.”

Assange’s arrest in London earlier this week indicated that the West isn’t as democratic as it thinks it is, Putin suggested.

“If there is democracy, it must be a full one. Why did they jail Mr. Assange? Is that democracy?” Putin said at a news conference Thursday. “You know what our villagers say: while someone’s cow is mooing, yours better be silent.” The Russian expression is loosely equivalent to the pot calling the kettle black.

see link for full article

#99 Mr. Lee on 12.11.10 at 1:54 pm

Mr. Turner, you hit the nail righ on its head, and now I know why you are no longer in politics…..it is called speaking the truth.

A few days ago Mr. Carney, went on a face to face with the country trying to give a careful warning about what is going to happen. This man has access to information that I could only dream of, and while being part of the Fed Reserve Fiat drame machine, he must be careful what he says. By the way, Mr. Carney is ten times the banker that Mr. Bernanke is.

Any, we Canadians got a veiled warning from our central banker. Take it for what it is worth, but when oil explodes to $100 per barrel next year and inflation rises on food, fuel but not so much in the core inflation sector…….stagflation will come about and Mr. Carney will raise the rates.

#100 doctore on 12.11.10 at 2:11 pm

Well, if we have C and all the bank honchos coming out lately saying debt is a problem and that mortgage amorts should be 25 years not 35, well we have all been told. Wait for the disaster as it will surely come. All it would take is the chinese to hike their bank rates and whamo the commodity binge deflates, gold tumbles, and the supposed boat loads of Vancouver property wanting drooling Asians halts on a dime.

#101 Only The Bankers Laugh on 12.11.10 at 2:21 pm

Bill in Peterborough

As my chosen blog name implies, Bankers are laughing at us, Flaherty, Carney and Harper are laughing at us propping up this whole illusion with the greatest hedge fund in Canada, the wonderful taxpayer backstopped CMHC, which can only hurt and never help the average Canadian.

If these bankers were anywhere near my home ice, they would be crushed into the boards stunningly fast when they spewed this crap. They are making money hand over fist with these no risk CMHC loans and then they are not lending to small/medium businesses who desparately need help to get going while our jobs are meticulously pruned offshore in a trend that won’t stop as we are no longer deemed to be a “growth country” in big corporates eyes.

We have been so insulted by these bankers getting risk free loans and those much worse political clowns who put their precious majority government dream in front of an extremely leveraged position for their people who are already swimming in debt. We have not had a real estate implosion yet and we’re already in debt up to our ears. The big housing starts will help make it worse. Condo fees like rent will also help!

What happens when there is even a little drop in real estate pricing?

Incomes flat here and declining against inflation even for union guys and dolls. Inflation in things we need is way up.

Burger King, for instance, just laid off 40% of their head office people. 40% and so it continues! In US, our biggest trading partner, it’s worse but we expect housing to continue to go up. What are we Canadians smoking? Are Canadians really that smug and naive at the same time?

It’s gotta be one of the craziest of times. Desperate times when people are trying all at the same time to make some extra money to plan their retirement. But by all piling into the safest asset that their grandmothers and parents have advised, this is the big one. It still could take a while longer to blow up as USA seems to be fooling everyone that QE is sustainable but eventually, people will demand more for their risk as USA is in worse condition debt wise than most Euro countries outside of PIIGS.

Should be an interesting 2011

#102 Milhous Plumbers on 12.11.10 at 2:22 pm

Firefighter needs to set some fires..
Here in the GTA One Bloor (note drop off the East word) I haven’t had a local Harveys or Tobys in 2 years…

#103 Herb on 12.11.10 at 2:25 pm

Since politics is mentioned now and then on this RE site, here is a summation of the political process based on a reporter’s three decades of observation:

… Standing firm on party principle only lasts until it clashes with the party’s popularity. All campaign promises are delivered with fingers crossed. Every broken promise can be rationalized. And every rationalization can be traced back to doing what’s best for the party in power.

http://fullcomment.nationalpost.com/2010/12/11/don-martin-what-i-learned-from-32-years-in-the-newspaper-business/

#104 Incubus on 12.11.10 at 2:29 pm

#98 Mr. Lee on 12.11.10 at 1:54 pm

Speaking of inflation take a look at this graph:

http://www.paulchefurka.ca/Oil_Food.html

#105 freedom_2008 on 12.11.10 at 2:38 pm

Isn’t Alberta the only place in Canada that people can walk away from their under-watered houses? If so, walk or run …

Somehow I don’t feel sorry for anyone who has a pension outside CPP, it is the pension-less ones who need help the most.

#106 Dorf on 12.11.10 at 2:39 pm

Sammy lives in a major Alberta capital city that begins with E, has a $450,000 house with a $325,000 mortgage, three daughters, a quad, a stay-at-home wife, no savings, a sled, no TFSA, no RRSP, no educational savings plan, a boat and, at 46, plans to retire in nine years. But that’s not the real problem. It’s Sammy’s other houses – all three of them.

All on a salaried employee’s wages. Pathetic.
Pure, unadulterated, unabated greed.

For some to succeed, others have to be allowed to fail. The only thing that will stop this guy’s spending spree is the bank saying “NO” for once.

I don’t give this guy one ounce of sympathy, and I’m going to low-ball him on his quad, his sled, and his boat when he gets hungry.

It is ridiculously irresponsible people like this who have put us on the brink of economic collapse.

By the way Garth, my new favorite quote is “People who firmly believe what they do not know.”

I am going to put it on t-shirts and give one to everybody I meet, because they are all dumb azzholes.

#107 Dorf on 12.11.10 at 2:43 pm

Those theatrics were sufficient, of course, to help get my sorry ass booted out of Stephen Harper’s caucus.

What would you prefer your destiny to be instead, Garth ?

Go along with the plan and get your name on Wikileaks as another “unrepresentative representative” ?

You’ve got class and you’ve got respect, take that to bed with you. Fock the title.

#108 Alister on 12.11.10 at 2:50 pm

So, I asked, why the hell did you do it?

The answer was what you’d expect: (a) Real estate’s safe. (b) All the guys were buying. (c) The bank gave us the money.

__________________________________________

Sammys answer descibes how he entered into the world of financial speculation, without a clue of basic money concepts. Not once did he mention return on equity or even a slight concept of risk management.

No need to feel sorry for him, he’s his own enemy and can’t be saved by anyone else.

You can’t fight stupidity with reason.

#109 jess on 12.11.10 at 2:55 pm

Dr. Philism: Are you hear to change it or defend it”

Bless those speculators
Speech by Commissioner Bart Chilton before the High Frequency Trading World USA 2010 Conference, New York
December 8, 2010

Numbnut used his own money
…. “In February, for example, one company lost a million dollars in the oil market in less than a second. That company lost its own money but sometimes whole markets are affected and many innocent people are hurt. ”

New Speculation Data

One might ask if there are as many speculative positions today as there were in 2008. If folks thought speculative levels were high then, data I’m discussing for the first time today reveal an even greater level.

Speculative money from the likes of hedge funds, index funds and pension funds is coming into the commodity markets at a blistering pace. There are more of these speculative positions now than at any time. To provide a more granular data look, between June of 2008 and October of 2010, futures equivalent contracts held by these types of speculators increased 47 percent in energy contracts, 20 percent in metals and 18 percent in agricultural commodities. More than $149 billion in speculative money in commodities markets represents more futures contracts than at any previous time. (Note: While the dollar amount of speculative money was slightly higher in 2008 at $162 billion, the actual number of futures positions held by these speculators was less due to the high cost of commodity contracts).
Not Bad Guys

Now, there is nothing whatsoever wrong with those speculators being in markets. Bless them. We need speculators. Without them, there is no market, full stop. The sheer size, however, of concentrated speculative interests has the potential of moving markets, of influencing true price discovery. That can make life difficult for the hedgers who use markets to manage commercial business risks, and for consumers who rely upon them to fairly price just about everything they purchase. Everything from a loaf of bread to a gallon of milk or gas to a home mortgage is impacted by these markets

http://www.cftc.gov/PressRoom/SpeechesTestimony/opachilton-35.html

#110 Timing is Everything on 12.11.10 at 2:58 pm

#63 Bill ( Peterborough)

http://www.youtube.com/watch?v=72o86UxXr7o

#111 Dom on 12.11.10 at 3:23 pm

Because I know #92

I can’t believe people had something negative to say about firefighters. I wouldn’t want to do your job if it was only one call a shift. I don’t care if you guys sit for a week waiting for a call. When you guys get a call you either risk your life or have to save a life. What you see during those calls I don’t think anyone could understand. You guys are hero’s in my book.

#112 T.O. Bubble Boy on 12.11.10 at 3:24 pm

Seems like many of the “homes” listed on realtor.ca these days are tear-downs or fixer-uppers, and some rather expensive ones at that:

condemned-looking teardown at Bathurst & 401 in North Toronto, for $699k

(Notice on Google Street View, this $700k teardown is right next to a parking lot for a giant Chinese Restaurant!)

And, here’s another one: a 1-bdrm teardown near Vaughn Rd. (south of Eglinton & Allen Rd.) for $430k. Google Street View shows how ridiculous this one is: can you say $430k garage?

#113 Alex on 12.11.10 at 3:25 pm

CHMC doesn’t have to be bailed out by government!
Once CHMC runs out of money it can declare bancruptcy.
Banks are stuck and their share prices will plummet.
Government directly buys banks for peanuts.
Now we need Rob Ford or Donald Trump for this job.

#114 Robert James on 12.11.10 at 3:28 pm

The Celtic Tiger explained in 2 minutes..http://www.youtube.com/watch?v=koY6kXhQDQo

#115 Live within your means on 12.11.10 at 3:32 pm

#71 Ret on 12.11.10 at 11:07 am
#1 Dorothy Re: Speculators

The student house slumlords are also batting 100% as chronic liars.
…………………………………

Twenty four years ago when my husband moved here to be with me, he attended an ESL course for 6 mos. He was from France and immigrated to PQ & obtained his Cdn citizenship. He met many immigrants from Poland and elsewhere. We helped out a few couples. One couple, with 2 young children, ended up buying an older home in a prime area in Halifax. They rented out the lower flat and, in the basement, they rented out 3/4 small rooms to students who shared a bathroom and a tiny kitchen. It was dark and dingy. I couldn’t imagine people actually living there, but student digs here are expensive if they want to be within walking distance to the universities. It allowed him to open up his own garage and hire some mechanics, sell the house and buy a nice townhouse in a good area. Several years ago we had them over for dinner after having lost touch with them. They’ve changed and we have no desire to see them again. Their 2 children are in TO and their desire was to move there to be with them and their grandchildren. Wish them well, however. We also befriended another young Polish couple who were friends with the other couple – normal. She became a nurse, but she was so religious and straight laced that we didn’t keep in touch with them. We both loved him tho. People move on.

#116 Timing is Everything on 12.11.10 at 3:33 pm

#77 Devil’s Advocate said – “I’d be happy to McLovin, however I have a history of being misunderstood on this blog…”

Actually, you are well understood, on this blog.
And I bet you have quite a history. Ha!

#117 Bullion.Bunny on 12.11.10 at 3:36 pm

Now For Something Completely Different!

William Earle McLaughlin, OC (1915 – October 30, 1991) was a Canadian banker.
Born in Oshawa, Ontario, Earle McLaughlin graduated with the gold medal in commerce from Queen’s University and joined the Royal Bank of Canada in 1936. In 1960, at an age considered very young at the time, 45-year-old McLaughlin was appointed the bank’s General Manager and then shortly thereafter, President. He would retire as Chairman in 1979.

Take from Collected Speeches 1961-1979 Printed by the Royal Bank Of Canada.

Governments, through creating a climate of uncertainty, particularly in the sphere of taxation and royalty policy, and through their siphoning off of the available financial capital into their own treasuries, can create the very need to step in. When governments then come to the rescue, let us not be deceived. We are merely seeing a shift or restructuring of control; we are not seeing the provision of any new physical capital. Furthermore, governments through their own powers are frequently in an advantageous position when they tap the freely operating financial capital markets, thereby pushing aside the private borrowers of capital in those markets.

No more need be said…………………..

#118 BrianT on 12.11.10 at 3:44 pm

#103Incubus-great graph, but what the guy missed is that the prices are beginning to diverge (food prices increasing more than oil prices). If the trend continues, look for sky high global food prices coming down the road.

#119 Leanne on 12.11.10 at 3:48 pm

#88 Love this Blog on 12.11.10 at 12:59 pm
#67 Leanne, Thanks for directing me to Garth’s rock star career. I LOVE it!

It was that or a Chippendale Christmas—didn’t think the blog dogs were ready for that :-0

#120 Defrauded2 on 12.11.10 at 3:51 pm

Great post Garth, but have you forgotten that it can’t happen here…..

http://www.standeyo.com/NEWS/10_Pics_of_Day/101210.pic.of.day.html

#121 Dan in Victoria on 12.11.10 at 3:54 pm

Because I know @ 92
I won’t begrudge you guys when you’re on the job.
I have deep respect for what you do.
Have I ever been in a burning building- yes
Have I ever been at a fatal car accident -yes
Have I been on site when some one is seriously injured and had to take action, yes.
And I saved my Dads life about 10 years ago when he had a heart attack.

Now lets look at it from my point of view.
I’m an old guy now but when I was younger could I do your job? Absoulutely, I have buddies that do it.

I priced a basement job awhile ago, close Dan but buddy here from the fire department is cheaper. Can you match it?
No.
Will you do it for cash?
No.
Does he carry liability insurance, does he carry WCB, does he have a business license, does he have an HST number?
No.
No big deal I said thats where I have to be.

Now how would you like it if every week I could come down to the station and say ” Hey i’ll do “Because I cans” job for 10% less.”
So sorry, no work for you this week, Dan under bid you this week.
Come back next week.
Some of the guys I run into are legit though, but I still want to bid for your job every week.
It is what it is.
But think from the other end.

#122 prairie gal on 12.11.10 at 3:56 pm

#81 devil’s Advocate wrote:
There are countries in the world which have long had far, far longer ammortizations than we in North America.
___

Yeah? Like where? I hear Japan had 99 year mortgage terms. How did that work out for them?

You can’t make unsubstantiated statements like that without providing some evidence to back it up.

#123 Bill ( Peterborough) on 12.11.10 at 3:57 pm

Re # 100 Only The Bankers Laugh

Yes but for how long. Remember what happened in Romania when they had enough.

http://www.youtube.com/watch?v=XsRQP7TifME

__________________________________________

Re # 109 Timing Is Everything

Wonder if people would think differently if they lived to the age of 200 years. Realizing they would have to wallow alot longer in the shit they created or allowed to be created.

#124 Live within your means on 12.11.10 at 3:59 pm

.#75 Got A Watch on 12.11.10 at 11:32 am

Boy you are some angry dude. You and some others are foaming at the mouth.

#125 David on 12.11.10 at 4:00 pm

112 Alex…yeah, that’s the obvious solution! Have the CMHC declare bankruptcy, simple as that.

Just because CMHC’s debt (as a Crown Corporation) is guaranteed by the federal government, well that’s not a big deal is it?

#126 InvestorsFriend (Shawn Allen) on 12.11.10 at 4:01 pm

Greed is Good. In fact very good.

A wise person once said… Too much of a good thing can be Great!

Admit it or not, greed for something be it money, fame, professional respect, or sex is what drives people to get out of bed and work hard. Believe it or not, hard work is what has led to our wondrously properous world.

When you stop being greedy (for anything) you will have lost your drive to work or perhaps even to live.

Long Live Greed!

#127 Patz on 12.11.10 at 4:07 pm

#49 objectivist sez:
Patz, your grasp of Ayn Rand is so superficial it’s ridiculous.

Oh good grief, why would I want to grasp Ayn Rand? Objectivism is philosophy for dummies! One might as well read The Philosophy of Chuckles the Clown.

#92 Because I know,
good post giving the fireman’s point of view. Firemen see, and deal with, as much blood and guts as paramedics and cops. What few realize is the emotional wear and tear these jobs entail.

I think it would be good if working people stopped knocking other working people unless your goal is comedy for the elite/leeches.

#128 Junius on 12.11.10 at 4:21 pm

#112 Alex,

Yeah, right. That is going to happen.

CMHC will cost the Canadian tax payer dearly.

#129 Dmitri on 12.11.10 at 5:02 pm

“I don’t see the 35 year am on a principle residence as being as much of a problem as the 5% down. If they increase the down back to the 10% it used to be, they could still allow the longer am as a way of helping young people to still have an affordable payment.”

This is one of the most delusional statements I’ve read.

Forcing amm. length to infinity, will do nothing for the affodability.

The only thing that will help affordability is a decrease in a house prices.

any mortgage with over 25 years of ammort. is nothing more then an expensive rent.

Forcing amm. length down to 10y. max and down payment to at least 50% will do wonderful things to the affordability.

Those hen houses on the outskirts of GTA will rapidly gain semblance of a normal consumable (which they are) and may be our economy will start recovering because people will stop malivesting into an asset that has no future.

#130 Mark in Edmonton on 12.11.10 at 5:05 pm

Banks CEOs talking about returning to a 25 year Mortgage during a time when the housing market is on the verge of a huge correction, and credit expantion has plunged 50%? Think about it… just talking about going down to a 25 year mortgage in the mainstream medi could be great business for the banks. A whole slew of people could panic that its there “last chance to get in” and more greater fools would jump in to the housing market, not thinking about the affect a 25 year amortization to the Mortgage Industry will have on house prices if it does go through after they’ve bought!
I know in Edmonton her the market really ‘warmed up’ as people bought in to catch this low rates. Now the market has “really cooled off” we’re back into 2006 prices-again!

#131 kitchener1 on 12.11.10 at 5:09 pm

Sorry but this dude is just clueless. No pity at all.

Got a great govt gig that allows early retirement with a gross pension of $3200, thats pretty sweet.

See, if things go right, dude is a finanical genius for investing in RE but if they go bad he is a victim??

With two kids gearing up for university, he decides its a good time to buy 3 spec homes???? Pure greed.

Thats the danger with an asset class (real estate) that allows 95% leverage and is insuranced by the taxpayer- CMHC.

This dude is has a total posistive cash flow of 7200 on 3 properties, so each one has $2400 or $200 a month???

Thats at the all time lowest interest rates ever.

If it carries, with a 48K investment he is seeing a 15% rate of return YoY BUT he has to take on 925K on debt to see this return.

Crazy thing is there are literally hundreds of thousands of fools like this out there and when the market turns, they are all going to get out at the same time. Really, this guy loses 1 or 2 tenants, interest rates rise he is wiped out for life.

#132 Wilde_at_heart on 12.11.10 at 5:38 pm

Not every parent sees themselves as obligated to pay for their kids’ university.

I’m sure he’ll just tell them to take out student loans to pay for it LOL

#133 Jeff Smith on 12.11.10 at 5:41 pm

Just what F is saying? I don’t know, but he definitely does not sound optimistic. And that should make any sane person scared.

http://www.bloomberg.com/news/2010-12-10/flaherty-says-u-s-growth-not-canadian-dollar-is-biggest-risk-to-outlook.html

F also says that deficit is not good for ya. Oh god, I didnt even know that. Thanks for educating me.

http://www.bloomberg.com/news/2010-12-10/flaherty-says-resources-are-backbone-to-canadian-economy.html

We need to rename F to the AXE.

http://fullcomment.nationalpost.com/2010/12/11/national-post-editorial-board-flaherty-needs-to-take-an-axe-to-spending/

#134 72 Norton on 12.11.10 at 5:44 pm

To Jane and a couple others – look up “Presumptive Legislation”.
Fire Departments will be hiring with the retiring boomers…..if you want a good chance at a shorter life.
Just saying.

#135 Patz on 12.11.10 at 5:51 pm

A while ago Stoneleigh over at The Automatic Earth wrote about “adaptive cycles” in relation to the various problems we find ourselves in. Here in Garth’s world the focus is on real estate but that is symptomatic of and affected by many other more fundamental forces. What’s driving our world and to where? Most readers here are, I assume, familiar with the idea of root causes and proximate causes. When we talk about RE we’re focusing mostly on proximate causes.

Adaptive cycles in ecology describes the process by which species inhabit and exploit niches. The cycles have phases broadly described as 1. the early expansion phase where growth is robust, 2. the consolidation phase, 3. the breaking up phase. The cycle then may die off or repeat with altered dynamics. That’s it simplistically. These cycles are ongoing all the time in all areas of life. Sometimes the cycles synchronize and reinforce each other, other times they balance each other dampening the effects.

ACs can be long or short term depending on what’s being looked at. A great example of a long running AC is the European development and exploitation of the Americas. This is a cycle in its latter stages that has been going on for hundreds of years. Smaller cycles such as the rise and fall of an industry can be looked at as an AC nested within the larger AC. The stock markets are ACs. A good example might be the NASDQ it grew fast in an age of technological innovation and collapsed with the dot.com bust and regenerated at a lower level.

World population, energy use are other examples of ACs. But what’s the point, all very interesting (or not) but what does it have to do with real estate or anything else? Lots!

There is a convergence of large adaptive cycles right now to the 3rd phase. The giant enterprise that is the human experiment on planet earth has definitely entered the final phase. One look at a population graph is enough to tell you that. Population, food, energy, economies are all macro cycles in their final stages. Whether their creative destruction plays out over years, decades or longer it will be short on the larger time scale of history.

Stoneleigh tells it better at
http://tiny.cc/7uum1

#136 Devore on 12.11.10 at 5:57 pm

#25 tiger_baby

what are the effects of constant money supply in an environment where both individual productivity and the number of individuals are increasing significantly (eg. over the last few decades)?

The value of money, and thus savings, goes up?

#137 john m on 12.11.10 at 6:02 pm

Just imagine if the US had CMHC guaranteeing all of the banks bad mortgages (guaranteed by their taxpayers)? Scary thought??….well that is our future..things are different here.

#138 Peter Pan on 12.11.10 at 6:09 pm

I know F worships unfettered capitalism…

Correction…

“F worships unfettered capitalism, backed by unconditional and 100% government guarantees…”

Big difference…

#139 Devore on 12.11.10 at 6:17 pm

#56 Habbit

Part of the problem is capitol has no loyalty. In our global economy it moves to where the lowest costs of production are. Never mind labor laws, enviromental regulations,wages ect.

Oh, but DO mind! Our governments have created us a system where capital (and for the most part goods and means of production) can move freely around the globe to find most favourable conditions, but labour cannot. This will create imbalances slanted against labour.

With the stagnation of real wage increases that has been with us for some time the little guys are taking it in the teeth.

Some guy earlier asked about what happens when money cannot be created out of thin air. This is the opposite. People can no longer imagine a world in which the value of their savings and work INCREASES. All they know is the reality where their savings and earning power are constantly being eroded by inflation, and more likely than not, on average, their wages are not keeping up. This is a decreasing standard or living, even though they may have more digits in their account.

As the real jobs are being exported to lower wage areas we keep our economy going by lending the poor slobs gobs of money no?

Yes, our real growth has been replaced by fake prosperity borne out of increasing government and personal debt levels. It is not sustainable.

Meanwhile back at the ranch corporate leaders are receiving grotesque bonuses stock options for marginal performance. Sweet!

Sweet indeed. In yesterday’s blog someone opined how stupid bankers are. They’re so stupid, they’re giving themselves record bonuses, while the little people substitute for steak with ground beef (ya know, gotta keep that CPI flat). Laughing all the way to the bank, as it were.

Ethics are taking a back seat to greed.

Corporations obey no ethics. They do, however, obey laws. Connect the dots.

Government leaders move to the boardrooms when they are out of office and vise versa.

This is something I wrote before. This is something we (as a society) have failed to prevent or solve. The problem of the revolving door between legislators, regulator, judiciary and industry. It is the very definition of moral hazard, conflict of interest, and corruption. How can we expect anything else.

Those at the top have a moral obligation to society to ensure all citizens are protected even from themselves. This is not happening.

(surely you mean from each other, not themselves?)

Indeed it is not. This is a direct result of the above. Those we elect to and employ in government do not work for us. At best, they work for themselves. Most of the time, they work for their friends and special interests who finance them. Again, how can we expect anything else. How can w build such a system, and then expect regular people, just like us, to resist all the incentives and carrots being dangled in front of them daily?

No new government policy will save the day.

Because the kind of thinking that created these deeply rooted problems is not able to solve it. But we will just plod along, and hope for the best.

#140 Cookie Monster on 12.11.10 at 6:24 pm

#7 Patz on 12.10.10 at 11:42 pm
To Cookie Monster who’s just discovered Ayn Rand meet Alan Greenspan her biggest fan—’nuff said! Oh, and ooops, she’s dead and so are her ideas.
—————-
Greenspan is a sellout. His actions at the Fed were in direct opposition of all Ayn’s principles, and just because Ayn’s dead it does not reverse the tremendous contributions she made to philosophy and literature. Aristotle is dead too.

#141 Timing is Everything on 12.11.10 at 6:36 pm

#120 Dan in Victoria

Good points….These guys get paid to do a job and they are very well compensated…

‘because I know’ guys in the volunteer fire dept, and they’ve done it all too.

#142 K on 12.11.10 at 6:36 pm

#92 I was with you until you slammed another profession. You are NOT the only person that works hard for a living. In fact many of the worst paying jobs are the hardest to do!

#143 Devil's Advocate on 12.11.10 at 6:50 pm

#121 prairie gal on 12.11.10 at 3:56 pm

#81 Devil’s Advocate wrote:
There are countries in the world which have long had far, far longer ammortizations than we in North America.

___

Yeah? Like where? I hear Japan had 99 year mortgage terms. How did that work out for them?

You can’t make unsubstantiated statements like that without providing some evidence to back it up.

Like… Switzerland.

#144 Cookie Monster on 12.11.10 at 6:50 pm

#12 tiger_baby on 12.11.10 at 12:03 am

You’re wrong on so many things so I’ll just pick on the main one, your notion of ‘free market’ monopolies.

Big business monopolies can only endure with the help of government aid.

1) In a free market consumers ‘choose’ to patronize a business including monopolies. If monopoly prices are too high you can ‘choose’ not to buy from them.

2) If a company’s monopoly is so effective at providing a good or service that competitors can not compete then that’s good, no harm done?

3) If a monopoly is extremely profitable then the free market competition will bring prices down soon. Only government intervention can prevent this free market self correction from happening. Even private sector collusion will not work because eventually someone will not join the gang.

4) Even monopolies have to compete for your money against other monopolies or industries in other sectors. You need gas, car, food, cloths, house, phone, tv etc.

Only public sector monopolies endure and there are many, healthcare, education, police, fire, garbage, income tax, CPP, EI, no choice for the consumer here, just pay up or you go to jail.

So if you want to vilify monopolies you should take a look at government and remember that government has the monopoly on force and coercion not business.

The rest of what you say is kinda crazy equating the End’s of a business mans objectives to monopoly is just nuts, as if the words ‘business man’ = ‘evil genius’.

#145 TheBestPlaceOnEarth on 12.11.10 at 6:50 pm

So what are you suggesting, he rent? 2 grand a month or more for 35 years and end up with nothing. A small fraction of renters can rent and save. This guy is doing the right thing. He has a PAYCHEQUE FOR LIFE and a HOUSE TO BOOT. More than renters have

#146 Devil's Advocate on 12.11.10 at 6:54 pm

“Mortgages in most countries are annuity loans with a level payment. Terms typically range between
20 and 40 years. The European Central Bank (ECB) reports that in 2007 the typical maturity in the
Euro area was between 20 and 30 years. Longer maturity products exist in several countries — up to 50
years in Spain and France and up to 60 years in Finland, although these loans have a very low market
share. The maximum maturity granted is often linked to the retirement age. At an extreme, Japan and
Switzerland have 100-year (inter-generational) mortgages. Scanlon et. al. [2009] note that the maximum maturity was shortened in several countries, including France and Spain, during the crisis.”

Dr. Michael Lea – International Comparison of Mortgage Product Offerings – Pub Sept 2010

#147 S.B. on 12.11.10 at 7:05 pm

Bigger problem: North American Union (the one that does not exist?)?

The new scheme, set out in a confidential document entitled “Beyond the Border: A Shared Vision for Perimeter Security and Competitiveness,” is due to be formally announced in January.

Details remain unclear. But press leaks indicate that the aim is to fully integrate Canadian and U.S. border enforcement, particularly in the air and seaports that receive people and goods from outside North America.

Canada would also amend its immigration and refugee policies in order to bring them in line with those of the U.S.

http://www.thestar.com/columnists/article/905413–walkom-why-ottawa-s-new-border-scheme-is-such-a-loser

#148 Cookie Monster on 12.11.10 at 7:29 pm

#49 objectivist on 12.11.10 at 5:43 am
Patz, your grasp of Ayn Rand is so superficial it’s ridiculous.
Greenspan was an adherent – 40 years ago! – when he was as big a gold bug as ever existed.
Yah, well, times change. Greenspan became a pump-primer that helped usher in the real estate bubble.
His late-career shenanigans have about as much to do with Ayn Rand as I have to do with the price of tea in China.
————————
I just want to add to this, pile on so to speak.
Ayn Rand was a literary genius and an absolutely brilliant thinker. She was to philosophy what Einstein was to theoretical physics. The women was simply amazing with incredible power of intellect and insight. Pure Genius.

So, any crack pot half-wit moron who attacks Ayn Rand personally and not her principles or ideas and ends their argument by stating the fact that the woman has passed on is a most obvious COWARD and intellectually bankrupt loser.

If you want to attack Ayn Rand then attack her ideas with a sound argument. Make your case, we’re listening Putz.

#149 confused and a little crazed on 12.11.10 at 7:43 pm

Sue or Susan ( phaarmaacy industry)

I read ur post …about guys appreciating intelligence. I think most of us do but some are intimidated. Some woman almost hold it against the party when she is educated more so than him. I do not think yiu aare one of those

Coincidentally, I am also from a science back ground with a Bsc in Microbio with a business minor and i work in management now . I deal more with money than tissue culture and here we are talking about Economy/ finance.

We are what we think we are …successful? only if we work at it . I don’t think Econ career is right for you because lying alot for banks seems to be the norm

#150 confused and a little crazed on 12.11.10 at 7:45 pm

nice talking to you Sue :)
hope everything works out for u

#151 Painted Toenails on 12.11.10 at 7:46 pm

Google Twin Towers and 911. See all those people running away – naked fear on their faces.

Now look at the ones running towards the towers. Thank a firefighter for their courage under fire.

Proudly,

A firefighters daughter and sister

#152 Nostradamus Le Mad Vlad on 12.11.10 at 7:49 pm

#17 dark sad person — “This is a Bankers wet dream if there ever was one-”

Interesting terminology. Figure I wouldn’t want to be under a wanking banking banker’s wet dream. All things considered, I’d rather be in Philadelphia!

#64 Bill ( Peterborough) — “. . . the first world countries for the most part sold themselves out to credit/ debt, while decreasing productivity.”

Consequently, productivity and good jobs have increased in the Third World, while the same two have all but disappeared from here, thus the cycles continue shifting from west to east. Good post.
*
#100 Only The Bankers Laugh — “Should be an interesting 2011″ — Nice timing, so cue this link — Picnic Not next year, that’s fer sure!

Total Lunar Eclipse on Dec. 20-21; almost time for another shake’n’bake quake somewhere? Haiti and Chile have had two big ones. Where next? The New Madrid Line or SAF?

From the link Thurs., this also plays a role. Spanish scientists further theorize that this massive object is a brown dwarf “dark companion” to the sun.

Might explain the frozen temps. across the planet. GW?

Quintillions “The real size of the global market rigging operations are not in the Trillions of dollars but in the QUINTILLIONS!”

CIA running a WikiLeaks mirror.

Link in. Silver manipulation bigger than expected.

#153 Cookie Monster on 12.11.10 at 7:57 pm

#75 Got A Watch on 12.11.10 at 11:32 am
—————-
Awesome!

#154 prairie gal on 12.11.10 at 8:02 pm

#139 cookie monster – I lol’d @ your comparison of Ayn Rand to Aristotle. Her contribution to philosophy amounts to a footnote.

#155 brainsail on 12.11.10 at 8:12 pm

#81 Devil’s Advocate

#121 prairie gal

I found this report “International Comparison
of Mortgage Product Offerings” quite interesting.

http://www.housingamerica.org/RIHA/RIHA/Publications/74023_10122_Research_RIHA_Lea_Report.pdf

#156 jess on 12.11.10 at 8:21 pm

Cookie says: Aristotle is dead too

Many buildings in Florence were built on saving the usurer’s soul. Today’s donations of stock/cash gets the plagues / wings seem to save them from tax. If greed is good than why bother with donations at all?

Perhaps you would prefer Aquinas. …”if the root be rotten so are the branches. But the root was infected with usury. Therefore whatever profit is made therefrom is infected with usury. Therefore he is bound to restore it. ”
===========================
And it would seem that Greed got worse with time.
The problems around 1985 began even BEFORE the stock market collapse of 1987

From 1935 -1985 a 55 year period
955 banks and thrifts failed in the USA. More than 300 of the failures occured in 1982 -84 alone.
1985 over 2500 banks and thrifts failed.

#157 Bill Grable on 12.11.10 at 8:30 pm

Unemployment is a HUGE issue, and this snippet is very worrisome. Makes you wonder how many younger folks will be able to buy ANYTHING>>>

>>Single mother Huda Eldardiry, 23, went through retraining because she was unable to keep working nights as a shoe saleswoman, but has been unable to find work since October.

She is not given up, however, so technically she is not yet a frustrated worker.

Unless she gets lucky, though, the data suggest the odds of her finding a job quickly are slim.

Schaefer says she’s seen university grads take up to a year to find a job, and in many cases they’ve had to settle for part-time or work outside their area of expertise.

The repercussions for the individual lives in terms of anxiety and living conditions can be severe, but there is also a societal cost to long-term unemployment, she says.

“I hate to say this, but they might find alternative means of employment — working under-the-table or doing illegal activities and that’s not good for anybody.”

http://tinyurl.com/25a6zq8

#158 AG Sage on 12.11.10 at 8:53 pm

#66 CTO on 12.11.10 at 10:19 am

My advice based on our experience of paying off our house years ago. Pay off the house now, if you have that much cash (I mean where else are you going to get that kind of guaranteed return on it in this environment?) and then say, look hun, look we have $2500 more per month (or whatever the payment was) that we can do ANYTHING with. We can drink expensive wine with every meal. We can take a vacation to the Caribbean every two months!

Once you get rid of the mortgage, it gets harder to take one on again.

#71 Ret on 12.11.10 at 11:07 am
#1 Dorothy Re: Speculators

>I agree with you but how would financial institutions identify the “speculators?”

They ask you on the mortgage app, is this your primary residence? If you check no, its speculative. If you check yes and lie, a year later they check it against the address on your driver’s license and bingo, you are up for a fine. A serious fine. Every year it is not your primary residence.

I’m making this enforcement scenario up, but really not that hard to sort out the speculators. Sure you catch the cottage by the lake buyers, but they shouldn’t be seriously impacted if they are really buying within their means.

#36 Aussie Roy on 12.11.10 at 1:43 am
>I may have said this before but its worth saying again.
The easy way to ensure people cant get in over their heads with debt, is for the banks to use a valuation on every property based on its potential rental income. The current valuations done by looking just at recent sales in the area is what can lead to over priced housing. Of course this would curb lending and the banks wouldnt like it.

That idea makes so much sense it brings tears to my eyes. Yeah, but of course it would curb lending into a bubble situation, so no way that would fly.

#159 Nostradamus Le Mad Vlad on 12.11.10 at 9:07 pm

-
4:42 clip Silver being used as currency in Michigan; is something wrong with the US$?

Silver “Now J.P. Morgan has been accused of doing the same thing, but in reverse. Instead of buying silver they are selling it short, that is they are selling it now to buy in six months time.” So if everyone buys silver bullion, the spot price appreciates 750% and JPM is forced to pay way over their margins, they will be broke. Another bailout?

4:49 clip 15 year old boy tells the elite / establishment to shove it — looks as if the Icelanders’ example is catching on.

Cdn. banks on fire and US banks also.

Top 10 States sheeples are leaving. What are the top five provinces here?

5:34 clip “I am re-linking this video to make a point. The Wall Street CEOs are not acting like bankers, They are acting (and spending) like drug lords!” wrh.com. — “It is not enough to succeed, others must fail.” — François de la Rochefoucauld.

Poland “Russia cannot possibly be pleased with these developments, and these actions on the ground by the US in Poland cannot be interpreted as peaceful toward Russia.” wrh.com. A wounded, dying animal has nothing to lose by starting new wars.

Euro “The IMF has its nose under the blanket.”

Are Banxters Criminals? “The international banks are proven criminal entities — everyone knows it, and everyone is beginning to openly say it.”

Wot’s In My Wallet? Paging Capital One!

4:34 clip (JFK) “So tell us again, Bernanke, where all that money went and exactly what was being purchased with it? J.P. Morgan; same question. Bank of America; same question. COMEX; same question. Wall Street; same question. Congress; same question.” wrh.com. Bill (Peterborough) — you may like (or remember) this one.

Gold Does a Swiss bank have any physical gold or not?

Color Revolution “What happens when the UK’s globalist nexus Chatham House, the US’s International Crisis Group (ICG) run by George Soros and Zbigniew Brzezinski, lawyers like Robert Amsterdam, and media giants like BBC, CNN, the Guardian, and the Economist get together to back street protests? Color revolution . . .” Soros and Brzezinski are affiliated with the elite, so something’s up.

Flu Vaccines Myths, lies, half truths and big pharma.

#160 hobbygirl on 12.11.10 at 9:48 pm

Can someone get rid of Cookie Monster? All he does is antagonize and insult anyone here who disagrees with him (great rebuttal defense). Get off your self-righteous and condescending high horse and show a little respect for others’ points of view.

Oh, and btw, don’t call me ‘dear’ or tell me to ‘go sew buttons’. You sound like you are taking a break from beating your wife.

#161 Joe Q. on 12.11.10 at 9:55 pm

#48 The Original Dave on 12.11.10 at 4:56 am writes: “the 35 years is just as bad as the 5% down. ”

Psychologically, you’re probably right. But quantitatively, this actually isn’t true.

Imagine two buyers purchasing $500k homes. Buyer A puts down 5% and takes a 20-yr am. Buyer B puts down 20% and takes a 35-yr am. Both buyers get five-year fixed-rate mortgages at 5%.

At the end of five years, Buyer A has $104k of equity in his home. Buyer B has $124k of equity.

In this case the big down-payment and longer amortization come out on top.

#162 betamax on 12.11.10 at 10:33 pm

#147 Cookie Monster: “any crack pot half-wit moron who attacks Ayn Rand personally and not her principles or ideas and ends their argument by stating the fact that the woman has passed on is a most obvious COWARD and intellectually bankrupt loser.”

Patz didn’t write that; he said: “she’s dead and so are her ideas.” For someone who prides themselves on their overweening intellect, you don’t read so good. Perhaps your reading of Rand is equally faulty; that explains your uncritical acceptance of her fiction as dogma.

And her ideas are as dead as Marx, for reasons already articulated by several people above. No one takes her seriously any more, except a handful of adherents who read a couple of novels and think they know something everyone else doesn’t. It is to laugh.

Cookie Monster: “If you want to attack Ayn Rand then attack her ideas with a sound argument.”

This from Mr. Dismissive, who tells others to sew buttons when he has no rational response.

#163 Bullion.Bunny on 12.11.10 at 10:35 pm

Garth, If I purchase the house does the bear come with it? They make great pets and love traveling salesmen!

#164 hobbygirl on 12.11.10 at 10:42 pm

Thanks betamax! :-)

#165 Patz on 12.11.10 at 11:07 pm

#147 Cookie Monster
I just want to add to this, pile on so to speak.
Ayn Rand was a literary genius and an absolutely brilliant thinker. She was to philosophy what Einstein was to theoretical physics. The women was simply amazing with incredible power of intellect and insight. Pure Genius.

Er…, you’re kidding right?

You know what’s ironic, Cookie Monster? You do know what irony is, don’t you? What’s ironic is that your tirade is so, so… ad hominem.

#166 Cookie Monster on 12.11.10 at 11:08 pm

Garth, there seems to be a lot of political elitist nonsense here, can you please do something to remove them? Hobblygirl and MasterBetaMax.

Hobblygirl, you sound like a hater of truth. Must destroy the purveyors of truth. If I choose not to entertain or mock your point of view it is my choice, I may freely condescend your opinion as you may mine. Touche. On Gard!

“On Gard”? Is that Republican for ‘En garde’? — Garth

#167 S.B. on 12.11.10 at 11:12 pm

#157 Bill Grable, how long until North American migrant workers (white collar!) board planes and ships to China, for low-paid work. They can remit money back to their families in Canada.

What goes around comes around…

#168 Ayn Rand on 12.11.10 at 11:20 pm

I love Ayn Rand (hence my moniker…..my daughter’s middle name too), a good prof in undergrad referred her to me – this over 25 years ago. After I re-read the Harry Potter series from back to back, I will reread The Fountainhead.

Socialism in the ideal sense (NOT Communism which is/was pure totalitarianism) seems wonderful, as does capitalism.

Nothing is pure however, and I hope in my 47 years on this wonderful earth, I have learned that compromises need to be made on both political fronts and being a Canadian (and an Aboriginal woman) am proud of our imperfect but seemingly working system that we have.

Actually, I have worked with the Ontario NDP, Tories and Liberals, in government and after 20 years, I don’t see many differences – the political masters deal with the economic situations of their days. People/politicans are flexible – who would have thought!

Che-Megwetch

#169 Kevin on 12.11.10 at 11:30 pm

Real estate always a good investment when prices go up?
http://saskatoonhousingbubble.blogspot.com/2010/12/real-estate-always-good-investment-when.html

#170 prairie gal on 12.11.10 at 11:34 pm

#143 Devils advocate wrote:

Like… Switzerland.
___

and what is the significance of that?

#171 Mark on 12.12.10 at 12:01 am

Sad thing is, he can declare bankruptcy, and still keep his job and pension. He will have much of his income confiscated for a year as a first-time bankrupt, but other than that, the firefighter faces no consequences.

Where’s the honour in that? — Garth

#172 DARLENE on 12.12.10 at 12:18 am

Since the comments today have been toxic. I’m going to post this, because everyone really needs to lighten up.

BAD Parrot
A young man named John received a parrot as a gift. The
parrot had a bad attitude and an even worse vocabulary.

Every word out of the bird’s mouth was rude, obnoxious
and laced with profanity. John tried and tried to
change the bird’s attitude by consistently saying only
polite words, playing soft music and anything else he could
think of to ‘clean up’ the bird’s vocabulary.

Finally, John was fed up and he yelled at the parrot.
The parrot yelled back. John shook the parrot and the
parrot got angrier and even more rude. John, in desperation,
threw up his hand, grabbed the bird and put him in the
freezer. For a few minutes the parrot squawked and kicked
and screamed.
Then suddenly there was total quiet. Not a peep was heard
for over a minute.

Fearing that he’d hurt the parrot, John quickly opened
the door to the freezer. The parrot calmly stepped out
onto John’s outstretched arms and said “I believe I
may have offended you with my rude language and
actions. I’m sincerely remorseful for my
inappropriate transgressions and I fully intend to do
everything I can to correct my rude and unforgivable behavior.”

John was stunned at the change in the bird’s attitude.

As he was about to ask the parrot what had made such a
dramatic change in his behavior, the bird spoke-up, very
softly, “May I ask what the turkey did?”

#173 pjwlk on 12.12.10 at 12:19 am

#39 Jane : “Heroes? They get paid to sleep, cook, and do volunteer work…” blah, blah, blah.

Best thing to do before you shoot your mouth off is to walk a mile in the other person’s shoes. You know not what you speak of.

#174 Cookie Monster on 12.12.10 at 12:20 am

“On Gard”? Is that Republican for ‘En garde’? — Garth
—————–
I guess, I’m not political.

#175 Guy_in_Regina on 12.12.10 at 12:38 am

I don’t begrudge Firefighters one red cent of their pay!

When the phone rings, that is a tough, tough job.

# 93 “Because I know” said it straight.

#176 TaxHaven on 12.12.10 at 12:48 am

Why not allow a little personal liberty here?

Fire protection is basically insurance: very expensive insurance forced on all of us by the government gun.

Instead, let’s make it optional. And then entirely privatize it. Competing fire protection companies would have to undercut competitiors while providing quality protection in order to win customers.

Frankly, I see no problem at all with watching one house burn down while another fire next door is doused if the former is uninsured. The bigger issue here is coercion versus peronal liberty.

We could do the same with police “protection” too, as it is certainly useless and expensive the way it stands. And then schools.

#177 OttawaMike on 12.12.10 at 12:53 am

#76 Got A Watch on 12.11.10 at 11:32 am
Good rant and I agree with most of it.
Charles Hugh Smith wrote an excellent piece last week on productivity gains and how we all wasted it on govt.

http://www.oftwominds.com/blogdec10/productivity12-10.html

Where I need to correct you is on the private sector workers in O-Town. There is a large underpaid part of the workforce in this town. The disparity between govt. drones, contractors and the non unionized that do many of the service jobs is breathtaking.
Southern Ontario probably has more opportunity and better pay for these type of workers.

#178 hobbygirl on 12.12.10 at 1:20 am

Cookie Monster #161 Hobblygirl, you sound like a hater of truth. Must destroy the purveyors of truth. If I choose not to entertain or mock your point of view it is my choice, I may freely condescend your opinion as you may mine. Touche. On Gard!

You mocked ME, not my point of view which would be fine. What does calling me ‘dear’, ‘go sew buttons’ or, ‘leave the thinking to us’ have to do with any counterpoint to my views? Your comments are way off topic now and getting rather shallow to pique my interest any longer. PS; your spelling sucks.

#179 realityguy on 12.12.10 at 1:25 am

The banks lending rates should be based on the average mortgage rate, not this extremely low, emergency rates @ 1% or 2.35 % mortgages.

They average rate should be somewhere around the 6% to 9% rate because in a few years rates will rise back up to those levels.

What the banks are doing is enticing people to get in with low rates. Once their in, its a 35 to 100 year life sentence to the mortgage ball and chain.

Its a great game if real estate continues to rise (just like any pyramid scheme. But once there are no more suckers who will support the higher levels, the house of cards will come tumbling down

#180 pablo on 12.12.10 at 1:27 am

I mean, look at this. Even the bankers are recoiling at the size, scope and threat of the current debt Goliath.After all, it’s in the naked interests of bank shareholders to stymie a HouseAgeddon in Canada.

Garth; do you really believe this?? Do you think Ed Clark or Bill Downe really give a rats ass about the bank shareholders??

The only things that they care one iota about is their share options, their bonuses and their benefits, like zero interest loans, loc’s, mortgages and credit cards. The rest of us could fall off a cliff into the abyss and they wouldn’t even react…………..oh it’s not different in canada- pity.

Garth I’ve seen bankers for what they truly are and it’s hideous, foul, evil and very very bad.

p.s. loved the pics in the previous blog; yellow lab, black lab, brown lab, meth lab. Lmfao.

#181 April on 12.12.10 at 2:43 am

According to the Nanaimo News, prices are still decending there but the realtors say”The good news is Vancouver and Victoria have picked up and we’re usually a couple of mths behind them”. Realtor spin no doubt. Comments anyone?

#182 garthfan on 12.12.10 at 2:45 am

Great blog.

No society can afford it’s public servants to be a million dollars in debt for houses when they have no net worth.
That should never be considered and promoted as a norm.

Can you imagine the toll it takes on one’s health to fight fires for years and years?

#183 just sayin' on 12.12.10 at 2:55 am

hey Live Within Your Means…..why so bitter?

Sounds like you’ve always got advice for everyone else; even people who don’t want it.

FYI you come across as really judgmental. I’m glad I don’t know you, I think you’d make me feel bad.

#184 betamax on 12.12.10 at 2:59 am

#166 Cookie Monster: “Hobblygirl and MasterBetaMax.”

So soon reduced to this.

#185 Agio on 12.12.10 at 3:20 am

Ayn Rand @ 9
Many of the firefighters I know of work at other jobs – landscaping, own small businesses as they are working 24 hour shifts for about 7-9 days of the month. That is, they earn a second income. Just saying.

I find it extremely hard for a family to save for retirement and RESPs when there is a stay at home parent. Nice to aspire to (staying home for the kids) but hard to make it all work out in the end.
___________________________________________

What does any of the above lament have to do with this firefighter’s special kind of stupid?
Nothing in Turner’s tale said the guy wasn’t a hard working fire engine. Perhaps an oblivious financial arsonist but not a slacker.

#186 Melissa on 12.12.10 at 4:47 am

Jim Chanos has again delivered an interview warning about China’s bubble economy. Let’s hope that Chanos is wrong, because if he’s not, their will be pain ahead for commodity exporters like Canada, Australia and Brazil.

http://www.unconventionaleconomist.com/2010/12/chanos-again-warns-on-chinas-bubble.html

#187 Utopia on 12.12.10 at 4:51 am

#95 Bill ( Peterborough)
———————————-

Not to worry Bill. Your objections are noted. I have been mad at our banks this week though but today I am in a forgiving mood. My perogative. My choice. And the words I am hearing from them sound like progress to me. They are people too and despite your paranoia not everyone is manipulative and not every program is preplanned and engineered to destroy the fabric of Canadian society. So I will take what I can get right now and be happy. The banks are listening.

Peace. Out.

#188 Utopia on 12.12.10 at 4:57 am

#104 Incubus…..

Thanks for the link to the oil/food chart.

#189 Utopia on 12.12.10 at 5:17 am

#160 hobbygirl …
———————————

Go girl! That “sew buttons” comment irked me too.

#190 Bill ( Peterborough) on 12.12.10 at 8:34 am

Re # 159 Nosty

Thanks for clip, and yes I remember.

Here’s on for you

http://www.publiccentralbank.com/

#191 Tony on 12.12.10 at 9:19 am

Sammy better hope they keep on manipulating oil prices upward. Oil is around 88 dollars US a barrel. Fundamentally it should be in the US 30 to 40 dollar range. I see buying in the condo market in Edmonton now. Prices have fallen around 50 percent or more for condos and apartments. Maybe Sammy should be buying condos which have fallen in half from the peak instead of houses which have only fallen about 30 percent.

#192 Bullion.Bunny on 12.12.10 at 10:08 am

Sad thing is, he can declare bankruptcy, and still keep his job and pension. He will have much of his income confiscated for a year as a first-time bankrupt, but other than that, the firefighter faces no consequences.

Where’s the honour in that? — Garth

Where’s the honour from the banks side. Giving a man a loan KNOWING full well he could never pay it back. Any first year loan officer could see this! This is the real crime!

There is a lack of responsibility on all sides. Borrowing obsessively then bankrupting doesn’t hurt the banks so much as everyone. — Garth

#193 Bill ( Peterborough) on 12.12.10 at 10:17 am

# 187 Utopia

They are people too and despite your paranoia not everyone is manipulative and not every program is preplanned and engineered to destroy the fabric of Canadian society. So I will take what I can get right now and be happy. The banks are listening.

******************************************

There is a differnce between Paranoia and connecting the dots, through educated reading and crossrefrencing.

Imo there are just too many coincenenses for my liking all seeming to point to the same direction.

Follow the money trail all the way through and see

DELETED. I warned you three times and kicked you off twice. Take your conspiracy theories and anti-Antisemitism and shove them. You are done here forever. — Garth

#194 Devil's Advocate on 12.12.10 at 11:04 am

SETH TODAY

Everyone and no one

Two things are always not true:

Everyone likes this.

No one likes this.

Sorry.

If you try to please everyone, the few you don’t delight will either ruin your day or ruin your sense of what sort of product you should make.

And if you believe the critic who insists that no one is going to like what you made, you will walk away from a useful niche.

Seth Godin

#195 Bill ( Peterborough) on 12.12.10 at 11:35 am

Garth:

Why don’t you

DELETED. You are history here. — Garth

#196 BrianT on 12.12.10 at 12:06 pm

#191Tony-I am surprised you are not aware of what the current global supply of $30 oil is. Oil sands product and deep drilling wells such as the one that messed up in the gulf do not supply product that can be profitably sold for $30 US.

#197 Moneta on 12.12.10 at 12:16 pm

There is a lack of responsibility on all sides. Borrowing obsessively then bankrupting doesn’t hurt the banks so much as everyone. — Garth
—–
The guy genuinely believes he’s got it made. The banks know he’ll be in a pickel but they don’t care because, when time comes, they’ll just dump his bad risk on CMHC.

So who’s more to blame? The lender who knows he’s a bad risk, the buyer who is convinced he’s got it made or the investor giving more dough to the banks by buying preferreds so they can keep the same friggin game going on?

You were reasonable until the comment about buying preferred shares. All preferreds, save those being initially offered, are purchased in the secondary market, so banks receive none of the sale proceeds. In fact, because preferreds carry fixed dividend payments, there is a net transfer of wealth from the banks to the owners of the securities, which should make your little black heart uncharacteristically happy. — Garth

#198 Junius on 12.12.10 at 12:23 pm

#186 Melissa,

I agree. I hope Chanos is wrong but I fear he is not. I have been to China recently and I can say there is every reason to believe he is correct.

#199 Hoof Hearted on 12.12.10 at 12:36 pm

Isee the subject of this article is another smug civil servant ie fireman.

My understanding is they have o eof the best pension plans availble. They are also known to moonlight and take jobs from tradesmen.

It is my understanding that pensions are safe from any confiscation, ie if one goes bankrupt the pension is still safe….this is why OJ Simpson was quite smug…his NFL pension was legally protected.

Regardless.Prairie cowboys are known to fling their bling when times are good… just go into any BC campgound within 6 hour drive of Alberta and observe the RV packages that cost over 100G’s that they use maybe 4 weeks of the year.

We have far too mnay smug civil servants out there…the sad thing is I think our gov’ts will be forced to turf many of them (as is occurring in other countries) who I don’t think have the best survival skills in the real world.

#200 Dorf on 12.12.10 at 12:46 pm

#93 Because I know on 12.11.10 at 1:23 pm

I concur with you completely on this one, especially in light of the fact that his profession had nothing to do with the story, except as a benchmark of what kind of operating capital this guy is working with.

He has made some really silly financial decisions, but that does not in any way negate the good work he does, when he does go to work.

I think it is really ignorant to disrespect such a self-less profession because a couple guys made bad decisions in their personal lives.

I have no problem with the guy sleeping, cooking, etc when there is nothing to do.

When he goes to work, he goes to work. He pays back all that slack time tenfold.

People, think of this:

When was the last time YOU were sitting around watching TV one minute, and two minutes later, you are out on the highway in the middle of the night, in a snowstorm, in the cold, trying to pry a lifeless body out of a twisted wreckage, upside down in a water and slush filled ditch, inside of the vehicle packed solid with snow, knowing full well that you’ve got only minutes to get this job done or you have wasted your time ?

You have only a couple of minutes to save this person’s life, you can’t leave it to finish tomorrow or put it off until after the meeting.

And everybody is depending only on that firefighter. The one person everybody puts the burden of responsibility on, to save a person’s life.

It’s all in your capable hands, M. Firefighter, to take this awful situation and make it right for us, because you and ONLY you, M. Firefighter, crossed the line where the rest of us stopped to stand and watch.

Much respect to you and your brethren, for the brave and self-less work that you do.

If everybody put their heart and soul into their job, such as you do, we might not be in this economic predicament in the first place, 10-4 ?

Now get your buddies’ finances in order so we don’t have to watch him go hungry after a lifetime of good public service.

#201 Mikey the Realtor on 12.12.10 at 12:47 pm

It looks there is a war starting on the blog, RE is going up and everyone here is mad about it, Garth included. My doors are still open to the buyers of the blog, no charge on purchase, just selling at a low 5%. Get in, the longer you wait the higher the price, dont say you weren’t warned.

#202 Got A Watch on 12.12.10 at 12:48 pm

I’m not angry, I furiously resemble that remark.

Hey, I have no great hatred for Ottawa, I have had a good time there, lots of friendly girls. It’s a nice place to visit, in the summer. Besides, I’m not prejudiced, I hate everyone equally.

More seriously, call me crazy, I just don’t like to see tax dollars wasted. Because the people that pay the taxes get up every morning and do something to pay those taxes. Government is inherently a source of vast inefficiency in the economy, just because every $ the Government ‘spends’ comes from your and my tax $. Or they just ‘print’ it, devaluing the currency and decreasing it’s purchasing power, which is just another form of tax.

Ottawa is just a ‘Government town’, you can find them in almost every country. A place where the main local economy is the existence of the Government and all it’s bureaucracy. I’m sure thinking is much the same in Washington, Moscow, or Beijing. As is the ‘entitlement’ of Government workers.

You think I am kidding with this austerity talk? Austerity is a thing you do because you have to, not because you want to, or just because it’s fashionable. Have you read at all about what is happening in Europe lately? Hello? Ireland?

When Government gets too large and spends too much, you get to where we are now: record deficits at Provincial and Federal levels. If taxes are raised, collected amounts would probably fall, the economy is struggling. Ottawa and Ontario and Quebec face serious Budget cuts to try to regain balance, which shrinks GDP noticeably as Government is too large a portion of it now.

Or we can just be delusional, like Americans, and continue to run record deficits until we hit the debt wall just like Iceland, Greece, Ireland, Portugal, Spain….. Current Government size and cost is simply unsustainable, it has to be cut, and you have to start somewhere.

The economy in North America is simply, sickly. Ponder Under 35 living with parents vs real estate ownership which shows 43% of ALL under-35s are still living in Mom’s basement

They suffer a much higher unemployment or underemployment rate compared to older workers, and often have to work in unpaid ‘internships’, today’s indentured slave workers. Even having an”education”, viewed against the cost now, is not that great – you ‘graduate’ to payments on a huge pile of debt, and may not get a job anyway.

The “new economy” has no jobs, everything could be automated or outsourced. What need for local humans, so inefficient and costly. Don’t look over your shoulder, a robot is gaining on your job.

#203 Junius on 12.12.10 at 12:58 pm

#200 Mikey the Realtor,

Thanks Mick! We have never before had anyone come here and say “Buy Now or Be Priced Out Forever.” That is a new one. You are an original for a realtor!

NOTE TO READERS – Don’t these guys ever have anything new that “it is different here” and the one above?

#204 Junius on 12.12.10 at 1:00 pm

Interesting article on the total loss of home valuation in the US since the crash. National total is $1.7 Trillion. Los Angeles and Orange Country at $677 million.

Fortunately it can’t happen here………yeah right.

Link here:

http://lansner.ocregister.com/2010/12/09/laoc-home-values-lost-677-billion-vs-peak/91874/?source=patrick.net

#205 eaglebay on 12.12.10 at 1:25 pm

#44 Investorsfriend said:
“I see a bankruptcy and possibly a divorce in his future.”

What does money have to do with love?
Does anybody marry for money?
What happens to a “working girl” if you don’t pay her?

#206 Guy_in_Regna on 12.12.10 at 1:34 pm

Bill is history?! Yaaaaay!!

The rest of you wackos take heed.

#207 Delta force on 12.12.10 at 1:35 pm

That comment about Canadians who get themselves in trouble and then just declaring bankruptcy is interesting. I think if they’re in deep enough that that would be what most will do and the tab will just be picked up by society. Good post!

#208 Moneta on 12.12.10 at 1:44 pm

All preferreds, save those being initially offered, are purchased in the secondary market, so banks receive none of the sale proceeds.
————
Did you see how many were issued during the credit crisis to boost capital ratios?

Banks received billions. Go look at Royal Bank’s balance sheet… equity got diluted by over 50% thaks to new issues.

Those billions kept the party going.

And you should be thankful. — Garth

#209 The Original Dave on 12.12.10 at 1:45 pm

With two kids gearing up for university, he decides its a good time to buy 3 spec homes???? Pure greed.
——————————————————-

Everyone is greedy. Every person is self-serving. Why are you trying to attack this person for wanting financial independence? You can attack him for making a bad investment choice, but I don’t think he should be attacked for his greed.

#210 The Original Dave on 12.12.10 at 1:48 pm

#48 The Original Dave on 12.11.10 at 4:56 am writes: “the 35 years is just as bad as the 5% down. ”

Psychologically, you’re probably right. But quantitatively, this actually isn’t true.

Imagine two buyers purchasing $500k homes. Buyer A puts down 5% and takes a 20-yr am. Buyer B puts down 20% and takes a 35-yr am. Both buyers get five-year fixed-rate mortgages at 5%.

At the end of five years, Buyer A has $104k of equity in his home. Buyer B has $124k of equity.

In this case the big down-payment and longer amortization come out on top.
————————————————

both inflate housing prices. I’m looking at it from a macro-perspective and pointing out the effect these factors have on market prices.

#211 Ben on 12.12.10 at 1:50 pm

#200

Sorry Mikey, I don’t have the job security and just plain can’t afford it anymore.

#212 Moneta on 12.12.10 at 1:51 pm

In fact, because preferreds carry fixed dividend payments, there is a net transfer of wealth from the banks to the owners of the securities, which should make your little black heart uncharacteristically happy. — Garth
———-
A small percentage of Cdns own equities. What they did just sends more money from the taxpayers to the richest Canadians.

I might be part of that top group but it makes me angry to see government and bankers, thanks to skewed and dubious policy, push me to screw over other Canadians in the name of self preservation.

#213 BrianT on 12.12.10 at 2:00 pm

#201Got-Yes, but it is unrealistic to discuss government waste circa 2010 without including the financial sector-the financial sector globally has become a gigantic waste of productive capital. Those trillions of dollars given to connected financial players don’t miraculously appear out of thin air-they are taken from everybody else.

#214 Debtfree on 12.12.10 at 2:02 pm

@ melissa 186.
Jim chanos . Is talking imo rubbish . I guess he missed a few facts about china . Like the biggest construction of rail lines in the world thousands of miles of brand new lines , pipelines and roads. Google chinese bridge construction and be amazed. The last time that happened in canada was how long ago? Jim is like us in canada sitting in a country with decaying pipelines, bridges , roads , buildings, towns ,cities and ports . Mean while we including anz are ripping up our country side and selling everything as fast as we can to china . They get the coal and we get the hole. Jim also doesn’t know how much of a down payment is required to get a mortgage in china . It would amaze him I’m sure. I wouldn’t want to get caught lying to my lender in china either. Penalties are a little stiffer over there. They put the penal in penalty there. Mean while our idiots in B.C. could have for the price of the Olympic farce built a fixed link to vanisle saving us billions on crumbling ferries. I guess if vanisle had fewer people and more mccains potatos we to would have a confederation bridge like mccains got in pei. BTW the next time you drive under an overpass watch out for falling concrete.

#215 BrianT on 12.12.10 at 2:06 pm

#199Dorf-Oh brother-you think it is fun for those guys you are sending over to Afghanistan to die (or come back with no legs)-and they certainly aren’t in line for a cushy early retirement like that guy. If he hates the work he should quit or just be quiet and do what he is paid to do.

#216 dark sad person on 12.12.10 at 2:08 pm

For those who care (or is it dare) to see the truth-

Please take the time to see how your freedoms are being eroded and controlled by the Political and Financial elite through our taxpayer funded Media and how exposing the truth becomes criminal to those who have the most to fear of the truth coming to light-

Of course the cesspool of Socialists that gather on this board and defend and believe that Governments are really only trying to dictate what’s good for the People-will recoil and put up their usual shield of denial-

Kill the Messenger-

This site will likely be off air by tonight-so watch ASAP-

**************************

From summer 2010 until now, Swedish Television has been following the secretive media network WikiLeaks and its enigmatic Editor-in-Chief Julian Assange.

Reporters Jesper Huor and Bosse Lindquist have traveled to key countries where WikiLeaks operates, interviewing top members, such as Assange, new Spokesperson Kristinn Hrafnsson, as well as people like Daniel Domscheit-Berg who now is starting his own version – Openleaks.org!

Where is the secretive organization heading? Stronger than ever, or broken by the US?
Who is Assange: champion of freedom, spy or rapist? What are his objectives? What are the consequences for the internet?

http://svtplay.se/v/2264028/wikirebels___the_documentary?cb,a1364145,1,f,-1/pb,a1364142,1,f,-1/pl,v,,2264028/sb,p118750,1,f,-1

#217 realpaul on 12.12.10 at 2:25 pm

Trudeau Liberals are foaming at the mouth as Flaherty staes that the CDN dollar is NOT the cause of Canadas economic woes. Further more he says that businesses are buying new plants and machinery with the strong Canadian dollar to improve productivity. Old Pierre ( Cuba) Trudeau would be pissed to see his ‘seven percent solution’ being watered down by actual acts of captial efficiency.

http://www.bloomberg.com/news/2010-12-10/flaherty-says-u-s-growth-not-canadian-dollar-is-biggest-risk-to-outlook.html

God forbid that business should actually make a comeback in Canada after three decades of Liberal governments attempts to squash it and turn the country into a mass welfare state of struggling poor and decadent beureaucrats lording over them.

Does anyone wonder why Canada sold all its gold reserves…sunk its manufacturing sectors…..cynically renamed the countries currency as ‘loonie’? Liberals had dreamed of turning the country into a haven for refugees and unionists while keeping the citizens buried in an increasingly violent police state (G20/RCMP) and the outrageous poverty of excessive taxation.

They almost got their way…but like the experiment of absolute state control that failed in the Soviet Union and China under direct communism, the soft communism of Trudeau failed due to the basic aspirations of people.

#218 S.B. on 12.12.10 at 2:31 pm

Tinfoil? :P

http://www.nytimes.com/2010/12/12/business/12advantage.html?_r=3&nl=todaysheadlines&emc=a2

A Secretive Banking Elite Rules Trading in Derivatives
By LOUISE STORY
Published: December 11, 2010

On the third Wednesday of every month, the nine members of an elite Wall Street society gather in Midtown Manhattan.

The men share a common goal: to protect the interests of big banks in the vast market for derivatives, one of the most profitable — and controversial — fields in finance. They also share a common secret: The details of their meetings, even their identities, have been strictly confidential.

#219 prairie gal on 12.12.10 at 2:39 pm

bye, bye Bill from Peterborough. Hope you get the help you need.

@ cookie monster
As far as Ayn Rand’s ideas go, its her brand of hubristic self-interest and narcissism that has brought the global economy to the brink. These self-aggrandized ‘industrialists’ who ship jobs offshore, lobby for tax cuts, hoard profits and then scoff at the little people who can’t find a job that pays a living wage. Its short-sighted and, frankly, sociopathic. Nothing good comes from unfettered greed and selfishness.

#220 kitchener1 on 12.12.10 at 2:40 pm

Here is what I find really odd.

F and Carney go on and on about Canada’s lending standards, no liar mortgages etc…

But this dude, just mortgaged 3 properties, got 926K of credit on 45K downpayment, all on the books of CMHC (taxpayers).

How many Canadians are out there like this guy? Sorry but this is not prudent lending. And this is were the problem lies, rates go up, prices drop etc.. these marginal buyers will be selling for whatever price they can get.

#221 Indentured Servitude on 12.12.10 at 2:44 pm

The bankers own our govts and our national debts and our labour and our taxes.

If you haven’t yet you owe it to yourself to listen to Aaron Russo’s interview in which he tells of what his ‘friend’ Nick Rockefeller revealed to him. Why do you think that now it takes both a husband and a wife working full time to make ends meet? Was that the fruit of liberation? No, it is enslavement… to the banks. And it is ruining our families and our culture. But hey, we get to live in nice houses, right?

#222 CTO on 12.12.10 at 2:50 pm

Garth and others

I love reading and gleaning much insight out of this blog, but sometimes issues get mudy and lost on this REAL ESTATE blog.

Some time ago G did a piece on US real estate vs Canada real estate. For kicks, I just got on mls internation and looked up property in Cape Coral Fla for $100000. Neadless to say the divide between Fla and Toronto is astounding!
Some say the prices in TO are run up by immigrants.
in light of this, i have to question all the newcomers to canada.
Could anyone please tell me why newcomers are investing in Canadian real estate that is run up to 2-3 times that of beautiful WARM tropical places like florida? Deosn’t the rule of investing say buy low, sell high?
Myself, i like ontario, but i am used to the cold and have lived here all my life, but for a newcomer, what is the attraction?

#223 Debtfree on 12.12.10 at 2:53 pm

I don’t know whether to laugh or cry.

http://www.youtube.com/watch?v=NOzR3UAyXao

#224 eddy on 12.12.10 at 3:09 pm

Educational film called ‘Money as Debt’

http://video.google.com/videoplay?docid=-2550156453790090544#

#225 CTO on 12.12.10 at 3:12 pm

Mikey the Realtor

Mikey, maybe you’re right about the next 6 months or this summer, but it becomes sooo obvious where we are headed when you compare our RE to US RE.

Consderng our 2 economies are sooo interreated…

Their RE is going to have to rise to catch ours and unfortunately Mkey our RE is going to fall to catch theirs, so considering that, i would say the US is by far a much better investment.

Mikey, do you sell US real estate by chance?

#226 Nostradamus Le Mad Vlad on 12.12.10 at 3:31 pm

-
#172 DARLENE — Thanks for the joke! Good way to start off the day. Kinda like this version of the Efishunsee Exxpurt.
*
9:51 clip “Over 90% of America did not want to passage of HR3997. The US Congress was held at “Executive Gun Point” and told: ‘you either pass this bill or we will declare martial law’.”

3:53 clip “Pentagon, Military Actively War Gaming ‘Large Scale Economic Breakdown’ and ‘Civil Unrest’ ”

Unprepared ‘Spose this will happen to a fair amount of people if they are not used to cold temps.

Gas Prices US$7.30 / gallon, one pound 22 pence in UK.

West abdicates Further proof of the change in cycles.

Evil Eyes Those eyes are not that alluring. Check out Pope Benny’s eyes.

Link in. Malaysia calls for return to gold standard.

Foreclosures “The market is expected to tally about 1.2 million bank repossessions in 2010, up from 900,000 in 2009, he says. “We expect we will top both of those numbers in 2011.” Economic recovery? Where?

Sept. 11, 2001 – Was this the start of WW3? “One entity not mentioned by the author, but very deeply involved in this process on the side of the US, is NATO.” NATO and the US have snuggled up to one another nicely.

#227 S.B. on 12.12.10 at 3:38 pm

Err, and if you still trust our “news” please realize that every story is expertly crafted for our consumption, for a desired reaction, by very smart people:

“December 10, 2010 “The Guardian” — In the US Army manual on counterinsurgency, the American commander General David Petraeus describes Afghanistan as a “war of perception . . . conducted continuously using the news media”. What really matters is not so much the day-to-day battles against the Taliban as the way the adventure is sold in America where “the media directly influence the attitude of key audiences”. Reading this, I was reminded of the Venezuelan general who led a coup against the democratic government in 2002. “We had a secret weapon,” he boasted. “We had the media, especially TV. You got to have the media.”
Never has so much official energy been expended in ensuring journalists collude with the makers of rapacious wars which, say the media-friendly generals, are now “perpetual”. In echoing the west’s more verbose warlords, such as the waterboarding former US vice-president Dick Cheney, who predicated “50 years of war”, they plan a state of permanent conflict wholly dependent on keeping at bay an enemy whose name they dare not speak: the public.

At Chicksands in Bedfordshire, the Ministry of Defence’s psychological warfare (Psyops) establishment, media trainers devote themselves to the task, immersed in a jargon world of “information dominance”, “asymmetric threats” and “cyberthreats”. They share premises with those who teach the interrogation methods that have led to a public inquiry into British military torture in Iraq. Disinformation and the barbarity of colonial war have much in common.”

#228 S.B. on 12.12.10 at 3:44 pm

Here is the full link from the Guardian. Keep this in mind when you listen to any “news” these days.

http://www.guardian.co.uk/media/2010/dec/10/war-media-propaganda-iraq-lies

#229 april on 12.12.10 at 4:49 pm

#200 – Mike the realtor.
If your so sure “prices are going up” why do you need to pump?

#230 Roial1 on 12.12.10 at 4:55 pm

201 Got A Watch on 12.12.10 at 12:48 pm
The main problem with “Government” austerity is where and how it is enforced/enacted.
The “Listeriosis” epidemics that we are expiriencing every so often is one DIRECT effect of “Rightwing” austerity. (cutback on food inspection at the behest of the VERY rich and at the same time giving them cuts in taxes)
The cut backs are not to the ones who can best afford it but to the so called middle and lower/working classes.
As for “unfettered Capitalism” do we realy need a freedom act for the “Attilla the Hun” capitalists (rape, pillage, and run off with the profits. Society /producers be damned.
I do not think this of all capitalists. The guy who builds his own business from nothing is in the same boat as the rest of us. Propagandized that black is white and his workers are his enemy if they ask for a living wage in this society.

You be the judge.

#231 TS on 12.12.10 at 4:56 pm

know F worships unfettered capitalism, manifest destiny and social Darwinism.
Great to know we have a Federal Finance Minister living by this thinking and setting policies that ultimately take advantage of his fellow citizens for the benefit of a few.
That survival of the fittest thinking can turn into social unrest in the long run.
It appears our PM has the same way of thinking.
I sure wish there would of been more MP’s like you in the house. I presume Parliament is also full of sheep and cowards selling out their own and beliefs and morality. Thanks for your courage and honesty.

#232 tired vulture on 12.12.10 at 5:05 pm

My wife is driving me crazy….we were looking for a bigger house 1 years ago (up-size), then I start reading this blog, I decided to wait but it is taking so long to burst…..around my area, houses are still selling very well….now my wife doesnt want to wait any more and keeps pushing my buttons!!

#233 TD69 on 12.12.10 at 5:14 pm

GARTH, BANG ON. THIS DIE HARD VCR REAL ESTATE LOVING GUY GOT THE PICTURE 2 YEARS AGO WHEN IN OF ALL PLACES VCR WAS DOWN 30% OVERNIGHT-INCLUDING THE WORLD RENOWNED WEST SIDE. I KNOW. I BUILD. LOT PRICES FOR A 33X122FT IN PT GREY WENT FROM $1.2MILL TO $775K-OVERNIGHT. ONCE AGAIN I SAID LOT PRICES-THE BARE DIRT. THIS HAS BEEN AN INCREDIBLE “DEAD CAT” BOUNCE. AND ROLLER COASTER IN BETWEEN. I JUST UNLOADED 2 PIECES OF REAL ETSATE THIS WEEK AT 2.5X THE PRICE I PAID ONLY 6 YEARS AGO. AND THE 5/35 OR 0/40 MORTGAGES ARE JUST BEGINNING TO SETTLE IN. AND GUYS LIKE ME ARE MORTGAGE FREE-AND GETTING OUT NOW TO SCOOP UP LATER-SAY 2 YEARS OUT OR MORE. THE ONLY THING KEEP VCR PROPER GOING IS OFF SHORE $. AND IT’S NOT DUMB EITHER. IF SOMEONE LIVES IN THE BURBS THEY ALREADY KNOW IT’S A BUBBLE. JUST TRY SELLING. LISTENING TO THESE $600 CORRESPONDENCE COURSE REALTORS WHO HAVE BEEN MAKING $300K A YEAR IS A KILLER. THEY THINK THEY WENT TO HARVARD. AND ONE EVEN TOLD ME THERE IS NO WAY A REALTOR WHO IS OWED $45K IN COMMISSION WILL BUDGE-OH REALLY-I HAVE THE PAPERWORK DONE ON ONE OF MY DEALS-FOR $8K COMMISSION-HST INCLUDED. WON’T BUDGE EH!!!!!
LIKE I TOLD THEM EVERYONE IS A REALTOR NOWADAYS. THAT’S WHY IT’S SCARRY. KEEP UP THE GREAT WORK I AM EMAILING PEOPLE I CARE ABOUT YOUR BLOG. UNFORTUNATELY IN THIS WORLD AS THE OLD SAYING GOES”YOU MAKE MONEY OFF THE POOR NOT THE RICH”.

#234 Peter B on 12.12.10 at 5:42 pm

A lot of people here in Alberta realize that they now owe more on their mortgage then their house is worth. But none of them are old enough to know Alberta’s ancient history. Back in the stone age we were governed by a party known as Social Credit. A conservative religious party that was also anti bank. HERE IS WHERE THE HISTORY GETS INTERESTING SO PAY ATTENTION BOYS AND GIRLS.

Social Credit passed a law known as the land not the men. This means if you walk away in Alberta from your mortgage the banks can only repossess your house. They CANNOT GO AFTER YOUR WAGES!

When people start to realize this a brown substance will start hitting a large fan! Prices will crash!

#235 Bullion.Bunny on 12.12.10 at 5:59 pm

There is a lack of responsibility on all sides. Borrowing obsessively then bankrupting doesn’t hurt the banks so much as everyone. — Garth

Agreed, one only has to look in the mirror for the responsible party. That said, the banks greed in these matters is unprecedented. Lending standards are far too low, min house down-payments should be 20%! This would end the party fast and prevent anymore sad stories.

#236 betamax on 12.12.10 at 6:04 pm

#21 Cookie Monster on 12.10.10 at 12:24 am:
“To all the greater fools and capitalist antagonizers….Socialism’s great until you run out of other people’s money.

Cookie Monster’s long post from the other day is repeated verbatim at:

http://batteryblog.ca/?cat=5

Ostensibly it was written by Randy Smith, editor of that blog, though the last line is plagiarized from Margaret Thatcher.

Randy is president of ESI:

http://www.esi-technology.com/

He’s educated in regard to batteries, so feel free to ask him any battery related questions.

#237 john m on 12.12.10 at 6:06 pm

One thing that really amazes me is how some people feel on top of the world because a bank will lend them enormous amounts of money to buy an overpriced, deteriorating,equity losing piece of real estate with little or nothing down………what a bunch of damn fools this country is saddled with–Banks are in business to make money plain and simple! They couldn’t give a rats ass who is guaranteeing their loans as long as they get their money……….and lucky us thanks to “F” and company we all are……..

#238 CTO on 12.12.10 at 6:21 pm

Hey! Mikey!

Typical house in beautiful Florida for sale by a typical realtor

4948 Normandy Ct Cape Coral, FL 33904

$205,000 Price

Sales History

Date Price
October 12, 2005 $725,000
April 20, 2005 $475,000

This supid fool paid $725 000 in 2005! See for yourself, check out the huge inventory of houses in America!

#239 GregW, Oakville on 12.12.10 at 6:26 pm

Hi Garth, fyi still flying? 2 article

Globalist Border Security Deal in Works Between U.S. and Canada
http://www.infowars.com/globalist-border-security-deal-in-works-between-u-s-and-canada/

“From The Globe and Mail earlier in the week:

Stephen Harper’s Conservatives are negotiating…

Transnational corporate “trading partners” in the U.S. and Canada are not about to let borders and the draconian border security apparatus get in the way of doing business. You and I will be subjected to increased border “security” and ever increasing Gestapo abuse at the airport while large corporations will get to write their own rules…”

Inside TSA scanners: How terahertz waves tear apart human DNA
http://www.infowars.com/inside-tsa-scanners-how-terahertz-waves-tear-apart-human-dna/
“Some studies have shown that THZ can cause great genetic harm, while other similar studies have shown no such evidence of deleterious affects.

Boian Alexandrov at the Center for Nonlinear Studies at Los Alamos National Laboratory in New Mexico recently published an abstract with colleagues, “DNA Breathing Dynamics in the Presence of a Terahertz Field” that reveals very disturbing—even shocking—evidence that the THz waves generated by TSA scanners is significantly damaging the DNA of the people being directed through the machines, and the TSA workers that are in close proximity to the scanners throughout their workday…”

#240 Cookie Monster on 12.12.10 at 6:33 pm

#178 hobbygirl on 12.12.10 at 1:20 am
You’re right. I was to lazy the other day to address what you said and instead resorted to ridicule. So you’re right and I apologize. Sorry.

#241 jess on 12.12.10 at 6:53 pm

Anybody read this one?

…”2000 book, Wall Street Capitalism: A Theory of the Bondholding Class, economist E. Ray Canterbery explains what happened and how The tax cuts drastically increased the incomes of the rich and they used their newfound money from the tax cuts to buy the Treasury bonds, notes, and bills that the Treasury Department had to issue in order to finance Reagan’s deficits. The combination of monetarism (high interest rates), supply-side tax cuts, and the phantom Soviet threat created the bondholding class. In essence, a Wall Street Welfare institution known as the bond market came to dominate politics in the United States. Instead of using taxes to fund the federal government (and increasingly state and municipal governments), taxes on the rich were cut and they were handed an “investment opportunity” so that working and middle-class taxpayers now pay a “bondholder’s tax” to firms like Goldman Sachs and JP Morgan Chase (as well as Japan and China). The domination had become quite apparent in early 1993 when President-elect Bill Clinton remarked “You mean to tell me that the success of the economic program and my re-election hinges on the Federal Reserve and a bunch of fucking bond traders?”

=

Robert Reich secretary of labor in the clinton ad before the national press club in 1995 since 1979 household incomes have swelled by 826 billion in 1993 dollars but about 98 percent of the increase has gone up to the top 5th. everyone else 80% of amercian households has shared just 2 percent of the income gains. the typical american family is living on less than it did fifteen yerars adjusted for inflation. what is more remarkagble about the statement was that inflaltion and interest rates were very low during the period following the 1990-91 recession. “

#242 sotiri on 12.12.10 at 6:56 pm

#200 Mikey the Realtor
There were so many Realtors in US, “smart” like you that warned Americans in 2006 “the longer you wait the higher the price” they all were “right” in their advise the same way as you are “right” now, don’t say you weren’t warned that this advises are so stupid.

#243 S.B. on 12.12.10 at 7:20 pm

Overheard in Alberta: get back to sewing yer buttons, Dear. Do not worry yer pretty lil’ head about my $1.2 milllion mortgage debt…

#244 Cookie Monster on 12.12.10 at 7:23 pm

Hey, FYI, my apology to Hobbygirl was written and submitted before I was outed by BetaMax. Right Garth?

#245 eaglebay on 12.12.10 at 7:24 pm

#232 tired vulture

Be a man, get yourself a woman.

#246 jake the snake on 12.12.10 at 7:36 pm

I liken the situation we are in globally to the situation one finds himself in while playing a video game. The player has fouled up his prospects and his world within the game so much that the only answer to his woes is to push the reset button to start anew. Wipe the slate clean, so to speak.

In real life, the only feasible — or at least, well-worn and tested — way to clear the canvass and start over is to have a globalized war. Like WWIII. This allows you to get everyone on the same page and working toward the same goal, not unlike communism and authoritarianism does.

The bankers were singularly responsible for all the major wars in history, particularly WWI and WWII. They will be the driving impetus behind part III. Not unlike a Hollywood trilogy, you might say.

#247 Moneta on 12.12.10 at 7:48 pm

….now my wife doesnt want to wait any more and keeps pushing my buttons!!
———–
Invest 10K… Go on a nice trip to Ireland, Greece or Spain. Maybe she’ll see the light.

The trip will be cheaper than what you will lose on a house.

Sometimes you’ve got to give a little to get a little.

#248 Mikey the Realtor on 12.12.10 at 7:58 pm

Don’t shoot the messenger folks, America is America and Canada is Canada, as we have witnessed in the greatest recession of all time every country had a real estate slump BUT Canada, if prices keep going up in a slump guess what happens when we have a balanced economy? I know the fundamentals, but they mean nothing in this era as we have seen, central banks, governments and big business have figured out how to manipulate markets and people like never before. Rates will be low for years to come, maybe another 25/50 basis points next year, hardly anything to dwell on.

#249 dark sad person on 12.12.10 at 8:00 pm

In fact, because preferreds carry fixed dividend payments, there is a net transfer of wealth from the banks to the owners of the securities, which should make your little black heart uncharacteristically happy. — Garth

********************

That would be fine-except the only thing keeping Bond and Shareholders afloat-is a Taxpayer bailout-otherwise they’d be dead meat and they “should” be-

Instead-the rich who “speculated” in risk-which is undeniable as the “Yield Premium” is the compensation fees they demanded for holding that risk-

They were wrong–they lost-except in this rigged game-you can’t lose-
So–buy into Banks-cuz-
the working poor are backstopping your losses-
Sweet deal if ya can swing it-

*****************************

222 CTO on 12.12.10 at 2:50 pm

Garth and others

I love reading and gleaning much insight out of this blog, but sometimes issues get mudy and lost on this REAL ESTATE blog.

***********************
Wrong–

Read the introduction to this site–it sez–

“THE GREATER FOOL: Garth Turner comments on economics, real estate, money and the road ahead”

ZAP!

#250 Sail1 on 12.12.10 at 8:11 pm

#232 tired vulture

Realistically until interest rates drop, if and when they do, I doubt very much you will see any substantial reduction in prices. Wishing doesn’t make it happen. Contrary to popular belief, just know you may be a vulture of road kill for the foreseeable future.

#251 dark sad person on 12.12.10 at 8:33 pm

#240 jess on 12.12.10 at 6:53 pm

Anybody read this one?

Instead of using taxes to fund the federal government (and increasingly state and municipal governments), taxes on the rich were cut and they were handed an “investment opportunity” so that working and middle-class taxpayers now pay a “bondholder’s tax” to firms like Goldman Sachs and JP Morgan Chase (as well as Japan and China).

************************
Of course the vote sucking Politicians know that to impose a direct Tax on the People where it’s out in the open and transparent and therefore vote adverse-they’ll use a backdoor scheme-which enriches those who are fortunate enough to be part of the “connection”

If Governments were forced to impose direct Taxes on People to conduct their Corporate led Wars-there likely would be no Wars-at least not the trumped up Wars of today-
No one see’s beyond the 6PM news-

#252 Nostradamus Le Mad Vlad on 12.12.10 at 8:35 pm

-
#190 Bill (Peterborough) — Thanks for the link; and
#193 Bill (Peterborough) — Too bad you had to bite the bullet. Nevermind — e-mail or phone, we can keep in touch.

#209 dark sad person — Good post and link.

#210 realpaul — “. . . as Flaherty staes that the CDN dollar is NOT the cause of Canadas economic woes.”

On this, F is correct — the loonie has nothing to do with govt. policies; the CPC are the only cause of how much debt this country has accumulated, and combined with the deficit, taxpayers have been left to pick up the tab.

Consequently, sheeples have unknowingly become serfs. C-H-F are fully responsible, no one else.
*
Something strangely weird comes Sweden’s way. “A person in the Armed Forces called a few hours before the explosions in downtown Stockholm a friend to stay away from Queen Street.” wrh.com. No link; for some reason, Google won’t translate it.

4:56 clip Useless facts no one ever knew, but the song has a good beat.

3:50 clip Wal Mart and the DHS. Lawyers — prepare for lawsuits galore!

0:32 clip — GW Metrodome roof collapses from too much snow.

2:21 clip How Wall St. became a criminal enterprise and took over the WH.

Obama and Tehran “If Obama takes the advice, experts say, it could sink his engagement efforts with Tehran.” — Webmaster’s Commentary: “If Obama takes the advice, he violates the Nuclear Non-Proliferation Treaty, which both the United States and Iran have signed, which not only gives Iran the right to enrichment for peaceful purposes but under Article IV obligates the United States to assist them.” wrh.com. Obama is a warmonger driven by the elite’s interests.

Decline “It’s coming and sooner than most people expect!”

Market Alarm “The borrowing costs of the government of the world’s largest economy have now risen by a quarter over the past four weeks.”

11:57 clip “How EU (Central Bank) stole gold (the Rothschilds).

‘Tis the season for treason, so beware!

Obama has begun his descent. No crash landing, but a total wipeout.

Vatican Bank It’s not just GS and JPM!

#253 Agio on 12.12.10 at 9:06 pm

Wonderful Article

#254 Devil's Advocate on 12.12.10 at 9:14 pm

Well, I don’t see what everyone is yapping about south of the 49th. Perusing the data from this site

http://tinyurl.com/p5gfj

http://investmenttools.com/median_and_average_sales_prices_of_houses_sold_in_the_us.htm

Everything seems as it should with nothing more than the bleeding off of the excess from this latest “bubble”. I’d suggest that they are now most certainly bumping along bottom now, poised to continue along the underlying upward trendline which is clearly intersecting with those corrected prices. (look at the first graph on the site)

This certainly does confirm what I am hearing from my working buddies south of th boarder. Of course those not working are singing a different tune – and what do they expect. Real estate is like that, as is life, you get out what you put in. Don’t work and you won’t get paid.

But you all check out the site and come to your own conclusions…

#255 palebird on 12.12.10 at 9:18 pm

realpaul..

telling it like it is, I love it, and I love watching the Lib’s lose it. “they” (the Libs) have little chance of getting back in the picture and that just puts a huge smile on my face..

#256 Herb on 12.12.10 at 9:18 pm

#235 Betamax

Outstanding! Keep up the good work.

#257 Herb on 12.12.10 at 9:22 pm

#217 unrealpaul

let go of that corn broom and try a broad brush or, better yet, crayons to fill in some of the details.

#258 Junius on 12.12.10 at 9:50 pm

#214 Debtfree,

That is not a very compelling attack on Chanos. He clearly knows a lot more about China than you do.

It is ironic that the China debate on this Blog comes at the same time as the Ayn Randites are marching around pumping unfettered capitalism.

Command and control socialist economies like China are great at creating a whole lot of infrastructure. The building has been on an unbelievable scale over the past 3 decades. However I witnessed building after building that looked fantastic on the outside but was empty on the inside.

The Chinese Real Estate overhang is even greater than Dubai. At the peak Dubai’s accounted for 30-35% of their economy. The US was around 15% before their bubble burst. China is over 60% right now. It is out of control by any measure.

The Chinese gov’t is trying to reign it in right now. Last week they required their banks to raise their reserves again. The tightening has already started. As their construction boom slows and their bubble unravels it will have a huge negative impact on a number of economies. Most notably Australia, Brazil and, of course, Canada.

#259 Devil's Advocate on 12.12.10 at 10:01 pm

http://stockcharts.com/charts/historical/djia1900.html