Social justice

Recently some people here have accused me of being arrogant and heartless. This is refreshing.

After all, this blog’s constantly being misinterpreted, since everybody loves extremes. The real estate humpers see a future filled with growth and hope. The doomers see one brimming with sorrow and detached body parts. Average folks have no idea what’s going on, but have a vague notion they should be stocking up on tuna.

The news, after all, conflicts. On the same day we heard the economy slipped into negative growth (at least for one quarter), another bank recorded fat profits. CIBC’s take was up 26% from last year – enough to reward stockholders with a higher dividend. So if banks are the harbingers, does this mean we’re okay? And if things are cool, why did the economy shrink?

This confuses the hell out of folks, so they go back to watching the nutcases on ‘America’s Got Talent’. Likewise on this miserable blog, when I predict no depression but warn significant numbers of families will fail, I’m accused of being an inconsistent dickweed. (I wish my mother-in-law would stop posting.)

But this is the world we now have. No 2008. No deep, dark recession or depression. No bank failures. No emergency. However, at the same time, a ton of people will lose most or all of their net worth. An army of Boomers will retire in desperation. Young house hornies will regret the day they closed. And the gap between the struggling and the wealthier will turn into a canyon.

Most people are making fundamental financial mistakes. You know this. They’ve embraced debt, because that’s the only way they can get real estate. It’s the new measure of social status and wealth, even when a house is sucking off so much cash flow that they save nothing. It’s the accumulation of debt that will do them in, just as it has in most other western countries. The outcome is obvious.

These folks think they shun risk by putting money into bricks. But with house prices at historic highs and interest rates at generational lows, both have but one direction in which to travel. This makes real estate (and gold) laced with risk. In comparison, stock and bond markets are boring and predictable.

Why am I heartless?

Maybe because I don’t care. This column, or my books, or my speeches, won’t alter what’s coming, since almost everybody you know worships houses, fears equities, saves nothing and owes much. This is why I’ve said it’s not a social justice blog. It won’t change a tidal wave of stupid. People will succumb to their emotions ten times out of ten. It’s hopeless. I give up.

But what I can do it talk to you, or those who trust me with their wealth.

To you I say the economy will soon resume growth, but it’ll be glacial. Governments seem ready to make some large mistakes. Corporations will make obscene profits because they have this recession thing all figured out. Stock markets will surprise like crazy on the upside. People with money, and liquidity, will see it grow as steadily as families with debt, and one asset, will decline. And those who took time to come here and learn about bank preferreds, real estate investment trusts, corporate bonds, exchange-traded funds, TFSAs, tax-deductible mortgages or income-splitting will do fine.

This is the arrogance part. I know what I’m doing.

 

169 comments ↓

#1 LH on 08.31.11 at 10:06 pm

Pay off your debts everyone! I just stuffed another 50k+ back to RBC (they were charging an usurious 3.75% on my old 5-year fixed rate mortgage).

Everytime I get tempted to buy something, I tell myself: why is someone in debt shopping? Why should I be buying crap when I owe so much?

And this is why I still live car-free (have never ever bought or God Forbid leased a car, and will not until I am truly debt free).

#2 Onemorething on 08.31.11 at 10:09 pm

Dont mistake Garth’s Perceived Arrogance and Heartlessness for TOUGH LOVE!

There’s just not enough of that in the world anymore and that’s the bloody problem!!!!

#3 waterloo Resident on 08.31.11 at 10:14 pm

Oh oh, this is BAD NEWS !
I think we just might be sliding into another recession.
Slowly sliding.

For anyone thinking of buying a house right now, I would wait.
There is significant signals that the world economy is entering a new recession.
Here’s some of the links:

Global shipping is coming to a stop as consumers in Europe and N.America dramatically slow down their spending:

http://www.bloomberg.com/news/2011-08-30/containers-slump-to-50-year-low-as-ships-from-china-slow-freight-markets.html

The Canadian economy is slipping into negative growth ( I.E. : Recession )

http://www.cbc.ca/news/business/story/2011/08/31/gdp-q2-canada.html

http://www.theglobeandmail.com/report-on-business/economy/growth/economy-contracts-for-first-time-since-recession/article2148328/

Hiring in the U.S. is slowing down again:

http://www.theglobeandmail.com/report-on-business/economy/jobs/pace-of-us-private-sector-hiring-slows/article2148348/

American consumer confidence is collapsing fast:

http://www.theglobeandmail.com/report-on-business/economy/us-consumer-confidence-plummets/article2146922/

And even rail traffic is flat, suggesting that the economy is flat right now, and if you look at the chart you will see that soon it will be going negative, so that suggests that we are going BACK into a recession real soon.

http://www.pragcap.com/rail-traffic-still-consistent-with-stagnant-growth?source=patrick.net

So if you are thinking of buying, just wait until this “Soft Patch” goes away.

#4 LH on 08.31.11 at 10:15 pm

On a different topic, a question for you Garth:

Do you suggest Canadian dividend-paying stocks and preferreds for those who are stuck in the highest marginal tax bracket? The dividend tax here in Canada is an amazing bargain retirees with no wage income, however for indentured wage slaves like me, the dividend tax seems to be more than DOUBLE the current US rate of 15%. Thoughts please? Thank you!

#5 squidly77 on 08.31.11 at 10:15 pm

I am like yourself, I could give a Rats ass really. I sold my house about a year ago, not because I wanted to but because my community was turning into a ghetto. I am cash heavy, a little nervous about the stock markets but all in all I am secure. Why I maintain my blog some what puzzles me.

I think its the mania that real estate is, its fascinating to watch so many people act like Lemmings and jump off the cliff and commit willful financial suicide without a care.

I am glued to this mania as a penny is to a magnet.

#6 Young Old fart on 08.31.11 at 10:17 pm

Bazinga!!!

#7 T.O. Bubble Boy on 08.31.11 at 10:20 pm

keep being arrogant!
(it is needed to fend off the wackos on this blog)

I don’t remember too many income-splitting posts on greaterfool over the years… that would make a great future post.

#8 DnG on 08.31.11 at 10:20 pm

Possibly first this time!

#9 Samsara on 08.31.11 at 10:21 pm

Garth, don’t give up on the blog! My wife and I have learned a great deal on here. By renting we’ve managed to rid ourselves of our debt (student loans) and are now starting to invest for our future. We’ve learned heeps from your book ‘Money Road’ and this blog helps to re-enforce that information.

Despite all the humpers and doomers on here, you are reaching many people that I believe have remained emotional dettached and logical about their finances.

I think from what we’ve taken from your book and blog, and if we continue to keep ourselves educated we’re going to be all right.

Thanks for all the advice!

#10 Habbit on 08.31.11 at 10:22 pm

Another great post Garth. You take the time to share your opinion and knowledge and that shows you do care. Thanks again.

#11 Kathryn on 08.31.11 at 10:25 pm

Hi Garth
We invested $10,000 in gold and silver coins back in 1999, when it was 276 US. Our modest investment is now worth a bit more….should we sell it all, or half or nada? We have a balanced portfolio and perhaps we should be looking to add more to that. My husband is retired, I am a small time artisan, we have not debts and modest savings. Our property was paid off in 1993 and is worth about 5 times more than we paid for it.
Thanks for all the great information. My lefty husband loves you too!

Do what most people cannot – sell at the top and buy at the bottom. — Garth

#12 disciple on 08.31.11 at 10:30 pm

Heartless? You? Nah, you’re just an old softy…and by the way, I actually do think that this is a social justice blog…the format and subject material is just a bit different…especially when I post…

#13 not 1st on 08.31.11 at 10:36 pm

So Garth’s continued advice is to grab whatever real estate gains you can, rent a garbage apartment and put your money in equities where banks of computers execute bogus high frequency trades all day long and scumbag traders and hedge fund managers dip into the pool to take their share out.

All at the same time, his “research” never lead him across the shadow banking sector with trillions in derivatives, or the U.S. fed goosing the entire world with backdoor 0% interest loans (nearing 10 trillion) or the real reason the U.S. imploded in 2008, or the real reason gold went up 1000% or that the U.S. will be done for the next decade as they wrestle with 100s of trillions in debt.

No thanks, I’ll chart my own course. Someone on the “know” would acknowledge these things are out there and that hasn’t happened on this blog yet.

#14 waterloo Resident on 08.31.11 at 10:44 pm

Dear Garth: I don’t think you are arrogant or anything bad, frankly I think you are an okay person, a nice guy, and I wish you the best.

I know that years and years of dealing with the weird freaks of society can sort of make you ‘shell-shocked’, and that might be the only problem you might have. Just meet a person who has been a TTC bus driver for a few decades and you will see what I mean. So just relax, enjoy life, and don’t let crazy people like me or that invisible pink elephant in the corner get you down.

#15 Duisburg on 08.31.11 at 10:46 pm

Garth, definitely agree that the real estate market is way overdue for a correction and it is way too frothy. Things are going to pull back big time…no doubt. But lumping Gold and Real Estate together is a farce. Gold is money and gold has a long way to go up…one day it will become a bubble…but not any time soon as the Fed keeps printing money. Debt is at an all time high and things are not pretty at all out there globally. I appreciate the local (Cdn) housing/real estate input from you….but i will listen to and read Jim Rogers, Jim Sinclair, Peter Schiff, Eric Sprott, among others about Macro Economics and the precious metals (Gold) market Thank you Very Much. Please don’t misguide your readers with your ridiculous comparisons of gold and the current Cdn real estate situation!! Thanks

Gold is not money and Sprott is selling it. Try to keep up. — Garth

#16 Cory on 08.31.11 at 10:46 pm

I dont know if I read it here or somewhere else but a survey of people and how they would control debt and spending was to reduce their food bill. Meaning they were willing to eat less to maintain the stupidity the you talk about Garth. It was at that point that I read this that I will never talk to people about real estate again. I know it will go nowhere and I will be looked upon as evil scum. I would have more fun and be more productive eating a bucket full of tacks.

It is absolute stupidity but it’s the way of the world. So I decided I will sit quietly and continue to make my 30+ % annual returns in the stock market and sleep well at night knowing that I am much further ahead than those who would rather pay people interest than make a return on capital.

#17 Smoking Man on 08.31.11 at 10:47 pm

You do know what your doing Garth, your typical audience folks afraid of risk, so your advice to them is good.

Funny thing happened on the trade floor today and for the last few weeks, seasoned traders, guys who have been around for years contributing to billion dollar 1/4’s don’t know what the hell is going on.

As per usual it takes a drunk who can’t spell worth a crap to fill them in, I’m asking for a raise soon.

It’s called algo trading.. computer trading, my field. It is doing about 75% of all trading in equities…when a sell or a buy trigger is hit, the algos fire up, waiting for confirmation triggers more algos, now when you have lots of computers doing this you will see 500 point up’s and downs… fundamentals don’t mean nothing, Its the new norm…You can run away or jump on the train and go ridding.

For the trigger happy grass hoppers never has such an easy opportunity to momentum trade ever existed. I say screw buy and hold those days are done….

This morning with a clearer head I thought my post last night was on inside the line not worthy of censorship, however it would have brought out the nasty people. So in retrospect good job for not posting it, but try and remember what I said and who will be buying up TO.

I’m never wrong about stuff like this…

#18 Utopia on 08.31.11 at 10:51 pm

Amen, brother.

#19 Utopia on 08.31.11 at 10:58 pm

#3 waterloo Resident said….

“Oh oh, this is BAD NEWS !
I think we just might be sliding into another recession”.
—————————-

Oh for crying out loud, I have been warning you all about that for a couple months now. It is baked in the cake. We have all known about it for quite some time and the odds were heavily on the side of a new recession as that was what most indicators suggested. Doesn’t anyone pay attention to my posts?

#20 BrianT on 08.31.11 at 11:05 pm

#15-Eric Sprott claims to have more money invested personally in precious metals than just about anyone on this planet (he says 70% of his sizeable net worth is in precious metals investments). If you have evidence to the contrary feel free to make it public.

#21 Sp on 08.31.11 at 11:10 pm

#15
“but i will listen to and read Jim Rogers, Jim Sinclair, Peter Schiff, Eric Sprott, among others about Macro Economics and the precious metals (Gold) market”

One other thing that these people (and other bugs) have in common other than gold is that they were all WRONG in 2008. Their view of the world through classical economics are even more wrong than their often criticized neoclassical economics.

#22 HouseBuster on 08.31.11 at 11:14 pm

Garth – They shouldn’t be stocking up in tuna. It has high mercury levels which is bad.

On a side note global fish stocks are in rapid decline and something like 70% of the world’s population depends on fish as a major source of food.

Armageddon? Oh yeah, it’s coming.

#23 Robert Dudek on 08.31.11 at 11:15 pm

#11 Kathryn…

Take about 30% of your precious metals position off the table. It’s been a good ride for you and I would take some profits. By doing so you will not make the maximum profit, but you will guarantee profit from your initial investment.

BUT DO NOT SELL IT ALL! It is very unlikely that we are anywhere near a top in gold or silver. The fundamentals are massively in favour of gold and silver right now, and until that changes it would not be smart to liquidate your entire position.

What you can do it sell 30% of your position when gold is surging and buy back 15% after a sharp correction. But don’t lose your core position.

Until interest rates in the US and Europe rise substantially, the gold bull market will remain intact.

#24 Robert Dudek on 08.31.11 at 11:18 pm

Sprott is only redeploying some of his non-core gold positions into silver because he believes the gold/silver ratio will reach 15 to 1 or better.

He still thinks gold is going much higher, only that silver will outperform on a percentage basis.

He is probably right about that unless the upcoming recession/no growth era is a lot worse than most people think it will be.

#25 timo on 08.31.11 at 11:20 pm

http://theeconomiccollapseblog.com/archives/25-signs-that-the-financial-world-is-about-to-hit-the-big-red-panic-button

interesting times

Since 1948, every time the four-quarter change has fallen below 2 percent, the economy has entered a recession. It’s hard to argue against an indicator with such a long history of accuracy.

#26 pablo on 08.31.11 at 11:20 pm

” another bank recorded fat profits. CIBC’s take was up 26% from last year – enough to reward stockholders with a higher dividend. So if banks are the harbingers, does this mean we’re okay? ”

The banks arent the harbingers Garth, they’re nothing more than parasites, the banks make money no matter which way the economy goes. They’re the scum behind all the personal debt people are saddled with and the realestate boom. Unless you were asleep the past ten years, you’d’ve seen how free wheel’n they were in their lending practise. If the customer could walk into the bank, make his mark on a note and wanted to buy a house, car, or wtf, the loan was approved as long as his profile was half way decent. The name of the game was portfolio growth and market share increase to guarantee the bonuses of the executive and senior management ranks. These captains of industry haven’t given a rat’s ass about the future viability of the bank or the welfare of their staff, because they’d be long gone with their fat retirement/severance packages before t.s.h.t.f.. We’ve been co-opted and corrupted by the American business values and mindset in the 80’s, where it’s every one for themselves and the hell with the other guy. Profit at all costs, and the ends justifies the means. With the cross pollenation that occurs between the banks at the senior levels , they’re all on the same page; screw the customer and the shareholders just as long as the bonuses are paid out at the executive suites. That’s where the money goes, not to the staff, not to premises, or technology.
I have nothing but contempt and disgust for the banks, and that’s very likely how they feel about me.

In contrast, I own them. — Garth

#27 Kilt on 08.31.11 at 11:24 pm

Funny you mention Gold as being risky.

How many news reports do I see each week with people moving their money to safe havens like, treasuries and gold.
One is risky as hell and the other pays you nothing to own it.

Kilt.

#28 disciple on 08.31.11 at 11:24 pm

Giant skeleton found by satellite imaging:

Google Maps: 28.5633N, 35.28077E

Leviathan? Fenced off by the Saudi government.

#29 timo on 08.31.11 at 11:28 pm

http://euobserver.com/19/113440

Polish finance minister says Europe at risk of “collapse”.

“It’s hard to imagine anything that would hit the Dutch, German or Finnish economy harder than the collapse of the banking system in any eurozone country,” he said. “The collapse of the eurozone would [also] be catastrophic for Poland.”

Not to worry, Our economy is not inter-connected and loan defaults will not affect us at all. Now where did I put my rose coloured glasses?

#30 vatoDETH on 08.31.11 at 11:32 pm

It’s not bragging if you can back it up – Muhammad Ali

#31 Joe on 08.31.11 at 11:33 pm

Squidly “I am like yourself, I could give a Rats ass really. I sold my house about a year ago, not because I wanted to but because my community was turning into a ghetto.”

Hahaha, dude, you sound like Clint Eastwood’s character in Gran Torino!

#32 Makaya on 08.31.11 at 11:45 pm

“I know what I’m doing.” People should also be aware of the flip side of the coin, aka people warning that 2008 might just have been an apetizer to what’s coming. Some of them also know what they are doing (or saying for that matter).

I would tend to think that the worst is yet to come. Corporate profits can so long remain high when the economy is shrinking. They won’t be disconnected from the real economy for too long, despite the mountain of cash they are currently sitting on. A sure sign of that is the big banks that are currently laying off thousands of people. That can’t be a good sign, can it?

Here is an alternative view of what’s coming:
Is It Time For The Financial World To Panic? 25 Reasons Why The Answer May Be Yes
http://www.zerohedge.com/news/it-time-financial-world-panic-25-reasons-why-answer-may-be-yes

The conclusion of this article:

“Things have not looked this bad for global financial markets since 2008. Unless someone rides in on a white horse with trillions of dollars (or euros) of easy credit, it looks like we are headed for a massive credit crunch.

What we witnessed back in 2008 was absolutely horrifying. Very few people want to see a repeat of that. But as things in the U.S. and Europe continue to unravel, it appears increasingly likely that the next wave of the financial crisis could hit us sooner rather than later.

None of the fundamental problems that caused the crisis of 2008 have been fixed. The world financial system is still one gigantic mountain of debt, leverage and risk.

Authorities around the globe will certainly do all they can to keep things stable, but in the end it is inevitable that the house of cards is going to come crashing down.

Let us hope for the best, but let us also prepare for the worst.”

#33 martin on 08.31.11 at 11:56 pm

i like your blogs men. they give me a great deal of knowledge of economics and i even brag around with the knowledge that i get here. garth, i have many relatives that are high end economists and analysts but they are not even close to the knowledge that you got. its quite weird

#34 Your Mom on 08.31.11 at 11:56 pm

Arrogant is the term that the uninitiated use when they are confused.

otw the initiated refer to at as “enlightened”

welcome to the new paradigm http://tmx.quotemedia.com/quote.php?qm_symbol=lhc&locale=EN

#35 Brad in Cowtown on 08.31.11 at 11:56 pm

Gold is not money and Sprott is selling it. Try to keep up. — Garth

Selling it to buy SILVER.
But of course you would intentionally leave out that part.

#36 Island Girl on 08.31.11 at 11:59 pm

I come here every evening to read your blog, occasionally I discuss what you had to say the previous evening with my dad, he was the one who pointed me to your blog in the first place. Although it seems like right now we’re not in a position to do a whole lot of investing we’re doing what we can to dig ourselves out of debt while reducing our monthly living costs. We spend less on food then we did before, but not because we eat less, we’re just taking better advantage of the climate and producing more ourselves. We took your advise and talked to a trusted investment advisor and he’s helping point us in a better direction then the banks lowly investment strategy. We might even have a little more money coming in once the retirement years arrive although since our kids are young it probably won’t be too soon. Happily renting and after our first experience with buying a home I think I could be happy renting a VERY LONG TIME.

Keep writing and I’ll be here reading! Your a breath of fresh air (at least for us).

#37 Junius on 09.01.11 at 12:05 am

#148 (previous post) Cookie Monster,

Dude, you really gotta stop reading the Tea Party crap! You are being manipulated by morons.

The founders of the US constitution had no experience with big gov’t. Their concern was entirely with what they did know about and that was the concept that absolute power corrupts.

The US Constitution is designed to create a balance of power between the Executive branch (President) and the Congress. The Congress is balance between the population (Congress) and the States (Senate) all monitored by an independent judiciary.

The Bill of Rights was added to give greater protection of individuals from the gov’t and the potential oppression of the minority.

There is nothing about limited gov’t. The US is being destroyed by corporate power that is undermining the balance of power. The overwhelming amount of money in politics has tipped the balance. Meanwhile with cases like Citizen’s United and Janus the rights of individuals have been extended to corporations. This is the US problem.

#38 Suede on 09.01.11 at 12:07 am

To #11 Kathryn,

You’ve almost 9 bagged (9x) your investment. Take what is referred to as a “Free Ride” and sell enough gold and silver to recoup your initial investment plus enough profit to account for inflation for the last 12 years since you bought it and ride the rest of it as you see fit!

If gold/silver go up higher, you’ve recovered all your investment and some profit and can sell more every higher tick in gold.

If gold/silver go lower, you’ve recovered all your investment and some profit and now have attack capital to buy if price crashes again.

#39 Two-thirds on 09.01.11 at 12:10 am

So, to trust you with one’s wealth, how much wealth must one have?

What is the admission price to the club?

#40 Junius on 09.01.11 at 12:13 am

Garth,

I think you underestimate your power to influence people. A small but dedicated group of people can eventually tip the majority. In fact, recent scientific studies indicate just 10% is enough to start a movement:

Scientists at Rensselaer Polytechnic Institute have found that when just 10 percent of the population holds an unshakable belief, their belief will always be adopted by the majority of the society. The scientists, who are members of the Social Cognitive Networks Academic Research Center (SCNARC) at Rensselaer, used computational and analytical methods to discover the tipping point where a minority belief becomes the majority opinion. The finding has implications for the study and influence of societal interactions ranging from the spread of innovations to the movement of political ideals.”

So don’t lose faith. i know I won’t.

#41 Suede on 09.01.11 at 12:14 am

To #10 Duisburg,

Sprott also sold a massive amount of silver when it hit that spike up near $50 earlier this year. He’s in the business of silver as Garth mentioned and his team is very smart at prospecting, profiting, promoting and the whole bit. Always recoup your capital in commodities when you can.

Take a look at the volume towards the end of april in this chart:

http://stockcharts.com/h-sc/ui?s=%24silver

That’s professional money (including the names you mentioned) selling to people who thought it was going to go to $75 two weeks after that.

#42 Blacksheep on 09.01.11 at 12:15 am

“Do what most people cannot – sell at the top and buy at the bottom. — Garth”

Great advise Garth.
The trick is, when is it at the top?
What’s your forecast for PMs?

thanks,
Blacksheep

#43 Davey Boy on 09.01.11 at 12:20 am

Re: Cory #16

30+% stock market yields year after year…really? Why do do you feel the need to embellish so much? I call BS on this one!

#44 Nostradamus Le Mad Vlad on 09.01.11 at 12:30 am

Fortunately, I’m not a Justin Bieber fan.

“This is refreshing. I’m accused of being an inconsistent dickweed. (I wish my mother-in-law would stop posting.) Why am I heartless? Maybe because I don’t care. And the gap between the struggling and the wealthier will turn into a canyon.”

The dickweeds are those who will not educate themselves, despite the fact that all the info. is available for anyone to use.

In this case a major downturn will do wonders for them — get off their butts, realize that 2+2 is not equaling four anymore, as the cost of living has exploded and incomes have shrunk.

When they learn the basics of life, only then can they remove the title of dickhead from themselves.
*
#13 not 1st — “. . . these things are out there and that hasn’t happened on this blog yet.”
— and —
#17 Smoking Man — “. . . guys who have been around for years contributing to billion dollar 1/4′s don’t know what the hell is going on.”

Connect the dots, add in (possibly) China and Japan calling their IOUs, the west’s slow decline due to costs of illegal wars plus social costs and the change in cycles — yes, we are in for plenty of turbulent times.
*
Sell America This ties in with Soros nad Obama, both lefties and Marx followers; 1:29 clip Lucky? Unemployed man finds US$150K in backyard; 90% of new jobs in UK went to outsiders; China tightens lending (Canada should have done this a couple of years ago); Yuan vs. US$ Within this decade; Double Dip chance soars; Banks use EU crisis to avoid legislation; Middle Class homelessness; East moves North China looking at Iceland and others.

Confiscation Dirty Thirties all over again; Ontario How screwed are you? Did Bonds just peak? Mebbe; Japan’s New Leaders and American Jobs.

The West – A slightly better description; Curry Gas Heating homes; 14 Fault Lines Why were nuke plants built so close to fault lines, and Yokohama not much better than Fukushima; Syria’s next, Algeria, Yemen and Iran (WW3); Gadaafi Left town quietly; Atlantis found off Spain (maybe); Sleeping Gas used by thieves; Ferris Wheel Like heights?

7:43 clip Canada — “The internet is under attack here in Canada and if Stephen Harper gets his way with the “lawful access” bill, he will pave the way for big brother to have total control over everything we do online.”; VA Nuke Plant If there is tritium over VA, chances are the feds. are keeping it quiet so as not to have panic stations by people — they’ll just let them die off more rapidly; Links in Smart Metering maps worldwide; New Jersey Same thing as the nazis did in WW2.

#45 Debt's Dark Embrace on 09.01.11 at 12:41 am

It’s gonna be interesting. I had a chat with an Aussie dude in Cebu City last night. He is here doing research because the mining industry conglomerate he represents will be needing 150,000 foreign workers over the next 10 years to work in the new mines that are opening up in Oz to keep up with Chinese demand for metals. The foreign contract workers are paid a lot less than Aussie miners obviously. And the manufacturing jobs have mostly all moved to China as well.
The last time I was in Kelowna I met an architect who was working on the new addition to Kelowna General Hospital, a Mexican contract worker. I filled a prescription at a pharmacy on Lakeshore Drive and the pharmacist was a Filipina. I passed by a few construction sites and saw lots of Mexican or Latin American workers.
So, if we have exported most of our manufacturing and call center jobs etc. and we are importing cheap labour from other countries, what will be left for our kids and grandkids ? Just a thought……….

#46 Timing is Everything on 09.01.11 at 12:42 am

#5 squidly77

Buy the cheapest house/home in the ‘richest’ location you can afford. They care about their ‘hood. Some of that ‘richness’ also tends to rub off. Bonus points.

It’s never too late to make a better decision.

#47 Ron on 09.01.11 at 12:46 am

In small town BC, we are having an ACME moment. There are many homes for sale, at inflated prices, and the owners are holding the anchor in the clouds…smiling…waiting for some idiot to come along. The idiots are dwindling and naive greed will be the undoing for many good people. It’s happening.

#48 Don on 09.01.11 at 12:48 am

The social justice part comes when I donate some of the money I make following your advice to lefty charities and the NDP. Irony!

#49 Chaddywack on 09.01.11 at 1:01 am

Spoke to a mortgage lender friend of mine today. He told me “I’m going to be honest with you, if rates went up even 1.5-2% I would have a line of people out the door right now…..but the thing is you need to buy because even if rates go up everyone from Asia is buying right now and they’ll just keep the market going. They see RE as a safe thing at a time when stock markets are crashing…Professional couples in Vancouver making $250k together can’t even get a house anymore….”

Ah Vancouver how I loathe thee!

#50 Foggy on 09.01.11 at 1:10 am

Yes buying a house is a giddy experience lacking in any objective analysis. Case in point, my ex-wife of 10 years just received a few thousand of inheritence from her mother’s death and what does she do with it? Puts it on a down payment on a house in a newly built sub-division in Lindsay. Her and the clueless husband can’t afford the mortgage now with their on-and-off salaries, and that’s at today’s rock-bottom rates, assisted with the builder’s incentives.
So buying at the top of the market with a guaranteed increase in future mortgage rates, using a small windfall of rarely seen cash. Brilliant. I give it 2 years – tops. Spousal revenge does eventually come – you just have to be patient.

#51 westopia on 09.01.11 at 1:12 am

What’s to be confused about. Banks profit by issuing debt. Debt reduces consumption. Reduced consumption brings on recessions…. Can you say “double dip.”

#52 westcanguy on 09.01.11 at 1:19 am

Garth,

First, I’d like to say that I respect you for your knowledge and insight not to mention your experience in the areas of finance and investing.

I don’t find you to be arrogant and I usually have a good chuckle when you put some people in their place…but….I do have an issue with some of your comments to those who have written lately asking for some guidance on where and how to start saving and investing. Answering them by stating “You’re screwed” is not only condescending but disappointing.

Surely you must understand that everyone has a different story. Not everyone has been able to own a house for the last 20 years, have it paid off and have built substantial savings. Some of us have lost much due to divorce, failed business or some other unforseen circumstance….perhaps even their own stupidity. Regardless, those people have seen the light, want to get back on track and believe in you enough that they value your opinion and advice…and when they work up the gumption to ask, you dismiss them with a couple of hurtful words that offer no hope for the future because the person who’s opinion they value, told them that they are screwed. Nice.
You were a public servant that helped your country. Now that you’re in the private sector, you’re only interested in helping those with wealth obtain more wealth? Not interested in helping those that may have a bleak financial future ahead of them and offer them
some basic strategies for building some wealth which could give them at least something, regardless of size, when they retire?

You are on here daily telling us what you see happening in real estate, the economy…you mention how half the population has no savings or can’t save any money, have no investments except their home…on and on. Is this blog just for the other half that does have savings and other investments? Just preaching to the choir?

I realize that some people have been responsible and prudent with money. Others could care less and are consumed by greed and self absorbed with having it all now but…there is another group. A group that might be..as you put it…screwed.. but at least they want to learn, they want to do what they can with whatever time they have left in working years. Are they not worthy or your advice and opinion? I think you’re better than that.

If I’m wrong, that doesn’t make you arrogant…. It makes you an @sshole.

I imagine you’ll delete my post because of the last statement and that’s ok. My comments are not meant for general observation. They are directed to you for your consideration.

#53 confussed on 09.01.11 at 1:40 am

Garth I have been reading your posts for some time. House prices in Vancouver are out of this world everyone can agree to that,My family was thinking of buying but thinks the market is too uncertain right now. If they do QE3 everyone is telling me that house will start going up in Vancouver starting in 2012. Who to believe? Any thoughts on that?

#54 WI Boomer on 09.01.11 at 1:42 am

Garth-

Enjoy the sage advice you post. I have purchased & read two of your books, they were very on the money as to advice, as well.

As a Yank, things are a bit different here but by only a few degrees, you understand. Our Real Estate lunacy started earlier, ended earlier, and the aftermath has yet to clear. Canada is at the peak currently in most over-valued markets (not Windsor).

I fear it’s the debt thing (too much of it) that will de-rail most families. RE when purchased with a decent down payment, and re-paid as fast as possible not 30 yrs can be a decent shelter investment. Homes like stocks that have gone through a torrid upward growth spurt will “regress to the mean” at some point. While people want a place to raise a family, and they should be able to wisely attain that at some time in life, a home is a wonderful thing. But, its nothing more than a place to take a dump, sleep, entertain etc. it is hardly an investment. At least, in MY never so humble opine.

Investments are stocks, I prefer the humble Index funds for a decent portion, large-cap, small cap, and a variery of Bond funds too. One needs to feed these as well as pay off, and improve that home over time. Not so difficult as generations past have shown us. These times we have tax deferred, and Tax free investment vehicles at our disposal, the prudent will use them.

You have consistently remarked on these.

Will the debt-ladden heed your advice?? Who the heck knows, when RE prices begin a regression the listing numbers probably will spike, selling prices start to melt…how far…how fast…who knows? Will it be Phoenix, and Florida north of the 49th parallel?? Who knows??

If I were over-burdened with a home, and other debt, you can bet your bottom Loonie I’d be trying my best to shed that albatross home ASAP!!!
Renters are NEVER in foreclosure.

#55 Cancer Bats Roadie on 09.01.11 at 2:00 am

A question about REITs…
I wonder how profits from rental income versus ‘paper’ profits from appreciation of assets have contributed to valuation of REITs? Is there danger that depreciation of property values can significantly affect the value of an REIT? Not meant to be a stupid question – trying to learn more about this type of investment.

#56 Being John Malkovich on 09.01.11 at 2:41 am

I was just in my bunker tweaking my HAM radio and watching re-runs of MASH on an old Betamax when suddenly a divine prophecy came to me–what this blog needs is more focus on “social justice”. The audience is here. . .the world is a mess, and the time is right.

Garth. . .stop fighting it dude. You have been selected as a prophet to better the world. It is time to renounce capitalism and the free market and recognize that your teaching of evil money-hoarding schemes are no longer contributing to the public good. Jesus wants you to stop preaching about how to invest in a “broken financial ponzi scheme” and start tackling bigger problems.

Think of your journey as one that Oprah followed–she went from sensationalist talk show host to being the sage figure of daytime television. You too can be known for more than this pathetic little blog if you would just follow your heart and get in touch with your inner christ.

Take up the cross dude, tell us how to be better citizens, not make more money off the back of a broken financial system.

Jesus would have wanted it that way! Praise the lord and pass the tuna ration!

#57 Sash North York on 09.01.11 at 3:01 am

Garth, just wanted to let you know, I read your blogs every night and have for a couple years now. You don’t know this, but you are one of my financial mentors and I thank you for your insightful financial information.

#58 Murder of Crow$ on 09.01.11 at 4:05 am

The U.S. national debt is about 14.7 trillion dollars and growing. Most money is digital, but did you ever wonder what $14.7 trillion would look like if it were all one dollar bills? Just for fun, I created a few visuals using the following values:

one dollar bills: 14,700,000,000,000

physical dimensions of a U.S. one dollar bill: 2.61 inches wide, 6.14 inches long, 0.0043 inches thick

1 mile: 5280 feet = 63,360 inches

circumference of the Earth: 24,902 miles along the equator

average distance from Earth to the Moon: 238,857 miles

speed of light: 186,282 miles per second

U.S. population: 312,112,000

Question: If you stacked 14.7 trillion one dollar bills flatly, one on top of the other, how high would the stack be, measured in miles?

Answer: 997,632 miles high

(14,700,000,000,000 x 0.0043)/63,360 = 997,632 miles

Question: If a stack of 14.7 trillion one dollar bills is 997,632 miles high, and you placed this stack horizontally along the Earth’s equator, how many times would this stack wrap around the circumference of the Earth?

Answer: more than 40 laps around the Earth.

997,632/24,902 = 40.06

Question: If a stack of 14.7 trillion one dollar bills is 997,632 miles high, would this stack be high enough to reach from the Earth to the Moon?

Answer: Yes, in fact you could divide this stack into 4 smaller stacks of equal height, and each one of the smaller stacks by itself would be high enough to reach from the Earth to the Moon.

997,632/238,857 = 4.17 stacks

Question: If you divided 14.7 trillion one dollar bills by the number of people in the U.S., how high would each person’s stack of money be?

Answer: 16.87 feet high

(14,700,000,000,000 x 0.0043)/312,112,000 = 202.52 inches per person

202.52/12 = 16.87 ft

(16.87 ft. represents just the national debt load, and does not include personal debt such as mortgages and credit card debt, etc. If you include personal debt, then the stack of money owed by every man,woman, and child would be over 35 feet high. Additionally, if you pile on unfunded liabilities such as social security, prescription drugs, and medicare, then the stack is much higher than 35 feet.)

Question: What if we re-arrange the 14.7 trillion one dollar bills in a different configuration, such as placing the bills end to end, instead of stacked one on top the other, how long would this ‘chain’ or ‘ribbon’ of bills be, measured in miles?

Answer: 1,424,526,515 miles

(14,700,000,000,000 x 6.14)/63,360 = 1,424,526,515

The speed of light is really fast, right? Well, not when you put it up against the U.S. national debt……………

Question: If you place 14.7 trillion one dollar bills end to end, and you stood at one end of this ribbon and shone a powerful light toward the other end of the ribbon, how long would it take the beam of light to travel from one end to the other?

Answer: 2 hours, 7 minutes, 27 seconds

1,424,526,515/186,282 = 7647.15 seconds

7647.15 sec/3600 sec per hour = 2.1242 hours

The State of Florida covers an area of about 53,937 square miles of real estate.

Question: If you took 14.7 trillion one dollar bills and placed them on the ground like so many rectangular floor tiles, with each of the four edges of the bills butted up against the edge of an adjacent bill, how many square miles of land would the bills cover?

Answer: 58,680 square miles

(63,360 x 63,360)/(2.61 x 6.14) = 250,507,918 dollars in one square mile

14,700,000,000,000/250,507,918 = 58,680 sq. miles

14.7 trillion one dollar bills would be enough money to completely ‘paper over’ every square mile of real estate in the State of Florida, with plenty of dollar bills left over.

Here are some other States of a similar size, any of which could also be completely papered over:

Michigan: 56,809 sq. miles
Wisconsin: 54,314 sq. miles
Iowa: 55,875 sq. miles
Illinois: 55,593 sq. miles
Georgia: 57,919 sq. miles
Arkansas: 52,075 sq. miles
Alabama: 50,750 sq. miles

Here are some other visuals I came up with, but I won’t bother to show the details:

14.7 trillion one dollar bills would be enough paper to solidly fill 6621 Olympic sized swimming pools, or enough money to solidly jam the hulls of 26 of the world’s largest ocean going oil tankers, or enough money to form a solid cube of paper approximately 279 yards long, 279 yards wide, and 279 yards high.

I hope somebody out there double checks my math on this stuff, just in case my calculations are all discombobulated. Did I put in too many zeros?

So what’s the point of my post, other than just for fun? What does this all mean? I don’t know, maybe it brings up a number of related questions.

As some people have pointed out, it doesn’t really matter how large a debt is, as long as it can be properly serviced.

But then I ask the question, can the U.S., Canada, and many other countries in the world, service their debts properly when we are facing a future of ever depleting oil supplies? You need energy to grow an economy, without it, we will contract.

Too bad we couldn’t come up with a new cheap and abundant source of energy to replace oil. Those UFO flying saucers are not zipping across the galaxy with little pistons moving up and down turning a crankshaft ’round and ’round.

Oops……..did I just say that last sentence out loud? Forget that you read that.

Drill, baby drill!

#59 Jody on 09.01.11 at 4:32 am

“To you I say the economy will soon resume growth, but it’ll be glacial.”

Yep, big time. Had the chance to go over to Europe this summer, Scotland was okay but Greece was a mess, lots of barter going on, people have for a lack of a better saying, dumped the euro already. Since nobody who works for the government has been paid in a year they barter goods and services. A perfect example of how we don’t need the bankers and their corrupt fiat money system. Life goes on without them, like, oh, my, God! Who would have thought right?

What a farce. And speaking of farce, you can see just how afraid they are when they go after a man like Bernard vonNotHouse. In no way was he trying to pass off what he made as US currency but God help us plebs when we try something different. They took the gold and silver from vonNotHouse, from Libya (thats why they went in), and soon from their own citizens.

http://en.wikipedia.org/wiki/Ron_Paul_Dollar

http://www.silvermonthly.com/the-strange-case-of-the-liberty-dollar/

There’s no alternative, we need to dump federal governments, period.

http://www.youtube.com/watch?v=BGo6iTebNRU&feature=related

#60 Phil S on 09.01.11 at 5:12 am

It’ll be interesting to see just how thin the veneer of “civilisation” will be in all the major “bubble” centrea, once the inevitable happens. Whilst I don’t expect a “Mad Max” scenario by any means, it’ll be fairly inevitable that those who “followed the herd” with the promise of amazing wealth , with neither risk, nor effort, will be certainly less than happy campers, and we all know from bitter past experience how spineless the majority of Career Politicians are. Maybe I’m very wrong, but I suspect the prudent are going to get it up the rear end sans lubrication!

#61 Imstupid on 09.01.11 at 6:08 am

#4 LH I’m with you.

Garth how can I as with LH avoid paying such high taxes? My problem is not income it’s being able to keep as much as possible. What do you suggest for people like me who are at the top of the tax bracket?

#62 nsqt on 09.01.11 at 6:38 am

Garth, the information you are providing is invaluable. I enjoy being a student at GTU……….

#63 JP on 09.01.11 at 6:47 am

Take it easy,

Some people will call you names, but that’s because they can not see what you can see.

I appreciate what you are doing Garth and even though I invest in gold, I believe eventually the stocks market will outperform gold. When the glacial growth begins that is.

#64 David B on 09.01.11 at 6:53 am

To you I say the economy will soon resume growth, but it’ll be glacial. Governments seem ready to make some large mistakes. Corporations will make obscene profits because they have this recession thing all figured out. Stock markets will surprise like crazy on the upside. People with money, and liquidity, will see it grow as steadily as families with debt, and one asset, will decline. And those who took time to come here and learn about bank preferreds, real estate investment trusts, corporate bonds, exchange-traded funds, TFSAs, tax-deductible mortgages or income-splitting will do fine.
+++++++++++++++++

Then do it and forget Real Estate! Forget it! Talk finance only ….. smart savers will look for ways to aquire cash to invest to make more money not ways to pay out in the hopes of finding a greater fool years down the road!

#65 househornyhousewife on 09.01.11 at 7:43 am

#44 Westcanguy

Some people really need to be told that they’re “screwed” as opposed to “everything is going to be OK” because many people really are in a dire situation and don’t even realize how serious it is.

Sure life can be a bitch and not everyone has tons of money set aside for retirement and a paid off house. But it is exactly these people who are getting themselves into huge sums of debt that they couldn’t possibly ever pay back in their own lifetimes .. all in order to feel better about themselves. And it is exactly these people who need to be told that they are screwed so that they can start to face reality.

Some of the questions that are asked really do deserve a harsh reply. When someone comes on and asks if they can afford a $750,000.00 home when they are just out of school making $50,000.00 a year and paying off their student debt … what the heck do you expect Garth to reply ? Or when someone else asks what they should do because they are 5 years from retirement, have $50,000.00 in the bank, earn $75,000.00 a year with a spouse and children still at college and they still have 10 years left on their mortgage … what is the reply to this question ? … “you’re screwed”. This should be evident to the individual but the fact that they are coming on this blog asking the question proves that it isn’t.

When you ask someone a question and you get a harsh and brutally honest answer well … you asked for it. If you want to hear sugar coated B.S. and have more wool pulled over your eyes then call your real estate agent.

Garth, the fact that you dedicate so much of your time to this blog proves that you are not an asshole. I would almost say the opposite as I myself have given up understanding the average consumer. If people are stupid enough to get themselves into ridiculous debt situations that they cannot possibly repay well then they deserve the consequences. If they are over 18 years of age and of sound mind, they got themselves in and it is up to them to get themselves out. Yeah sure, the poor babies had no idea that a $50K per annum salary cannot secure a million dollar home and it is the wicked bank’s fault for loaning them the money. Everyone needs to realize that the banks are under no obligation to help you and business is business (even if their advertisements suggest otherwise).

I hope I am not being too harsh … ;)

HHHW

#66 DARLENE on 09.01.11 at 7:56 am

westcanguy on 09.01.11 at 1:19 am

Thank you. I couldn’t have said it any better.

#67 Mr C on 09.01.11 at 8:03 am

For the most part, people read or hear what they want to hear so its hard for them to see why the housing market may go down or why stocks may go up in the near term.

Fact is, no one knows for sure what will happen. Garth maybe right, he maybe wrong. The underlying message I have read on this blog is diversify and reduce risk. Its okay to own a house, or gold or stock or bonds but it has to be allocated to fit the individual. (Eg more aggressive for younger, more conservative for older).

Everyone would love to hit that home run with the penny stock or the buy a house that doubles every few years in value and that is part of the problem. Many are not satisfied with lower steady returns which add up over time. Even in investing, the “I want it now” attitude is very strong. People risk most of their wealth on what they feel is the best investment for a quick return. Maybe that is gold or the next Google stock that is currently .15 cents or that house in the perfect area.

#68 Bottoms_Up on 09.01.11 at 8:29 am

#16 Cory on 08.31.11 at 10:46 pm
————————————————-
The cutting back on food thing doesn’t sound too ridiculous to me.

My families food bill is about 10-15% of our monthly take home income (includes eating at restaurants).

This is a significant monthly expense, where corners could be cut to save a few hundred bucks. Stop eating out. Stop buying pre-made foods. Make more homemade foods in bulk.

In an environment where people are trying to cut down on their debts, it makes sense to me that they look at their food bill (if they would eliminate their tv bill to save 1% of their budget, or live in a hot house in the summer and a cold house in the winter to save 1%, why wouldn’t they look at their food budget?).

#69 jess on 09.01.11 at 8:45 am

more objection Junius

Aug. 30 (Bloomberg) — The Federal Deposit Insurance Corp. filed an objection to Bank of America Corp.’s proposed $8.5 billion mortgage-bond settlement with investors, joining investors and states that are challenging the agreement.

===
Willful Neglect of the Macro kind

-a high proportion of the assets refleted on its balance sheet were fictitious.
http://www.opalesque.com/files/20110826_Weavering_Judgement.PDF
=========

#70 Aussie Roy on 09.01.11 at 8:48 am

Aussie Update

When all else fails to impress the locals, you gotta start spruiking to the overseas investors. I enjoyed this video, in particular the way the “year” was shortened from july to july, to, Jan to July to show a fall of only 2.9%, Why?, well because the july to july figure is -6.9%. I suppose they guess a -2.9 YTD 2011 is a lot better than YOY of -6.9%.

http://media.domain.com.au/property/domain/global-interest-in-australian-property-2594211.html

Rising AUD to cost more local jobs.

http://www.news.com.au/money/rising-aussie-dollar-to-slash-more-jobs/story-e6frfmci-1226127331126

More jobs lost like this.

http://www.news.com.au/breaking-news/csr-cuts-100-manufacturing-jobs-across-new-south-wales-and-victoria/story-e6frfku0-1226127424162

Debt’s Dark Embrace on 09.01.11 at 12:41 am

It’s gonna be interesting. I had a chat with an Aussie dude in Cebu City last night. He is here doing research because the mining industry conglomerate he represents will be needing 150,000 foreign workers over the next 10 years to work in the new mines that are opening up in Oz to keep up with Chinese demand for metals. The foreign contract workers are paid a lot less than Aussie miners obviously.

Aussie mining sector represents 3% of the total Aussie work force, seriously big money but tiny employer. Its predicted an additional 180K jobs will be lost by July 2012 in other sectors. The need to upskill and or retrain is already being talked about by govt and of course the unions. In the past one of the first things to get slashed is foreign worker intake – visas.

The unions here would not allow what we would call scab labour, Aussie or not, if you can legally work here you get the same wages and conditions. Might there be some employers who try to push the system, sure, but dont let the very powerful unions catch ya.

Australia is a highly unionised country (they are the power behind our current Labor govt) as such any methods used to dilute wages or conditions for the locals gets slapped down pretty quick. As an Aussie I would almost bet my left one, that if unemployment keeps rising the number allowed and the list of “occupations allowed” to seek foreign workers would shrink fast.

http://www.immi.gov.au/managing-australias-borders/compliance/working-legally/

Get your Aussie mate to read these links.

Workers under paid on oil rig
http://www.abc.net.au/lateline/content/2011/s3201892.htm

http://www.smartcompany.com.au/Free-Articles/The-Briefing/20080723-Well-paid-foreign-workers-flock-to-Australia.html

A record number of overseas workers entered Australian on temporary work visas last year, overwhelmingly filling high paid, professional jobs in the ICT and health sectors.

The data on s457 temporary work visas, released by Immigration Minister Chris Evans yesterday, shatters the myth of the low paid foreign worker brought to undercut the wages of local staff.

More than 58,000 s457 visas were granted to temporary workers in 2007-08, a 24% increase on 2006-07 levels and the single biggest yearly intake ever conducted under the scheme.

Global pay scale Australia wins.
http://in.reuters.com/article/2011/03/04/idINIndia-55319920110304

#71 disciple on 09.01.11 at 9:05 am

#46…Debt’s Dark Embrace…The assumptions you make about people betray your racist bigotry. Don’t you understand that the old way of doing things is passing away and a new system is rising to take its place? How blind you are…

#72 arctodus on 09.01.11 at 9:15 am

Why am I heartless?

Maybe because I don’t care. This column, or my books, or my speeches, won’t alter what’s coming

Welcome to my world Garth Turner…..

There is no recession coming, there is no depression coming……

Collapse has arrived…riding the dragon of oil depletion….

For the few whole are interested….google up “Seneca Effect”…..you might get an idea of just how fast thing can go bad…..

and no..tuna won’t save you…

#73 Pat on 09.01.11 at 9:15 am

G: “This is the arrogance part. I know what I’m doing.”

I too know what you’re doing. This is the not being dumb part.

#74 Nemesis on 09.01.11 at 9:18 am

@BJM/#57… I really didn’t want to waste 15 min. wiping the coffee ‘spatter/distribution’ off my monitor (it’s a big monitor)… However, your post did give me a great idea for some new GreaterFool banner art (and by implication, a great ‘new look’ for GT)…

http://tinyurl.com/3dv8cwg

PS – WestCanGuy, GT is only beginning to master ‘prophesy’ (a notoriously ‘curmudgeonly art’) – ‘MiracleWorker’ is a little harder, it could take some time. For my part, I’m sticking with William Goldman… “Nobody knows anything.” Of course, William also said, “You can never trust what you read.” Writers.

#75 Tom from Mississauga on 09.01.11 at 9:19 am

Hi Garth
Your friend Sherry Cooper found god. I a note to BMO Capital Markets clients she recommends reading this.
http://www.theglobeandmail.com/report-on-business/rob-magazine/is-the-cmhc-financing-a-house-of-cards/article2137716/
BMO I guess backs round 4 of CMHC tightening. You’d think they know their client base are Canadian taxpayers or something.

#76 Big Fan of the Pathetic Blog on 09.01.11 at 9:21 am

You are making education about bank preferreds, real estate investment trusts, corporate bonds, exchange-traded funds, TFSAs, tax-deductible mortgages or income-splitting SEXY, Garth.

People get addicted to your blog. (Like me) And it’s tax free!

One day soon I hope to ask an intelligent question about financial matters. Because you are writing this blog Garth, there is hope for that.

#77 Bottoms_Up on 09.01.11 at 9:39 am

#29 disciple on 08.31.11 at 11:24 pm
——————————————
Looks like an 80 m long cockroach. Possibly an anomaly or perhaps a sculpture/artwork much like the Nazca lines:

http://en.wikipedia.org/wiki/Nazca_Lines

#78 Nemesis on 09.01.11 at 9:54 am

psst… there’s one stuck in your ‘blog machinery’.. it may well amuse.

#79 Lana on 09.01.11 at 9:57 am

First time poster, and a little leery, but here goes. My husband had to retire early and I work full-time, and hope to for several more years. I’m looking at 64 shortly.

We lengthened our mortgage to reduce our bi-weekly mortgage payments to something we can afford. We do have a financial planner and we are on a tight budget. We can’t afford to rent, so are hanging on to our house, which we bought in 1999 at $145,000. It is now worth around $250,000.

We took in a boarder. This is something older people should consider….a young boarder who can help with the heavy lifting, snow-shovelling, etc. Our house is fairly large and if I had my way, we would have 2 boarders.

When I was growing up, my parents had 2-3 boarders at any given time. That was in the ’50’s, and it helped my parents pay off their mortgage and feed 5 kids.

So if you can’t sell, or don’t want to live in an apartment, or can’t afford the high rent, take in some boarders. It is a win-win solution.

#80 Peakoilist on 09.01.11 at 10:04 am

Garth doesn’t care…surprise, surprise.
Garth’s pendulum wildly swings weekly from fear to greed and everything in between, while still maintaining an aura of” but if You’re prepared financially, don’t worry”.. Keep the investor herd happy and sleeping at night.
Anyway , GT still love ya…Mean it !
Apparantly, so many others do too, coming here today to stroke GT’s ego..don’t worry guys his ego is large enough already..Kevin O’Leary and Garth are the best of buds, just sittin around countin the moulau and as they say sleeping well at night. Yeah, right.
So lately, I read Garth’s prognostications and then can’t wait to read the comments, where the real meat and potatoes are..So many smart people here. So my tip of the hat today goes to the blog dawgs. I eagerly await your comments, because Garth is like Bernanke and Carney, He’s got nothin’ new, not even a heart.

#81 BrianT on 09.01.11 at 10:04 am

#21SP-Other than gold-that is a good one-somewhat like saying that other than all those goals and assists Gretzky scored, he wasn’t really much of a hockey player.

#82 poco on 09.01.11 at 10:04 am

# 59 Murder of Crow$—–that was alot of wasted space—the visual is so much easier to comprehend

http://www.pagetutor.com/trillion/index.html

#83 Devil's Advocate on 09.01.11 at 10:26 am

This is the arrogance part;

You bash real estate incessantly and offer investment advice sparingly.

Unfortunately, this is what most people own. That lack of diversification has placed them at risk. — Garth

#84 Aussie Roy on 09.01.11 at 11:15 am

Devil’s Advocate on 09.01.11 at 10:26 am

This is the arrogance part;

You bash real estate incessantly and offer investment advice sparingly.

Unfortunately, this is what most people own. That lack of diversification has placed them at risk. — Garth

Such arrogance Garth, pointing out to people what they could see themselves if they knew where to look, or dare I say, if the RE industry itself pointed out a few home truths about current house prices.

dev, has your industry addressed any of Garths points, no?, you just say, no worries, no risk, its different here?. Now that would be arrogant, hey.

I dont agree its arrogant to point out the obvious.

Very high house prices when compared to wages.
House price appreciation has out stripped wage growth.
If wages or rental yield didnt drive prices then debt has.
Most people have a lot riding on future house prices.
Most have no diversification.
Most people still see no risk.
etc etc

Before you can manage risk you must clearly identify it. I know you dont see any risk but neither does a BPOE, sorry I mean, neither does a lamb before the slaughter.

Not arrogant, its called “identifying risk”, so it can be managed.

#85 Junius on 09.01.11 at 11:21 am

#70 jess,

Interesting to see. It does appear like the tide is turning in the US as clearly a number of people are no longer prepared to roll over for the banks. Good to see.

Sadly, Obama remains on the wrong side of the issue. Tim Geithner is clearly deeply conflicted on this issue as he is surely covering his own tracks from his time at the NY Fed. Could be a House of Cards for him.

Here is to hoping!

#86 Peakoilist on 09.01.11 at 11:33 am

#73 arctodus on 09.01.11 at 9:15 am

Glad to see that you’re back and Garth didn’t ban you !
thanks for the article on the Seneca effect.
Interesting to read the point about how Pollution could be the aspect that really speeds up decline.
Case in point: Alberta is currently extracting close to 1.5 mb/day, expecting to increase that to 3.5 mb/day by 2025. How will they do this? Technology will make this all happen( if the price of oil plummets with recessions, all bets are off). However, as that technology increases production, so too does pollution, exponentially. It will no doubt be very costly to deal with all of that nasty sh*t. Will that turn a slightly profitable business into one that has to close up shop? There is one other point though. Corporations are not people and have no ethics, therefore the oil sands corps will probably pull a “BP” and just sink that crap to the bottom of whatever..’see problem solved”.
http://www.economist.com/node/17959688

#87 waterloo Resident on 09.01.11 at 11:38 am

#23 said: (“They shouldn’t be stocking up in tuna. It has high mercury levels which is bad”)

Oh CRAP ! I’m screwed ! Canned tuna is all that I eat.
Maybe that’s why I see the invisible pink elephant in the corner of the room?

#88 Junius on 09.01.11 at 11:44 am

#54 confused,

You asked, “If they do QE3 everyone is telling me that house will start going up in Vancouver starting in 2012. Who to believe? Any thoughts on that?”

QE3 may delay the pace of the downfall in Vancouver. That would be about it.

QE3 would probably stoke the markets up a bit and get some people feeling better but it would do very little for the underlying economy if QE2 serves as any guide.

There is probably nothing that can be done to prevent Canada from going into recession this fall. With debt levels at the current levels there is just no way the overall market can get hot. Meanwhile home ownership rates have never been higher so who is left to buy?

It does look like the End of days for the RE: Bubble.

#89 Junius on 09.01.11 at 11:48 am

#54 confussed,

Here is what Mish Shedlock has to say about Canada and our Re market on his Blog today:

“No Bright Side to Canada’s Performance

There is no bright side to Canada’s performance. The confidence is misplaced. The global economy is in complete shambles. The US, Eurozone, UK, Australia, Brazil, and parts of Asia are in recession.

Moreover, austerity measures are about to smack Europe, the Australia housing bust is in full swing, and Brazil just joined the recession party. To top it off, China and India are fighting huge inflation problems.

If Canada is ramping up productive capacity now, it is a huge mistake, not a bright spot. Moreover, Canada’s enormous property bubble will collapse and perhaps a global slowdown is just the right catalyst this go around.”

#90 Utopia on 09.01.11 at 12:05 pm

#76 Tom from Mississauga wrote……

“Your friend Sherry Cooper found god. In a note to BMO Capital Markets clients she recommends reading this”
http://www.theglobeandmail.com/report-on-business/rob-magazine/is-the-cmhc-financing-a-house-of-cards/article2137716/
—————————————

Not a bad article. I love it when our daily discussions finally go mainstream too. But I disagree with the authors conclusions.

I believe strongly that caution should be administered now by Mr Flaherty when it comes to modifying mortgage terms and the basic rules of CMHC and its insurance practices. More emphasis should be placed on the application entry points, on the lenders themselves.

Benny Tal has recently warned that further adjustments to CMHC rules could have the adverse risk of immediately sending us into recession. He has estimated that hazard accurately.

The outcome of past changes has been dramatic. Too dramatic perhaps and further rule tightening might just send us into a hard landing.

I do like the recent approach taken by our big banks though in increasing variable rate mortgages. That is helpful now and it lets the Bank of Canada off the hook on rate changes, thus ensuring we retain the stimulus of low rates while still slowing the growth of credit somewhat.

Those are smart moves in my opinion.

If any intervention comes, it should perhaps be directed at restricting those most at risk of future default from getting into trouble in the first place.

This is not a broad based systemic change but rather a targeted approach that will limit future problems and reduce the risk that CMHC takes on.

It may just mean that applications for new mortgages are scrutinized more carefully, that the screening process itself is tightened to reduce future default risks.

It is more a function of administrative adjustments than major policy changes from that perspective.

#91 Jim Moving to Burnaby on 09.01.11 at 12:05 pm

GT Fan Mail:
We’ve sold the house, paid off ALL the debt, rented a house, gonna invest diversified and balanced, live debt free and liquid.

For anyone who says GT is arrogant, here’s a quote from Top Gun:
Viper: In case some of you are wondering who the best is, they are up here on this plaque.
[turns to Maverick]
Viper: Do you think your name will be on that plaque?
Maverick: Yes, sir.
Viper: That’s pretty arrogant, considering the company you’re in.
Maverick: Yes, sir.
Viper: I like that in a pilot.

My paraphrase:
Majority: So you think you’re gonna win financially with balanced and diversified investing?
GT: Yes Sir!
Majority: That’s pretty arrogant, considering the opinion of all of us, who know that real estate will save us from financial ruin, if we could just find a way to get the bank to let us buy that million dollar shack in Vancouver.
GT: Yes Sir!
Jim: I like that in a financial adviser.
Majority: ?????

Please keep talking about this stuff, Mr. Turner. Some of us have listened…

#92 Smoking Man on 09.01.11 at 12:13 pm

Soft BatMan formation between 10:04 and 10:24

If TSE does not get past 1280 in the next hour, short it big time….

God I’m good

#93 Devil's Advocate on 09.01.11 at 12:20 pm

Unfortunately, this is what most people own (real estate). That lack of diversification has placed them at risk. — Garth

So it’s as much about a marketing opportunity as anything.

It is not they who “own” real estate who are at risk. It is they who have borrowed so heavily to acquire it recently who are at risk. It could very well be that many of they who leverage their futures in one way or another to invest in your recommendations might find themselves at equal or greater risk. There is no free lunch and there are no guarantees in life.

Far, far more people will declare bankruptcy this year due to the consequences of an unforeseen medical issue than an ill-timed real estate investment. Lack of long term disability insurance has placed them at risk. But I am sure under your licensing you must be able to sell that too.

My comment was about diversification. Who peed in your cereal? — Garth

#94 Kevin on 09.01.11 at 12:31 pm

@Cory: ” I decided I will sit quietly and continue to make my 30+ % annual returns in the stock market”

30%? Wow, that’s great! Good for you! That’s very, very good, for an amatuer!

Of course, I make 40%, but I’m much better at it than you. Don’t beat yourself up. 30% is quite impressive for a little hobby investor like yourself.

Also, I have 6-pack abs and my farts smell like fresh popcorn.

This internet thing is great! You can say any crazy old thing, and nobody can prove you’re lying!

#95 disciple on 09.01.11 at 12:32 pm

#78…Bottoms Up…Frankly, I don’t know what to make of it, but it certainly doesn’t seem like a natural formation. You may not have heard of the pyramids on Mars (Cydonia region) but closer to home, one of the first instances of Chinese counterfeits perhaps, here is a link on pyramids in Shaanxi:

http://web.utanet.at/mahain/Pyramids_in_China.htm

#96 dddd on 09.01.11 at 12:41 pm

i think prices in the burbs get it the hardest – dt TO and VAN will easily remain the high demand areas regardless of the overall mkt.

off topic…
ever kill a man? stab him 33 times and watch him die? then UBC law if for you!
http://www.vancouversun.com/news/Paroled+West+Vancouver+killer+goes+school/5334156/story.html#Comments#Comments

maybe he is a new garth fan, saw the danger of debt, and wanted to erase the 90k debt he owed to the ventilated victim???

raise your hand if you want a savage killer to sit in school with your children! what about the retribution hit that may go down in or near class

#97 disciple on 09.01.11 at 12:43 pm

Apologies for being so off-topic…this is what wealth does, though, it frees up your time to discover more important things in life…remember…you ARE money, never forget this, never accept your lot in life, play the hand you’re dealt, never give up, you are infinite potential…money is not wealth, you are.

I believe there is at least one pyramid also at the headwaters of the Mississippi river in southern Illinois but I haven’t the inclination right now to research it…I’m hungry…catch y’ll later…

#98 jess on 09.01.11 at 1:01 pm

E. B. White

The trouble with the profit system has always been that it was highly unprofitable to most people.

#99 Pr on 09.01.11 at 1:02 pm

The 7 life of the Canadian real estate. No reason for those prices, other than the bank of CANADA, CHSL and the Government action to pump this bubble. Now they have to keep pumping the housing market or its kaput.

#100 Burnt Norton on 09.01.11 at 1:03 pm

#96 dddd on 09.01.11 at 12:41 pm

Thanks for that link. Un-freaking-believable.

Actually, it is on-topic. Social justice? Not so much it seems. Increasingly, it is every person for him/herself. All the more reason to find someone competent to help manage one’s finances and not simply trust what the government / banks / media / friends or family suggests.

#101 spaceman on 09.01.11 at 1:05 pm

Saving, investing in a balanced portofolio, reducing or eliminating debt, (or at least managing debt and using it to invest) All these things I have learned from this blog and other publications.

But now I am educating my children to learn this stuff when they are young, not like me, its late in life for me (turned 50 this year) but i am not going to give up on them. The wife thinks i burden them with too much, they are 12 and 13, but they like it. My oldest has a paper route and is saving for a bike what better way to learn about budgeting. I am also teaching him how to play the blues on guitar, how else is he going to get through University… I don’t have any money…

#102 jess on 09.01.11 at 1:06 pm

86 Junius

yep…but what is the old saying ….he who speaks first loses ;^+

#103 The American on 09.01.11 at 1:07 pm

Justin Beiber is going down hard. Nobody can stand him, except 12-year old school girls. His popularity is falling as fast as the U.S. RE market.

#104 Daisy Mae on 09.01.11 at 1:09 pm

CBC blogger: “If you thought Campbell was bad, hang on to your family jewels while little Miss Horrid flushes the rest of us down the corporate toilet..”

Wow! BCers are still mad as hell.

#105 Garth's Mother-in-Law on 09.01.11 at 1:12 pm

Yeah …
And my daughter could have done much better than you !

#106 Devil's Advocate on 09.01.11 at 1:13 pm

As you ponder whether or not to allow my last post consider this;

“62.1 percent of the bankruptcies were medically related because the individuals either had more than $5,000 (or 10 percent of their pretax income) in medical bills, mortgaged their home to pay for medical bills, or lost significant income due to an illness. On average, medically bankrupt families had $17,943 in out-of-pocket expenses, including $26,971 for those who lacked insurance and $17,749 who had insurance at some point.” Theresa Tamkins – CNN Health

While that does pertain to the US, in Canada it is not so significantly different:

”…of leading causes of bankruptcy in Canada, are medical problems; they often can and do lead to a lot of financial problems. Fortunately, in Canada most of our medical expenses, such as hospital care, are covered by the government, unlike in the United States where medical bills for uninsured Americans are a leading cause of bankruptcy in America.

However, if you get sick or injured, and you are off work for a number of months, even with medical insurance your income is reduced, and that makes it more difficult to service your debts.” http://www.bankruptcy-canada.ca/bankruptcy/causes-of-bankruptcy-in-canada.htm

The point is; if you truly do want to be a savior you might consider the hundreds of thousands of Canadians who are of such fundamentally poor financial acumen that they live from paycheque to paycheque with nothing put away for a rainy day. None of the advice you offer is of any value to those millions who have squandered so that when faced with such an unforeseen medically setback cannot raise the money to meet the expense many with equity in their home can.

People with significant equity investment in homes are so far ahead of they with none it is incomprehensible, if you truly are so selfless, that you would ignore this most needy of your sage financial advice. But oh no, you resort to constant condemnation of home ownership because it is “sexy” and as such gets the attention of your prospects through fear mongering that they might lose it all. They who have no resources what-so-ever, real estate or financial, are not your prospects are they Garth?

Only you could manage to blame me for unforeseen medical emergencies. This breaks new ground. — Garth

#107 Linda Pearson on 09.01.11 at 1:41 pm

#79Lana on 09.01.11 at 9:57 am

Good point, Lana. A cousin, who is currently in dire financial straits, has taken up boarding foreign language students and, at the present time, has 3 of them. Never having had children of her own, she really enjoys these teens and particularly likes helping them with their English language skills. The 2 girls and 1 boy who live with her now are Chinese, so meals are a blend of North American and Oriental cuisine, lots of experimenting and laughing and everyone helps with the dishes.

She took a lemon and made rather spectacular lemonade I think.

#108 jess on 09.01.11 at 1:41 pm

Foreign IT firms use transfer-pricing provisions, double taxation treaties to minimise taxes in India The Economic Times
Sep 1 – “Although 30% of the workforce of IT multinationals is in India, they book barely 5% of revenue here
=====

Private finance deals allow investors to rip off taxpayers twice say MPs
By James Chapman

PFI has landed the taxpayer with a £20billion bill on top of what would have been spent if the Government had bought the services directly.
Spending watchdogs say hundreds of pounds a time is being charged for something as simple as fitting a new plug socket or a lock under PFI deals.
PFI deals allow a government to take large swathes of spending off the country’s balance sheet in the short-term. But MPs from all parties have warned that the schemes – which will land governments with a huge bill for decades to come – are unaffordable.
Independent economists say that if PFI commitments were included in the national debt, the public finances would be plunged billions deeper into the red. …”

Read more: http://www.dailymail.co.uk/news/article-2032412/Private-finance-deals-allow-investors-rip-taxpayers-twice-say-MPs.html#ixzz1Wivt43Y3

#109 Devil's Advocate on 09.01.11 at 1:42 pm

My comment was about diversification. Who peed in your cereal? — Garth

You do every day you blame my industry for peoples lust for homes and the poor decisions they make. My experience is, if I recommend to a buyer that they not buy they will seek the services of another who will “sell” them a home. If they are going to buy at least I can help them make as good and informed a decision as possible.

Only you could manage to blame me for unforeseen medical emergencies. This breaks new ground. — Garth

How do you come up with that Garth. Come on, that’s just silly nonsense. Surely you can do better than that.

Maybe tell us about something more fundamental to the economic wellbeing of Canadians, something like fiscal restraint. It’s not just home purchases which lead to financial failing you knoew. I do believe, if you research it, you will find that more non-homeowners declare bankruptcy in a given year than homeowners. Of course I do not doubt that recent indiscretions may shift that tide somewhat but only for a short period.

My point is; a little less “wolf crying” and more substance might be in order and negate those accusations of arrogance.

#110 Hoof-Hearted on 09.01.11 at 1:49 pm

The hardest thing than learning is UNlearning.

There are always the minority that gravitate around the truth that goes against the grain aka open mind and willing students.

The rest (majority ?)are programmed to be in denial, and when the truth increasingly ramps forward and then becomes undeniable, often their next move is to shoot the messenger.

Nothing’s changed.

#111 Tim in Ottawa on 09.01.11 at 1:54 pm

Your mother-in-law is wrong. You’re not an inconsistent dickweed, you’re a consistent dickwad.

She’ll be thrilled. — Garth

#112 Junius on 09.01.11 at 1:56 pm

#106 DA,

How is a person with all their equity in a home better off than someone with a balanced portfolio in a time of critical illness or other immediate financial need?

As Garth points out all the time, a home is an illiquid asset. If a person gets sick and has to re-finance or tap into their home equity isn’t that more difficult than just pulling money out of financial portfolio?

Your argument is illogical. I think Garth’s key message is to be diversified and put yourself in a more resilient position to deal with the future. You are way off base.

#113 jackie on 09.01.11 at 2:07 pm

Mr. Turner, you care and that’s why this blog is here, thank you.

#114 Peakoilist on 09.01.11 at 2:09 pm

#105 Garth’s Mother-in-Law on 09.01.11 at 1:12 pm
thanks for my LOL moment for the day.
Didn’t you sit down with that girl and warn her about boys like Garth? On the other hand , she’s rich now..soooo

#115 Junius on 09.01.11 at 2:11 pm

#102 jess,

At some point the role of the banks in the financial crash needs to be fully understood by the public. In the 1930s it was the Pecora Commission’s prosecution of the banks for their role in the 1929 crash that educated the public and created the political will to create the banking regulatory rules such as Glass-Steagall and the SEC.

It may ultimately be Obama’s biggest mistake that he did not do something similar instead of allowing the “extend and pretend” period to continue and a watered down law in Dodd-Frank to be passed. A crisis is a terrible thing to waste and he wasted it.

Good article on the banks in naked capitalism:

http://www.nakedcapitalism.com/2011/09/voxeu-if-banks-should-act-as-utilities-why-not-treat-them-as-such.html

#116 Bailing in BC on 09.01.11 at 2:13 pm

106 Devil’s Advocate

Have you given up on Real Estate sales and gone to selling insurance? One of the local realtors here in Squamish BC have done just that, many others are finding other ways to suppliment their income.

#117 bcc7 on 09.01.11 at 2:38 pm

Dear Garth,

This is totally off topic, but can you teach us how to find and pick a financial advisor (for someone who has less than $50k asset).

for all, here’s another view of HAM in Van http://www.globaltvbc.com/video/million+dollar+impound/video.html?v=2113328382
in some sense they are good for our economy, if they are just buying exotic cars.

#118 Junius on 09.01.11 at 2:44 pm

Shocking article in this month’s Atlantic magazine about the growth of student loan debt in the US. It is up 511% since 1999!

Much like with housing the cause is the access to debt and not the value of education. The costs of education have gone up……because they can.

People seem to forget that the value of cheap debt goes to the seller more than the buyer. The buyer thinks they are getting a deal because they have more money but the real value goes to the seller who get an artificially inflated price.

Here is the article:

http://www.theatlantic.com/business/archive/2011/08/chart-of-the-day-student-loans-have-grown-511-since-1999/243821/

#119 Moneta on 09.01.11 at 2:48 pm

So if you can’t sell, or don’t want to live in an apartment, or can’t afford the high rent, take in some boarders. It is a win-win solution.
——–
It’s an amazing idea but if it catches on… what about those REITs?

#120 Aussie Roy on 09.01.11 at 2:50 pm

Devil’s Advocate on 09.01.11 at 1:13 pm

The point is; if you truly do want to be a savior you might consider the hundreds of thousands of Canadians who are of such fundamentally poor financial acumen that they live from paycheque to paycheque with nothing put away for a rainy day.

Are you going to practice what you preach and warn current buyers that houses have never, ever in history been so expensive when compared to incomes they should atleast be careful?.

Devil’s Advocate on 09.01.11 at 1:13 pm

But oh no, you resort to constant condemnation of home ownership because it is “sexy” and as such gets the attention of your prospects through fear mongering that they might lose it all.

Doesnt YOUR industry use FEAR to help sell houses?. You know, quick buy now or you will never afford a house ever, coz house prices only go up, yada, yada, yada. I’m sure I dont have to tell you the pathetic nonsense based cliches common to your industry.

We all know the method used to deal with house price risk if you are a realtor, its simple, there is no risk, its different here – LOL.

Dev, your ramblings today have set a new standard – well done.

What is the problem?. Cant, or maybe unable to fault the logic behind what Garth is saying. Come on Dev, play the ball or maybe the puck instead of the man.

Pssst, maybe try some logic to target Garths message to support your opinion, it couldnt hurt, could it?.

http://en.wikipedia.org/wiki/Logic

#121 X on 09.01.11 at 3:00 pm

re #106 – I hope b/c of your posts of medical issues being the greatest risk for bnankruptcy that readers will diversify their RE holdings and purchase income producing equities to diversify. Much easier to look after with a serious medical ailment, than maintaining a rental property.

#122 BrianT on 09.01.11 at 3:11 pm

#115Junius-His biggest mistake? Exactly who do you think Obama is going to work for when he is finished as a politician? Building houses with Jimmy Carter? Supposedly Tony Blair needs a minimum of 5 million a yr to fund his lifestyle-I wonder if he is working for Habitat For Humanity.

#123 Bill Gable on 09.01.11 at 3:25 pm

Before we break out the champagne – Recent stats – Canada slipped into recession again, and among the G-7, only Japan did worse – and that’s because of Fukushima.

Lovely.

I had 6 friends lose work this week.

All boomers. All in tatters.

I spent half the morning talking to shellshocked and scared friends.

Most are 100% all in on their big houses. Kids in Uni, or younger. Not a dime in savings. Boats (*three of them have boats and cottages!) – all these people lost their life’s career JUST this week.

What would you do?

Time to pay attention to what our host is saying, or you’ll wind up like my stressed and terrified friends.

It made me extremely uneasy, to say the least.

#124 DM in C on 09.01.11 at 3:26 pm

Holy crow, DA’s back and gone completely off the deep end.

Guess RE is not doing too well in Kelowna and he’s taking to blaming Garth and ranting about ….. well, what exactly is he ranting about…. illness causing bankruptcy? Bankruptcy in general? Things getting a little tight at home, DA?

Not quite on topic, but at least his rants are amusing. If amusing you mean kindof odd and sad.

#125 OttawaMike on 09.01.11 at 3:56 pm

#115 Junius/Jess
The US banking industry and somewhat the European banks, are so entrenched in govt. I really don’t see the pendulum swinging back to far this time.

Influence runs at never seen before levels through lobbying and the banker’s incestual relationships(particularly Goldman) traversing the industry, central banks and regulators.

I believe your post @#37 indirectly addresses this to.

Obama missed his chance to reign them in. Do you think the Tea Partier, Redumblican, GOP types are going to do it when they get elected next?

#126 Burnt Norton on 09.01.11 at 4:12 pm

#109 Devil’s Advocate on 09.01.11 at 1:42 pm

“My experience is, if I recommend to a buyer that they not buy they will seek the services of another who will “sell” them a home. If they are going to buy at least I can help them make as good and informed a decision as possible”

———-

What a laugh. Are you back trying to convince the anonymous blogosphere that realtors do noble work? LOL

———-

#116 Bailing in BC on 09.01.11 at 2:13 pm

“106 Devil’s Advocate

Have you given up on Real Estate sales and gone to selling insurance? One of the local realtors here in Squamish BC have done just that, many others are finding other ways to suppliment their income”

———–

Hmm, makes sense. Continue overselling in order to profit personally from gullible clients’ fear and/or greed. No, not the agent’s fault. But not noble either (except for Tim Lippe in Cedar Rapids).

http://www.youtube.com/watch?v=ytPYm0_bgjU

#127 Victoria Tea Party on 09.01.11 at 4:12 pm

#2 onemorething

Please read…

#3 waterloo Resident!

Then read Garth all over again #2!!

It’s not that looking after #1 is THE cause of too little love in the world. It’s just that those who don’t look after #1 have NO POSSIBILITY of EVER looking after the ones they love around them because they’ll have been swamped by history, economic and otherwise.

Rather…teach your nearest and dearest HOW they can ALSO achieve that status, and preferably WITHOUT wandering along on others’ backsides!

#3 has an arm-full of bad economic news, the worst being the Baltic Dry Index. Now that those huge container ships, containing millions of bits of Chinese-made crap, have arrived at their destinations, in the West, there’s no more shipping to do until next year! So these giants of the seas will be “beached” along with their mainly Third World crews UNTIL NEXT TIME, AMERICA! No more looking after #1, in this case eh?

So, #2. Economics is not a cruel sport, a game of oneupmanship. It is the way things are in our mercantilist world AND the natural world. It’s survival of the fittest. Read Niall Ferguson’s “Ascent of Money…” book that I was flogging on this site the other day. You won’t like what you read, but it is FACT, the TRUTH.

Forewarned is forearmed.

BTW, take a look at headlines from today’s Financial Times. It’s now getting beyond UGLY out there, moreso than ever, unfortunately.

Travel with care. And watch for rogue waves that can upend your life.

#128 jess on 09.01.11 at 4:13 pm

…”In the early 1990s there was a predatory lender called Delta Funding, which basically targeted elderly people of colour in neighbourhoods like Queens and Brooklyn, and promised potential clients the impossible. At the time Ms. Ward needed money for personal reasons. One day she received a flyer from Delta filled with all these promises and subsequently refinanced her home….
I’ve been fighting eviction for the last three years, and the predatory lenders for the last 18.
I couldn’t even pay the original loan – so I rescinded it in less than 24 hours

Ms. Ward was supposed to receive $10,000 of what she borrowed from Delta at closing, but received only $1,000. As soon as she got the check for $1,000 from the lender, she went to the District Attorney’s office, which sent her to New York’s Department of Housing Preservation and Development. The people there helped her to draft a letter rescinding the loan, which she immediately sent off.

Since then the US government has shut down Delta over its corrupt business practices, but unfortunately this did not impact the loan, which never should have existed in the first place, because it should have been cancelled. Basically her loan got bought up by bank after bank. Eventually the loan wound up on an auction block in 2008, and it appears that Wells Fargo was the bank that got paid….”

According to Ward’s lawyers, by the time Ward’s home went into foreclosure, interest rates, attorney fees, late fees and charges had bumped what she owed on it to $200,000. The property went up for sale at a mortgage auction in 2008, where it was reportedly bought up to the tune of $345,000. However, Ward has refused to leave the home she no longer owns

http://observers.france24.com/content/20110901-usa-new-york-brooklyn-neighbourhood-fights-eviction-great-grandmother-alleged-victim-predatory-lending-bedford

#129 Ultraumatic on 09.01.11 at 4:16 pm

I have to give credit where it’s due, Garth, your columns of the past few days have been stellar. It’s this kind of sober and sobering writing that has kept me reading the blog for as long as I have. A wider audience would benefit from seeing it, I think.

Where I tend to get irritated is on those occasions where you go out of your way to slam those who have no financial buffer (and maybe puff yourself up in the process). So I am glad that you have clarified your position here:

Maybe because I don’t care. This column, or my books, or my speeches, won’t alter what’s coming, since almost everybody you know worships houses, fears equities, saves nothing and owes much.

We can actually agree on this point: if a person insists on keeping themselves ignorant, and can’t be bothered to read a newspaper or otherwise seek out information about the world, then they probably deserve what’s coming.

I still make an exception for those who, through genuine life circumstances, can’t get ahead–and these folks do exist.

Anyway, I just wanted to chime in with a genuine, snark-less comment complimenting you for some good posting lately.

#130 Ultraumatic on 09.01.11 at 4:19 pm

#115 Junius and #102 jess

Re: Obama and banks, check this out: http://www.rollingstone.com/politics/blogs/taibblog/obama-goes-all-out-for-dirty-banker-deal-20110824

It’ll make your stomach hurt.

#131 EdmontonJim on 09.01.11 at 4:24 pm

The issue has always been, and will aways be, a question of power and wealth. Poor people want wealth, rich people want power. Rich people who want wealth become poor, and poor people who want power become rich, or get killed. It’s just the way the world works, and nothing anybody does can change this fact.

Of course everyone wants some of both, it’s the balance that matters, and money is just a placeholder for both.

The only thing thats changed is that the powerful (rich) have learned to hide. Bill Gates and Warren Buffet don’t parade around like the kings of old, so they stay in power. They will stay like that for as long as they stay out of sight.

But most people have learned nothing. We spend all our time and effort on accumulating ‘wealth’, that, if we stopped to think about it, isn’t all that great. And since we are loathe to give up our ‘wealth’, that we neither need nor want, we give up more and more power until we are old and spent. Then when we have no more power, we are discarded like a dead horse.

But no revolution, no crash. Because the disillusioned and disempowered are too old to fight back, and the young and strong are too busy watching ‘American Idol’, to realise that there is an 80 year old stealing his car.

Well, unless the disillusioned majority remembers that they can still vote, but what are the odds of that happening?

#132 jess on 09.01.11 at 4:26 pm

junius this one is for you

i like this feisty lawyer ….
mr. eric att. gen. is going to look in the fraud in this one….

http://observers.france24.com/content/20110901-usa-new-york-brooklyn-neighbourhood-fights-eviction-great-grandmother-alleged-victim-predatory-lending-bedford

#133 EdmontonJim on 09.01.11 at 4:55 pm

To put it another way.

– There is a large number of people who will soon be unable to sustain their standard of living.
– Some of those people have children they have not yet alienated, many do not.
– Many retirees will be reduced to poverty. Some children of retirees will also be reduced to poverty.
– The loss will be socialised to a degree proportional to the political literacy, or criminal tendencies, of the worst off. This socialisation will not affect the rich.
– Life will go on, but everyone who still has a job will have a nagging feeling that they should be really angry about something.

#134 Live Under Your Means on 09.01.11 at 5:01 pm

#83 Devil’s Advocate on 09.01.11 at 10:26 am
This is the arrogance part;

You bash real estate incessantly and offer investment advice sparingly.

,,,,,,,,,,,,,,,,,,,,,,,,,

I roll my eyes when posters want G to offer investment advice on specific “preferreds, real estate investment trusts, corporate bonds, exchange-traded funds, “, etc. That’s why you pay a FA.

Some one asked about income-splitting. My understanding is that you can only do that if both are 65. Correct me if I’m wrong. As the lower income earner (retired – w/a ‘now’ quasi DB plan) I try to take advantage of who claims what. However, I think we need an acct. as I’m really confused about capital gains and losses. I think we have losses, but have claimed them and I think there maybe a time limit to do so.

OT – am tired – spent 3 hours in the garden today – removing obnoxious weeds. Filled 2 large greenbins. One of my garden beds is inundated with wild blackberry (when they extended the street). Did research today and came to the conclusion that it will have to be totally dug up & can take years to eradicate. Those wild blackberries have taken a foothold on our side bank in front also. My passion has always been gardening & that’s mostly why we bought this home. I haven’t put in a veggie garden for 2 yrs. due to health problems & travel overseas. Hope that will change next spring.

Pardon my rant.

#135 jess on 09.01.11 at 5:10 pm

every bubble needs a story and a “herd”

Speculating with Lives
How Global Investors Make Money Out of Hunger
http://www.spiegel.de/international/world/0,1518,783654,00.html

Distorted Prices

UNCTAD chief economist Heiner Flassbeck, a former senior official in the German Finance Ministry under then Finance Minister Oskar Lafontaine, has long been concerned about speculation. The walls of his Geneva office, with its view of Lake Geneva, are covered with diagrams, while his latest book on the role of speculators sits on the table.

After the 2008 financial crash, Flassbeck began monitoring changes in the prices of currencies, commodities, government bonds and stocks more closely. When he found that the graphs were noticeably similar, Flassbeck assembled a team to study the phenomenon.

The result of the team’s efforts bears the innocuous title: “Price Formation in Financialized Commodity Markets: The Role of Information.” But the contents are explosive. The UNCTAD experts conclude that the commodities market isn’t functioning properly, or at least not the way a market is supposed to function in economic models, where prices are shaped by supply and demand. But the activities of financial participants, according to the study, “drive commodity prices away from levels justified by market fundamentals.”

This leads to massively distorted prices, which are not influenced by real factors but by the expectation that economic developments will improve or worsen.

#136 anjing bau on 09.01.11 at 5:30 pm

Smoking Man 92…..Soft BatMan formation between 10:04 and 10:24

If TSE does not get past 1280 in the next hour, short it big time….

God I’m good

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
the daily pattern is a gartley AB =CD …still not enough selling to take out the intraday pivots w/ conviction. Bust 12660 on more than 15 M on a 10 minute bar would be the signal

#137 patiently waiting on 09.01.11 at 5:31 pm

#53 confussed on 09.01.11 at 1:40 am

Garth I have been reading your posts for some time. House prices in Vancouver are out of this world everyone can agree to that,My family was thinking of buying but thinks the market is too uncertain right now. If they do QE3 everyone is telling me that house will start going up in Vancouver starting in 2012. Who to believe? Any thoughts on that?
____________________________________________

You are not the only one who is confused. I have never seen a time quite like this. In my hood (White Rock / South Surrey) there have been many recent sales that really perplex me. Some Chinese buyers that bought within the past year are already putting their homes on the market , but for huge price increases (i.e. $500,000 and some up to a million or more) than they just paid . . . WTF . . .

Here are a few examples:

MLS F1119286 purchased in March 9th 2011 for $1,985,000. It was put back on the market 4 months later in July for $3,280,000

MLS F1120215 purchased June 24, 2010 for $1,475,000. Back on market in July 2011 for $3,980,000, then reduced to $2,999,000.

MLS F1120879 Sold in Dec 2010 for $1,240,000. Now on the market 8 months later for $2,517,000

MLS F1119723 Sold in Feb 2011 for $1,268,000. Now on the market for 6 months later for $2,480,000

MLS F1121845 Sold Sept 29, 2010 for $1,568,000. Now on the market 11 months later for $2,380,000.

MLS F1118164 Sold April 2011 for $1,488,000. Put back on the market before the ink was barely dry 2 months later in July for $1,988,000.

There are more like these, but I think you get the picture. All are Chinese buyers. I know that there are many legitimate Chinese buyers but something seems a little fishy here . . . why are so many trying to flip so fast? and for such absurd price increases? . . . WTF is going on . . .

#138 Young Old fart on 09.01.11 at 5:32 pm

#28disciple on 08.31.11 at 11:24 pm
Giant skeleton found by satellite imaging:

Google Maps: 28.5633N, 35.28077E

Leviathan? Fenced off by the Saudi government.
=================================

Holy Crap!!!!!

#139 Snowboid on 09.01.11 at 5:33 pm

#106 Devil’s Advocate on 09.01.11 at 1:13 pm…

To be fair, DA, why not use statistics that refer to Canada?

I recall a report done specifically about boomer bankruptcy issues, by the Office of the Superintendent of Bankruptcy Canada.

This is a government agency, not an organization sponsored by bankruptcy trustees.

The government study acknowledged that the causes in the US were mainly medical.

However, in Canada, they accounted for about 15% (a tad bit less than 62.1%)

Here is the top 7 breakdown for all 55+ age groups:

Over-extension of Credit 29.21%
Medical reasons 14.66%
Insufficient Income 11.83%
Loss of employment income 11.24%
Money mismanagement 9.39%
Involvement in failed business 6.73%
Marriage breakdown 4.34%

The number one cause is ‘overextension of credit’ which is something that shouldn’t be an issue for boomers.

Of course people with health problems and “significant equity investment in homes are so far ahead”…

if they sell, sell, sell…

right now!

#140 biil c on 09.01.11 at 5:35 pm

The problem garth is you dont understand investments.
No matter what you own, cash, gold, real estate, stocks, art collection, barbie dolls etc. Its all the same.
Number 1 rule applies. Buy Low Sell High. That’s it. Nothing else matters. Real Estate is stupid high. For those who own lots they can now make a fortune. SELL SELL SELL. Whomever buys Now. God Help you.

I think I get it. — Garth

#141 Live Under Your Means on 09.01.11 at 6:05 pm

Tottally OT but I loved this Utube that my hubby sent me this am. Fantastic. Must watch till the end.

http://www.youtube.com/embed/kPvciIdDZAE

#142 blase on 09.01.11 at 6:19 pm

Bill Gable,

What industries are your boomer friends in, and what parts of Canada? Sounds like some kind of a bloodletting.

#143 Cato on 09.01.11 at 6:21 pm

Spot on Garth.

For the most part collectively as a species we tend to learn and evolve from our mistakes. I have no doubt the next generation will learn from mistakes of their parents & grandparents, this insanity won’t be repeated and the country will take a step forward. We’ll lump the housing bubble in with the idiocy of the tulip bubble.

There is reason to be optimistic. We live in an age where the human potential is expanding at an exponential rate. We are catching a brief glimpse of a world that can eventually exist, one in which people live sustainably on the planet in societies that allow all to lead a full existence. The human animals that have given the world so much grief throughout our history are slowly being contained & suppressed with each evolutionary step we take, the likes of Hitler will never be able to walk the earth again in the not to distant future – things are getting better, not worse. I have to wonder where we would be today had a lower order human not thrust a sword into the chest of a higher order human named Archimedes on the cusp of making discoveries thousands of years ahead of their time. As a species we aren’t losing these bright sparks as we have in the past and this is the reason we are now leaping forward as a species.

The extremes found on both the right & left of the political spectrum have resulted in the welfare/warfare state we have before us today. Its a relic to be relegated to our barbaric past – its brought us economic ruin and death. What comes next? who knows but it will be different than what has come before, its in our DNA.

Real wealth isn’t found in false, fabricated economies. Its not created by speculating on financially dead assets like tulips or houses. Its created by tapping into the potential in all of us, its by a small group of people taking metal & fire used by previous generations for thousands of years and finding a new use by creating a steam engine for the benefit of all. The western world won’t end because a few among us decided to trade their economic futures for a piece of granite. Real wealth is continuing to be created at a phenomenal pace in the world at large, its just being masked by the unwinding of the western property bubble. Hiding under a rock is no solution to the problems the world is facing and its no path to financial security.

#144 Junius on 09.01.11 at 6:34 pm

#132 jess,

Great find. Thanks. Kind of say it all about the mortgage lending business in the US. Not much better in Canada. Our day will come.

#145 Junius on 09.01.11 at 6:40 pm

#125 OttawaMike,

You asked, “Obama missed his chance to reign them in. Do you think the Tea Partier, Redumblican, GOP types are going to do it when they get elected next?”

No. I don’t expect them to do anything. My bet is that the banksters blow the world economy up one more time before we elected politicians with the guts to bring in rules and regulations to protect us.

However I do really, REALLY hope I am wrong.

#146 Junius on 09.01.11 at 6:43 pm

#130 Ultramatic,

Great article in Rolling Stone. Matt Taibbi is one of the few journalists who is on the ball.

Notice that so few work for mainstream media? While Rolling Stone is a great magazine it is primarily a music mag but they are now a more credible source of information than Newsweek or Time. Sad.

#147 ballingsford on 09.01.11 at 6:46 pm

#52 West Canada Guy

Agree with you whole heartily! Nice post!

Garth, maybe you should consider folks who don’t have a half million to invest.

#148 pjwlk on 09.01.11 at 6:47 pm

#45 Debt’s Dark Embrace “…So, if we have exported most of our manufacturing and call center jobs etc. and we are importing cheap labour from other countries, what will be left for our kids and grandkids ? Just a thought…”

My sentiments exactly! Self-serve check-outs are the latest thing to get under my skin. $2 to fill up your tires at the gas station is another. That’s nothing more than corporate greed at work, and we are all letting it happen…

#149 Peakoilist on 09.01.11 at 6:50 pm

#131 EdmontonJim on 09.01.11 at 4:24 pm
that was a great post, until you told people that all they have to do is vote, and all of our problems will be solved.

Nah, don’t think so, with our $1=1 vote system..its all about the money. Our political system is corrupted…totally sold out to the corporate interests. Btw, having said that, I always vote because it feels good to do my civic duty, I guess. But those wealthy folks are pulling the strings, while they are hiding in the shadows.

#150 Westernman on 09.01.11 at 6:55 pm

Bill Gable #123:
So 6 of your self-entitled,smug,snobby friends got a lesson in life and finance huh? Looks good on them… you ask what would I do?
I would laugh and laugh and laugh! That’s what idiots like your social climbing “friends” are for…comic entertainment.
What they got is what is so rarely dealt out these days-JUSTICE. As opposed to law, which we have PLENTY of.
So sit back with your favorite beverage and have a good,long satisfying laugh at them. They deserved it.

#151 Chaddywack on 09.01.11 at 6:58 pm

#137 patiently waiting

They’re not going to sell for that….not even close. I think they’ll be lucky to get what they paid for some of those.

I’ve also heard from a realtor that he sold his house in Richmond for $1.1 M and two months later the guy is trying to flip it for $1.5 M.

As soon as this market corrects even a bit there will the the opposite of this a rush to the exits.

#152 Peakoilist on 09.01.11 at 6:59 pm

#137 patiently waiting on 09.01.11 at 5:31 pm

Are they practicing those stunts that waterloo resident was talking about ( and thinking about emulating i might add) in yesterday’s blog . check yesterday’s entries for a description of this method, that curled my short and curlies more than they’ve ever been curled. Is there no government watchdog that watches over these things??!

#153 The InvestorsFriend on 09.01.11 at 7:03 pm

U.S. HOUSE PRICES HAVE BOTTOMED

The latest Case-Shiller home price index released this week sows home prices were up (albeit marginally) in June in every sinle one of the 20 Cities they cover.

http://www.standardandpoors.com/indices/articles/en/us/?articleType=XLS&assetID=1221192472066

Yeah this is the non-seasonally adjusted figure and the seasonally adjusted was actually down a smidge. But I doubt that seasonal factors calculated from historic data have much relevance.

Fact is, house prices were up in June. Likelyhood is, the bottom is in.

Sorry to all the real doomers and nutbars on this Site, but the financial world will not end.

Smart snow birds that spend four months of the year down South have surely bought a place by now. If not, Buy now, it is the opportunity of a lifetime, me thinks.

I would NOT buy a house in the U.S. for investment purposes, too much hassel. For that case buy a public company that will rise with the house price recovery.

But snow birds should seriously consider buying.

Remember the rule is buy low. If you don’t recognise that U.S. house prices are LOW today then you can’t be helped.

#154 Peakoilist on 09.01.11 at 7:25 pm

#143 Cato on 09.01.11 at 6:21 pm
that was such a great post..I feel all warm and fuzzy. I’m afraid that you’re wrong about “real wealth” being created, as you so aptly put it. The wealth being created is speculated wealth..its a bubble of massive proportions. The big banks are spinning wealth out of nothing…The big corporations are producing nothing of value, but are playing in this giant casino, and are making out like bandits, as Garth said last night…Sure the stock market may soar, but beware.
Why is this happening? We are in the age of Peal Oil..the age of diminishing returns…some will still become wealthy, but there will be many more losers.

#155 BPOE on 09.01.11 at 7:26 pm

Cars that Seattle kids can only dream of.

http://www.bclocalnews.com/news/128886793.html

#156 Bottoms_Up on 09.01.11 at 7:33 pm

#109 Devil’s Advocate on 09.01.11 at 1:42 pm
———————————————–
Garth doesn’t often (if ever) accuse realtors “for peoples lust for homes and the poor decisions they make”.

I have read a few of his books; you’d be surprised he actually recommends people buy using an agent!!

#157 Nostradamus Le Mad Vlad on 09.01.11 at 8:00 pm

-
Yesterday’s Wise Words from the KDC remind me of the mass of people today:

“The more I study religion, the more I am convinced that man never worshipped anything but himself.” — Richard Burton.

In any dictionary, the only definition of the word cult is worship. I guess if anyone wants to join a cult (more for social reasons than anything else), all they have to is become Narcissitic, worship themselves and thus start their own cult. If they make money from it, so be it.
*
Money for Nothing? Speculating with lives; Tracking Gold ETF’s and other stuff; French Financial Weekly Same as Glass-Steagall? Tax Meters for Hookers ‘R’ Us “… and sends the money to Greece in a hopeless attempt to save the European Union from a banking system, designed to produce more debt than money!” wrh.com; GS – What else is new? 10:17 clip Marc Faber is right — don’t keep or store PMs in the US, as they are being confiscated now; Being Prepared Food stuffs, etc.

BoA Chapter 11 bankruptcy recommended; Utah firms hiring Mexicans; Exporting Jobs There must be something behind this Gibson Guitars takedown; Bankrupting The World Dad (Nostradamus Jr.) was right all along; Deflation Take down the elite and sheeple; Greece’s debt Heading past Neptune.

Yes! There are still rights for individuals; Distractions Further evidence that 9-11 was an inside job, only to give the US free space to invade Af’stan then Iraq under false pretences; Fukushima Due to the winds higher up, apparently NAmerica is getting more than its fair share; 5:12 clip Rioters will lynch journalists if prosecuted in UK; Dictatorships That’s what the west if fast becoming — a collection of tinpot dictatorships. How the roles have changed; Kansas City Privately-held WMD there; CC & Humans Now they tell us, and Gutless Maggot Oz politician.

Fluoride Suburb of Nashville ends using it; Body Scanners Germany stops using them; Kashmir and Iran. The GoA is where 34 US Navy ships were headed for in fall 2010; Syria Like Iraq, no WMD can be presently located, but no doubt someone will ‘place’ them there; Computers New COINTELPRO; Euro. govts. and NATO – Propaganda garbage, and 1:25 clip NATO polluting Libya’s water; New Fuel Bad for oil cos., good for scientists.

#158 HouseBuster on 09.01.11 at 8:43 pm

#137 patiently waiting
—————
What’s to figure out? Their trying to unload on even stupider HAM.

#159 Smoking Man on 09.01.11 at 9:01 pm

#136 anjing bau on 09.01.11 at 5:30 pm

Watch and learn little grass hopper

#160 Smoking Man on 09.01.11 at 9:09 pm

Check this out kids

remember what I said this earlier.

WASHINGTON/NEW YORK, Sept 1 (Reuters) – Securities regulators have taken the unprecedented step of asking high-frequency trading firms to hand over the details of their trading strategies, and in some cases, their secret computer codes.

http://newsandinsight.thomsonreuters.com/Legal/News/2011/09_-_September/Securities_regulators_seek_high-frequency_secret_sauce/

Having anticipated this move I have tones of decoy algos.

No f’s with the smoking mans code….

#161 EdmontonJim on 09.01.11 at 9:22 pm

#149 Peakoilist

My last sentence wasn’t to suggest that voting would solve our problems, it was more to sarcastically imply that a mass political movement could result in upheaval, maybe even revolution. That’s not the way out, and it won’t happen anyway.

#162 timo on 09.01.11 at 9:26 pm

#147 The InvestorsFriend,

your quoting Standard and Poors call that the bottom is in?

wow, tell that to Ireland as their predictions are a little suspect.
——–
May 5,2011,

Irish residential property prices have “completed their correction”, according to Standard & Poor’s

http://www.qualitybusinessalliance.ie/blog/sp-call-bottom-on-irish-housing-market/

The rate of decline in Irish house prices slowed to 0.8 percent in July, the weakest pace so far this year and a sharp slowdown from a drop of 2.1 percent the previous month, data on Monday showed

http://in.reuters.com/article/2011/08/29/ireland-houseprices-idINWLA429420110829

but who knows, r/e always goes up I’ve been told.

#163 Bottoms_Up on 09.01.11 at 9:38 pm

#159 Smoking Man on 09.01.11 at 9:01 pm
———————————————
You called that short pretty nicely, not hitting the 12,800 mark and then the market fell off a cliff.

#164 Peakoilist on 09.01.11 at 10:08 pm

#161 EdmontonJim on 09.01.11 at 9:22 pm
Good, thanks, I would totally agree with that take.

#165 Metro Van Observer on 09.02.11 at 1:05 am

Garth I would guess that a silent majority who follow this blog daily but are shy to post find your commentary invaluable. Who cares how some oversensitive types perceive you when you are doing the masses a huge favour by offering them FREE sound financial advice. I read a multitude of financial articles on various websites daily but yours is my FIRST and only real GO TO site. Why? Because it hits hard at the facts of our challenging time. It speaks the truth. It displays the courage to expose issues that other real estate sponsored sites\media refuse to discuss objectively.

Thank you for helping us out from your sheer goodwill. People you are getting FREE excellent financial advice that you would pay big $ for elsewhere. Do not take Garth’s public service for granted.

#166 miketheengineer on 09.02.11 at 8:00 am

Garth et al:

Selling your gold:

There was an article in Toronto Sun (sometime in the last 2 weeks, sorry no link, you can look for it) that I read at the barber shop. The reporter had a few pieces of gold “estimated by expert” for their value. Then he went to some of the bigger gold dealers that advertise to sell your gold. Guess what, they were not paying 1800 per ounce of gold. They were paying less, to the tune of 50% less than what they say the price is in the news paper. So you think it is worth xxxx when really it is only worth “half”. Cause that is what the gold broker will give you for it.

Kathryn – do a market test. Take one coin and bring it to the shop. Ask what it cost to buy a similar coin at the shop. Then show him yours and see what he will pay. But don’t offer the item till you see or know what will be given for similar items. Those guys that buy and sell gold are “sharks” and in business to make money lots of money…at your expense.

Lesson learned….the guys who buy and sell that kinda stuff “know how to trade”. Everything is negotiable in those places. If he won’t give you what you want, leave immediately and find someone who will.

I think you will only get some 70% at best of market value. And right now times are good? What if a real emergency happens? Who knows what the “sharks” will give you when “everyone ” goes there with their gold rings, jewelery etc. Scrap value is what you are going to get, the bare minimum.

#167 disciple on 09.02.11 at 8:59 am

#154 Peakoilist…don’t worry about Peak Oil. Other exciting new technologies will soon reduce the need for gasoline or plastics. There are several shining beacons of hope, many emerging out of true science, rather than corporate academia. It’s one of the reasons Steve Jobs stepped out of the way. Most of our advances in technology, such as with silicon, are back-engineering efforts of re-discovered or “lost” technology.

Don’t ever make the mistake of thinking that your real rulers are stupid. They have a well-crafted plan and a lot of it depends on controlling your mind. The fun challenge is in discovering what the plan is…

#168 georgo c on 09.02.11 at 9:23 am

The Canadian Real Estate Pyramid
A pyramid scheme relies on people paying money in, and then recruiting lots of other people to pay money in. The people at the top of the pyramid (the first in) make money and everyone else gets screwed. Simple math shows the pyramid will collapse quickly with the exponential growth required to sustain it. I encourage you to read the Wikipedia article for examples.

Real estate requires cash in for a down payment and closing costs, and enough income to sustain the mortgage loan, home owner’s insurance and property taxes – all percentage based on the value of the property. The higher the price, the more cash down and income needed. itg.
As housing prices continue to grow, are we truly pricing out new buyers in the long run? In other words, if buyers don’t already own real property or have a large enough bag of cash, how will they get in? And if they can’t get in, how will sellers get out? Do you see the analogy of the pyramidal dilemma?
Sure, people will inherit real property over time, but if that eventually becomes the only way in, it cannot sustain this model.
I don’t know about you, but my paycheck has not been growing “in this economy.” Granted, home prices are not increasing like they were but these housing booms with price wars and massive price jumps are not easy to recover from. There’s no such thing as a “reset”.

“Affordable” is a relative term. When mortgage interest rates go back up, this pyramid will grow in mass.

I guess my point is that real estate is a dangerous, if not shaky, model that our economy, both personal and national, is heavily reliant upon. It’s based on personal price setting (we always deserve every penny coming to us – it’s an investment) and speculation. And affordability and sustainability is based on personal income that does not keep up with housing prices and is largely out of our personal control. This adds up, to me at least, to ultimate financial disaster. Many people suffered in the last housing fiasco; many, many more will suffer in this one as debt is out of control.

If ultimately people can’t afford to buy in to this scheme, the demand goes down. The people holding the property can only sell to each other. That can only work for so long. We are only selling to each other now and the house of cards is about to fall very soon. Maybe today, maybe tomorrow, The banks know it, the real estate agents know it, flarehty knows it I only hope you all know it.

#169 Mister Obvious on 09.02.11 at 6:00 pm

#167 Disciple

Tinfoil talk, I’d say.

You seem to have confused ‘technologies’ with ‘sources of energy’. There is plenty of the former and precious little of the later.

As for Steve Jobs, he’s probably “stepping out of the way” because he wants to spend his last few months with family. Technology has done about all it can for him.