Discipline

In a world where people with fat mortgages and no savings get to live in mansions and drive hot cars you might think there’s no justice. Dirt cheap money and runaway hedonism make savers, budgeters and investors look like pickled nuns. When the borrowers are enjoying the stuff others only dream of acquiring, what’s the use of saving?

A week or so ago I asked that question after a writer for Maclean’s magazine decided to use this pathetic blog readership’s as a research project. After all, what better collection of whiners, malcontents, anarchists, incendiaries, enviers and conspiratorials could one possibly assemble? Reading yesterday’s comments, for example, was an experience akin to combining an Amway convention and a Hitler Youth rally. Made me ashamed to admit I wept when Mufasa croaked. As I posted your blog messages, I had to hum ‘Feelings’ for eleven hours straight.

Anyway, the guy finished his piece and it’s published. Here it is. You can read about one or two of the people who post here, and I’d like to thank all the others who asked to participate. Boy, do we ever have a lot of pissed-off readers!

Why is that?

Yes, housing’s a big part of it. Your idiot brother-in-law who borrowed 90% of the price of a house you’ll never afford (and he can’t) and now flaunts his imaginary capital gain. Those young couples with better homes than their parents ever had, and who got them with nothing down. All the zombies on HGTV shopping for second homes in Martinique or spending $400,000 decorating their seasonal cottages in Muskoka.

That would have Gandhi flipping birds.

But there are so many other pressures. Like living so damn long. Stats Canada this week says not only is everyone’s longevity swelling, but guys don’t even get to check out at a reasonable time. Now women live an average of only five years longer, and (worse) anyone who’s made it to 65 will probably last another 20 years.

This means you have to worry about money for far too long. A million-dollar retirement nest egg at $50,000 a year is gone in two decades, and yet we know only 1% of Canadians will actually have that much investible money. How can somebody actually get married at 30, buy a house, send kids to college at 50 and have seven figures saved at 65? Especially if they read a dumb blog full of people telling them to invest in guns and tinned tuna?

And then there are the markets, the damn Greeks and all this talk about deflation, recession and economic turmoil. It’s now all but impossible for the average person to worry about a family, a job and their finances in the same day – or at least to manage all three. The stress is overwhelming, especially when you call your sister in her $1.3 million house bought with 8% down.

So, why not blow everything, join the masses and live for today?  In other words, why save?

The answer is simple. Because the world splayed out before you will not last. It simply cannot.

Intellectually, we know this. It’s impossible for real estate values to keep rising past the point of affordability, even though people borrow more and borrow debt. No asset class has ever done this, nor will. The correction will be sharp and painful for those who decided to play without any skin in the game.

The housing correction, arguably begun in key parts of the country, will obviously traumatize the people who bought with little or nothing down, and who will be thrust into negative equity. It will also pull property values in general lower, nailing those who sucked too much equity out – especially to buy a boat, a vacation or a cottage – as HELOCs.

Interest rates will not stay where they are forever, unless we go depressionary. But that won’t happen. And as mortgage rates normalize, borrowing costs soar and real estate values move in the opposite direction. Suddenly savers get the upper hand, while borrowers get the shaft.

The economic malaise will pass. America will recover. Countries deleverage. The Europeans will be less revolting. Global growth and corporate profits will stabilize financial markets, rewarding those who beavered away on their TFSAs, retirement plans and who made steady, regular investments. But in order to profit from the trip back up, you require two things – liquidity and conviction.

Days ago I told you one of the human traits holding so many people back right now is called recency. It’s the belief that what exists today will be replicated tomorrow. It could be nutty Vancouver house prices, or scary stock markets and doomers in Depends.

Get over it.

Failure is self-imposed. I have the blog comments to prove it.

190 comments ↓

#1 Dern on 09.27.11 at 9:32 pm

First! Boo Ya

#2 Dern on 09.27.11 at 9:37 pm

Now that that’s out of the way, great post! As a young university student studying economics this blog has been of great value to my studies. Thanks Garth for your insight!

#3 vatoDETH on 09.27.11 at 9:44 pm

Good read on the MacLean’s article! I really hope I don’t get screwed by this government for holding out and doing the right thing! I will blow a gasket!

#4 Westernman on 09.27.11 at 9:48 pm

Good post Garth,
One of your best yet. You got it exactly right so all you people who can’t wait to see the smarmy debt laden snobs take their fall just hang in their and keep living sensibly within your means and you will get to see the the big show when Garth’s observations come true – he’s not wrong it’s just a matter of time till this debt fantasy train leaves the tracks. Prepare yourselves and enjoy the show.

#5 Smoking Man on 09.27.11 at 9:55 pm

#2 Dern on 09.27.11 at 9:37 pm

Sucker

Already at 8000 words on my book how to make it with no school……………….

#6 Smoking Man on 09.27.11 at 10:02 pm

From the Mcleans artical by by Jason Kirby, and Chris Sorensen on Tuesday, September 27, 2011 9:30am – 4 Comments

“He argues this amounts to a massive subsidy for the country’s banks, since the rate depositors are paid to part with their money is far less than what the banks can earn lending that money out to other people as mortgages”

Do these writers know know how the fiat money system works.

Yellow rag

#7 Helicopter Ben on 09.27.11 at 10:03 pm

Occupy Wall Street MSNBC Reporter SLAMS NYC Police Brutality! http://www.youtube.com/watch?v=rxnQFO6048M&feature=player_embedded

#8 1drs on 09.27.11 at 10:04 pm

Its a wonder to me that the message of this blog is so misinterpreted by so many. As a first time commenter I can’t help but think I may be one of them but I hope not. When I started reading this blog I had cash and a pension and RRSP’s and a mortgage free home. . . . but no idea what to do with the cash. I thank my lucky stars that a friend showed me Garths blog and I learned that I really needed a TFSA and investments that made tax sense. I now own ETF’s in my maxed out TFSA and so does my significant other. I also have investments in more ETF ‘s . All of the ETF’s I own pay dividends so I am being taxed at an affordable rate.
I think this is Garths message: I am debt free, diversified and feel secure. Even in a time of such volatility. Oddly, I don’t think the message has changed since I first started reading this blog. How is it that so many miss this point ?

#9 Chumbawumba on 09.27.11 at 10:06 pm

Garth, as you said – let’s not be scared and have the conviction and liquidity to ride the wave up.. But let’s not jump in too early either – true, risk has been removed from the market, but economic growth is STILL slowing beneath the foggy lenses of sovereign debt issues. Once those debt issues resolve, the underlying cyclical growth issues will rise to the forefront and we WILL see additional drag on the markets. Let’s put some money back in, but there are still rainy days ahead – hold back some capital for the real opportunities that are around the corner..

#10 Hmm I doubt that's true.. on 09.27.11 at 10:08 pm

#5 Smoking Man

Sure hope you have a better spell checker than you use for your posts. I call BS!

#11 Boombust on 09.27.11 at 10:11 pm

My heart doesn’t bleed for poor Steven Patterson who moved from Camridge to Vancouver in 2008 and has been renting ever since… (re: Maclean’s article).

My heart goes out to the poor suckers born and raised in Greater Vancouver who were gobsmacked by a tsunami of a real estate boom and have been on the sidelines for YEARS.

They have been patiently waiting for things to correct. And, if they don’t feel at all betrayed by nasty political nonsense on the parts of F and Carney, they should.

However, the chumps who have bought into this nonsense will see a startling sea change likely sooner rather than later.

#12 Jody on 09.27.11 at 10:21 pm

This is why some people, such as myself, sometimes wish for a total collapse of the system, see the link below. Someone tell me how this kind of BS is helping society in any way, shape, or form. And people wonder why I hate government.

“You have an illegal lemon tree, die tax slave die!”

http://www.activistpost.com/2011/09/lemon-tree-lady-speaks-out-about-usda.html

#13 Smoking Man on 09.27.11 at 10:28 pm

#10 Hmm I doubt that’s true.. on 09.27.11 at 10:08 pm

Ya see the book is going to be edit free, mistakes are going to be left in, its part of the plot, written by a dyslexic,,,Duh

#14 shanks on 09.27.11 at 10:34 pm

check out the area around lake michigan:
http://radiationnetwork.com/

this goes right along with vlads post from yesterdays blog:
http://theintelhub.com/2011/09/27/nuclear-power-plant-in-michigan-venting-radioactive-steam-into-the-environment/
(and for reference: http://maps.google.ca/maps?gcx=c&q=South+Haven,+Michigan&um=1&ie=UTF-8&hl=en&sa=N&tab=wl)

why does this not even hit the radar anywhere on the news?

#15 rainbird on 09.27.11 at 10:51 pm

“Interest rates will not stay where they are forever, unless we go depressionary. But that won’t happen.” – Garth.

Ah but they will – even at zero rates – as in Japan for 20 years and counting – because all of the good paying jobs have gone to Asia – i.e. to the over 4 billion people who work at wages 50 to 1 to those working in North America. This is known as GATT.

In order to continue our normal standard of living we have no choice but to borrow money – which can’t be repaid. You can’t make it working because there is no work other than the service type jobs paying minimal wages.

Just take a look at the prediction that was made by this brilliant man in 1993,
Interview with Sir James Goldsmith:
http://www.youtube.com/watch?v=4PQrz8F0dBI

#16 City Slicker on 09.27.11 at 10:58 pm

“How can somebody actually get married at 30, buy a house, send kids to college at 50 and have seven figures saved at 65?”
———————————————————–
Hit that right on the nail head. And to add to that it’s the financial stress that is a culprit in failed marriages, and freaks out those thinking of it (getting married).

#17 nonplused on 09.27.11 at 11:00 pm

I decided not to try and get in the McLean’s article because I thought it was going to sound like a bunch of whiny rich people to everybody else, which is about what happened.

The key point is that Carney probably can’t raise rates again without causing havoc in the mortgage and consumer debt areas. He is obviously not much of an economist (neither is Ben) or he should have known that the easier you make it to borrow, the more people borrow. I mean, that’s how the stimulus from lowering the rate works! People do not have an instinct that tells them when they should stop borrowing, they only look at the monthly carrying cost, and they eventually borrow right to their limit. They also look at how everyone else is living, and figure since they have the same sort of job, that is probably a good basis for their own expectations as well.

So, that last point leads to a situation where many people, especially if they have kids, are spending at least $2000 a month more than they make to support their lifestyles. Oh sure, you could give up the second car, Timbits hockey, the Christmas vacation and sell the trailer, but what kind of a dad are you then? Everyone else is doing it. My kid is so damn pumped up about hockey that it’s getting funded even if I can’t pay for it out of income. And of course his sisters find equally expensive pass times as well.

I am close friends with a couple who grossed $200,000 last year. After taxes and his child support they had a very nifty $100,000 left over, or a tidy $8,333 per month cash about. Sounds like a lot hey? But after their mortgage and other things, guess what? They were into their HELOC too! Now, some of their lifestyle choices are perhaps questionable, but still. To look at him you’d never say “those 2 are making $200,000 a year”. They drive modest domestic vehicles, live in a fairly average 2400 sqft house, and don’t buy designer clothes, not even LuLu Lemon. Don’t get me wrong, nobody is going to have any sympathy for this couple, and maybe the wife has a gambling problem I don’t know about or something. But if they can’t balance the books, who can?

So not all those HELOCs are buying Beemers, although a lot of them are. Apparently breast implants too. I have an employee who wants a lump that is bothering her removed from a joint. Apparently only plastic surgeons do that sort of thing because it’s not covered. Well, she is on a 7 month waiting list just to get an appointment for a consultation, demand for adding lumps is so strong. Read that correctly because when she first told me I got it wrong too. She doesn’t have an appointment in 7 months. In 7 months they will book her an appointment that is another 6 months or so down the road from there. But I digress; my point is many people are balancing the budget with HELOCs.

Maybe if we didn’t have an indoor hockey arena for every square mile of city the lifestyle expectations would be lower. But they are what they are and it’s really quite expensive to keep up even if you don’t own a Beemer or any added lumps. Dog help us if real estate even stops rising. With no HELOC headroom, the difficult choice between hockey and the Christmas vacation might become very real for a lot of people. What happens to the economy then? The average cup size is going to start trending down for sure, but a lot of other things we think are “part of the deal” might start trending down too. Not Timbits though. This is Canada after all. That’s one program the government could fund at 100% and nobody would complain, like the education system. Although strangely people will pay personally for hockey and not for education, leading me to conclude that most parents think Hockey Canada has a better program than the public education system.

#18 Small Steps on 09.27.11 at 11:02 pm

That McLean’s article is terrible, just horrible. They should have aksed for your imput Garth.

#19 ottawa pete on 09.27.11 at 11:05 pm

Sign of the Times?: “Survivalist Consultant”

“To help you and your family survive in the eventuality of social economic or environmental collapse.”

http://www.usedottawa.com/classified-ad/Survivalist-Consultant_15474151

#20 Tim on 09.27.11 at 11:08 pm

Conservatives rushing through a bill that’s tougher on pot growers that pedophiles

http://ca.news.yahoo.com/conservatives-force-early-vote-massive-crime-bill-opposition-194007112.html

What a progressive thing to do! When we all know that this can’t be stoppe. The Neo Cons will be filling up all of the new prisons they are building with people committing mild offenses for pot. We all know that keeping it illegal is what allowed these scumbag gangs to get so big and well capitalized and murder innocent people caught in crossfires.

#21 Patrick on 09.27.11 at 11:19 pm

Our real estate market is a major accident waiting to happen. How badly you get hurt depends on how much debt you have. Right now people who are under a mountain of debt are really pushing their luck and eventually it will run out. Check out this guy who almost dies twice within 1 minute.

http://www.youtube.com/watch?v=cts9XhhItqw

#22 T.O. Bubble Boy on 09.27.11 at 11:23 pm

Question of the day: what areas of the Canadian economy would decline if interest rates were raised from today’s 1% emergency levels to say a still-historically-low rate of 4%?

Answer: somebody correct me if I’m wrong, but I would think that almost all areas would be perfectly fine, but residential real estate would plunge and a few other areas related to consumer spending would slow a bit. Would manufacturing really change at all with a $1.10 loonie vs. a $1.00 loonie? Would oil & gas companies even notice? Would potash miners even notice? Would Bell and Rogers even notice?

exactly.

#23 Timing is Everything on 09.27.11 at 11:25 pm

#7 Helicopter Ben

I don’t hate cops, but I always feel better when they’re not around.

I avoid ‘em as much as possible. They could be the nicest guy (gal) in town, but the potential for bad stuff to happen is not worth the risk. It’s a survival skill. I may not be ‘smart like a fox’, but I am ‘wary like the wolf’.

#24 Jane on 09.27.11 at 11:37 pm

“And as mortgage rates normalize, borrowing costs soar and real estate values move in the opposite direction. Suddenly savers get the upper hand, while borrowers get the shaft.”

I hope to goodness this will happen. The years of waiting are difficult. After selling our home, we are cash rich (invested well), but having difficulty making it montth to month. The mortgage was so much less per month.

#25 HouseBuster on 09.27.11 at 11:50 pm

What would you do if you won $21 million? Someone in the GTA won.

#26 Morry on 09.27.11 at 11:52 pm

There is good debt and bad debt. Those who have an affordable mortgage will not be in any trouble should there be a correction.

#27 April on 09.27.11 at 11:54 pm

A relative of mine who happened to be talking to an investment adviser in BMO today was told by this person that RE listings are starting to pile in.

#28 stevenson on 09.28.11 at 12:00 am

Again we continue to wait for jesus to return to earth. What if thew market does not correct for another 5 years. Would it not make sense to make gain on the next few years? People lose so much money and opportunity cost when renting and they keep on wishing for something to maybe happen? So say it does…. somebody is going to have to pay for the bailout package, such as tax payers.

Either way the savers will LOSE in the end.

Look at Greece, they spend unresponsibly but yet the countries that worked hard will have to save them. Same goes for savers.

#29 Jane on 09.28.11 at 12:00 am

So according to , for prices to normalize in Van, the will have to come down 70% to balance the 140% increase. I’m not going to be able to get back in the market. Ever. Can’t afford the rent anymore, can’t and won’t do a mortgage. I am going to have to move my family. What a horrible, depressing realization.

How’s Ottawa?

#30 vreaa on 09.28.11 at 12:23 am

“Reading yesterday’s comments, for example, was an experience akin to combining an Amway convention and a Hitler Youth rally.”
—-

hahahaha
Wonderful image; thanks.

#31 Peter B on 09.28.11 at 12:31 am

As usual the folks at the Onion have the solution to an aging population.

Social Security Reform Bill Encourages Americans To Live Faster, Die Younger

The new law will remove restrictions on cigarettes, drugs, and alcohol as well as provide tax incentives for seniors who bungee jump off of cliffs.

http://www.theonion.com/video/social-security-reform-bill-encourages-americans-t,21006/

#32 Joanne Billson on 09.28.11 at 12:33 am

Mr. Turner,
While listening to talk radio today , I heard about Allessio Rastani a Trader in the UK. He gave an interview to BBC regarding the markets and also stated dire predictions if investors are not prepared to what is coming. He went as far as saying in less than 12 months millions of investor’s savings will vanish in the markets., and that this was just the begining. There was some questions if he was involved in the Yes Man Group. What is your take on this latest story , should we be concerned? He sure sounded convincing to me.

Ignore him. His 15 minutes are over. — Garth

#33 Smell The Coffee on 09.28.11 at 12:34 am

The current policy of zero interest rates, for such a long period of time, presages a long enduring global depression.

Central Banks including Canada’s aggressively printing money ad infinitum backs this negative trend. Simply doing currency swaps, is like swapping each other’s under wear at camp. It may feel like a change, but no one is getting anything clean.

Governments are spending half as much money as they take in tax receivables. This will not last for ever.

The witch hunt by IRS for US tax expatriates is a symptom of national bankruptcy. When Government seek to pry the ‘loose change’ hidden under the sofa seats, we are nearing the end game.

Given back-to-back recessions, we admittedly are already in one now. After the 1929 crash the entire country didn’t stop dead. Some regions kept on rolling until the money engines in New York slowly wound down.

We in Canada are still rolling on from a latent flywheel effect. Things are still whirring but there is no force behind it. Harper and team know this. The BC Government knows this and are doing the Obama version of a jobs-road-show, only with no jobs produced fro their self-serving promo.

Real estate being the most illiquid asset class will drop like a stone. First by defaulting buyers who will be forced by banks to liquidate, which will start a fire sale. Price drops of 50%,70% even 90% down in the poorest neighbourhood is probable and will last for a decade before thing fully bottom. Real estate and condos will be pariah assets for the entire Generation Y, let alone Z. The Boomer retirement delusion will finally be toast. Freedom-95 will be the new goal. (TD Banks will likely be burned in some communities due to resentment for this now abandoned and irritating tag line. Anger will be directed at the most visible targets. Immigration will all but cease. Urban populations will start an out migration back to small towns with three generation-families to conserve energy and expenses. The Walton’s John boy will have a Canadian accent.

This macro trend has already happened in some US southern cities. We are not immune here. To think otherwise is pure hubris. This time next year, in Vancouver (as well as other urban centres) there will be heard a funeral dirge, not a party.

#34 Nostradamus Le Mad Vlad on 09.28.11 at 12:34 am

-
Garth at 298 years old Now that’s discipline!

“. . . make savers, budgeters and investors look like pickled nuns.” — Hey there, we may be old, grizzled and have pickled nun brains but we’re gonna enjoy a nice retirement! Not spectacular, but adequate.

“. . . the zombies on HGTV shopping . . .” — They’re zombies. They don’t come out during the day, too exhausted from all-night shopping sprees racking up CC debt.

“. . . a dumb blog full of people telling them to invest in guns and tinned tuna?” — Depending upon circumstances, would GICs and CSBs be better? One can eat the former or burn the latter. Or make Tuna Macaroni casserole.

“Suddenly savers get the upper hand, while borrowers get the shaft.” — About damned time. That will be an excellent time to use a HELOC and invest to improve one’s life.
*
#186 Timing is Everything on 09.27.11 at 9:19 pm — Truth is stranger than fiction — now proven! Thanks TiE, great link! One for you — ‘Owzaboud some freebies from Uncle Sam’s military? Yours, no question asked!

#187 Nemesis on 09.27.11 at 9:29 pm — “Life is like a box of chocolates.”

Aaahhh yes, tungsten- and lead-filled delectable milk chocolates with crunchy frog, anthrax ripple and lark’s vomit, good for the waistline and to keep the ladies occupied while we’re all here! But for real men, The Commandos among us, dark chocolate filled with buttercups and brandy. Mmmm, gawd I’m drunk with power already!
*
Market Banter “2. You should be shorting the market with the psychos.”; Young People hit hard by US downturn; Wealth Interesting that the wealth of churches is declining, and the wealth of their ‘flocks’ is also going down; Beggars’ Banquet for QE3 (we’re the beggars); Luxurious Poverty Have it all and have it now!

China, Europe and Psychopaths; Not The Great Train Robbery, the great pension heist; ECB Bonds and Oh God! Book Three; Philadesphia Food Stamps by the thousands; German Banks Hiding losses.

Wikileaks Pretext for ‘net censorship. Where is Julian Assange, anyway? Is he paid by the CIA to stir the shit? Weather systems getting their knickers in a twist. GW’s will proclaim loudly the planet’s getting hotter ‘n’ hell; Tex-Mex Another day, another war; This is what the Nazis did in WW2. The whole cycle is being repeated. It appears civil liberties are being eroded by western govts.; The Falklands This is somewhat of a joke, as the UK military is nowhere near as strong as it used to be. Hello sailor?

WTO doesn’t seem to care for Putin; Russian view of Wall St. protests, m$m blackouts etc.; Harper A picture tells a thousand word; Diebold Paper ballots are still better.

#35 Hakuna Matata on 09.28.11 at 12:36 am

Poor Mufasa.

#36 April on 09.28.11 at 12:46 am

i forgot to add the area I’m referring to [#12] is the Lowermainland bc.

#37 Observer on 09.28.11 at 12:56 am

Maclean’s, I tip my hat and fall to my knees in reverence to a superb article. Someone should send a framed copy to Mr Carney. Savers unite!

#38 new-era on 09.28.11 at 12:57 am

gee Garth you sound like one of those End – Of – the – world critics….

#39 shanks on 09.28.11 at 1:21 am

think about it, if all this “money” were used to do some good, things could be really nice. It is a tool which requires practice and discipline, the love of it will beat you every time.

#40 The thing in the basement on 09.28.11 at 1:24 am

2 Dern – from the McLeans article:

“When Chinese families who are saving for their
children’s education, or to take care of an elderly parent,
see their savings eroded by low rates and inflation, they
have responded by spending less and saving even more.”

I brought this up in my former guise as a killer chicken. I wanted to know if there was a name for this effect. I guess it’s some sort of liquidity trap, but do you know if there is a more specific one?

#41 Judy on 09.28.11 at 1:37 am

Garth,

If someone saves $1M over their lifetime for retirement, can’t they live out the rest of their years on the interest alone without substantially dipping into the principal? I am assuming $1M in a balanced portfolio yielding at least 4% per year and the retiree withdrawing about that amount per year. $40K per year isn’t huge and won’t buy you a hot car but it should be enough to live on combined with whatever CPP and OAS is available at the time of retirement (knock on wood).

Under this scenario, the $1M would not be gone in 20 years…

#42 George on 09.28.11 at 1:46 am

Interest rates will not stay where they are forever, unless we go depressionary. But that won’t happen.
So Garth please tell us how you know that we won’t go depressionary?

#43 Kimberly on 09.28.11 at 1:53 am

The hardest part about being one of the screwed, debt-free, ‘loser’ saver-types is feeling like I’m the only one in Vancouver that doesn’t see the lunacy of buying real estate right now – thank you for this blog, and this post in particular, because it helps make me feel like I’m not crazy after all (financially speaking anyway).

The best part of being a saver-type is peace of mind and the amazing sense of freedom of not owing a single penny to anyone. To me, this is priceless.

#44 wtf????? on 09.28.11 at 2:27 am

Actually Garth…..sprinkle a bit of gunpowder on tinned tuna and you got a fun fizzy snack.

It was dissapointing to read the reporters missive in that none of the gritty reality was laid bare. You got the impression from the article that ‘savers’, ‘seniors’, the disabled on fixed incomes’ are some kind of nebulous crowd of farty pants fringe dwellers and not the real people who haunt the food lines, soup kitchens and charity missions of middle class Canada.

He should have gone to the Gospel Mission where they have had to set up a side room for the overflow of hungry kids from working families who can’t put food on the table every day so as not to scar the kids by making them slop out of the trough with the hard core wino’s.

Maybe he should have interviewed some of the seniors standing in line at the food bank who can’t pay rent and buy groceries at the end of every month so have to resort to handouts after thirty years of savings are wiped out by the Flaherty ZIRP and REV CANs cash grab when they’re forced to crystallize the zero interest bonds.

There are as many stories of growing CDN poverty as you want to discuss. I really think this reporter missed the entire story.

#45 Ghost of Tom Joad on 09.28.11 at 2:27 am

Is that a pitbull? All pits should be shot (and it would be really nice to put their idiot owners down too – or at least neuter them so they can’t produce any other idiots).

So people are living longer and that’s a problem for some? Here’s some ideas to help solve this problem:
1. Increase fluoride in water supply so that it will shut down your organs quicker. Great for shattering your bones and giving you useless feeders arthritis.
2. Increase your intake of government supplied flu shots (take two if possible). Oh yes, and make sure your daughters take a Gardasil shot so they can enjoy living with cancer and auto-immune problems for their remaining years. And then when they die you can be so proud for helping the solve the population problem.

Well, it was sure nice to have a drop in the prices for gold for silver. Always happy to load up some Sprott and SPDR when you get those kinds of deals. I cashed a bunch out at close to $1900. Makes a little more than Garth’s balancing pottyfolio. Pottyfolios are just as risky because even though corps have all this money – they also have massive pension problems that they have to pay for.

Pulled out mutual funds with ontario gov’t debt. Told her I don’t like holding Ontario debt because they’re probably in worse shape than Greece. She didn’t disagree. Ontario – you’re going to die and probably have to resort to cannibalism. Don’t eat Garth.

Beach Girl & Smoking Man – keep on posting. Miss reading the Big Lebowski –

Sure don’t miss DA – Juliass – you two suck. Both of you please drink more fluoride and inject Gardisal.

#46 Blobby on 09.28.11 at 2:44 am

Im 35. I’ve been out of work now for 15 months.

In that time, not only have i managed to pay my rent/food/bills/etc – but i’ve also managed to enjoy myself – eating out/dinners/partying/et and to be 20k better off now than i was 15 month ago… All without doing a days work at all in that time period.

People heavily lugged up on debt wouldn’t stand a hope in hell if they were put into the same position as me.

Sometimes it “saves” to be a saver/investor.

I look at some of my friends who are struggling to earn 40k a year – but have absolutely nothing to show for it , as they were talked into buying property 6 or 7 times their earnings… Some of them their condo fees/mortgage payments are almost as much as my rent…

But yet they laugh at me as i’m “throwing away money on rent” and will “never be as well off as they ‘will be’ when their mortgage is paid off”….

As a British immigrant to this country (moved here 10 years ago) – i never went to your schools (and i never did that well in school myself either) – but i have to wonder, what it is they teach here!

#47 Onemorething on 09.28.11 at 2:57 am

Yes it’s true that Canada will try and protect those spenders the same way the US did and where is that getting them.

The US played all kinds of games since 2009 and the avg drop of RE (while sitting on the fence for about the last 8-10 months at 30%) is already entering a the new phase in which the next 2-3 years will go to 45%.

Canada avoided the whole initial drop only due to timing of US stimulus and now global orchestrated ponzi plays.

I dont have a real sense of how bad and how quickly CAN RE will drop. A conservative guess is 30% nationally over the next 2-3 years and there wont be a sniff of recovery for at least 5-7 years when we might see north of 40% avg decline.

VAN and TO both taking 35-45% down initially and another 10-15% before the turn. Back to 2003/02 on prices before all this cheap money started to float.

It’s been 30 years of stimulus but the last 10 was when the majority of the load was shot!

#48 Nickolaos Vlittas on 09.28.11 at 3:12 am

G-Money, two questions, : Is there a site that isn’t written in English, say maybe in Mandarin, that offers an opinion similar to yours that gets them to second guess the biggest purchase of their lives? And…in the swimsuit catergory of a Mr Universe competition, who would win, You or Max Keiser?

Neehow BlogDogs!

#49 Simon on 09.28.11 at 4:46 am

Once the housing crash in underway in all its glory I do believe the bottom will be reached when planet Nibiru aligns with the centre of the galaxy as predicted by the Hopi indians and Mayan calendar. Let’s hope us good guys are raptured before that day;-)

#50 Phil S on 09.28.11 at 5:08 am

One thing’s for sure – the future is looking increasingly less like the “Wonderful Utopia” popular in the 1960′s SF movies, and possibly (for some posters we note) more akin to the “Mad Max” Apocalyptic version!

Getting excellent returns on longterm Agribusiness investments Worldwide (orders of magnitude better than housing, even in GTA!). We may be Renters, but we sure are NOT “Poor Renters”, and are happy to rent whilst it’s cheaper to rent than to own. When it becomes economically sensible to own, then we will own.

Simple, really. Why does no-one else “out there” (i.e. outside this very useful and rational, but very small, group) notice this??

#51 big T on 09.28.11 at 6:32 am

Japan has had 20 years of this, whats their real estate
situation? re, article, first mainstream comment I,ve
seen!

#52 Keeping the Faith on 09.28.11 at 6:39 am

#27 stevenson = Loser Real Estate Pumper

#53 tomohawk on 09.28.11 at 6:48 am

@Jane #28

My wife and I walked down the street to check out the new condos that are being phased in over the next seven years. Nothing beats a free adventure to see how the other half lives. The least expensive ones were roughly 400 sq ft bachelors that were going for about $175K. The largest were 2 bedrooms going for around $350K; they were roughly 1000 sq ft. The condo fees were 40 cents per square foot on all units. To compare, we live in a 1000 sq ft 3-bedroom that we rent for about 1100/month. We live in an “okay” neighbourhood, but nothing special. To buy some box in the sky at those prices is just nuts, imo.

#54 plain_janey on 09.28.11 at 7:15 am

#46 Blobby on 09.28.11 at 2:44 am
“As a British immigrant to this country (moved here 10 years ago) – i never went to your schools (and i never did that well in school myself either) – but i have to wonder, what it is they teach here!”

I’m Canadian but have been in Britain for nearly 10 years now and I have to agree in some respects, as the longer I’ve been away, the more I notice how clueless a lot of people back home seem to be about managing their finances. I keep wondering if they were always this naive and I just didn’t notice before, or has it gotten worse over the last decade? Must be all that Timbits hockey taking precedence over school…

#55 penpal on 09.28.11 at 7:16 am

@ # 27 Stevenson
and
@ #32 Smell the coffee

I used to think that postings like this were not worth reviewing. They are extreme OPINIONS and their cases are not substantiated by facts or professional research.

Now, instead I use them as points of reference, realizing that the real world circumstances resulting from the popping of this RE bubble will fall somewhere between these two extremes.

Accordingly, the readers here would be well served by not following either highly polarized view, but rather using such extremes to shake them from any complacency they may have developed.

Most of the complacency I read of here is predicated on the assumption that there is no RE bubble or that its deflation will have little effect on their economic lives.

Nothing could be farther from the truth and to failure to accept this will be very detrimental to the net worth of any current house owners.

If you really do not believe that a massive RE bubble exists in Canada currently, I suggest that you are wasting your time in reading this blog.

#56 penpal on 09.28.11 at 7:22 am

@ # 46 Blobby

“But yet they laugh at me…..mortgage paid off”

You call these people friends?

Friends are a reflection of self.

You might want to consider this.

#57 T.O. Bubble Boy on 09.28.11 at 7:29 am

@ #51 big T

Japan has had 20 years of this, whats their real estate
situation? re, article, first mainstream comment I,ve
seen!

http://www.doctorhousingbubble.com/wp-content/uploads/2009/01/07-03-27_japan_real_estate_prices.jpg

Japan rose 100% in about 10 years (1980-1990), and in the 21 years since has fallen right back to where it started pre-bubble.

#58 TurnerNation on 09.28.11 at 7:53 am

For all the YLO yield hounds:

Dividends on Common Shares to be Eliminated

The Yellow Media Board of Directors has determined that it is in the best interest of the Company to eliminate future dividends on its common shares. This decision is in compliance with the amendments that the Company has agreed to make to its principal credit agreement and will improve its financial profile and capital position. The $0.025 dividend per common share that was previously declared by the Company and announced on August 4, 2011 remains payable on October 17, 2011 to shareholders of record at the close of business on September 30, 2011. The cash retained from the elimination of dividends will be used to reduce indebtedness.

#59 Kevin on 09.28.11 at 8:00 am

Great post, Garth.

One question that has always bothered me about this whole situation. Isn’t there a built-in contradiction to suggesting that all the profligate borrowers will be financially ruined when the economy picks back up and interest rates normalize?

That is, if all these zero-down, eyeball-deep debt slaves are a minor rate blip away from being financially upside-down, then how could the economy be “humming along?” In what scenario could the economy be doing so well that interest rates return to normal (which the central bank does to cool down a hot economy) if such an enormous portion of the population is in such tenuous financial circumstances? Wouldn’t such a rate increase cause the economy to crash back down again, necessitating more rate cuts?

I guess I just don’t see how a high-interest, hot economy can be reconciled with the simultaneous idea of millions of underwater homeowners facing bankruptcy.

#60 GTA Girl on 09.28.11 at 8:01 am

Housebuster: I live down the street from a lottery winner A middle-aged couple who won $20 mill in early 2000′s. Moved from their shack and bought a high end builder home w/bells whistles. We learned that this year their trusted lawyer ran off with a large amount of their remaining winnings. They had given the guy carte Blanche because they just wanted an annuity to live off.

We are all waiting for the For Sale sign.

#61 bigrider on 09.28.11 at 8:02 am

Garth I read the article. Last paragraph, if savers are get punished again on the way down when housing finally implodes (Ritchie Hok) then why are we/ I diligently saving in a balanced porfolio again?

Why not buy a couple of condos in the AURA development at Yonge and Bloor fully financed of course.

#62 Waterloo Resident on 09.28.11 at 8:05 am

HAPPINESS:

I was sitting in my car at a traffic light last evening and to my left I saw a dirt trail in the grass, it was a path that people used for a walking path because there’s no sidewalk there.
I remember when I was a kid, I had a banana-seat bicycle, it had big fat tires and was a lot of fun to ride it all over those off-road dirt trails, through fields and along the sides of streams and rivers.

That’s when I came back to my senses, I truly understood at that one moment that having granite countertops and stainless steel appliances doesn’t make you happy, no, what makes you happy is the freedom to go and do whatever you like whenever you like and to have absolutely NO worries or stress about money or debt. Todays indebted consumers will never understand such simple happiness because every day they are faced with huge bills and that is sad because their life is empty of the type of simple happiness that kids like me used to have when I was young.

I am so glad that I don’t have ANY debt, and I’m going to get my bike out of the garage today and go searching for some fun trails to hit and have fun with.

Enjoy life while you can, we won’t be around forever !
Bye.

#63 Moneta on 09.28.11 at 8:05 am

Maybe if we didn’t have an indoor hockey arena for every square mile of city the lifestyle expectations would be lower. But they are what they are and it’s really quite expensive to keep up even if you don’t own a Beemer or any added lumps
———
And ironically, a lot of Canadians employed in these sectors that are part of the fat are probably savers who don’t want to share their money because they are convinced they worked hard for their money.

The joke in our system is that we are measured by our income (or spending power) but most of us are working in sectors that are non-essential. We think we deserve every penny we earn and hate to pay taxes or help those who make less… because they’re lazy. LOL!

#64 pbrasseur on 09.28.11 at 8:07 am

Excellent McLeans article (thanks for the link Garth). Not only it presents an accurate description of the current situation, it also points to the obvious:

Savers are at risk to be wiped out even more!!!!

It only make sense if you think about it. If there is too much debt and borrowers are struggling to repay then lenders take the hit.

It doesn’t really matter whether it’s through inflation or default, they take the hit.

Mind you the borrowers wont be having much fun either…

So what’s the solution?

Keep saving but invest in assets that have real (and growing) intrinsic value and the potential to keep up with inflation. To me such assets are mostly shares of excellent businesses, sure in the short and medium term they will fluctuate, but in the end you will get the reward. But if you are not comfortable with that you may follow Garth’s advice about a balanced portfolio, IMHO it is not as good but it sure beats your mattress.

#65 penpal on 09.28.11 at 8:07 am

Re: Macleans article

I can’t believe Garth was contacted for input for this very light treatment of a very serious topic.

As usual, the mainstream media fail to do their job and add to the complacency of Canadians.

Upon viewing the Ontario political party leaders debate, I have given up hope for this province to reverse the spiral of economic malaise.

It seems that Canadians are completely apathetic to the darkness of their futures.

#66 DaBull on 09.28.11 at 8:14 am

#56 penpal on 09.28.11 at 7:22 am

“But yet they laugh at me…..mortgage paid off”

You call these people friends?

Friends are a reflection of self.

You might want to consider this.Friends are a reflection of self.

You might want to consider this

I thought on this blog, friends where something to admonish and ridicule to make one self feel better.

#67 TurnerNation on 09.28.11 at 8:14 am

The article states: “After years of scrimping and saving to pay off their first mortgage, they had earned a tidy profit when they sold the Cambridge house…”

See, this gives the notion that houses are profit machines! Not places for eating and sleeping in.
Wrong idea.

#68 househornyhousewife on 09.28.11 at 8:17 am

Ah come on people ! Savers are not suckers. Not at all.

Imagine for a moment, if you will, having a home for which you paid 10 times what you earn in a year, a couple of expensive cars in the driveway (purchased on credit or leased), a holiday cottage somewhere .. also mortgaged and a maxed out line of credit that was used to install granite countertops in your kitchen / bathrooms and for those new stainless steel appliances (that will be so horribly outdated in a few years). Oh and let’s not forget all of those evenings you spent eating in fancy restaurants with friends in order to stroke your enormous ego because, let’s face it, you’ve “made it” and you want EVERYONE to know it.

Now, imagine that it is time to pay your monthly bills so you sit down at your desk and start writing cheques (well ok, at your computer making payments on-line .. sorry I am a little behind the times) … when you suddently realize that all of this STUFF that you own has not only NOT made you any happier but it has turned you into a slave of the bank. Your paycheque now goes almost in entirety to pay off your loans and mortgages and you can no longer go shopping or plan vacations or ANYTHING anymore. Not only that, you are chained for the next 20 -25 years to this deal and short of claiming bankruptcy or running off to Africa under an assumed name, there is no way out of it.

Interest rates aside, is a person like this to be considered truly lucky and fortunate ? Honestly ?!

Yes the mutual funds are down and one can only get a negative return on GIC’s once you factor in the tax rate and inflation … but isn’t a saver still better off than that thoughtless spender ? The saver may not be getting the return on their money that they deserve at the moment but the key here is that it is THEIR money and not the bank’s money. Spenders are essentially working to pay off their debt whereas savers are not.

Savers should simply batten down the hatches and try to invest as wisely as they can during these tough economic times. They should also investigate and see if there are other options to the investments that have worked in the past. These are changing times and you have to adjust to them. In other words, as a saver, you have to do the best that you can under the circumstances. Spenders, on the other hand, should enjoy their STUFF before it gets repossessed and they find themselves with nothing but the clothes on their backs to call their own.

The laws of physics have not changed. Liquidity is still better than illiquidity. Most businesses do not fail because they are doing badly (although if they are doing badly for long enough, they do) .. the downfall comes because of illiquidity .. when they can no longer pay their bills. This is also true of individuals. Liquidity equals flexibility and this will NEVER change.

Get real people. The government will not punish savers and reward spenders. Savers are the economy’s only hope in hell of coming out of this mess so governments have to be nice to them and try to coax THEM into spending THEIR money in order to get the economy moving. DO NOT be fooled. Do what you have always done and live within your means, whatever they may be and for HEAVEN’S SAKE STOP looking at other people .. just worry about yourselves.

HHHW

#69 penpal on 09.28.11 at 8:18 am

@ # 57 T. O. Bubble Boy

I find it amazing that Canadians in general are incapable of looking at their RE market objectively.

The experiences of RE market bubbles bursting in Japan, America, England, Ireland, Spain, Portugal, etc. with all the attendant economic fallout and pain are lost on them.

And Canadians consider themselves “well educated”?

Canadians can’t do math nor think critically, yet their teachers are among the highest paid on the planet.

Funny that.

#70 Don on 09.28.11 at 8:18 am

The most frightening part of the coming personal debt troubles was outlined in the last two paragraphs of the Maclean’s article:

Whatever happens, Ritchie Hok, an actuary living in Ottawa, is convinced savers will ultimately wind up paying the price for others’ imprudence.
……
He’s convinced Canada’s housing market is a bubble that will eventually burst, and when it does, policy-makers will rush to people’s rescue. “My fear is that most people in Canada are now debtors and not savers, and so governments will enact policies to help them because they make up most of the population,” he says. “Savers may get screwed on the way down, too.”

If Hok is right, the frugal few could be in for even more pain ahead. Why is it again that it pays to save?

But of course, it won’t be just a cynical plot by a government trying to stay popular – they’re going to have to do something drastic to rescue the debtors or risk watching the entire economy sink deeper than it otherwise would. Nonetheless, it will be galling to watch for those of us who won’t be receiving giant government subsidization of debt. I hope our reward is coming in Heaven, because I myself will find being able to post “I told you so” on real estate blogs a pretty cold compensation.

Look at that. None of this has come to pass yet, and I’m already bitter about it.

#71 penpal on 09.28.11 at 8:20 am

@ #66 Da Bull

I laughed when I read your post.
Thanks, I needed that!

#72 timo on 09.28.11 at 8:25 am

http://www.telegraph.co.uk/finance/economics/8792829/BBC-financial-expert-Alessio-Rastani-Im-an-attention-seeker-not-a-trader.html

Boy does the BBC have egg on its face. A talker brought up to juice ratings and cause sensational journalism…Bravo!!

“They approached me,” he told The Telegraph. “I’m an attention seeker. That is the main reason I speak. That is the reason I agreed to go on the BBC. Trading is a like a hobby. It is not a business. I am a talker. I talk a lot. I love the whole idea of public speaking.”

#73 Stevenson on 09.28.11 at 8:26 am

#56 Penpal

I agree there is bubble in Canada and especially in Vancouver, but does it mean it will burst? As for Toronto lets look at it in a different perspective and understand why our RE is so expensive. We have something called jobs, industry, and a wannabe world class city.

It’s similar to your wireless carrier or cable company. Do you have a choice? Yes between bell and rogers. Anything else would be cheaper and better, but would be useless out of the city which is the same idea as not living Toronto.

In the end not only do we have immigrants providing high demand to Toronto, but Canadians themselves trying to find a place here. Where else can they find an urban life with job opportunity?

Lets admit it Canada lacks competition in every market including RE.

#74 TurnerNation on 09.28.11 at 8:29 am

53 tomohawk on 09.28.11 at 6:48 am

Those prices are nothing when in downtown Toronto new condo bachelors are $285-320k, and one bedrooms go for 300-400k; two bedroom units cost 400-700k – these are in fancy new downtown buildings.

#75 J.P. Morgan on 09.28.11 at 8:55 am

Mr. Turner said:

Interest rates will not stay where they are forever, unless we go depressionary. But that won’t happen. And as mortgage rates normalize, borrowing costs soar and real estate values move in the opposite direction. Suddenly savers get the upper hand, while borrowers get the shaft .

As others have also asked you on this blog, how on earth can this happen Sir Garth? Canadians are strapped to make ends meet on these low interest rates. Returning to normal levels will wipe out everyone who has bought with less than 20% down and that is quite a few in recent years. Governments have no choice but to keep rates low and continue to punish savers. Savers don’t count at this stage of the game. Low rates keep the economy on the life support that it is. We are too far into this mess to allow rates to return to their historic norms.

#76 Ward Cleaver on 09.28.11 at 9:02 am

#68 Horny Housewife

A masterful post Horny Housewife. You hit everything smack dab on the head. Well done!

#77 Beach Girl on 09.28.11 at 9:06 am

I live with 3 young people. They live in an apartment in the lower level of my home. Paying 500 each inclusive. This is a luxury pad. These are nice 20ish year-olds. Who are getting increasingly pissed off. They complain to me, and get mad. They think they are never are going to get ahead. Probably right. No rich parents here.

I just told them, I am no smarter than you. I was just born at a better time. All are enrolled in some Gov’t. program, to enable them to get job skills.

One young girl, went to the counselor. That Gov’t moron told her to train to get into the airline industry as a flight waitress. She laughed. She is 40 pds overweight, eating Kraft dinner. She is no beauty and acknowledges it.

She told the lady, do you have anything at little more down to earth, that I could train for.

Job Skills, Tracks some other programs I can’t remember the names of. What are these people doing?

#78 pjwlk on 09.28.11 at 9:19 am

Kind of reminds me of this blog – with Garth in Red… LOL

http://thebubble.msn.com/video/?id=ab789eb2-fe2c-4b93-bd12-b65fbbaf20a2

#79 Moneta on 09.28.11 at 9:20 am

Get real people. The government will not punish savers and reward spenders. Savers are the economy’s only hope in hell of coming out of this mess so governments have to be nice to them and try to coax THEM into spending THEIR money in order to get the economy moving. DO NOT be fooled.
———-
I have trouble believing that someone can be happy and peaceful when afflicted with a lack of self control.

IMO, as a saver, just that is worth a lot in gold.

#80 Junius on 09.28.11 at 9:29 am

#73 Stevenson,

You said, “We have something called jobs, industry, and a wannabe world class city.”

Yeah, right. It is different there.

Sorry but Toronto has a huge real estate bubble. It may not be as bad a Vancouver but it is pretty bad. House prices in Toronto have risen for the same reason they rose everywhere else – cheap debt combined with speculation.

Your theory can only be correct if house prices rose because of increases in salaries levels in Toronto. Check the facts – they did not. Wages have been pretty flat for years now. Certainly house prices have way out paced them.

#81 maxx on 09.28.11 at 9:46 am

Cher Garth,

Without having read a word of your posting yet, the pic, as most of the pics do, made me grin. Your blog is one of the highlights of my day. I’ve learned so much from you and my fellow blog dawgs. Many thanks!

#82 EdmontonJim on 09.28.11 at 9:50 am

This is going to be preachy. I’m not sorry.

Why save? Because at the very least it builds character. Living within ones means, and learning to be prudent and rational with financial decisions are life skills, ones that should be taught by parents and teachers.

And even more than nest eggs, capital gains and investment portfolios, it is those life skills that allow people to not only survive crisis, but to thrive. I learned that in Boy Scouts. ‘Be Prepared’ isn’t about knowing how to tie knots and build igloos – its about learning to not be afraid because you know you have the skills to succeed.

#83 Waterloo Resident on 09.28.11 at 9:52 am

Yes, THINGS ARE DIFFERENT HERE IN CANADA:

- In America, rates are near zero and many people are afraid of losing their jobs, that why housing market is falling ( http://www.marketwatch.com/story/worried-workers-stall-housing-market-2011-09-23 )

- Meanwhile, here in Canada the opposite is true, here rates are near zero and many people are afraid of losing their jobs ….. hey wait, isn’t that THE EXACT SAME AS AMERICA ??? Then how come for those exact same reasons Canadians see buying homes as the ONLY thing that will save them, because that is the ONLY thing that is going up in value these days?

Strange isn’t it?
————-

Meanwhile, a few months ago I started a campaign to try to try to bring about a 0.1-cent charge for every transaction that occurs on North-American financial exchanges in order remove the problem of high-frequency traders and the flash-crashes that they bring to the market. Of course the big guys didn’t like it because it meant no more big profits for them, so my idea was totally shot down.
Well, now Europe is bringing my idea INTO LAW by 2015 ! Yes, you heard it right, now the European Union will be bringing in a financial transaction tax of 1-Cent for every financial transaction !!! So it looks like SOMEONE was listening to me after all, someone REALLY BIG after all. Read about this new tax here : http://news.ph.msn.com/business/article.aspx?source=patrick.net&cp-documentid=5320228

#84 Mr, Lee on 09.28.11 at 10:04 am

“Discipline”
Is a very appropriate title for everything that we are witnessing in the world right now. It did not take discipline for crash into this sort of personal debt, but it will take discipline to get out. Debt, whether from the loaner or borrower was a sure thing over the last decade. I believe this to be a thing of the past. Right now in Europe, many constituent EU countries are debating rescue packages for countries and financial institutions. What they are also discussing is the amount of money these institutions will have to lose in the bond market in order in order to receive rescue funding from the tax payer.

So there you have it, the moral hazard of risk versus reward is returning to the world of finance. All of these borrows that over extended themselves will get a lesson in “Discipline” sooner than they may want to.

#85 Mr, Lee on 09.28.11 at 10:10 am

One more point that I would like to make.

Many contributors to this blog suggest the interests can not increase because said increase would wipe out a lot of debt holders. This may hold true, but our system is mostly based on the premise of Caveat Emptor…….Buyer beware.

If the above argument held, then most governments would hve bailed out under water mortgage holder and the like. This would be the case in both the US and EU. They did not, in fact many people lost their assets with out much regard from the governments.

I agree with Mr. Turner. Interest rates will go up once this malaise is taken care, and it will be taken care of.

#86 Dean on 09.28.11 at 10:19 am

Great column today. I hate to admit it, but it does sum up my sentiment and frustration.

And to those who think the government won’t or can’t raise rates, you’re kidding yourself. We are too tied to the U.S economy that we’re in many ways, just along for the ride.

#87 Dad on 09.28.11 at 10:22 am

Debt is the only thing holding together 2/3 of marriages for people under 40 in my anecdotal opinion.

As yourself son: How long will it take cupcake to start humping the repairman and looking for the Bigger Better Mr.Big if the vacations, new cars, granite counters and fancy dinners evaporated?

#88 Steven Rowlandson on 09.28.11 at 10:23 am

One of the few ways to make saving worth while is to cut off the ability of banks to lend currency units out of thin air throught fractional reserve lending. We need a high interest rate environment to reward savers to encourage them to make deposits and supply capital to be lent out to borrowers in the private sector preferably for productive ventures. Government must be prohibited from borrowing. Government debt is a sickness that has to be cut out.
Low interest rates it turns out encourages some very bad habits that must stop. Bad habits like government borrowing, extreme real estate and vehical prices and excessive debt levels in the economy. Frankly I am surprised young people and workers have not gone berserk over the high costs and low pay they are confronted with. Really they should be raising hell over it all the time with out quitting.

#89 pessimist on 09.28.11 at 10:39 am

#17 nonplused

I am close friends with a couple who grossed $200,000 last year. After taxes and his child support they had a very nifty $100,000 left over, or a tidy $8,333 per month cash about. Sounds like a lot hey? But after their mortgage and other things, guess what? They were into their HELOC too! Now, some of their lifestyle choices are perhaps questionable, but still. To look at him you’d never say “those 2 are making $200,000 a year”. They drive modest domestic vehicles, live in a fairly average 2400 sqft house, and don’t buy designer clothes, not even LuLu Lemon. Don’t get me wrong, nobody is going to have any sympathy for this couple, and maybe the wife has a gambling problem I don’t know about or something. But if they can’t balance the books, who can?

The problem with this particular couple is not that the **can’t** balance the books. They just **don’t**.

I have a similar income, but all in my name (other than some investment income), so it is taxed horribly (why Canada does not allow joint returns is far beyond me). So I clear less after taxes, but have not child support.

We choose to live below our means. This was a conscious decision made a long time ago. From discussions with friends, it’s pretty obvious that we are in a very small minority group.

It’s not hard. No cable (nice to live our lives never seeing or hearing commercials), very affordable cell phone ($100 per year at 7-eleven), no big trips (most people don’t even visit local attractions that can be done in a day), thrift store for clothes (I can’t believe how people can buy in the big stores), only very few of the “toys” that everyone wants, buys and then chucks aside. We rent right now because it is far, far cheaper than owning.

People simply don’t know how to NOT spend money. They don’t realize the long-term financial and psychological costs of “the good life”. Spending money does not buy happiness, but saving money sure as heck buys peace of mind.

Bottom line, we save way over 50% of our after tax income. We have fun. Many more could not only make ends meet, but save a hefty chunk of cash each year if they at least tried.

Now, before I get blasted for being unsympathetic, yes, there are a lot of people who are genuinely having a hard time making ends meet due to personal and/or financial goings on in their lives. I feel for these people. But I get tired of hearing from/about people pulling down a quarter million dollars per year crying about how they can’t make a go of it.

Last I heard, the best idea when something that you are doing isn’t working is to try to do something else, not cry about how it is not working.

#90 JohnnyBravo on 09.28.11 at 10:42 am

#68 househornyhousewife on 09.28.11 at 8:17 am

I wish you were correct, I really do. It’s a valiant post, but flawed. Sorry, Ward.

Yes, being overly indebted is never good. Even being mildly indebted for the sake of consumption is not good. Yes, it makes you a “slave” to your creditor(s). But that’s obvious.

Yes, everyone knows deep down that “stuff” doesn’t make you happy or fulfilled as a human being. But it sure does something for us (utility, status, convenience, empowerment, what have you) or people wouldn’t want so much of it. Let’s not deny that part of our natures.

Money in the bank is not your money. It’s theirs. You agreed to loan it to them under specific terms. All you have now is a claim. Cash in your hand is your money. That’s about it. I know this may sound a bit esoteric, but if the SHTF as some think it will, this could matter.

Businesses go under because revenues can’t cover expenses. That’s about it.

And government won’t punish savers? That’s exactly what they have been doing. They do it with cheap money. Your point about getting savers to spend is bang on, because spending fuels the economy. But savings should be fuelling investment and thus the future economy. But first, there are very few actual savers left. How many people actually have a positive net worth? And second, governments constantly look for ways to turn your savings into taxes.

The name of the game is “inflation.” That’s how the system works. Inflation always punishes savers by continuously devaluing money, but it helps banks and governments. Banks profit from it, and governments get to spend money before it filters into the economy (to you and me) and gets devalued.

Today the tendency is toward deflation, which they are fighting tooth-and-nail. If you are a saver, you want deflation. Not a deflationary collapse like ’08, but mild, constant deflation. It increases the value of money, and you wouldn’t have to speculate just to try to keep from falling behind.

In any event, I do hope that things pan out positively. That sanity will return. And that savers will get rewarded for their prudence, discipline and foresight. It would be good for the economy in the long run. But we are not on that track right now, unfortunately.

#91 GregW, Oakville on 09.28.11 at 10:47 am

Hi Garth,

Might someone be able to clarify these Aug “sales” numbers as opposed to last Sept years “sold” numbers mentioned later in the article? At first glance it sounds like buying and selling of houses in Toronto increased 24% in Aug 2011 compared to Aug 2010.
Or have just more been put up for sale or haven’t sold so are still on sale?

The article is quoting the Toronto Real Estate Board. (So you know there is no biases their to make it look like a good time to buy and sell.)

Article: http://realestate.yourmoney.ca/2011/09/autumn-real-estate-market-canada.html

“There were 7,542 sales through MLS in August, a 24% increase over 5,083 sales in August of 2010.”

“What we saw last September were 6,310 properties sold in Toronto; a significant drop-off from the 8,196 properties that sold in September of 2009, but more in line with the 6,424 properties that sold in September of 2008.”

#92 Off-Gridder on 09.28.11 at 10:47 am

Extremely greatful for being published in this magazine vs. McLean’s. It means a lot more to me :)

#93 PEI Red on 09.28.11 at 10:58 am

Hey Garth,

Do you think that the savers who have socked away a couple hundred K & have no debt may make out when everything normalizes, just because so many others will have nothing? I worry that no matter how much I save, it just won’t be enough.

#94 disciple on 09.28.11 at 11:10 am

I used to believe that a good portion of jobs in Canada had been transferred to the East, but I’m beginning to believe that a good portion have simply been eliminated. Perhaps those “non-essential” positions are slowly phasing out.

Maybe we are witnessing the evolution of the economy as technology brings us ever closer to that utopia dreamed of in science fiction after the Great Depression. What I mean is that perhaps the concept of having a “job” is like a dinosaur caught in the headlights of a spaceship called progress.

This is in fact what I see. This is my vision. No more jobs and instead passionate vocations, sharing freely instead of using money, major pillars in the triumph of the human spirit. Imagine no more money, it’s easy if you try…

#95 JohnnyBravo on 09.28.11 at 11:10 am

#82 GregW, Oakville on 09.28.11 at 10:47 am

They are simply comparing year-over-year sales numbers. (August 2011 vs. August 2010; Sept. 2010 vs. Sept. 2009.) They compare Y-O-Y figures because of seasonality.

#96 ralph tieleman on 09.28.11 at 11:19 am

Live Large ! there are no debtor’s prisons in Canada !! Worst case scenario is that my Ferrari gets repo’d and the kids will have to eat fresh salmon and halibut from the local food bank.If I lose the house I can rent it from the new owner for a fraction of my mortgage payment !! I’d write more but I have to go up the limit on the visa card !

#97 disciple on 09.28.11 at 11:24 am

The most insidiously false dichotomy that has been shoved down our throats since we were kindergartners, is capitalism versus socialism. Both are based on the myth of scarcity, which is patently and demonstrably false. A cursory examination of nature and our Mother Earth proves it.

Am I the only one who can see this? There is plenty of stuff for living to go around. Why do you continue to play the stupid game of saving and borrowing what should be free?

#98 LB on 09.28.11 at 11:32 am

Basel III requirements for global financal institutions to increase their capital ratio requirements,along with curtailing CMHC backstopping, will be the impetus for Canadian banks to increase interest rates,irrespective of the Bank of Canada’s actons , and this will be the catalyst to an overall correction.

To hasten this process, to benefit from the resulting deflationary environment and to protect themselves, savers can take control now by withdrawing their money, in cash.

Bank runs have always been a most effective precursor to inevitable and necessary corrections.

#99 GregW, Oakville on 09.28.11 at 11:45 am

Hi #33 Nostra,

re: that link to “Diebold’ voting machines can be hacked by remote control. September 27, 2011

“Voting machines used by as many as a quarter of American voters heading to the polls in 2012 can be hacked with just $10.50 in parts and an 8th grade science education, according to computer science and security experts at the Vulnerability Assessment Team at Argonne National Laboratory in Illinois. The experts say the newly developed hack could change voting results while leaving absolutely no trace of the manipulation behind.”

Didn’t PM Harper asked/tell our ‘Elections Canada’ to get electronics voting machines and vote counting machines! Local elections have them. I don’t like it at all. You are just being conditioned to think their use is ok to pick who our law makers will be. We know better.

I like the paper ballots counted by my neighbors hands, just fine thank you!!!

So what can we do to stop this and protect the peoples vote? Once we loose it it’ll be gone forever, for you, your kids and grand kids.

#100 GregW, Oakville on 09.28.11 at 11:49 am

Hi #92 Off-Gridder, I hope you’ve gone out to get some extra copies for yourself, to give the grand kids.

#101 Smoking Man on 09.28.11 at 11:56 am

It’s getting ugly………

YLO is done, Ouch!!!!!!!!!!!

Euro is finished run for cover

#102 jonni on 09.28.11 at 11:59 am

Beach Girl @ 77

I have to agree totally. A friend of mine, a 50 something year old construction electrician, suffered a serious industrial related accident that made it impossible for him to climb. After a mountain of unsuccessful physiotheraphy, Workmans Comp deemed that he was a candidate for re-training…. and what field of endeavour did they put him in ? MARKETING !!! Shessssssssssh …. wouldn’t something a little more trade related like electronics be more suited ? C’MON MAN !!!

#103 Young Old Fart on 09.28.11 at 11:59 am

#5 Smoking Man on 09.27.11 at 9:55 pm
#2 Dern on 09.27.11 at 9:37 pm

Sucker

Already at 8000 words on my book how to make it with no school……………….
====================================

Roger that!

====================================

#60 GTA Girl on 09.28.11 at 8:01 am
Housebuster: I live down the street from a lottery winner A middle-aged couple who won $20 mill in early 2000′s…. We learned that this year their trusted lawyer ran off with a large amount of their remaining winnings. They had given the guy carte Blanche because they just wanted an annuity to live off….

====================================

Stupid gets what stupid deserves. In this case I put it down to just plain lazy. Winning that much means you don’t have to work any more but to not even take care of your own cash??? Zero sympathy….

===================================

One has to adjust with the times. There was a time when RE was THE best place to invest and if you did, you made out well (if you sold…like now)

There was a time when gold was THE best place to invest and if you did, you made out well (if you sold…like a couple weeks ago)

NOW is the time to put your money in………….

Wait…. why should I tell anyone that… they wouldn’t listen anyway…. ask Garth….they never do….

I hear The Smoking Man, my folks would not let me quit school so I showed up in the morning to say “here” then walked out the door to my job site. Made 48k back in 1980 when I should have been in school and never looked back. I see university grads living in Mommy’s basement…. losers…..

Contrary to the article, savers WILL win. It is being SMART and having lots of money to put away. Perfect example: I am in a middle class restaurant (i.e. not McDonalds) and I see a young couple with a baby eating there. Free country sure…maybe Grandma gave the money to go out… sure…. BUT, true savers would have saved that money, bought groceries and ate at home because it is cheaper!!!!

Saving is not putting 2 or 3% away. Does anyone coupon any more? I am in the top 1% and we still coupon….or is that beneath some of you?

Garth is right, those of us that have the cash will make out in the future. In fact, I was thinking about buying another motorcycle, it will be a Harley this time. When the Harley sales guy said “financing is no problem, all our bikes sold are financed” , then I knew that I only have to wait. I will continue to SAVE my $$$ and next Spring I will vultch a nice ride off some dipshit that has been making payments off a shiny piece of metal sitting gathering dust in his garage…..

Get the picture?

#104 Devil's Advocate on 09.28.11 at 12:01 pm

I am seeing a good number of the “Fence sitters” jumping off to this side and making offers. They are lowball offers which require a lot of work to bring together but they are making offers none-the-less where-as not long ago they where so confused they could not bring themselves to do even that.

#105 888realtor on 09.28.11 at 12:02 pm

#75 J.P. Morgan
“Governments have no choice but to keep rates low and continue to punish savers. Savers don’t count at this stage of the game. Low rates keep the economy on the life support that it is. We are too far into this mess to allow rates to return to their historic norms.”

…and then our governors simply don’t know how they would be able to handle the situation if they moved the rates up… even slightly . They’ve spent so much efforts trying to disintegrate, dissociate people, deprive them of any uniting ideas or informal, uniting organizations and all of a sadden – there would be millions of disillusioned, pissed-off borrowers and most of them in their late twenties, early thirties… it is lake having a castrated god back to be normal again… normal dog might yelp and even bite. Who might want this?

#106 Young Old Fart on 09.28.11 at 12:07 pm

…Contrary to the article, savers WILL win. It is being SMART and having lots of money to put away….

=================================

Should have previewed this closer. Before everybody pounces on this… I meant ” …being smart and having MORE money to put away….”

#107 Ward Cleaver on 09.28.11 at 12:13 pm

#90 Johny Bravo

Good retort. Agreed savers are being punished via below inflation interst rates. Savers will still be ahead of the spenders even with this negative interest rate environment. In 2008 when even the might Garth lost 14% of his holdings, the GIC crowd making 4% were up 18% on even an astute investor like Sir Garth Turner. So both you and Horny Housewife make valid points. Eddy Haskell on the other hand…

In 2008 I lost nothing because I did not sell (was buying). In 2009 my paper losses vanished. In 2010 my portfolio gained 15%. The average three-year return was 5%. Go back to waxing the LeSabre, Ward. — Garth

#108 The thing in the basement on 09.28.11 at 12:15 pm

41 Judy – $1M at 4% will be zero in thirty years with annual withdrawals of $56K. Now if you save just $5K of that per year for the same 30 years at 4% we’ll have
almost $300K to cover our old wrinkly buttocks should
we live that long or to leave for the kids should we depart.

18 SS – what’s so horrible about the article?

62 Waterloo – here is the bike for you:

http://www.specialized.com/ca/en/bc/SBCProduct.jsp?spid=62060&scid=1100&scname=Mountain

#109 Professor Stu Gatz on 09.28.11 at 12:19 pm

#5 Smoking Man

Glad to hear you are working on your magnum opus of how to make it without an education. Let us hope when it makes the New York Times bestseller list, all students currently studying to become lawyers, doctors, dentists, accountants, engineers, etc., will abandon their studies, drop out of school because it is such a waste of time and money and become day traders and industrialists just like you, your royal highness.

#110 Siddhartha Gautama on 09.28.11 at 12:23 pm

#97 Disciple

The most insidiously false dichotomy that has been shoved down our throats since we were kindergartners, is capitalism versus socialism.

The middle path disciple, the middle path. Always take the middle path between the extremes, in this case outright capitalism and socialism/communism. I think by Garth’s comments he is a closet Buddhist, rejecting the metalheads and the socialists who frequent this site. For this and his financial vision, I think we should dub him the Buddha.

#111 sam.i.am on 09.28.11 at 12:28 pm

After reading the comments on this blog, i understand better why m.moore is able to make million$ producing lame documentaries – everyone’s a victim and misery likes company. A lack of basic macroenomic understanding helps too.

#112 Snowboid on 09.28.11 at 12:35 pm

I don’t know what to think about all the doomers (and some ‘out and out’ nutbars) on this site.

Prof Turner offers his advice, through this blog and books, and you adapt it to your own situation. End of story.

“Failure is self-imposed” — that says it all.

Instead it’s like a bunch of sheep watching the wolves, but instead of implementing an escape plan, they all complain to each other about how close the wolves are getting, whose fault it is, when will the SHTF and what will happen tomorrow?

There are obviously many smart people on this blog, it amazes me that instead of channeling this intelligence into solutions for their problems, they proselytize, try to spread fear, or blame everyone else for their problems.

I am not smart by any means, maybe more lucky than anything, but took the Professors’ advice, massaged it, and am very happy with the results. Still have a way to go to complete the plan, but refuse to sit here and worry myself to death – having too much fun with life!

Re-read your posts, most of you answer your own questions.

#113 deaconmoss on 09.28.11 at 12:36 pm

Keep on keeping on, Garth. Stick to your guns. Your message is waking up people and we need it!

#114 jess on 09.28.11 at 12:47 pm

15 Enrons?

“The SEC alleges that the heavy use of leverage and the structure of the synthetic CDOs exposed the school districts to a heightened risk of catastrophic loss. The investments steadily declined in value in 2007 and 2008 as the CDO portfolios suffered a series of downgrades. By 2010, the school districts learned that the second and third investments were a complete loss and that the lender had seized all of the trusts’ assets. The school districts suffered a complete loss of their investment and suffered credit rating downgrades for failing to provide additional funds to the trusts they established.”
==

Lawsuit, Teacher Layoffs Follow Wisconsin Budget Signing
Gov. Scott Walker (R) signed the state’s budget with massive cuts to education funding,
5 Wis school districts settle investment lawsuit
==================
Tally of the misbehavin’
SEC enforcement actions addressing misconduct that led to or arose from the finanical crisis
http://www.sec.gov/spotlight/enf-actions-fc.shtml

#115 bigrider on 09.28.11 at 12:50 pm

#85 Mr. Lee said _ ” I agree wth Mr Turner Interest rates will rise once this Malaise is taken care, and it will be taken care of”

Really ? How do you think it will be taken care of? No one on this blog, including it’s founder seems to have a solution.

The solution is the system. It self-corrects, unlike the wailers who come here. — Garth

#116 Requesting to Garth on 09.28.11 at 1:06 pm

Hey Garth,

Any chance of putting up something like a ‘like’/’dislike’ or +1/-1 button on the blog posts? I love reading them but it would be great if we could sort by highest/lowest rated or most-commented on – there’s some really great ideas being shared in the comments that we should have a way to bubble up to the top so more people can read it; similarly, the morons who post idiotic comments could be demoted into oblivion :) Whatdya think? Engadget.com has a system like this – works great. Just my 2 cents – love the blog otherwise!

#117 Libored on 09.28.11 at 1:18 pm

Libor is different this time right Garth.

LIBOR Hasn’t Fallen For 46 Days As Someone Is Getting More Desparate To Overpay (By Over 200%) For Funding

http://www.zerohedge.com/news/libor-hasnt-fallen-46-days-someone-getting-more-desparate-overpay-over-200-funding

#118 allister on 09.28.11 at 1:28 pm

101 smoking man

YLO is a buy the dividend is 224%

HAHAHAHA

#119 Kevin in Winnipeg on 09.28.11 at 1:29 pm

The Macleans article was very disappointing. I think it should have concentrated on the change in attitude towards investing. Who is smarter, the renter who makes 10% a year investing or the person who’s house goes up 10% a year which they purchased with 5% down? The investors are thought to be fools for not buying a house. Canadian real estate needs a wakeup call.

#120 JohnnyBravo on 09.28.11 at 1:31 pm

#107 Ward Cleaver on 09.28.11 at 12:13 pm

Don’t misunderstand me re: saving. I’m not advocating stuffing your money in the orange guy’s shorts. While that’s a lot safer than securities, you’re GUARANTEED to lose because inflation and taxes overwhelm the interest you earn. This has always been true because no matter what interest rates on savings are, they are never much above the rate of inflation, if at all.

My general beef is that our financial system relies on devaluing our money, so that the average person cannot make an appreciable gain without taking the kind of risk one should not feel compelled to take. Most people are woefully ill-equipped to cope in this regard.

(There have been periods in history where all the average person needed to do was work hard and save, knowing that the $100 they squirrel away today would still be worth $100, or perhaps even more, when they retired.)

And the situation seems to be getting worse, as we are currently caught in a downward spiral of cheaper and cheaper money that destroys the value of savings. But at the same time, money is getting harder to get from working. So people feel forced to try to make money from money. This can work for some because as long as the economy is productive you can “put your money to work” and extract profit from the labours of others. But this cannot work for everyone at the same time.

#121 Blacksheep on 09.28.11 at 1:35 pm

“Ignore him. His 15 minutes are over. — Garth”

How bout this guy. More good news from BBC.

http://www.zerohedge.com/news/step-aside-bbc-trader-head-unicredit-securities-predicts-imminent-end-eurozone-and-global-finan

Fear sells. Buy at your own risk. — Garth

#122 bigrider on 09.28.11 at 1:59 pm

F&^% this equity market.It should have never gotten so bad. Savers should not be getting as punished as they are.Yes I guess I’m whining.

Meanwhile, Toronto condo sales march ever forward and prices ever higher.

So F&^% in angry.

#123 disciple on 09.28.11 at 2:00 pm

#103 Old Young Brat…jeez Louise, where do I start…There are not only gaping holes in your logic but also in your humanity. Yeah, I get the picture, alright…
Discouraging consumer spending would hurt everyone, yourself included, your highness. And the purpose of couponing is to get you to spend more, not less, but I guess you’ve been a victim of marketing so long, you didn’t notice that part. And why didn’t you take the money you spent at that full-of-yourself restaurant and donate it to charity or help out a grandkid or something? What a screwball… Maybe what you need is a true woman in your life so you don’t end up dying alone with that great big pile you like to showboat before us.

#110 Siddartha…thanks again for the insight.

#111 sam I am… Moore is an agent of the industrialists he pretends to criticize. But I guess you didn’t know that…I dunno, was it the millions he makes every year stating the obvious that threw you off? Karl Marx was the prototype. For those of you lurking, learn to recognize the double agents in our midst, the NDP party is chock full of them.

#124 mac on 09.28.11 at 2:03 pm

This summer we spent some time in the vast US desert. We ended up touring the ancient cliff houses of the old Anasazi indians. It was an interesting tour with our native guide telling us that the current Hopi and Peublo people refer to the disappearance of the Anasazi as the Time of Decadence.

It was possibly the first real estate boom in North America reaching its climax from 1250-1300, followed by the abandonment of these settlements and the complete disappearance of the people. The cliff dwellings became extremely popular bringing in record numbers of dwellers.

To respond to that demand, that they built more and more of them to greater heights, which in turn lured in even more people. Eventually all the resources were used up… the firewood, the game, the water, the arable soil. Then, all the people vanished.

No one knows what happened to them but one thing is certain–all the real estate agents were eaten!

#125 Smoking Man on 09.28.11 at 2:10 pm

#109 Professor Stu Gatz on 09.28.11 at 12:19 pm

Cheap shot

Not everyone can be a doctor or a lawyer….
Engineer, start today better be ready to learn China and Indian lingo cause thats the only place you will find a job.

As far as the other cources, complete waste of money

smart ass

#126 disciple on 09.28.11 at 2:11 pm

#112 Snowboid…why do I feel you are talking to me without actually addressing me? You take a very extreme view on some things, but I do agree with not worrying and making changes for the better. I get the sense you once enacted the behaviours you are condemning, so if true, then I applaud that. Good for you.

But, I don’t believe failure is self-imposed in all contexts. It depends on your definition of failure and the cards you are dealt in life. Life doesn’t come with an instruction manual, so don’t try to impose your standards on others in judgement. You’re wasting your precious time on this blog just the same as I am, which for me is a pleasant distraction, so get off your high horse, please.

#127 bigrider on 09.28.11 at 2:17 pm

Hey maybe if were all f&^% in lucky and this continues, we can make it 3 , 40% plus “corrections” in the global stock markets in the past ten years.

Considering there have only been 3 since world war II ,that might really start this century off with a bang.

No secular bear market these past ten years my A$$

#128 Rookie57 on 09.28.11 at 2:18 pm

I often think of the phrase “buy wholesale, sell retail” as it applies to the market. It is interesting that everyone loves to buy a consumable item when it is on “sale”, but when it comes to the market or RE for many it is the reverse. Market fear seems to instill a “buy retail, sell wholesale” mentality. I think we are all guilty of it at some time or another. Some learn and prosper, and some just lose.

Rookie57

#129 sue on 09.28.11 at 2:33 pm

House Horny House Wife: I love your posts! You are very intelligent..you sound just like me..haha

#130 David B on 09.28.11 at 2:34 pm

Forget all of the above, why not talk about the real issue wrt to the Global Economy.

http://www.bloomberg.com/news/2011-09-28/road-map-to-prepackaged-orderly-default-that-keeps-greece-in-euro-view.html

Yes this is just one opinion but a very good overview and a eye opener for those who say “Who cares about Greece” nothing to do with me eh?????

#131 Live Under Your Means on 09.28.11 at 2:41 pm

#94 disciple on 09.28.11 at 11:10 am
I used to believe that a good portion of jobs in Canada had been transferred to the East, but I’m beginning to believe that a good portion have simply been eliminated. Perhaps those “non-essential” positions are slowly phasing out.

Maybe we are witnessing the evolution of the economy as technology brings us ever closer to that utopia dreamed of in science fiction after the Great Depression. What I mean is that perhaps the concept of having a “job” is like a dinosaur caught in the headlights of a spaceship called progress.
…………………………………

DH created a program, solely on his own time, that saved his team weeks of work at the beginning of the school year. His immediate boss wanted him to share it with all the other Tech Supervisors. He said no, but shared it with one Supervisor that he totally trusts and knew she’d make good suggestions. He’s thinking about copyrighting/patenting it and perhaps selling it to other school boards in the prov.

Anybody know how to go about it & costs involved.

#132 Two-thirds on 09.28.11 at 2:51 pm

Some rather deplorable effect that can be seen in Canada is that credit is cheap and plentiful… except if you plan to start a business, or have a technology that has implicit risks in its development/deployment.

It seems that ordinary people have no problem securing $500K and upward to buy houses, but try borrowing even $200K to start a business… A whole different game altogether (think bring your firstborn to the bank).

This kind of monetary stimulus has little teeth and sadly may only make the day of reckoning worse, 5 years from now, once rates normalise.

Japan, for everyone, here we come.

#133 PTDBD on 09.28.11 at 2:55 pm

How much will it cost Canadians for yet another Bank bailout

#130 Thanks for that Bloomberg article on the Euro crisis. The Bank bailout is expected to span Trillions and the article states that taxpayers will pay the cost. It will be justified with the totally wrong arguement that it will save them greater pain.

It is my understanding that the IMF will contribute it’s underfunded resources to the bailout. Canada contributes to the IMF, as does the USA. Will they raise their debt ceiling again to pay the IMF? Will Canada add to its RECORD debt to contribute to a Bank bailout?

How much will it cost Canadians for yet another Bank bailout

Our trio of finance “experts” met yesterday to discuss this. Shouldn’t our Media demand an answer?

#134 Wills on 09.28.11 at 2:56 pm

#126 disciple
well said!

People like to think it is possible to plan correctly, make smart moves, stay out of trouble, master one’s emotions, etc and that doing so will garner a reward of financial security. This isn’t true, however. Bad things happen to stoic, hard-working, law-abiding planners every day. As long as the successful blame the unsuccessful (whatever the definition of success) for their lot, things can not improve.

Until some people have had to make the choice between groceries and medicine due to circumstances that are no fault of their own they can’t and won’t change their tunes. They believe that there’s a way to stay on the right track and so they feel free to criticize people who they view as having strayed from it.

#135 Snowboid on 09.28.11 at 3:09 pm

126 disciple on 09.28.11 at 2:11 pm…

You flatter yourself making an assumption I was talking about you.

I’m actually talking about the overall impression I get from the last few weeks of blog comments.

Sure, for many years I was one of the sheep. I didn’t start my real education until I started traveling the world in 1993, then realized I was really quite stupid in the overall scheme of things.

“Life doesn’t come with an instruction manual, so don’t try to impose your standards on others in judgement.”

That doesn’t make any sense!

I don’t think I’m wasting my ‘precious’ time on this blog, or I wouldn’t be here.

“…so get off your high horse, please.”

Now you are flattering me, keep it coming!

#136 penpal on 09.28.11 at 3:09 pm

@ #68 HHHW

Remember Penpal’s motto;

“You don’t own things, they own you!”

Think about it.

Travel light in this life;

1) Rent what you need, when you need it and for only as long as you need it.

2) Buy only what you can’t or won’t rent.

#137 Smoking Man on 09.28.11 at 3:12 pm

#118 allister on 09.28.11 at 1:28 pm

Thanks man Salt on an open cut…..First bet I ever made that cost my more than 1/2.

Note to self: never list for rumors in a bar on bay street.

Good news is you know when I shorted the market, Ca Cing :)

#138 Mister Obvious on 09.28.11 at 3:20 pm

#62 Waterloo Resident,

Your take on happiness is identical to mine. Thanks for posting that nice little flower in the dirt.

#139 Sean on 09.28.11 at 3:24 pm

I wish my mind hadn’t been wired to save at such a young age. Its the bailout generation. Saving is a losing game these days and since the majority are in debt they will be saved…they will get the bail out. Same parallel in the NBA.

Someone teach me how to spend!

http://www.grantland.com/story/_/id/7026680/welcome-amnesty-20-nba

At its core, the onetime, get-out-of-debt-free clause helps teams that foolishly overspent for players. You couldn’t blame the league’s savvier executives (like Oklahoma City’s Sam Presti) for bristling if and when it’s invoked — especially for some of last summer’s more questionable signings, when teams knew a harder cap was coming and acted recklessly anyway. Is it fair to whisk away those mistakes when someone like Presti, who spent wisely and frugally these past few years, gets no benefits whatsoever?

#140 gadzooks on 09.28.11 at 3:30 pm

Latest report on poverty in Canada is just the tip of the iceberg. The grinding reality of this report on homelessness doesn’t count the millions of hungry seniors or children……let alone the incredible leap in the numbers of working families who send their middle class kids to school hungry most days of the week hoping that ‘a school program’ will be provided out of pity. Let’s think about that last one…..you buy too much house and fill the driveway with his and hers pick ups and then can’t afford to pack a bag lunch for kids because the weekly grocery bills are too high?

How the foodbanks new ‘by appointment’ program that has working poor families setting up appointment times after work so that the kids don’t miss out?

I’ve already mentioned the Gospel Mission in Vancouver has set up a separate room for hungry kids to eat when they come for dinner with their working poor parents so that the kids aren’t ( sort of ) scarred for life by being fondled by the wino’s and general population of sick people who in a decent society would be hospitalized and other flotsam of Vancouvers out of control poverty scene.

I don’t see why the reporters can’t make the connection between 150% debt/income ratio and the fact that after school sports sign ups are way down due to lack of funds….why schools now are permanently asking for donations so that anonymous kids have supplies and field trips.

Still….you’ve got the real king bat scum bags leaching off the system in the ‘poor’ area’s…..and I’m talking about the ‘gentrification asswipes’ who are paying 1 and 2 million for ‘character homes’ in ‘funky East Vancouver ( these are lawyers, doctors, movie, techie types who want ‘cool’, that are also taking advantage of the free lunch programs at schools where there are inner city kids attending. You’d think these asswipes would pay their way instead of vultching the system.

Also….there are plenty of civic worker, social worker, poverty advocatelawyer etc asswipes taking up residence in subsidized housing units in co-ops etc meant for the ‘poor’……these dickwads should be so ashamed that ‘a nice bridge dive’ would be a blessing to us all.

#141 disciple on 09.28.11 at 3:35 pm

#135 Snowboid… I’m sorry, you don’t make any sense to me. On the one hand you criticize other posters for not having enough fun in life as evidenced in your mind by your observation they are wasting their time being nutbars on this blog, then you say, you are not a sheep or stupid anymore (presumably like they are). So , I simply ask, what is the point of complaining about these people? Was your intention to help them see the folly of their ways? Well then, I guess I lost the pin of your good intentions in the haystack of your indifference.

#142 Ward Cleaver on 09.28.11 at 3:41 pm

#120 Johny Bravo

Good points and I agree Mr. Bravo. My point is that savers, even those entrusting their savings to the orange man’s shorts are further ahead even after the ravages of inflation to the spenders in our society. In other words the spenders are the biggest losers of all. The good investors obviously do better than the savers. I have to get back to polishing my LeSabre.

#143 Tony on 09.28.11 at 3:41 pm

#8 1drs on 09.27.11 at 10:04 pm

Don’t end up like Grandpa “what’s his last name” who grabbed a nifty investment paying 14 percent at the time. Few would remember his post about 8 months ago or what the stock paying 14 percent actually would be. I know it had to be the “Yellow Pages” which was paying that and was around 5 and half dollars. Haven’t seen Grandpa “what’s his last name” on this blog ever since. Don’t end up like him.

#144 Stevenson on 09.28.11 at 3:43 pm

#80 Junius

Real Estate prices are not “only” tied to cheap interest rates. The cheap interest rates is not only available to Toronto and Vancouver. Do you see other cities outside the metropolitan’s increasing at the same rates?

Vancouver is tiny place where people like to live. Do you really think its only Canadians buying the RE in Vancouver? Really who can afford those properties in Canada who net only 40% of their pay in an city without much industry? How would rate increases affect the RE if majority of the buyers are international buyers that bought with cash?

Don’t whine and cry if you guys missed the boat. Sorry to hear that, but make more money or move further out from the cities.

It’s just like how New York City and LA took off. Look at how those cities are doing now after the financial crisis. Places like manhattan are always going to be prime RE. There is a REASON why they become more and more expensive.

Vancouver and Manhattan? Seriously? — Garth

#145 Mr, Lee on 09.28.11 at 3:45 pm

#115 Big Rider

I usually do not respond to blog entries but feel compelled to respond this one because is reflective of a view point that many share.
The solution to the financial problem lays in what started it, namely an orgy of irresponsible debt accumulation. Yes, I have heard the argument that real income levels have not increased for the middle class in twenty years, and this is true. That debt was the only tool people had to keep up their life style choice, an excuse. That is the point, choices people made. Today I work and Wal-Mart and tomorrow I buy a half million dollar home that I will never be able to pay off. Okay, perhaps the home is all that you want. Oh no, I want the boat and the tropical vacation financed the HELOC attached to the house that I have been told will go up in perpetuity . See the pattern here?
Blame the banks, the derivative markets, credit defaults swaps…..whatever you like. Also blame the frivolous borrower who thought that the party would go on forever with no repercussions.
The market will prevail and correct itself, make no doubt about this. No matter how many creative bail outs plans any government can come up with. In the end the “hair cut” will be felt by all that went to the barber. By the way we are already seeing this in the EU with the 21% bond loss provision in their bailout discussions.
What Mr. Turner has been preaching for the past two years now is get liquid, get diversified, do not go into unsustainable debt, and do not follow the heard. Sounds reasonable to me

#146 disciple on 09.28.11 at 3:51 pm

“See the beam in your own eye, lest you complain about the sliver in mine”.

You just can’t continue on in this same flawed economic system with blinders on thinking that unequal reciprocity is still the right way to move forward. You’re fooling only yourselves. We are sheep, indeed, but sheep in cages of our own construction. We look to rules, regulations, statutes, bylaws, government itself to solve our problems through self-correction, but guess what, Padre? To date, we’ve solved nothing at all. In my humble opinion. Tell me, one problem, that we have solved, and I’ll show you how someone in the past has done it better. That’s your homework for today.

#147 Brad Mitchell in Calgary on 09.28.11 at 3:52 pm

In 2008 I lost nothing because I did not sell (was buying). In 2009 my paper losses vanished. In 2010 my portfolio gained 15%. The average three-year return was 5%. Go back to waxing the LeSabre, Ward. — Garth

First of all, I doubt it. If true, let’s hear some testimonials from your clients. They should logically be up 5% over that span too…
Secondly, Gold investors have doubled their money in the same time period (hence, your ridiculous bitterness towards them).

Actually, that was my personal portfolio, so I’m happy to provide you with a testimonial. And gold, of course, was in my portfolio as I have long advocated having it as part of a diversified asset mix. BTW, why are you such a wiener? — Garth

#148 Stevenson on 09.28.11 at 3:56 pm

Problem is the people who have borrow irresponsibly may or may not get away with it. One thing for sure is that people who played it right and saved will most likely get dinged for doing so. Bail out plans affect everyone and it is unfair that people who did not borrow irresponsibly will have to fork out more through taxes and fees. If we run into a recession because of so then the savers may also become part of the lay off cycle.

Its easy to be a irresponsible spender, but what is the upside of being a saver if you must share the pain?

#149 JohnnyBravo on 09.28.11 at 4:01 pm

#142 Ward Cleaver on 09.28.11 at 3:41 pm

OK. Say “hi” to June. She looks quite fetching in black and white.

#150 Junius on 09.28.11 at 4:02 pm

#144 Stevenson,

Dude, you think Vancouver or Toronto compare to London or New York? Give you head a shake.

Next thing you will be joining the “we are like Monaco” chant along with all the other RE: humper lunatics.

Vancouver and Toronto are both in for a severe shock.

#151 Worried Realtors on 09.28.11 at 4:04 pm

Both RE sales and prices continue to fall and the fact we have many realtors posting pathetic propaganda just tells you how worried the RE industry is of the currect housing crash. Many realtors haven’t made a sale in months. September sales are said to be horrible and insiders are very worried. Why else would realtors post on this blog?

#152 bigrider on 09.28.11 at 4:07 pm

#115 Garths Reply to Bigrider ” The solution is the system. It self corrects unlike the wailers who come here”

It’s that self correction that is most fearful to all, it seems, even you, as you advocate current intervention(distortion) by those authorities which would see this broken economic model continue.

Fine . Your point of view. Just realize that there is nothing ‘self correcting’ about it.

As for the wailers, the biggest seem to be those who cry out ‘Canadian housing bubble’, me included of course, a bubble that has not burst.

#153 Worried Realtors on 09.28.11 at 4:12 pm

Stevenson a delusional realtor

Realtors like you were saying similar BS about the US RE market just before it crashed. Was watching US housing porn and saw how the expert realtor was telling a buyer how hot Vegas RE was and that prices were going higher for many reason. The Tiny Townhome was $400K and a good investment. Now it’s under $100K. It’s coming to a Toronto RE near you. Canada housing is a house of cards that every realtors knows it. Every house of cards crumbles , since maxed out people can not borrow from one card to pay another. CRASH!

#154 Junius on 09.28.11 at 4:12 pm

#146 disciple,

That is one bizarre post. And you have lots of bizarre posts but that one is really strange.

Why are we always looking for a magic bullet solution or a quick fix answer to everything? The Tea baggers and Randroids think it is all about no government. The socialists think it is about total control. Why is everyone looking for a simple solution?

Could it not just be that the world is a very complex system that is nearly impossible to predict with precision? Does it therefore not make sense to build into our systems and our lives more margin for error and more resiliency.

Free market economics nearly destroyed Iceland. Socialism the old Soviet Union. Why do we always need a perfect paradigm to worship?

#155 Blacksheep on 09.28.11 at 4:13 pm

PTDBD #133,

I just reread ” The Creature from Jekyll Island” by G. Edward Griffin.
The book was written in 1994, yet in one scenario predicts the massive bank bailouts that took place in 07/08.
It also explains the relationship between:
Central Banks-certain Politicians-War-IMF-UN.

I would be very interested in Garth’s opinion of the book, being an (ex?) insider.

What say you Garth?

take care,
Blacksheep

Read it. Rejected it. — Garth

#156 bigrider on 09.28.11 at 4:19 pm

#132 Two-Thirds- Great post.

#145 Mr.Lee- I do have a balanced portfolio of greater value than my fully paid house, I follow Garthian principles for the most part although not entirely. I am angry at the difficulty at getting a decent return on that portfolio and the amount of volatility we must endure to get it.

#148 Stevenson- I could not agree with you more on that last sentence of your post and hence my rants today. What IS the upside of saving these days if you must share the pain of idiot borrowers ??…the quandry I eluded to earlier.

#157 Bill Gable on 09.28.11 at 4:24 pm

Flash – to all Turnerites, Gilt freaks, and doomers – good news!!!!

“Canada has the best reputation in the world, says a study measuring public perceptions of 50 countries around the world, released on Tuesday.

The Reputation Institute study measures the trust, esteem, admiration and good feelings the public holds towards 50 countries, as well as perceptions of peoples’ quality of life, safety and attention to the environment.

Results from 42,000 respondents worldwide ranked Sweden next, followed by Australia, Switzerland and New Zealand, the reputation management firm said.

The countries scored high for their steady democracies, high economic output per capita, focus on active lifestyles, well developed political systems and perceived neutrality to international political upheavals.

Being perceived as a safe country was the main driver of a country’s reputation.

Pakistan, Iran and Iraq were ranked lowest in the 50-country study, while the United States and China were ranked in the middle and lower tiers.

Violence-stricken Mexico plunged from 24th place in 2009 to 35th place this year. The reputations of Greece, Ireland and Spain also dropped while Germany climbed five spots to number 11.

http://tinyurl.com/3zlmreu

* Caveat – from the well known, highly respected “Reputation Institute” run by whom, exactly?

#158 PTDBD on 09.28.11 at 4:32 pm

During the last financial crisis I congratulated myself and neighbours for being prudent and wise savers. We did not become embroiled in the toxic asset selloffs and real estate madness of the USA. Good savers and taxpayers were we.

A year later, we discovered with great difficulty and prodding that our Town Council had not been so wise. $30 Million of our taxpayer money had been invested for short term holdings into ABCP. Bagholders of last resort through no fault of our own. The great Canadian justice system ensured that we could not sue.

As this newest bailout unfolds, Canada rejoices in not being Greece. We are out of the fray. It will not cost prudent Canadian taxpayers. We will not have to bail out Banks who unwisely invested in those debt riddled countries. After all, these Bankers are professionals, they know the business. They take the risks. Now they must take their losses. Right?

Right?

When Carney pushes for a Trillion dollar massive bailout. When Flaherty says “we are not an island”. When Harper has to use what he hears in New York to figure out that our economy is strong and urges G20 unified action…….then you just know that the virginal prudent will be Banker Bagholders again.

#159 Blacksheep on 09.28.11 at 4:37 pm

Garth,

Straight forward answer. Thank you.
On what grounds did you reject it, specifically?
Which part or parts are incorrect?
Not being confrontational, just seeking truth.

take care,
Blacksheep

The Fed is an integral part of US government, wholly answerable to elected officials, an instrument of federal monetary policy, and now utterly divorced from the private interests of member banks. The book is interesting for its context, laughable in its conclusions. — Garth

#160 Heinz Skitzvelvett on 09.28.11 at 4:56 pm

http://www.househunting.ca/vancouversun/real+estate+richmond/5471831/story.html

Of the “24 reasons Richmond real estate in booming”, hipster immigration and salmon made the list, but historically low interest rates did not. What do they teach at journalism school anyways?

I just need 1 reason NOT to buy in Richmond: soil liquefaction.

#161 Tony on 09.28.11 at 4:57 pm

#118 allister on 09.28.11 at 1:28 pm

Wrong the dividend n YLO is going to be zilch after the next payout.

#162 Onthesidelines on 09.28.11 at 4:58 pm

To LB #98 re banks raising rates.

Excellent analysis. Absolutely agree.

Already happened in 2008 or thereabouts when RY’s stock price nose dived and they needed capitol. For a limited time, they offered a two year GIC paying 4%…that was about 1.5% over what you could get on AAA Crown backed bonds at the time.

Just like in 2007, the endgame will start with the banks first.

#163 Abitibi Doug on 09.28.11 at 5:06 pm

Garth said: So, why not blow everything, join the masses and live for today? In other words, why save?

To answer that question I’ll use a comparison. There’s the old saying you can’t have your cake and eat it too. Says who? Get 2 cakes! The point being that you can save and still live for today. I’ve saved over the years, and as a result have been able to only work intermittently and enjoyed having the summer off, great fun. I feel free, not being burdened by a high debt to equity ratio and as a result sleep well at night. Now the punch line: I have some cash on hand and have been able to take advantage of those Boxing Week blowout, fire sales of stocks recently. They will go up again as many long term investors (including Garth) are aware. Yes, live in and enjoy the moment!

#164 bigrider on 09.28.11 at 5:11 pm

Really rejected my last post Garth. Let me guess, I am not in a position to comment on performance of your balanced portfolio YTD. Ok fine. Your 5% annualized return you quote for 2008 to 2010 stands.

Allow the second part of the post then please.

What is the point of applying such effort in maintaining a balanced portfolio commensurate with all the volatility and sacrifice involved in forgone consumption(saving) for such little return, if idiot borrowers with no money down and nothing to lose ,who humped condos, can now sell their contracts for so much more.

If we get this oh so elusive real estate correction, they walk away unscathed.

Please write you representatives, title of your letters ” terminate CMHC immediately”

#165 bigrider on 09.28.11 at 5:15 pm

By the way Garth, what is your opinion on CMHC existence ?

Does it need an overall or has it’s time come for termination?

#166 Stevenson on 09.28.11 at 5:17 pm

#150 Junius and #151 Worried Realtors

Not sure if you’ve been in a cave but there have been many posts and articles explaining how we will not crumble like the US. Simply because we won’t have an over supply of housing and robo mortgages.

How we are still steady among all the developed countries.

http://www.thestar.com/business/article/1060129–canadian-housing-market-outperforms-the-developed-world-scotiabank

Toronto is nowhere in the same scale of New York but the similarities of the reason why it has high demand leading to expensive real estate. In Canada what cities are even close to being affordable with job opportunities? NO you do not have a choice. Deal with the high prices or move on because someone else is more then willing. Yes cheap interest rates help drive volume up, but so what? Why would it have to adjust if there is still high demand?

Wishful thinking will not get you anywhere. You waited a few years already what’s another few years?

I am not a realtor but if I was either way market is good us. Market keeps growing I got continue to make big commission, market falls I’ll get sales everywhere.

#167 ballingsford on 09.28.11 at 5:23 pm

I wonder why the stocks went south today as they went north yesterday and the day before. What was the deciding factor?

Great post today Garth! You rock!!!

#168 NFN_NLN on 09.28.11 at 5:28 pm

#118 allister on 09.28.11 at 1:28 pm

101 smoking man

YLO is a buy the dividend is 224%

HAHAHAHA

They eliminated the dividend, that’s why it crashed 50% today.

http://www.theglobeandmail.com/report-on-business/top-business-stories/trading-yellow-media-stock-a-speculative-endeavour/article2183151/

#169 AlwaysWrongMan on 09.28.11 at 5:29 pm

Ran into my friend the other day. She says she just flipped a condo and earned $34K. She told me she just bought another two in downtown Toronto which is currently being built. I told her don’t do it, try to sell it asap, as the market is going down, and she could well be stuck in negative equity. She told me that I said the same thing in 2007. Look how wrong I am. I thought about it and its true. Have been wrong for years and years. I look foolish every time.

#170 penpal on 09.28.11 at 5:36 pm

@ # 166 Stevenson

guaranteed you won’t be posting here in 8 months, maybe even 5 months – you will be too shellshocked

mark my words hotshot

takes more than a bs OPINION devoid of fact like yours to hold up the RE market in Canada.

#171 Maybe Not .. on 09.28.11 at 5:53 pm

Re: The Van Allen Belts
(From the other day)

http://www.clavius.org/envrad.html

Not to flog a dead horse, but Disciple … are you kidding ME? It’s you who obviously didn’t read the blog. It quite clearly debunks virtually every argument moon landing hoaxers have re: the Van Allen Belts.

And what does the name of the blog have to do with it’s content regarding this matter? Ridiculous. You read into things far more than you need to bro.

By the way, I USED to believe that the moon landing was a hoax also. After studying BOTH sides, I changed my mind.

Oh, and I watched the event happen as a child. Did you?

P.S. I actually like a lot of your posts and agree with some of them myself. I do believe in some conspiracies, just not that one.

News flash: This is not a moon landing hoax blog. — Garth

#172 bigrider on 09.28.11 at 5:58 pm

#169 Alwayswrongman-Yup , know the feeling.

#170 Penpal- Hey ,did you steal my post verbatim from 2008? …LOL.

Oh… for want of this oh so elusive RE decline.

#173 Nostradamus Le Mad Vlad on 09.28.11 at 6:03 pm

#12 Jody — Great link. Western govts. want us to become so dependent on them for help, when we can do most of the stuff ourselves. It is a reminder of when Stalin murdered 50 million of his own people. That’s depop!

#19 Tim — That’s why the CPC is building jails even ‘tho they’re not needed, as crime is going down. Housing more and more ‘criminals’ instead of having them on the street so, no riots. See response to #12 Jody above.

#30 Peter B — “. . . tax incentives for seniors who bungee jump off of cliffs.” — Hmmm. Interesting thought, bungee ju,ping off cliffs. Do we have to walk all the way back up again?!

#37 Observer — “Savers unite!” — Investors and savers. We can look after ourselves, but it’s unlikely that we can bail out the up-and-coming generation. They’re on their own.

#39 shanks — “. . . things could be really nice.” — G’day shanks. Unfortunately, certain elements in the world are removing the money, essentially recycling it into nothing, but not having the slightest idea that the cycles of humanity are also in the process of changing. The future, whis is now, right here, is a doozer for those who are unprepared.

#43 Kimberly — “. . . and the amazing sense of freedom of not owing a single penny to anyone. To me, this is priceless.” — Indeed, plus setting the phone for two rings so telemarketers speak to the voicemail!

#62 Waterloo Resident — “HAPPINESS: Enjoy life while you can, we won’t be around forever !” — Well said!

#90 JohnnyBravo — “Money in the bank is not your money. It’s theirs. You agreed to loan it to them under specific terms.” — Alternatively, the same money can be invested with monthly DRIPs, not touched by a bank or anyone else. Whether it’s a non-registered or registered plan doesn’t matter. Possibly Garth or someone can put me on the right track.

#97 disciple — “Both are based on the myth of scarcity, which is patently and demonstrably false.” — Correct. This is an abundant planet, all we have to do is to enjoy it, reasonably but not excessively.

#99 GregW, Oakville — Hi Greg. Short of having a revolution (which is why the CPC are building new and unwanted jails, so when we do start fighting back we can be tossed in there and forgotten), there is not much anyone can do. Next election could be a combination of Rhinos / Liberal Parties, but the Rhinos are too sensible!

#125 Smoking Man — “. . . to learn China and Indian lingo cause thats the only place you will find a job.” — Good, low-paying jobs. They used to be high-paying jobs here, but no longer.

#174 ballingsford on 09.28.11 at 6:09 pm

I wish the stocks would make up their mind whether they are going up or down. I’m ready to make a $2500 contribution to my son’s RESP for the year at the right time this time instead of doing it when the stocks are high.

So far, the RESP is in negative territory on the contributions.

I should read Money Road again!

#175 Snowboid on 09.28.11 at 6:12 pm

#141 disciple on 09.28.11 at 3:35 pm…

Okay, now I understand why you thought my first post was referring to you.

You say I criticize other posters for not having enough fun in life. How you get that from “Still have a way to go to complete the plan, but refuse to sit here and worry myself to death – having too much fun with life!” is beyond me.

Where did I say “they are wasting their time being nutbars…”?

How do you presume I am saying other people are being stupid?

Bottom line – this line of thought is wasting my time. This blog is not an appropriate venue for social issues.

I started following this blog several months ago, to follow up on the real estate advice from ‘Greater Fool’. After following advice from that book and ‘Money Road’ started posting here about our experiences with real estate on Vancouver Island and the Okanagan. I have found myself posting off-topic, but generally try to follow the stated intent of this blog.

My comment today was intended to summarize my frustration that the posters are more focused on problems than solutions.

If you can direct me to an appropriate social issues site I will be happy to provide my thoughts there.

I would love to compare notes on the advocacy roles I have played since the early 1970s in social, justice, and consumer issues.

Then I will challenge you to retract the insulting last sentence of your post # 141.

#176 bigrider on 09.28.11 at 6:27 pm

RE prices going down in T.O . No way !

The asians are coming ! The asians are coming !

Italians already here !!!

#177 bigrider on 09.28.11 at 6:33 pm

#174 Ballingsford -contributing $2500 into an resp…forget the financial assets.

I hear CMHC came out, in conjunction with the banks of course, a new loan scheme whereby contributers to RESP’s can place said deposits into a contract with a new condo builder for purchase of a unit and get the 20% federal portion to use as part of the downpayment…

False of course but perhaps someday soon maybe ?

#178 ballingsford on 09.28.11 at 7:06 pm

Come on folks, take out those fat mortgages, and load up on high end appliances, granite counter tops, leather couches, in floor heating, and get yourselves one on those fancy HELOCs for a convertible BMW, Porsche SUV, and/or a cottage in the country.

Life is good and credit is cheap! Spend, spend, spend, and be a good Canadian! Our Country wants you! Don’t worry about debt, it’s only debt!

We need to unite and spend to save this country! Ask not what Canada can do for you, but what you can do for Canada. (JFK used this in one of his speeches but it had the US flavor.)

What’s the difference if you have $100,000 in assets or $100,000 in debt when you pass away? Ask your beneficiaries.

#179 maxx on 09.28.11 at 8:02 pm

#82 EdmontonJim on 09.28.11 at 9:50 am

Brilliant post Jim! It speaks to people who have mastered critical life skills and are in control of their wealth. I recently came across a great quote: “a budget is about making money go to where you want it, rather than wondering where it went.”

#180 Stevenson on 09.28.11 at 8:02 pm

#170 Penpal

Yeah you would wish I wouldn’t be around speaking in about 8 months cause that means you would still be waiting spilling your money in rent and missing the boat yet again. While on the other hand I will be even further ahead.

Remember the greater fool is the one that follows. The question is which side do you follow?

Some of you keep on thinking this market is going to tank. Has it ever crossed your mind that you guys are just as blind and bias as the people shopping away at properties? They see the market at one extreme with their own believes and you guys on the other hand only see other side at the other extreme.

One thing is different though…. they are not just wishing and dreaming, but instead taking action by buying. Those that are saving and waiting should be shorting the RE market. If you guys are so sure market is going to tank then you should go extremely bullish shorting a real estate sector ETF.

#181 Wills on 09.28.11 at 10:06 pm

“The Fed is an integral part of US government, wholly answerable to elected officials, an instrument of federal monetary policy, and now utterly divorced from the private interests of member banks. — Garth”

At the risk of insinuating myself into a conversation that I didn’t start, I’d like to point out that Alan Greenspan himself has said – on video and on multiple occasions – that the Fed answers to nobody, and is governed by nobody outside of the Fed. It is in now way a government institution. Neither is the Bank of Canada.

#182 steve on 09.28.11 at 10:34 pm

Garth your basic premise that real estate will collapse is correct, however it is the timing of this that is impossible to predict. it is basically a ponzi or pyramid collapsing. when there are no new entrants the game is over and it collapses.
with housing everyone that could buy one has got one and now there are no jobs so the amount of people that are out there to buy a house has decreased even more.
also since the end of july the united states has been in deflation. (this is the start of the rise of the usd) probably canada is in defation also but it is imposible to tell as cdn dollars are so small in supply compared to the amount of usd.

It will not collapse, but correct – in some places (as I have said) mildly, and in others wildly. — Garth

#183 Dude on 09.28.11 at 10:59 pm

Last

#184 Jeannie on 09.28.11 at 11:05 pm

Garth; yours is the voice of reason that calms our uncertainties during these turbulent times.
I haven’t thanked you lately, but you’ve inspired us to ‘stay the course’, it’s reassuring to know that this too will pass, that the world is not coming to an end.
Thank you.

#185 Peter B on 09.29.11 at 12:36 am

I did some research with google. Just as I suspected bed bugs are a real estate deal killer.

http://www.nytimes.com/2009/08/23/realestate/23cov.html?partner=rss&emc=rss&pagewanted=all

#186 Sky on 09.29.11 at 1:34 am

@ Nostradamus & Tim (# 19):

Q- How do you spell tyranny ?

A- When penalties for growing 6 pot plants exceed penalties for pedophilia.

Since Canada is about to acquire official tyranny status, we’re going to need a snappy new moniker.

Trouble is – all the catchy names have already been spoken for by various other regimes. eg Motherland, Fatherland, Homeland. Definitely a problem.

The greedy Homeland has also grabbed the War on Poverty, War on Terror, War on Drugs. What does that leave Canada? The War on Drugs 2.0? That’s so derivative it’s shameful. If we must have a tyranny then can’t we at least be original?

With the billions about to be shelled out on prisons then I suppose the new crime bills could double as a job creation program as well. Sigh. Here we go copycatting the Homeland again.

But hold on a minute. Where’s all the money for the prisons coming from? Aren’t we in a recession? Don’t we have a humungous national debt to worry over? Guess not. Looks like those things only exist in my skewed alternate reality.

So what should we call ourselves? “Harperville”sounds corny.

What about the “Crownland”? Dept of Homeland Security-Dept of Crownland Security. That has a pretty good ring to it. What do you guys think?

#187 Betty Danin on 09.29.11 at 2:07 am

Garth why don’t you ever talk about foreign government bonds like Australia, New Zealand, Brazil, South Korea, India etc. ? These foreign government bonds are paying yields from 4.00% to 11.50%.Every portfolio should have some foreign component of 10%-15% to start. In my economics class I remember that capital flowed to the highest rate of return it can get on a risk adjusted basis of course.

#188 Kilby on 09.29.11 at 7:54 am

Victoria and surrounding municipalities. Price reductions for past 3 months.

July 479

August 701

September 707

Will see what October brings…..

#189 disciple on 09.29.11 at 9:40 am

Mr. (or Ms.) Snowboid… I regret having caused you any mental anguish, but I will retract nothing at this time, unless you can come to grips with the fact that your original post was insulting.

“My comment today was intended to summarize my frustration that the posters are more focused on problems than solutions.”

My dear Snowbird, I would tend to agree with this statement, but therein lies the conundrum; that is, you are assuming we know what the problems are. How can we arrive at solutions without first understanding the nature of the problems? As typical as typical gets, you like to shut people up if they are not spewing the same rhetoric you are. That is what I stand in defiance of. Sure, I understand that this is not a social justice blog, but last time I checked, neither is it a “shut-the-hell-up unless-you’re-a-socially-indifferent-S.O.B.” blog.

But that last comment wasn’t directed at you, so don’t flatter yourself, it was intended to “summarize my frustration that posters such as yourself are more focused on actively ignoring problems and sure as rain don’t offer any solutions”.

#190 Snowboid on 09.29.11 at 11:20 am

189 disciple on 09.29.11 at 9:40 am…

You win, and are indeed a pleasant distraction.