What fools do

It’s not every day the finance minister puts the words “condo” and “crash” into the same utterance. Probably never. Except on Friday. And he picked a helluva time to do it.

Personal finances in Canada and the US are nearing a crisis point. At least most Americans know they’re screwed. Watching your work colleagues and relatives discover that here will be quite the experience. But you can be sure it’s coming.

For the record, F said the following to an editorial board meeting at the Globe and Mail. In the last few days the elf from Whitby has completed his flip-flop – from the real estate pumper who ushered in the cheapest, easier credit in Canadian history, to the panicked politico sticking his finger into the crumbling dyke of public debt.

“I also talk to developers, and I hear from some of them who are in the business of building condos that they don’t really have a plan, they’re just going to keep building them until people stop buying them. It’s not exactly a fiscal plan. It will lead to a crash. I do worry about the last person buying a condo in Toronto, and people getting caught”

That last person, by the way, is called the greater fool. Did you ever think F would get around to publicly endorsing this pathetic blog?

This crash warning comes after Ottawa moved to rein in CMHC, refuse to increase the agency’s insurance limit, make it illegal for the banks to stuff insured mortgages into bonds, force the cost of home loans higher, and encourage tough new lending regs for later this year. But it also comes too late. Real estate prices are extreme. Everybody you know has pigged out on cheap loans. The cult of housing is everywhere.

In the last two years an unknown and growing number of first-time buyers have put 5% or less down, taken on a massive obligation, and bought a property. They did this when prices were the highest and rates the lowest. What were they thinking?

The risk in this behaviour is enormous. Real estate values need only fall a small amount to wipe out every dollar in equity, so owners end up shouldering a debt worth more than their property. This is exactly what continues to take place in the US, where young couples need only a 3.5% downpayment to get an FHA-insured mortgage (think CHMC). In the last two years alone, over a million of them have slipped under water, with another 10,000 a month joining them in financial failure.

This is what happens when values fall. The consequences this time in Canada are unknown, since we’ve never had a housing bubble based on emergency interest rates, cash-back mortgages, variable-rate loans and government lender insurance. Add to that a rapid and building oversupply of housing stock, economic lethargy and a Boomer tsunami, and little F is right to freak out. Very few people are ready for what comes next.

But this real estate stuff is just the wick. It’s not the bomb.

Housing’s inevitable correction and economic blowback looks likely to happen when millions of people in Canada and the US are learning how much retirement sucks when you didn’t get ready for it. It’s hard to overestimate the impact of Boomers – nine million here and 76 million in the States – entering their Depends years.

I’ve given you the stats many times: seven in ten of us have no corporate pensions. Half have no savings. Forty per cent of families can’t pay all their monthlies. The average RSP will last about two years. And nobody can live on CPP and OAS.

To the south, even more drama. A quarter of Americans now say they’ll retire after 80 – about two years longer than most will live. On average people have saved only 7% of their modest retirement goal ($350,000). Thirty per cent of people aged 60 have about twenty thousand saved. Only one in nine is confident about retirement. And 60% have a net worth, outside of real estate, of $25,000 or less. Yikes.

This is an economic and financial disaster waiting to roll across the continent. And every day, through their ignorance, greed and fear, people make it worse. For example, the most popular investment in Canada today outside of a house? Bond funds. In the first 90 days of this year misguided people shoved $7.1 billion into these funds while they sucked $3 billion out of equity funds.

Of course they’re doing this because they perceive stocks to be dangerous and bonds safe. But the opposite is more likely true. As interest rates creep back to normality and the global economy stabilizes, bond prices and bond funds will take a drubbing as bond yields rise. Even the spectre of higher rates – which Mark Carney has already raised – is enough to create losses for new investors.

But this is what fools do. Buy bonds when rates can only go up and buy condos when prices can only decline.

Look around you. Do the opposite.

If you made mistakes – like telling millions of people they could buy houses with zero down and lifetime mortgages without risk because it’s different here – there’s still time to repent.

218 comments ↓

#1 JRH on 04.29.12 at 8:42 pm

BOO !!

#2 george on 04.29.12 at 8:42 pm

Carney’s debt warnings at odds with monetary policy

http://www.theglobeandmail.com/report-on-business/commentary/barrie-mckenna/carneys-debt-warnings-at-odds-with-monetary-policy/article2417289/

#3 99% on 04.29.12 at 8:47 pm

Now that picture is bordering on child porn. I am shocked and disappointed Garth. I expect better from you. Tsk, tsk.

I feel sorry for you. But in case you are in law enforcement, it has been replaced. — Garth

#4 Reality bytes on 04.29.12 at 8:58 pm

Who wants to save money till your too old to enjoy it. Eat drink and be merry, for tomorrow there are noodles.

#5 Realtors and mortgage broker's know the crash is here! on 04.29.12 at 9:05 pm

Soon it will be common knowledge to the masses that the housing crash has started. The last two weeks was the top of the housing bubble. The condo ponzi will see an over 50% crash just like miami. Realtors are in a total panic and they know their days of easy money are numbered. Look out below…… It’s going to be a nasty crash realtors.

#6 wopaholic on 04.29.12 at 9:08 pm

Ohhh what a tangled web we have woven. Think I will invest a million $ in gorgeous luxury homes in Arziona which is enough to practically have the state re-named after me :p

#7 john turner on 04.29.12 at 9:08 pm

Why do people even bother with this pathetic blog?

Beats me. — Garth

#8 Ross Thomas on 04.29.12 at 9:11 pm

“But this is what fools do. Buy bonds when rates can only go up and buy condos when prices can only decline.”

Can’t agree with your here, Garth. With the domestic RE market looking decidedly unsteady, Europe plunging into a deep recession, China’s property- and export markets in full retreat and the US slowing because of govt cutbacks, I don’t know where you’re seeing the growth (i.e., inflation) that would necessitate rising interest rates. Deflation seems much more likely to me at this point.

Great site, though. Pass the popcorn.

#9 LH on 04.29.12 at 9:12 pm

Do the hard trade. C01 and C02 SFH’s still have room to shift higher. Just simple supply and demand, as downtown becomes more walkable. Condos and willowdale bungs have seen their best days.

#10 LS in Arbutus on 04.29.12 at 9:12 pm

Damn! I thought that was a great picture. Totally made me laugh!! Where do you people come from? Seriously. I showed it to my 6 year old daughter and didn’t think twice about it.

Anyhow, the post itself giving me the chills, and I got out last year.

I work at a bank that has a defined benefit pension for “oldtimers.” Not me. After 30 years of pensionable service – one person I know who is retiring will hit the big time with approx $950 a month in pension. Add this to a full CPP / OAS payout and what do you get, $2,000?

And this is one of the “fortunate” ones with a “good” company pension. BTW, for the private sector, this pension is comparatively good.

Now imagine someone that doesn’t have their home, car etc., COMPLETELY paid for, living on this, or less?

It is a sobering thought.

#11 Sebee on 04.29.12 at 9:13 pm

Could they have the detailed data already showing a clear trend? I’m not talking about slower volume, but perhaps value and mortgage activity trends. I’m sure they know a good while before we know it. With new fudged real estate number reporting we know less and later.

#12 Dan from Richmond Hill on 04.29.12 at 9:14 pm

Garth, then why are you optimistic about the US future if you know all this?

The economy will still move forward slowly. Smart investors will do fine. — Garth

#13 truth hammer on 04.29.12 at 9:17 pm

I’m idly wondering what effect rising rates will have on preferred shares when institutional money guages the risk preimium on fixed ( inc bonds) to be less and the pendulum swings back to equity? The capital losses on the prefs will eclipse the security of dividends…..value trap ….n’cest pas? This might be the second leg knocked away for the beleaguered bond investor as they see everything conservative ( inc real property values) simultaneously sinking like the Titanic. In this scenario we should have seen the last of the savings accounts wiped out and as I have forecast….a tsunami of ‘boomers’ cut adrift from their island of dreams and selling whats left in a blind panic to preserve what little capital they have left.

Of course this is a perfect storm for the CRA sharks who will be circling to feed on the remains of asset crystillization. If a dummy like me can think of this…..do you really think the suits in the finance dept haven’t already planned for the hoovering of Canadians assets into tax revenue? Perhaps this is all part of the bigger picture plan to beggar Canadians into debt slavery.

I have been watching with interest how the political divide has been forming up. The Mulcairs and the union bosses have begun to add inferances ( some call these trial balloons) of mortgage sustainability in an environment of rising rates to their public pronouncements. I think the left wants to reposition it’s bulwark with the corpses of the mortgage dead. they expect to start washing up on the shores of Parliament…..very cynical thinking…… c’est la guerre du politique mon ami……no prisoners taken…no quarter given.

Demand for preferreds will likely eclipse the impact of a slow normalization of rates. — Garth

#14 In God and Garth We Trust on 04.29.12 at 9:17 pm

“But this is what fools do. Buy bonds when rates can only go up and buy condos when prices can only decline.
Look around you. Do the opposite.”

The bearded mystic oracle who runs this blog, the all knowing, all wise sage from the east, the lone voice crying out in the financial wasteland of Canada (and all round jolly good fellow)and who should be in charge of monetary policy rather than herr Carney has just given us the time tested formula of making money. Buy low, sell high and buy when there is blood in the streets not euphoria. All hail the chief!

#15 Babblemaster on 04.29.12 at 9:18 pm

Unfortunately, there is no accountability. When this is all over, instead of punishment, Mr. Flatulence will be richly rewarded. When he is out of office he will serve on board of directors, make public speaking appearances for big fees, etc. Quite disgusting. When he appears on the talking head shows, he will be treated with great deference. Yet, the pain he will have inflicted will be felt by many for years to come.

After all, nobody blames Greenscam. The mastermind of the greatest financial boondoggle in the states is still proud of his record at the helm of the fed. Not his fault at all.

However, I guess the sheep get the sheppards they deserve.

#16 Cowboy on 04.29.12 at 9:21 pm

Maybe the people buying now will be the last ones?

There are SOLD signs all over the place,

I don’t get it, my cousin bought a house in 2008, and he actually made a little bit on it recently! (he developed basement however, I think that saved him, but still)

Calgary seems unstoppable!

When will prices go down?!

#17 penpal on 04.29.12 at 9:26 pm

@ # 8 LH

Ya, ya, ya,….bs!

Heard the same crap in every major city I have visited at the height of their respective bubbles – from Madrid to Miami – same delusion.

Sorry sucker -everyone is gonna feel it with this bubble popping – one way or another.

Go back and read Garth’s post above again.
And he’s sugar coating it IMHO.

#18 NoName on 04.29.12 at 9:28 pm

#4 Reality bytes on 04.29.12 at 8:58 pm

Noodles are ok, but problem is when you have to pay for gastritis surgery after eating all those noodles…

just my take on it, i could be wrong…

#19 Nostradamus Le Mad Vlad on 04.29.12 at 9:31 pm

-
“Yikes. But this real estate stuff is just the wick. It’s not the bomb. Personal finances in Canada and the US are nearing a crisis point. This is an economic and financial disaster waiting to roll across the continent.” — So the CPC is closing the barn door after the horse has escaped. Solid planning! Even better, we dumbkopfs gave them a 38% majority to carry out their plans with unrestricted access.

We get the govt. we deserve.

“Did you ever think F would get around to publicly endorsing this pathetic blog?” — But of course. Without saying it verbally, he has publically endorsed you for Michael Wilson’s old job. Not!
*
#187 GregW, Oakville on 04.29.12 at 7:15 am — G’day Greg.

Re: the food we consume. I am not always ablle to get to the Farmer’s Market here, but one thing we do have is plenty of fruit and veggie ‘road stop’ shops on roads, which landowners use to supplement their income.

The Farmer’s Market has become so popular here that shortly, they will move across the street to a much larger location, but that won’t stop us from going to local stands to get a better quality product. May be more expensive, but it’s worth it.

#238 Jeannie on 04.29.12 at 6:49 pm — Glad you liked the articles.

There was a story on CTV Saturday, about a tiny community who lives on one of BC’s Gulf Islands. They are completely self-sufficient. BC Hydro has approached them plenty of times about have power lines put in — No thank you!

It can be done, but only if people are willing to change their lifestyles. No TVs, stereos, material goods to hinder the way they live. A harbinger of things to come?

#20 Freedom First on 04.29.12 at 9:34 pm

Great post Garth! I have passed along your blog site for quite a while now, but funny, no one will admit to reading it:) ……..that’s ok. We all know why.

#21 penpal on 04.29.12 at 9:36 pm

@ #12 Babblemaster

Greenspan’s appearance fees have declined substantially and apparently, his dance card ain’t so full anymore.

But, he is a consultant to PIMCO, the largest 3rd party bond fund managers in the world.

He has largely been discounted by the people who count in finance and his tenure as Fed chief is increasingly seen as a co-opted one and his reputation is tarnishing as a result.

F is insignificant and his reputation is about as lofty as his stature. Most international finance media give him regard commensurate with his physical stature. I believe one publication dubbed him ” a cretin in deed and form”.

Perhaps you need to read a bit more, perhaps look at ZeroHedge from time to time for some real financial journalism.

#22 DonDWest on 04.29.12 at 9:41 pm

“In the last two years an unknown and growing number of first-time buyers have put 5% or less down, taken on a massive obligation, and bought a property. They did this when prices were the highest and rates the lowest. What were they thinking?”

That I want to move out of my parent’s basement maybe?

#23 nobody you know on 04.29.12 at 9:44 pm

Flaherty: “It’s not exactly a fiscal plan. It will lead to a crash.”

And on that note, here’s part of an exchange between Mark Carney and a Senator last week:

Senator Mac Harb: ““I have a developer in Ottawa who told me to tell you, governor, so you can tell the Minister of Finance, that it’s great about [interest rate] tightening but he told me ‘I couldn’t sell a condo cause everything came to a stop as soon of the Minister of Finance was talking about strengthening the borrowing and all of this stuff’.”

Carney: As for “your developer friend,” the governor said that . . . “if that possibility means that his condominiums are unsaleable, perhaps his condominiums are unsaleable. Full stop.”

link: http://natpo.st/JhOaVM

That made me smile.

#24 TurnerNation on 04.29.12 at 9:45 pm

600,000 for a slanted Leslieville semi unrennovated same owners, thirty years hence.

http://www.realtor.ca/propertyDetails.aspx?propertyId=11842218&PidKey=1623100562

#25 dd on 04.29.12 at 9:48 pm

#14Cowboy

When will prices go down?!
……………………………………………………………………….
Prices have come down cowboy. 2007 was the top year.

#26 45north on 04.29.12 at 9:49 pm

great post Garth!

But it also comes too late.

well it’s not too late to help, Nortel hit the wall at 100 mph but Cisco put the brakes on, hit the wall and bounced back.

Mark Hanson says that you cannot judge loan quality as long as prices are going up. He thinks that Canadian mortgage defaults are going to be higher than US! He says that because Canada does not have the reserve currency of the world, the housing bubble will hit Canada harder. This stuff is pretty damn obvious – somebody’s been talking to Flaherty.

Well Jim, there is no way you can skate around this. No way. Jim here’s my plan: The Government gives every household that is foreclosed $1000/month for a year. The banks get their insurance money from CMHC only after they foreclose. Huge advantage is elimination of shadow inventory which is killing the US. Jim, if you don’t have your plan, you know the NDP has its plan.

[email protected]

#27 RainCity on 04.29.12 at 9:51 pm

Garth, I have followed your blog for about two years since my very wise father showed it to me. My spouse and I are in our mid-30′s and surrounded by dumb friends who are house hungry and itching to buy. I hate to think what will happen if they are stupid enough to jump into the market right now. Maybe I should send them the link to your blog and hope they learn something from it – but I doubt they will.

If I had a buck for every time I heard someone say “But it’s different here” and “If you don’t buy soon, you’ll be priced out forever” I probably could retire right now.

Thanks for being one of the only voices out there pointing out what a disaster this will be.

#28 penpal on 04.29.12 at 9:51 pm

Just an observation, but I went shopping for groceries at a Zehrs store (Loblaws owns?) and a few items at a Shoppers Drugmart in a SW Ontario city (not Toronto) and was absolutely blown away by the cost of food and non-prescription medical supplies.

It has been some time since I have had to do the shopping and so I can see not only that prices have risen substantially since my last foray, but that prices are at a high level relative to incomes (75% of Canadians working make $50,000 or LESS).

If you add this fact to the conditions that Garth has pointed out tonight, I have no idea of how rather a lot of Canadians are going to “live” given their huge debt burdens.

The years ahead will be very interesting, and not in a good way for many.

#29 Kaganovich on 04.29.12 at 9:52 pm

#14

Calgary will never stop. It is a perpetual motion machine and the houses packed like sardines all around its core will continue to appreciate in price ad infinitum. Only a fool wouldn’t but there. Calgary is the only town on earth that will escape the deflationary forces that stalk the globe. Everyone will move there and your house will be worth a billion dollars in a decade.

#30 RetiredBoomer2 on 04.29.12 at 9:54 pm

if F makes those declarations it is probably a lot worse than he says and taking over CMHC means it’s bust and likely to take down the C$ 15% along with shaking up the banks so it could be time to buy american blue chips as the gross up on Canadian dividends it causing claw backs on this old age wealthfare bum.

#31 Aaron - Melbourne on 04.29.12 at 9:55 pm

Hi all, reporting from Melbourne Australia where I attended a popular delusion known as the Housing Industry Association “Home Show” this past weekend.

Surrounded predominately by boomers ogling the latest gadgets and lifestyle accessories like massage chairs, young couples dreaming of wrought iron balustrades for stairs they don’t have, and *new Australians* clutching at bargain cleaning products spruiked at 10 minute intervals.

There was a presence by the State Revenue Office of Victoria. But instead of having a ready-reckoner chart showing the full cost of buying property of different types and at different prices they had a print out of the buyer incentives (Known as the First Home Owners Grant – or as Prof Keen calls it = First Home Vendors Grant). Victoria has become highly dependent on this revenue stream and transaction volumes tell the obvious story that the state will have a rather large black hole to fill from other sources. Our state budget comes out tomorrow.

Also Consumer Affairs Victoria was there offering advice on myriad issues to do with contractors/products in the industry. Pity then that they didn’t take aim at another contingent out in force.

I made the mistake of hesitating and making eye contact with a property spruiker. Actually I was scratching my head at the posters they had up on the stand. One was about using a Self-Managed Superannuation Fund strategy to invest in property. The other was about unlocking the equity in a fully owned Principle Place of Residence to invest in SIX OTHERS.

The offers of financial advice were coming thick and fast. Without invitation I was informed of how this chump had “made $450k last year alone!”. No mention if that was a realised capital gain or just a paper profit. No mention of how heavily geared or whether property is the only asset class he was invested in. I just wished him the best of luck in hanging onto every penny of it and walked off safe in the knowledge that I have no exposure to that sort of risk and can vultch when I am good and ready.

Aaron

#32 Keeping the Faith on 04.29.12 at 9:57 pm

Stevenson … Come to playeee-yaaaayyy!?!?!?!?

#33 penpal on 04.29.12 at 9:58 pm

Question for Garth and others here;

Do you think that CMHC will renege on their mortgage insurance when they find out that claims of income etc. made by people receiving mortgages are found to be false, misleading or outright fraudulent?

As it seems that many mortgage brokers have been very “creative” in their applications for mortgages on behalf of their clients seeking to buy a home, I would think that CMHC may take the position that they were ‘defrauded’ should the numbers of payment defaults grow significantly.

#34 gary on 04.29.12 at 10:07 pm

Garth you previously stated what % of your income should go to a mortgage.What % of your income should go towards your rent?

#35 GEORGE on 04.29.12 at 10:23 pm

Australian new-home sales dropped in March to a record low, the Housing Industry Association said in a report that urged the central bank to cut interest rates by half a percentage point when it meets tomorrow

http://www.bloomberg.com/news/2012-04-30/australia-new-home-sales-fall-to-record-low-amid-rba-rate-pause.html

#36 Jpn on 04.29.12 at 10:24 pm

# 27 Kaganovich. Were you in Calgary in the early 80′s ?

Check into it…. Mortgages sold for a buck…. Many lost
their homes… Walked away from them leaving the keys with the banks. I remember signs pleading for another boom and the promise they won’t blow the money again

#37 Smoking Man on 04.29.12 at 10:26 pm

What fools do?

Go into a ripper joint showing off infront of the youngest son completly shit faced. Throwing a swing at bouncer missing by 3 feet the getting tossed out the front door
when the phyco son on the balcony accross the street at the delta is watching

Who now might be going to jail cause so fat fk needs dentiors

One day ill grow up

All the same amazing week end

#38 City Slicker on 04.29.12 at 10:36 pm

Garth, then why are you optimistic about the US future if you know all this?

The economy will still move forward slowly. Smart investors will do fine. — Garth
———————————————————-
So long as those investors know the next bubble to pop will be the US dollar. First it was the .coms, then RE, next the USD. BRICS alliances of Brazil, Russia, India, China and South Africa, and other country’s slowly but surely will be using gold, that’s right gold, as the reserve currency.

Will. Never. Happen. — Garth

#39 City Slicker on 04.29.12 at 10:36 pm

Oh here’s the link:
http://www.citypress.co.za/Business/News/Brics-move-to-unseat-US-dollar-as-trade-currency-20120324

#40 ellen on 04.29.12 at 10:36 pm

I used to live on that tiny island in BC that is not hooked up to the grid. People still have TVs, stereos, and lots of other things that require electricity, but of course not at the level that people on the grid do. Lots of appliances will run on 12volt. They just creatively generate the electricity they need themselves with solar panels, windmills, etc. Many things are possible if you opt out of the high energy-use lifestyle.

#41 Toronto_CA on 04.29.12 at 10:40 pm

If we get another global recession at the same time as people’s home equity plummets…yikes. Canada isn’t going to bring down the world if our houses correct of course, it would just be a local recession as people stop spending their HELOCs and fret about how their house is underwater rather than bragging how rich they are because someone’s house down the street sold for $25k more than asking.

But if we are in the midst of a correction in housing locally, and Europe goes bust or just a cyclical recession hits (every 8- 10 years or so, right?) at the same time…nasty.

Thanks for your blog post Garth, I did ask over the weekend on the comments exactly this question and you answered. It is true that Canada has never had a housing bubble created in this fashion so we have no history book to look into. The only consolation we can take is that we got out of the great recession pretty mildly by global standards (by going into massive household and government debt).

#42 Dontcallmeshirley on 04.29.12 at 10:41 pm

#31 penpal

Do you think that CMHC will renege on their mortgage insurance when they find out that claims of income etc. made by people receiving mortgages are found to be false, misleading or outright fraudulent?

——

Last year, in a BMO identity theft RE scam in Alberta, there was speculation underwriting deficiencies would be the basis for denying a BMO claim. I never saw any follow-up to that story.

It’s possible, but i would think a bank has a long list of mitigation before ending up on CMHC’s doorstep.

For example, a bank would have to try selling a property first. That could take up to a year or more.

#43 Garth and Einstein Share the Same Birthday on 04.29.12 at 10:43 pm

The reason behind the genius of the wise, all knowing, bearded mystic oracle who runs this blog is very simple. He shares the same birthday as the greatest physicist to ever live, Albert Einstein! The skeptics among you can wiki them both.

#44 dd on 04.29.12 at 10:54 pm

#38City Slicker

reserve currency.

Will. Never. Happen. — Garth
……………………………………………………………………….
China Iran swaps oil for gold.

#45 anon on 04.29.12 at 10:56 pm

anyone have any april updates for toronto and vancouver re: sales and inventory? I know there is still one day left, but I am curious how it’s looking.

#46 Furst on 04.29.12 at 10:58 pm

FURST!!!!!!YEEAAHH. I win again.

#47 BC Bring Cash on 04.29.12 at 10:58 pm

Garth says “smart investors will do fine” He may be right. Better to have a plan than none at all.
I quote from an article written by Jim Quinn as he talks about the experience in the US.
(Watching pompous politicians, egotistical economists, clueless media pundits and self proclaimed experts on the Great Depression predict an economic recovery and a return to normalcy would be amusing if it wasn’t so pathetic) Harpers economic action plan comes to mind. The signs are everywhere you look. He hasn’t even taken down the signs. Now he is declaring that the recovery is fragile. No kidding George. First stimulus which didn’t work and now austerity which will not work, whats next Harper?

http://www.silverbearcafe.com/private/04.12/nothing.html

#48 Furst on 04.29.12 at 11:02 pm

#37 Smoking Man on 04.29.12 at 10:26 pm
What fools do?

Go into a ripper joint showing off infront of the youngest son completly shit faced. Throwing a swing at bouncer missing by 3 feet the getting tossed out the front door
when the phyco son on the balcony accross the street at the delta is watching

Who now might be going to jail cause so fat fk needs dentiors

One day ill grow up

All the same amazing week end
_____________________________________________
Smokingman, what type of example are you setting for your son. I hope your children have the proper sense to go to college and get a job. This will allow them to be employed and not underemployed or unemployed like the situation you’re unfortunately facing. I’m not looking down on you at all or in any way. Many are going through tough times but I hope you can change. Like I’ve said many a time, spend your money on education. Don’t abuse the entertainment like the rippers and Ka-CINOs. You need to stop throwing your life away. Think positive, work hard and get a job. Your life will turn around soon my friend.

#49 Kaganovich on 04.29.12 at 11:05 pm

36

Its called sarcasm….check into it.

#50 John on 04.29.12 at 11:07 pm

Re: #14 To GOD and Garth we Trust

Whats that big sucking sound I hear?

#51 erik on 04.29.12 at 11:10 pm

That’s a correct reasoning, just give us a year or at least a decade when this crash will happen. Cause it goes on already for 5 yeas

#52 BURN on 04.29.12 at 11:11 pm

We don’t need no water let the MF’er burn! Burn MF’er BURN!!!

You know it’s really sad that Canada didn’t learn a lesson from the rest of the globe…..yes, it does make Canadians more ignorant than any other country.

#53 VancouverJoe on 04.29.12 at 11:17 pm

“A quarter of Americans now say they’ll retire after 80 …”

In reality it might be much worse, I would probably want to work after 70, but who will hire me?

#54 blase on 04.29.12 at 11:18 pm

I’ve been looking on rentfaster.ca at rentals in Calgary. I’m actually shocked at how cheap rentals are, considering what it costs to buy.

For instance, 2-bedroom apartment in Varsity near University of Calgary and LRT, building has indoor pool, nice exercise room, utilities included, $1239/month.

5-bedroom houses for rent decent neighborhoods close to transit, under $2,000.

One house had 2 bedrooms upstairs, 2 down, perfect for university homestay students downstairs. The rent was $1,700/month, and if you rented out the downstairs bedrooms for $500/each to homestay, you’re left paying $700/rent for a house. Who ever goes into their basements anyway?

The problem with housing and condo prices in Canada is that from a purely “place to live” standpoint, there are limitless choices for much, much cheaper than buying.

People who buy routinely don’t factor in the closing costs, the gas costs to live in the burbs, the furniture costs to fill the house, the repair costs, the property taxes, the interest rate hikes down the road.

People talk themselves into buying. They WANT to buy, so they find the facts that support the premise that buying is better. It’s how people think. It’s what makes it so easy for the banks and the government to borrow t heir lives away for hardwood, granite, and a deck.

I remember when the average house cost less than $200,000 in Calgary. When was that long, long time in the past? Less than 12 years ago.

A house is just a house. So many Canadians have forgotten that. It’s just 4 walls. What matters is the life you live in it.

I actually look forward to people coming back to earth and getting their priorities straight again. Hopefully there will be less BMWs on the road too.

#55 Not 1st on 04.29.12 at 11:20 pm

Garth, I thought the good ol american consumer was gonna rocket back and ride another financial wave. I guess they are really as broke as I have been saying all along. I think I will go long cat food.

#56 T.O. Bubble Boy on 04.29.12 at 11:21 pm

Here is my pick for “sleaziest listing”:
http://www.realtor.ca/PropertyDetails.aspx?PropertyID=11851404&PidKey=419286391

88 LAWRENCE AVE E Toronto, Ontario
Price Change. Apr 28: $669,000 Apr 29: $969,000

Seriously? This place went up $300k in 1 day?

I’ll also point out that this house was listed/re-listed 3 times in 2010 (for $799k). Back then it was listed as a 4-bdrm, so the current seller must have reno’ed and removed one of the bedrooms in the process.

So, not only did this place get listed for a “one day bidding war”, but they are also trying to get the buyer to essentially pay $170k for the renos that they’ve done over the past 2 years, including REMOVING A BEDROOM.

This typifies the current thinking in the bubbly areas of the GTA: buyers should pay over 100% of the home reno amounts spent by sellers, even if the renos are probably crap and may even be undesirable (i.e. removing a bedroom).

There are going to be a lot of contractors and flippers caught with some HUGE reno debts when this housing bubble bursts.

#57 The Thing in the Basement on 04.29.12 at 11:23 pm

22 DDW – it’s called “renting”

32 KTF – Warriors??

33 Penpal – yes, definitely, and possibly soon as CMHC wants to scare the pants off some who still may practice
that.

#58 Victor on 04.29.12 at 11:27 pm

Carney’s debt warnings at odds with monetary policy

Sunday, Apr. 29, 2012

Mr. Flaherty and the Conservative government share responsibility for the borrowing binge. Last week, the government tabled a bill to put federal bank regulators in charge of Canada Mortgage and Housing Corp. and its fast-growing mortgage insurance business. But the move comes after allowing a near-doubling of the agency’s insurance cap to its current level of $600-billion since 2007. CMHC is now on the hook for half of the $1.1-trillion worth of home mortgages in the country.

And there are the banks. Lending standards are arguably looser than they’ve ever been, allowing more people to reach further on borrowed money.

If the bubble bursts, Canadians will surely want to know why Mr. Carney and Mr. Flaherty didn’t do more, sooner.

Saying “I told you so” might not cut it.

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

http://www.theglobeandmail.com/report-on-business/commentary/barrie-mckenna/carneys-debt-warnings-at-odds-with-monetary-policy/article2417289/

#59 BC Bring Cash on 04.29.12 at 11:34 pm

Carney’s debt warning at odds with monetary policy. In other words he has helped create the debt monster that he now declares as the monster that needs to be slain.

http://www.theglobeandmail.com/report-on-business/commentary/barrie-mckenna/carneys-debt-warnings-at-odds-with-monetary-policy/article2417289/

#60 miller on 04.29.12 at 11:35 pm

Thank you Garth for the time that you spend on educating the masses.
Could someone please send a link to the story about the gulf island off the grid program. Thanks very much

#61 Smoking Man on 04.29.12 at 11:54 pm

#48 Furst on 04.29.12 at 11:02 pm

proper sense to go to college and get a job.

Are you for real….. My kids have the best education in the world, me as there dad., you want me to have them schooled so they can be someones bitch.

Don’t think so.

#62 Makavelli on 04.29.12 at 11:55 pm

Don’t buy RE or bonds? What’s safe now to buy? Equities & REITs?

#63 Inglorious Investor on 04.29.12 at 11:56 pm

#235 Mr Buyer on 04.29.12 at 6:18 pm

I agree. Actually, as I said before, I would call it a mania, plain and simple. I’m just saying that, by definition, if the consensus is that there is a bubble, then that means the consensus is expecting a bust. But markets don’t typically work on consensus.

Markets seem to work like Heisenberg’s Uncertainty Principle from the field of quantum mechanics. When you look at a particle, you can know either its position or its momentum, but not both at the same time. The very act of looking changes the state of the particle because you cannot observe it without interacting with it.

Market action is based on expectations. Therefore, if a consensus expectation emerges, the market will act to nullify the expectation. This is because the market is not the economy, but a group of people (and HAL 9000 A.I. machines) constantly trying to outsmart each other to gain the advantage.

So, either the market correction in Canada is going to be far, far worse than most can imagine, or the correction will be drawn out far enough that prices just stagnate (perhaps after a sudden, sharp shakeout drop) for a time while the rest of the economy catches up. How long this would take is anyone’s guess. Months? Years? Decades? Centuries?

I don’t know how the required rebalancing will manifest. But in any event, I think SFH could be a dead asset from an investment perspective for a long time.

Does this mean the economy will be dead? I don’t think so. Homes are but one asset––an important one to be sure. But if housing stagnates and homes become just places to live again (rather than investment assets), the economy will simply move on to other assets. Maybe we’re due for a paradigm shift.

Sounds almost sacrilegious, I know. But one day, we may very well look back on our current mania with housing, shake our heads and say, “What were they thinking?”, just like people today might look back on the Dutch in 1637 and say, “Tulips? Really?!”

#64 Peter Pan on 04.29.12 at 11:59 pm

This is my take on Flaherty’s recent pronouncements on real estate activity in Canada…

For Flaherty, CMHC is a flaming paper bag full of dog poop that he has dropped at the neighbour’s house.
Flaherty has created it and has left it on the doorstep of Canadian taxpayers… He knows what he has created and he knows what is going to happen.
Flaherty has rang the doorbell and he can’t distance himself from it fast enough…
Run little evil elf Flaherty, Run!

#65 penpal on 04.30.12 at 12:04 am

@ #42
Thanks for your input.

I am not sure that the Power of Sale allows a bank to wait a year to sell a property as there is an implied and very real cost to carrying that propety, which after a year, could add a lot to the bill for the shortfall that the lender will finally present to CMHC to make good on?

Thoughts?

Btw.. I was wondering also what came of that big mortgage fraud case with BMO.

My best guess being that CMHC hushed it by settling it out so as to not draw attention to what is likely more frequent an occurrence than they would care to admit.
Also, they may not want to give anyone any ideas to replicate the fraud.

#66 Opinionator on 04.30.12 at 12:12 am

Hold your horses chicken little haters. As much as you’d like everyone who’s already bought to crash & burn so you can pick up the entrails on the cheap, ain’t gonna happen. Housing might go down in Toronto or Vancouver, but modest correction – i.e. 10-15%, not 30-70% like in some U.S. cities. All the dirty shirts in Europe, instability in Middle East, nationalizations in Latin America are making U.S. & Canada look like safe harbours in comparison. So, we won’t depress, but will plod along at a negligible pace, i.e. 2-2.5 per cent, and the governments & central bank will continue their policies of financial repression (i.e. 0-1% interest rates) to develerage, but also because the U.S. government cannot afford to make interest payments to their bondholders if interest were to normalize to 4-5%. Toronto’s high bidding homeowners not out of the woods, but will probably come out OK, as real estate was underpriced, so it’s been reverting to the mean compared to other big cities.

#67 penpal on 04.30.12 at 12:21 am

@ # 37 Smoking Boy

You post here in the virtual world because in the real world no one listens to you.

I mean, seriously dude, if the average person met you in somewhere they would be out of earshot so fast that you would have no audience for your bs (whores and their ilk looking for an easy mark excepted).

Anybody that would stay and listen to your bragging azz would be too drunk, too high or a bigger douchebag than you (if that is even possible) to give you the adulation that you so cravenly seek.

By posting here you gain an audience that you could never have in real life.

My bet is that you are genuinely friendless in this world and a source of embarrassment for your family. Drug addled, drunk and whoring away your life doesn’t make you special and successful, just pathetic.

I find it quite odd that you NEVER respond to my posts or anybody on this blog that slags you in a definitive manner.

Sucks to be you.

#68 jp on 04.30.12 at 12:23 am

just a quick question,

how is interest going to be forced to go up?

I mean look at Japan, they just keep it low as deflation persists.

Not baiting here, just really have been going through it over and over again. I think if Japan can keep interest rates that low for that long, wouldn’t Canada be able to do the same?

Now, housing crash, deflation will take care of that no matter how low the interests are (like Japan).

#69 Tim on 04.30.12 at 12:24 am

Finally,
I’m sick of hearing people who make half the money I do telling me their condo has doubled, while I’ve been on the sidelines for years.

That elf from Whitby? You really have a hate-on for the little turd…

#70 VICTORIA TEA PARTY on 04.30.12 at 12:34 am

STOCK MARKETS: STILL VIABLE?

The world’s stock markets are a generally sonambulant lot these days.

And I don’t like it one bit.

For a number of years Garth has been extolling the virtues of the Canadian stock market as a place to purchase certain securities such a common and prefered bank shares, some energy companies, various protective ETFs and so on, in these otherwise uncertain investment times.

Fine. OK. But is NOW the right time to pursue that investment plan?

Or, is it time only to covet the cash and hope for a substantial market correction?

Wish I knew. Maybe the correction is some time distant.

NO REASSURANCE

Meanwhile, the fiscal/monetary noise out of Europe is amazingly depressing and noisy, as everyone, from the exhalted elites of Brussels to the hungry Greek street kids, seems to have completely lost their grasp not only on economic “cures” but also on reality itself.

Note that the Fascist salute has returned to the Greek streets as a national election there looms a week hence!

MEANWHILE BACK AT THE RANCH

And now, turning away from Garth’s stock advice to his more-than-well-predicted real estate market debacle; it’s unfolding as it should, but about two years late (better late than never) except for the tens of thousands of additional NEW victims it is about to consume along with the OLD new ones.

Garth wrote this today:

“…The consequences this time in Canada are unknown, since we’ve never had a housing bubble based on emergency interest rates, cash-back mortgages, variable-rate loans and government lender insurance. Add to that a rapid and building oversupply of housing stock, economic lethargy and a Boomer tsunami, and little F is right to freak out. Very few people are ready for what comes next.

But this real estate stuff is just the wick. It’s not the bomb.”

Ah, yes, the bomb.

It is a multi-headed hydra of a monster composed of aging boomers’ financial problems, continually crashing US real estate prices, nascent inflation, deflation worries, and Europe!

We don;t know how low those housing prices will go, and their effects on markets here. So…

SELL IN MAY AND GO AWAY?

That’s probably good advice for new investors.

For those who bought their bank and oil/gas stocks 20 dollars ago, I’d say stay the course.

For the newbies, stow the cash and wait a while.

The 2007-08 American house price collapse just about destroyed the world’s capitalist system.

A similar situation happening in Canada will merely destroy OUR system, unless, Mr. Carney decides to print more money and kick the can down the road summore!

Then will it be OK to jump back into the stock market (2009 repeat, but ONLY in Canada)?

I dunno!

#71 Debtfree on 04.30.12 at 12:42 am

@38citysliker brics are so 2011 . It’s mist now Mexico ,India ,south Korea ,turkey. China has reached the middle income trap . They will now be lucky to have 6percent growth . Mist is the new Rapid growth areas.Japan in the 70s Taiwan 80s south Korea in the 90s all went from 9 to 5 percent . Because the bigger an economy becomes the harder it is to maintain rapid growth. And Russia is having one of the largest brain drains ever. Oilogopolies /kleptocracies are like that.

#72 Steven Rowlandson on 04.30.12 at 12:43 am

I am expecting boomers and real estate prices to get flopped lower than whale crap. The fall out from that event will damage the fiscal and political credibility of both banks and government resulting in retrenchment and in some cases outright failure. The fall out from retrenchment or failure will mean a change in the political system and a lot of people losing their life savings from deflation if there is too many bad mortgage debts or hyperinflation if those loses are redeemed by the printing press because of government mortgage insurance… If mortgage debt is dodgy and it is backed by the government then government debt is going to look dodgy also. There is no real political will to pay down debt and that raises the questions. Why should any investor buy a government bond? Why should they buy a morgage backed security? These are serious questions if the policy is the continuity of low rates and rising risk of the debt not being paid or not being paid in currency that has buying power. Rising rates mean higher interest costs for mortgages and government debt. With out bond buyers that just leaves inflation or a collapse in government spending and financing for mortgages. Such a collapse means depression in the real world . All that home owners dreamed of is gone.
All the political promises of pensions, health care, education, welfare, subsidies and government jobs will be subject to real limits or even outright abolition.
Damn near every one in canada that can get a place to live at low interest rates and extreme prices has a place to live. There is a very limited supply of 20 and 30 year olds that are getting 6 figure incomes. It is so bad the government is importing foriegners to prop up the real estate market. There is no support for house prices from the 10 to 20 buck and hour crowd if they have any smarts. All this means that a collapse is unavoidable. It will go from real estate to the banks and government and then with the big spenders down and out the collapse will burn through the stock market and then the real economy.
You can’t have an economy based on government, banking/ finance, social programs, real estate and home construction and shopping. You have to have a broad base of primary and secondary industry, farming, fishing, logging and mining. Production of real wealth and good pay for workers is essential to a healthy economy. After that it is a matter of having a sane fiscal and monetary policy at the personal and national level.

You have to have the bulk of the population out of the cities and on the land where they can be self sufficient or less dependant on government and grocery stores. What has happened in the last 50 to 60 years has made canada more vulnerable to economic and social if not also political collapse than the depression of the 1930s. Yet next to the problem of Fukashima being 86 times worse than chernobyl and the zionists and their slave governments trying to start a nuclear WW3 an economic depression is almost no problem at all. What is a dangerously radioactive northern hemisphere worth?

#73 Nostradamus Le Mad Vlad on 04.30.12 at 12:47 am

-
Quote for this Market: “It’s almost worth the Great Depression to learn how little our big men know.” — Will Rogers (iTulip.com).
*
Bait and Switch Recession or depression? Democracy “Like a tidal wave, the crisis that has overwhelmed southern Europe smashed into the northern core last week.”; Double Dip to lower home prices, then here; CC details – info. Stolen out of thin air, due to new contactless tech.; Apple Tax avoidance or tax evasion? Their shares are worth a pretty penny; Baby Squid I would have voted for Porky Pig as the new BoE chairman; Lobbyists Prices for these will be heading north soon, such as here; 3:42 clip How NAFTA killed Smiths Falls; Cameron Why does he make a statement like that? Does he know more than what he’s letting on? UK Stamps Helluva hike in price; The Rich Get Richer Has anyone heard that expression? The Borg has assimilated the US Fed; 3:36 clip Ghosts of 1965 — Charles de Gaulle’s speech; Rising Rates Interesting perspective; Groowth Supplants Austerity Then why are so many losing jobs? Boeing wins juicy contract in China; but Slowing Chinese economy.

Krugman We’re finished, but Ups and Downs of life; Oausterity Chart; Western Siberia New oil; Less Money (chart incl.); Money and Sex or How To Ruin A Marriage; Unraveling The EZone; FTfm Lotsa links; 5:31 clip Fukushima — One ‘quake away (there were a bunch Sunday); Trilateral Commission Intertwining the economies of China, Europe and the US? “TC is essentially a junior affiliate of Bilderberg, the most exclusive and secretive club in the world, which was largely established under the auspices of the European-based Rothschild banking dynasty. “; Escaping poverty; Gold Price Suppression Dutch central banxter memoirs revealed.
*
Be Prepared in case of a FF in Chicago soon, and FBI – CIA previously hatched plots; Global Police State We’re in one; 11:14 clip Russia criticizes Israel’s propaganda; Holy Smokes! Smoking Man, apply for a few! Implanting false memories. The mind is an adequate to good servant, but a poor master. The Illumined Mind is a little better; Ten Biggest ‘Quakes.
*
disciple – Interesting stuff, and 44:31 clip Time travel? Only in the lower psychic regions, not the higher spiritual ones.

#74 T.O. Bubble Boy on 04.30.12 at 12:51 am

Apparently even “wealthy” ($100k+) Canadians worry about paying the bills:

http://www.canada.com/business/Housing+prices+cause+financial+worries+affluent+researcher/6538129/story.html

What’s there to worry about? Just sell your dumpy North Toronto “as is” bungalow in a HAM bidding war and the $1.1M should give you plenty of cash to pay the bills:

C2313424 – M2M – 429 CUMMER AVE Toronto, Ontario
Mar 21: $799,000
Mar 31: $899,000
Apr 29: $1,089,900

http://www.realtor.ca/PropertyDetails.aspx?PropertyID=11696590&PidKey=-1539198166

(future site of yet another ugly McMansion)

#75 John on 04.30.12 at 12:55 am

Ross Thomas wrote:

“Great site, though. Pass the popcorn.”

Really true. With the frequent articles of high quality, humor and good writing…plus some strong comments and links…I check into this site every day.

#76 Mr Buyer on 04.30.12 at 1:03 am

#54 blase on 04.29.12 at 11:18 pm
I’ve been looking on rentfaster.ca at rentals in Calgary. I’m actually shocked at how cheap rentals are, considering what it costs to buy.

For instance, 2-bedroom apartment in Varsity near University of Calgary and LRT, building has indoor pool, nice exercise room, utilities included, $1239/month.

5-bedroom houses for rent decent neighborhoods close to transit, under $2,000.
…………………………………………………………………..
These are horrendous amounts for rent. Try $800 for the 2 bedroom and $1000 for the 5 bedroom and you may actually have something people can afford. Even rents will see a reckoning before long. Speckers will not be able to gouge huge rents out of a tapped out population as this CRASH progresses. $800 a month for a 2 years old 3 bedroom house here an hour and fifteen minutes outside of Osaka Japan (by train). With factories humming at full capacity all around a year after a devastating Tsunami. The Crash after the bubble impacted rents as well. This will be a peak year for rents and they will decline as well.

#77 Mr Buyer on 04.30.12 at 1:04 am

that is 2 year old house not 2 years old house. Just do not pay any attention to me….

#78 Carpe Diem on 04.30.12 at 1:05 am

#2645north

There is no way in hell, I would stand up for any help to losers that can’t budget and forecast. Anyone who can’t handle their own home purchase should go in bankruptcy and get a really bad X to their names.

Better yet they should do some community service for the pain they have caused to the economic system.

My dad always said, don’t get in debt, don’t spend needlessly and don’t under-budget.

I of couse did not listen until I was 40 but I’ve learnt and listenned to my dad lots these days.

I have friends in Vancouver who have $1M assets but 600-700K in debt. They keep saying they are worth $1M … huh?

I wish the best for them but they’ve been warned plenty of time.

In the end, I won’t be able to help them with their lust for growth in one asset class.

This weekend I enjoyed this article at G & M about the Bubble Busting for the professionals …. check it out if you can find it.

#79 getreal-tor on 04.30.12 at 1:13 am

#56 T.O. Bubble Boy on 04.29.12 at 11:21 pm

Sigh, all these nay sayers… It did say the living room has “custom drapes.” This means you will be the only person in the neighbourhood with those drapes which in that area is worth at least 200k so considering it a bargain at 170k.

#80 Mr Buyer on 04.30.12 at 1:16 am

#63 Inglorious Investor on 04.29.12 at 11:56 pm
I’m just saying that, by definition, if the consensus is that there is a bubble, then that means the consensus is expecting a bust. But markets don’t typically work on consensus.
…………………………………………………………………….
Well lets stress test that assertion. Popular consensus holds that sunset follows sunrise. Lets take a sufficient large sample size of observations and check and see if this popular consensus is indeed a fallacy. I think there are many caveats that must be attached to that little bit of wisdom that render it meaningless and possibly dangerous when applied to this bubble. I think we have passed into the self evident phase of the bubble’s reality really. Markets (typical market forces whatever that means) do not really work on bubbles either, bubbles are a completely separate uncomplicated single cell form of life. Bubbles consume and spread until all resources are exhausted and then crash.

#81 Mr Buyer on 04.30.12 at 1:23 am

(To be sung as if the Chorus to The Great Pretender)
Well yes I’m the Great Attenuator
Oo Wa Oo Wa
Attenuating all the Time
Oo Wa Oo Wa
I worry about
A large scale bust
So I tell everyone,
Everything
will be fine
Oo Wa Oo Wa

#82 Mr Buyer on 04.30.12 at 1:45 am

I think the scope of what has happened in Canada and around the world is very hard to grasp. The implementation of Real Estate bubbles for economic reasons has shifted the ground so profoundly that the bubbles and more to the point their crashes may well in retrospect be the black swan events that initiate even more profound changes. As a boy watching Star Trek I had a hard time imagining how society made the shift from being money based. Never in my most elaborate imaginings did I come up with governments around the world rendered entire life times of work for money meaningless by changing lending practices to inflate housing prices which caused so much lasting harm that people saw money and more importantly the manipulation of money as an unnecessary social evil. Just because Japan did it and survived it did not make it a good idea. Japanese debt and Canadian debt are very different creatures.

#83 Investx on 04.30.12 at 1:59 am

“In the last two years an unknown and growing number of first-time buyers have put 5% or less down..”

And yet so much of what you write is based on these 5%’ers, not knowing how much they make up the market.

We have strong evidence 9 of every 10 new mortgage originations are 5%-down deals. Absolute numbers are not collected. But go and visit some 25-year-olds. Getting out will be good for you. — Garth

#84 Investx on 04.30.12 at 2:00 am

“Demand for preferreds will likely eclipse the impact of a slow normalization of rates. — Garth”

I hope so. But what are you basing this on?

#85 Soylent Green is People on 04.30.12 at 2:09 am

University is just a ponzi scheme

http://www.jamesaltucher.com/2010/02/dont-send-your-kids-to-college/

.
.
.

#86 jay on 04.30.12 at 2:12 am

#62 – I admit I am biased as I own the leading Canadian junior resource website in Canada; but you really should take a look at the precious metal explorers.

They have been hammered. Many of them are trading at with market caps less than cash on hand. You have to be careful and selective but there are stories there which are going to run up…a lot.

Meanwhile, at the DWI, another house in my leafy Victoria neighbourhoos was pressure washe over the weekend (and thanks a lot guys, nice noise on a Sunday morning) and should be listed tomorrow. Which means I can throw a rock off my terrace and hit three houses for sale and one vacant.

#87 Harlee on 04.30.12 at 3:23 am

Smoking Man = Pinocchio

Furst = Jiminy Cricket

#88 Peter Pan on 04.30.12 at 4:44 am

#61, Smoking Man…

I’m shure your a grate teecher. You’re kidz are going to lern a lott of grate stuff aboot speling and eckspressing theirselves from you. Dont send dem to no dum skool.

#89 Daisy Mae on 04.30.12 at 4:57 am

“If you made mistakes – like telling millions of people they could buy houses with zero down and lifetime mortgages without risk because it’s different here – there’s still time to repent.”

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

But, but, but….will Flaherty LISTEN? Seems to me he’s STILL attempting to shift the blame.

Now the DEVELOPERS are to blame for this disaster because they continue to build without a ‘fiscal plan’ in place….

#90 Daisy Mae on 04.30.12 at 5:14 am

john turner on 04.29.12 at 9:08 pm
Why do people even bother with this pathetic blog?

Beats me. — Garth

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

LOL That’s funny. But, believe me, I’ve learned soooo much from this blog over the years…so I really appreciate it.

Getting others to listen has been, and is still, NOT easy. I guess it’s because “(They) can’t HANDLE the truth” as Nicholsen would say.

They’re coming around, slowly but surely….but probably too late.

#91 groovin_123 on 04.30.12 at 5:41 am

” Of course they’re doing this because they perceive stocks to be dangerous and bonds safe. But the opposite is more likely true. As interest rates creep back to normality and the global economy stabilizes, bond prices and bond funds will take a drubbing as bond yields rise. ”

Uhmmm….. and what do you suppose will happen to stock prices when interest rates rise???….. (and they will be rising, and no, not due to an improving economy.)

Let’s also not forget the huge line of boomers ready to liquidate their portfolios in order to feeed themselves and stock up on depends.

Anyone ever seen a stock chart of the NIKEI? Here, let me help you.

http://finance.yahoo.com/echarts?s=%5En225+interactive#symbol=^n225;range=my;compare=;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;

Now click on ‘MAX’ timeline. See that big spike in 1990? Pretend that’s the TSX in 2008 and draw out the rest.

Demographics. Period, end.

Oh wait, it’s different here… lol….

A gradual rise in rates will have minimal impact on corporate profitability, so not many worries there. As for Boomers liquidating portfolios, you have it 100% wrong. Most have the bulk of net worth in real estate and many will need to convert that into income-producing wealth. Finally, there is little valid comparison between Canada and resource-starved Japan, with its massive savings rate, where cheap rates did not help real estate one whit. — Garth

#92 P & T S on 04.30.12 at 6:06 am

The reason behind the genius of the wise, all knowing, bearded mystic oracle who runs this blog is very simple. He shares the same birthday as the greatest physicist to ever live, Albert Einstein! The skeptics among you can wiki them both.

____________________________________________

The most recognised by the General Public maybe, but the greatest EVER most certainly not. Even Einsten admitted to “standing on the shoulders of giants” – giants such as Newton, Leibnitz, Planck, all of whom were in a different league. Arguably the General and Special Theories were as much formalisations of existing diverse work, as de novo innovation.

A major reason why the “Great Names” in Physics / Mathematics are “Public Unknowns” is that they mostly shunned the Public domain, and their work was of a complexity that is / was very far beyond the understanding of “The Great Unwashed”!!

#93 Wall St Banker on 04.30.12 at 6:15 am

I wonder if the Canadian banks will introduce a suicide-related disability to pay?

I recall those back in ’05-06′…….. we had a whole group devoted to obtaining Fannie/Freddie defaults as a result of Suicides/Murder-Suicides.

#94 I'm stupid on 04.30.12 at 6:28 am

I’ve posted here before about my sweet old mom. How I need to give her about 10k per year just so she has enough to pay monthly expenses. This will be a reality for most in Canada and the US. Every Realestate pumper quotes the same garbage when trying to explain current prices “inheratance in the next 20 years will make boomers kids rich”. Ya good luck with that. If you love your parents be prepared to finance their retirement or watch them live in poverty. My mother is lucky I guess because I still care. I’ve paid for cars vacations and helped her pay her monthly expenses for the last 5 years only to watch as it gets more expensive each year. That’s the reality of the situation. I just got the misfortune of having to be the first to do it.

#95 House on 04.30.12 at 6:58 am

an editorial board meeting at the Globe and Mail – that’s Larry, Moe and Curly right.

#96 Steve on 04.30.12 at 7:00 am

Is that the sound of the water level in the harbour dropping meters lower than normal???

#97 Market Bull on 04.30.12 at 7:07 am

“It is a capital mistake to theorize before one has data. Insensibly one begins to twist facts to suit their theories, instead of theories to suit facts.”

~Sherlock Holmes

#98 CTM on 04.30.12 at 7:15 am

http://www.huffingtonpost.com/2012/04/29/foreclosed-homes_n_1461533.html

The future?

#99 unbalanced on 04.30.12 at 7:23 am

It wasn’t that long ago that some people here stated buy USA. Well guess what. It’s still going down. Do what I do. Visit and go rent a place for a few months. My interest from my lowly GIC’s pays for it all. No headaches. Something breaks, phone the agent. Sit back and enjoy. Oh!! Did I mention my 3 kids come down for free. To each their own.

#100 Stephen on 04.30.12 at 7:44 am

Hey Victoria Tea Party (poster #70), I fully sympathize with your struggles over what to do with your investments right now. My balanced portfolio of REITs, preferreds, dividend equity ETFs, and bonds has generally done OK until now. But everything I read (and I read a lot) suggests that it is going to be a rough summer for investors. This blog focuses on housing, and we all know how bad that mess is. But world wide, there are a lot of other issues that are just as serious, if not more so. I hope Garth is right about preferreds, but I’m not entirely convinced. And he probably IS right about bonds. So, what are we to do? Personally, I’m taking a bit of a break for a while. Friday I sold some equity ETFs that have done exceptionally well. And I’m going to sit on the cash for a few months. If there is a correction, and I think the odds are better than 50% that there will be, I’ll buy back in. The housing bust is certainly going to have some effect on the economy. I just don’t know what it will do to stocks. And the mess in Europe bothers me. Sitting on cash (about 25% of my portfolio at the moment) for a little while is, in my opinion, a smart thing to do. Buy low, sell high. Sell some stuff that has done well, and wait for the next correction. I think it’s close.

The No. 1 destroyer of wealth among DIY investors is trying to time the market. Just construct a balanced and diversified portfolio and check is every six months. Or don’t be so cheap and hire a pro. — Garth

#101 Don on 04.30.12 at 7:58 am

I’m stupid on 04.30.12 at 6:28 am
I’ve posted here before about my sweet old mom. How I need to give her about 10k per year just so she has enough to pay monthly expenses. This will be a reality for most in Canada and the US. Every Realestate pumper quotes the same garbage when trying to explain current prices “inheratance in the next 20 years will make boomers kids rich”. Ya good luck with that. If you love your parents be prepared to finance their retirement or watch them live in poverty. My mother is lucky I guess because I still care. I’ve paid for cars vacations and helped her pay her monthly expenses for the last 5 years only to watch as it gets more expensive each year. That’s the reality of the situation. I just got the misfortune of having to be the first to do it.

No you have the fortune to be able to do it.Some are not so blessed!
.

#102 Smoking Man on 04.30.12 at 8:02 am

DELETED

#103 Garth and Einstein Share the Same Birthday on 04.30.12 at 8:12 am

#90 P & T S

I respectfully disagree and so do 130 of the world’s leading physicists . You also have your quotes wrong. It was Newton who said he walked on the shoulders of giants not Einstein. According to a poll taken of 130 of the world’s leading physicists, by the British journal Physics World, Albert Einstein was voted, among these distinguished physicists as the greatest of all time. Newton came second.

http://media.caltech.edu/press_releases/12019

#104 Garth and Einstein Share the Same Birthday on 04.30.12 at 8:24 am

Better link to the end of the millenium poll by Physics World magazine ranking Einstein as the greatest physicists of all time.

http://news.bbc.co.uk/2/hi/541840.stm

#105 Arse on 04.30.12 at 8:40 am

Real gross domestic product in Canada declined 0.2% in February. Temporary closures in mining and other goods-producing industries contributed to the decline. Decreases in mining and oil and gas extraction, manufacturing, utilities as well as forestry and logging outpaced advances in construction. In service-producing industries, gains in wholesale trade and in the finance and insurance sector outweighed declines in retail trade and in the transportation and warehousing sector.

#106 HalifaxEd on 04.30.12 at 8:49 am

People in Halifax still convinced they are sitting on goldmines with the shipbuilding contract just around the corner. After all, it is different here, even though our economy has stalled, wages are weak, taxes are high, and people here are just as loaded with debt as the rest of the country. But the ships will save us…right?

They are still building half-empty subdivisions with $400K plus homes for all the welders and electricians soon to return home from out West and/or be imported from overseas. Realtors (and their loyal lapdogs in the media) are already gushing over bidding wars, even though you could probably count them on one hand.

We will all be rich soon…Halifax is the new Calgary and Toronto, even though there is no economic engine or influx of population to justify it. Buy now and don’t worry; the ships contract has inoculated us from any impending financial repercussions. It is different here in Nova Scotia.

(This was intended as sarcasm, for those with busted detectors.)

#107 Ret on 04.30.12 at 9:15 am

#24 House for sale in Leslieville

I checked the link. Looks like a piece of crap for $600,000 and even that wide angle lens can’t hide the 17 ft lot. They want the living room and dining room chandeliers excluded. I’m sure that they are exquisite but play games with someone else. The sellers of this pile can’t be serious.

They are too lazy and cheap to even get off their derriere and put up some home depot cheapies.

#108 NoName on 04.30.12 at 9:21 am

#92 I’m stupid on 04.30.12 at 6:28 am

What you are doing for your mom is very nice of you, but many of us are doing same thing. Maybe not to that extent of cars vacations etc, but I can tell you that “philanthropy” is big with most of the immigrants. Some of those foreign people (i like to call them) are health insurance, college fund, and breadwinner for their family in overseas.
Not all of us come with monies, for those like me and my wife who came from 2 different continents with no money, road to prosperity is just different mind set, education and institution of family first, and everything else second.
Some times it sucks to be immigrant…

#109 disciple on 04.30.12 at 9:43 am

#43 Which Einstein? There was at least one doppleganger… This post is dedicated to smoking man:

“The only thing that interferes with my learning is my education.” – Albert Einstein

“The purpose of Compulsory Education is to deprive the common people of their commonsense. – Chesterton

“Real education must ultimately be limited to men who insist on knowing, the rest is mere sheep-herding.” -Ezra Pound

“Common sense is in spite of, not as the result of education.” – Victor Hugo

“Against my will, in the course of my travels, the belief that everything worth knowing was known at Cambridge gradually wore off. In this respect my travels were very useful to me.” – Bertrand Russell

“The public school system: Usually a twelve year sentence of mind control. Crushing creativity, smashing individualism, encouraging collectivism and compromise, destroying the exercise of intellectual inquiry, twisting it instead into meek subservience to authority.’”—-Walter Karp

#110 Do Do Bird on 04.30.12 at 9:51 am

There are some inexpensive pockets of houses in Ontario like Windsor and Fort Erie. I do not know why these great communities are undervalued and ignored but being Toronto centric in Ontario has cost many of these fine Ontario towns more than just jobs.

#111 Dontcallmeshirley on 04.30.12 at 10:00 am

#65 penpal,

I am not sure that the Power of Sale allows a bank to wait a year to sell a property
—–
The CMHC resolution process has never been articulated in public media that i’m aware of. CMHC insurance likely requires a bank to pursue a “best efforts” recovery before defaulting to an insurance claim. “Best efforts” can mean a hundred different things and take who knows how long.

The BMO mortgage fraud is likely before the court. It’s a perfect example of the maze a lender has to go through before netting a CMHC claim.

But your original point was might CMHC walk from claims and force lenders to eat their own cooking. Not likely, it would be a case by case court process.

#112 Inglorious Investor on 04.30.12 at 10:02 am

#80 Mr Buyer on 04.30.12 at 1:16 am

If it’s all so self evident to you, Mr. B, then try this:

1. Predict the timing of, and values at, the peak.

2. Predict the duration and nature of the decline (e.g crash, slow burn, crash followed by slow burn, crash followed by sharp recovery, lasting one year, two, years, 20 years, etc.)

3. Predict the timing of, and values at, the bottom.

Then let’s wait and see how right you were.

#113 Tiny Bottoms on 04.30.12 at 10:08 am

Canadian banks got $114B ‘bailout’ during recession

Support for banks ‘much more substantial than Canadians were led to believe’: CCPA report

One of the most well-known ways in which policymakers helped the banks during the crisis is through a $69-billion CMHC program whereby the housing agency took mortgages off the balance sheets of big Canadian banks.

“The federal government claims it was offering the banks ‘liquidity support,’ but it looks an awful lot like a bailout to me,” says Macdonald.

“The support for Canadian banks was much more substantial than Canadians were led to believe,” Macdonald said.

http://www.cbc.ca/news/business/story/2012/04/30/bank-bailout-ccpa.html

#114 Victoria on 04.30.12 at 10:09 am

Halfix Ed

We were thinking of moving to Halifax at one point. We are fed up with BC. Anyway, the RE agent we spoke said we better buy now because everything is going and may double in price. :-)

#115 Victoria on 04.30.12 at 10:13 am

Don,

My parents died suddenly 14 years ago. If they were alive today they would be around 80 and I can’t imagine how they would survive. My dad was lucky to retire early and had a good job when he worked but considering interest rates they would have been screwed.

I wonder why there is not a Lobby for seniors and the interest rate debacle. I am certain many are in this boat. The country is too under populated and too spread out for any group to join together. That has always been the problem…. but still.

#116 Canadian Watchdog on 04.30.12 at 10:14 am

Daniels FirstHome Hazelton Place Sells Out In Just One Day: http://blog.buzzbuzzhome.com/2012/04/firsthome-hazelton-place-sold-out.html

“The developer also offered a “Gradual Deposit Payment Plan” which requires buyers to pay $2,500 with the Agreement of Purchase and Sale, then another $2,500 within 10 days of the purchase and finally $1,000 every month until they reach 5 per cent of the purchase price or they move into their home.”

In other words, builders are now offering an interest free deposit loan to entice buyers. Brilliant. Now TREB can add these future sales to their statistics in order to pump up GTA’s average price in their next monthly report, because as Robert Hogue noted in RBC’s latest economic report:

“[T]he strong gains in property values from 2009 to early 2011 were overstated by MLS average price data.”

Right he is.

#117 Smoking Man on 04.30.12 at 10:21 am

Fake smoking man give it a rest your tranishing my brand

Penpal you just inspired an epic post. For tonight thanks

Bubble heads GDP ouch. Translation if you think Carneys coconuts where in a knot before well the vise just sqizzed em a bit more.

Unless we have massive job gains rates will go nowhere. F and C can talk the market down all they want but unless the herd sees some real action. Up up and away

#118 Doug in London (formerly Abitibi Doug) on 04.30.12 at 10:22 am

So at long last Flapperty and Brother Carney have decided to do something about this runaway real estate bubble. That’s great, but isn’t acting now like locking the gate after all the cattle get out?

#119 Market Bull on 04.30.12 at 10:28 am

U.S. Economic Data released today:

“Personal income increased $50.3 billion, or 0.4 percent, and disposable personal income (DPI) increased $42.5 billion, or 0.4 percent, in March, according to the Bureau of Economic Analysis.”

#120 Paul on 04.30.12 at 10:37 am

Canadian banks did not need a bailout. Oh Steven.

http://www.cbc.ca/news/business/story/2012/04/30/bank-bailout-ccpa.html

#121 Not 1st on 04.30.12 at 10:49 am

Garth, how about some real evidence of this boomer housing sell off and reinvestment into equities, like a poll or something. I think if you did some questioning you will find that most boomers will hang on to their family home no matter what. The property markets up for 10 years straight and this group is still not unloading in mass yet. What are they waiting for? The talking heads on CNBC are just sure all this money is coming back in, but I don’t think so. People got a shock to there retirement in 2008 and are not going to risk it again.

And somebody 65 has no appetite for the volatility of equities at that age anyway. They are looking for safety so expecting this mass influx of housing funds to goose the stock market is folly. Not gonna happen. At the same time millennials, Gen Xers and most foreigners shun the market too. This thing will be in sideways motion for a long time.

An argument time will prove is limp. People need cash flow, not illiquidity. But, granted, some folks will hang on to their homes until it is too late to save them. I trust you will be one? — Garth

#122 Metro Van Observer on 04.30.12 at 11:00 am

While I agree with you that individuals need to take responsibility for securing their financial futures (retirement) I think the wealth divide needs to be acknowledged as well. The 1 & 99% divide is an issue today exactly because of the wealth concentration being consolidated into fewer and fewer hands.

The looming retirment crisis illustrates a broken capitalist system where most working people struggle to make ends meet with ever increasing costs while wages (despite productivity gains over the past decades!) are often lower after adjusted for inflation compared to say the late 70′s/early 80′s.

In other words, poor financial planning comes against a backdrop where the middle class is (has been?) destroyed by a repressive financial system. Why would people trust stocks when they’ve been burned so many times in the past 1o years? Maybe people are tired of playing in the boom bust financial casino?

Just some thoughts.

The system is not broken. Most people are financially illiterate in a world which demands more and more knowledge. The tools are widely available. Most people choose to watch HGTV and SportsNet instead. — Garth

#123 Lianne on 04.30.12 at 11:08 am

#113 Tiny Bottoms

Canadian banks got $114B ‘bailout’ during recession

Support for banks ‘much more substantial than Canadians were led to believe’: CCPA report

***********

Funny… Eric Sprott said virtually the same thing back in November 2009.

http://www.sprott.com/media/34041/MAAG-11-2009-Dont-Bank-on-the-Banks.pdf

#124 Babblemaster on 04.30.12 at 11:12 am

#21 penpal

I’m sure that Mr. Greenscam has his detractors now. Especially in view of the huge mess he was instrumental in creating. However, he is still generally treated with deference in the MSM and he remains unapologetic. And has profited in retirement, though the gravy train may be running out of steam – he has still done well. There is no accountability.

Though Mr. Flatulence is not of the same stature in the financial world, he will still serve on various boards and he will consult and he will have many paid speaking engagements. He will not be held accountable.

#33 penpal

No one will be held accountable. Nobody was in the US. Not at any level. Case in point; the fools who bought vastly overpriced homes they couldn’t even begin to afford, with liar loans, are considered to be victims that are deserving of a bailout by the rest of the populace. And nobody at the mortgage company, or at Fannie Mae, had to face any comeuppance. Not in monetary terms and not in legal terms.

#125 Timbo on 04.30.12 at 11:13 am

http://www.marketwatch.com/story/chicago-pmi-slows-to-29-month-low-in-april-2012-04-30-1016220?link=MW_pulse

“The index for production saw the steepest drop in 11 months, falling to 57.1% in April from 68.6% in March. That’s the lowest level since September 2009. ”

still above 50 but barely……

http://www.marketwatch.com/story/consumers-spend-at-slower-pace-in-march-2012-04-30

“The combination of slower spending and faster income growth pushed up the savings rate to 3.8% from a post-recession low of 3.7% in February.

Economists caution that consumers cannot keep drawing on their savings to pay for goods and services. Eventually wages will have to rise faster or Americans will cut back, hurting the economy. ”

Government handouts cannot go on forever to subsidize spending….

#126 Canadian Watchdog on 04.30.12 at 11:32 am

“The system is not broken. Most people are financially illiterate in a world which demands more and more knowledge. The tools are widely available. Most people choose to watch HGTV and SportsNet instead. — Garth”

That’ equivalent to a hedge fund manager calling you financially illiterate because you’re not some quant trader making 20-30% on complex derivative trades on the OTC market. People shouldn’t have to be financial experts just to save the fruits of their labour.

Expert status is not required. When people would rather have a house than a financial plan, they architect their own demise. Surely you are not justifying willful ignorance. — Garth

#127 amazed on 04.30.12 at 11:38 am

True story, my relative got a call from the bank today…. banker eliminated his fees and gave him a line of credit for fun and another visa for fun… my relative says I don’t need it… but Mr. Banker insists he takes it. It doesn’t cost you anything and you will have no fees…. ok… takes it…strange world.. when you need it they won’t give it to you and when you don’t they are all about giving you the money.

#128 Mr Buyer on 04.30.12 at 11:45 am

#112 Inglorious Investor on 04.30.12 at 10:02 am
#80 Mr Buyer on 04.30.12 at 1:16 am

If it’s all so self evident to you, Mr. B, then try this:

1. Predict
……………………………………………………………………..
I predict a massive crash as all bubbles crash. Good night (Just collected another data point and night did follow day again on my side of the earth, how about yours?)

#129 Stephen on 04.30.12 at 11:51 am

“The No. 1 destroyer of wealth among DIY investors is trying to time the market. Just construct a balanced and diversified portfolio and check is every six months. Or don’t be so cheap and hire a pro.” — Garth

I don’t disagree with your first sentence. However, I’m not cheap. But I am careful. I do a ton of research, and I buy and sell very infrequently, and only after a lot of analysis. I agree that most people should hire a pro; the problem is that it’s really difficult to separate the good ones from the bad ones. And there are a lot of bad ones out there. Uneducated and inexperienced investors simply don’t know how to find a good one. They don’t even know the basic questions they should ask, or what they should be looking for. Furthermore, the really good pros are generally only interested in clients with a minimum 6 figure portfolio. So even if a new investor wants to work with a pro, they are usually very limited in their choices, especially outside of the major centers. For example, try to find a really good, and available, pro here in Atlantic Canada where I live. For me, it makes sense to do my own research. I trust my own ability more than I trust a young inexperienced unproven professional, regardless of how many letters he/she may have behind her name.

Put the same research you devote to picking assets into finding an experienced, independent-minded, no-commission, fee-based advisor who sells nothing and practices active management. That’s a better investment. — Garth

#130 coastal on 04.30.12 at 11:58 am

“Canadian banks got $114B ‘bailout’ during recession”

Of course they did, but no one wanted to spoil the party so the world was led to believe Canada was the Rock of Gibraltar. What a load of crap. Now watch the real estate industry try to bury this but it’s too late, the cat is out of the bag and the house of cards is about to crumble. Many young and dumbers are about to learn a life-long and very painful lesson. Talk about being F’ed.

#131 John saccy on 04.30.12 at 12:05 pm

Who wud thunk this?

http://www.zerohedge.com/news/quantifying-big-five-canadian-banks-114-billion-bailout

#132 Canadian Watchdog on 04.30.12 at 12:06 pm

The Red Pin MLS Weekly Listings Up 5.3% w/w, 65% m/m. http://www.theredpin.com/blog/canada/toronto-real-estate-%E2%80%93-your-weekly-mls%C2%AE-update-%E2%80%93-apr-3-2012

#133 Not 1st on 04.30.12 at 12:10 pm

An argument time will prove is limp. People need cash flow, not illiquidity. But, granted, some folks will hang on to their homes until it is too late to save them. I trust you will be one? — Garth

Unfortunately, my argument holds up to the recent evidence, while yours does not.

- More than 10 years of home price increases and boomers still not selling. Some have seen their home prices quadruple and still they hang on.

- daily warnings on consumer debt and housing bubble and sovereign debt problems, yet boomers still don’t sell.

- 2009 lows in the stock market and boomer cash didn’t come back in then.

- QE has been goosing the gains in the market for more than 3 years, yet boomer money stays on the sidelines.

- Corporate profits at record highs for a couple quarters now, money stays out. Volume has been thin which indicates these are hedge funds trading back and forth, not retail investors.

Now I ask, what exactly is the catalyst that will bring about this mass influx into equities from coming retirees?

A very large percentage of boomers will hang on to their house and work part-time or seasonally to fund whatever retirement they can get. They will not be funneling any more money into the stock market no matter what yields they can get. They will eschew all risk at that stage of their life. Many will have adult children living with them into their 30s because thats the new reality we have created for our young people. Many will simply keep their house until they go to the nursing home. The home will likely be willed on to the kids.

I will propose a much more likely reality that the stock market stalls and falls when RRSPs and 401Ks are cashed in over the next 5-10 years.

Believe what you wish. The Boomer real estate equity exodus will be a defining feature of the financial landscape over the next 15 years. Best prepare now. — Garth

#134 Sales stalling in the GTA? on 04.30.12 at 12:10 pm

Opinionator#66

You are a deluded realtor who doesn’t understand economics but what do people expect from a realtors who has 6 weeks training and then become an experts..lol. The housing crash in Canada is going to be worse then the one in the 90′s. Canada will have a US style like crash. You can wish all you like but if it wasn’t for the CON’s bailing out the banks $110+ billion dollars in 2008-09 the housing market would of crashed so hard! Now the COn’s will not increase CHMC so the ponzi is going to crash. EVERYONE in the industry knows it and everyone on this blog knows it. The truth is getting out there.

#135 VICTORIA TEA PARTY on 04.30.12 at 12:23 pm

#100 Stephen

DIY investors, as Garth puts it, live risky investment lives. The problem with finding “pro” to handle your portfolio, is ANOTHER problem.

I used the word “is” instead of “could be” because in the 43 years I’ve been investing I can’t tell you how much bad advice I’ve received and, in the result, the number of advisors I’ve had to sack.

If you want to know whom my best advisor has been to date, it is Garth! And I’ve never met him! Free advice. How nice. Thanks.

BROKERS STILL ARE NECESSARY

DIY investors, nevertheless STILL need a full-service broker, but they SIMPLY MUST become students of history, economics and politics.

That is a full-time course of studies that is profoundly interesting and, yes, history has a definite cyclical bent!

TO HELL IN A HOME-MADE HANDCART

My latest advice is to keep eagle eyes out on Europe and the fraudulent ECB money-printing, backroom deal-making and the emergence of strong left-wing and right-wing “rump” groups seeking to find scapegoats for their attempts at power grabs.

Germany, France, Spain, Italy and Greece are firepits of “social change” which could boil up into monster human tragedies.

Study European history from the Great Depression years and the pre-World War Two “combat” between Communists and Fascists in Germany, France, Spain, Italy and Greece!

Is history repeating, in some fashion or other? I’m kidding myself. Just kidding!?

And China. What’s going on there? The veils behind veils, the internal Communist Party politics, and the collapsing bhousing markets are a bother for investors. Outcome? Not right now.

THE DISMAL SCIENCE

From an economics standpoint, keep a lookout for changes in interest rate TRENDS, and watch commodity prices.

Some cash on the sidelines is good. Twenty-five per cent is cautiously competent.

But keep on studying all of you DIYs and brokers (“my” brokers? Never met a more historically ignorant lot in all my life! You’re fired!)

#136 John on 04.30.12 at 12:33 pm

The economy will still move forward slowly. Smart
BRIC postings:

“investors will do fine. — Garth
———————————————————-
So long as those investors know the next bubble to pop will be the US dollar. First it was the .coms, then RE, next the USD. BRICS alliances of Brazil, Russia, India, China and South Africa, and other country’s slowly but surely will be using gold, that’s right gold, as the reserve currency.

Will. Never. Happen. — Garth”

————–

Regarding the above exchange, it’s more reasonable to conclude, “Will. Never. Happen.”

Why?

Well, look at the order of operations in a landscape of money junkies:

1. Currency wars
2. Trade wars
3. Real wars

It’s best to understand the reality of addiction. Addiction means making a pain-relieving higher power out of something to avoid the pain of self. Consider the perceived threat to an addict, who is disconnected from self, desperately living a false self. Filled with self-hate and pain. There is no WAY he will back down.

And the judgment centers are turned off ( check out “hypofrontality” on youtube). They neither know about or are capable of making real decisions. Thus you have a “Romney” who does anything to win. And he’s a non-player in what’s been driving the Canadian real estate fraud. A spoke in the wheel. Obama, Merkel, Sarkosky too. All.

The money junkies CAN’T back down and would never allow gold as a legit entity in their riverboat derivatives casino. Never. Unless they were defeated in a war. Since they play extremely dirty, that’s unlikely.

You can toss all the BRIC’s you want. The game IS rigged, and gold might be used in some form of trade, but not in the current ponzi.

What happens with mafia turf wars? Same dynamics. But with fools at the base of the pyramid, in debt or not, with a house or not, invested or not, aware or not….holding it up.

That ye olde Canadian sense of entitlement means nothing to the mafia. And since they know how much the media “has” the public, they can fly almost anything now to see what happens.

Addicts know how other addicts think.

BRIC, sure…gold sure…if they can develop a corrupt military and political edifice the likes of what the mafia has first. It doesn’t seem likely at all.

However…it’s a crap shoot right now. Since up is down and black is white, anything can happen.

Gold will never again be currency. Stop dreaming. — Garth

#137 GregW, Oakville on 04.30.12 at 12:38 pm

Hi #19 Nostra, re: the Harbourside “Organic” Farmers’ Market (HOFM) in Oakville is moving location this year.
To the THE WHOLE FOODS TERRACE!!(301 Cornwall Rd.)
In 2012, the Harbourside Organic Farmers Market will be open from 9 a.m. to 1 p.m. on Saturdays (June 16 to October 27). For more info and some other growing
Good Food ideas. http://www.oakvilleorganicmarket.com/

#138 Bottoms_Up on 04.30.12 at 12:39 pm

Garth, that’s proof that F really does like you.

In terms of things ever getting back to normal…not sure if they can (other than a crash)?

I mean, how does the average family save 20% (or even 25% Dogforbid) as a dp? We’re talking $70-80,000? That’s a lifetime of savings as per your own admission that 1/3 people at the age of 60 only have $20,000.

That’s why the 5/30, 0/35 and 0/40′s were brought in in the first place…people couldn’t save because it’s expensive to live. 0/40 enabled people to get into houses despite the rising prices. Canada should have taken its medicine years ago and not tinkered with the housing market. Yes, prices would have come down, but today they would be at more affordable levels, and people would actually be saving to buy their home.

I probably would still be saving (rather than having bought in 2009 with a gift dp of 8%). And, the house I’d be looking at buying would be nicer, and ultimately my mortgage smaller, and my lifestyle better.

The next few years are going to be very interesting….

#139 Andrew Norman on 04.30.12 at 12:41 pm

Markets tend to lead the economy by about 3 months. The markets have been stalled since the start of April.

And the move from December 2011 to the beginning of April 2012 had historically low volume.

http://bullandbearmash.com/index/djia/weekly/

In short, we could be in for a big down turn and real estate will not be spared.

#140 Inglorious Investor on 04.30.12 at 12:42 pm

#128 Mr Buyer on 04.30.12 at 11:45 am

Really, Mr. B? Somehow I expected better. Oh well.

#141 Junius on 04.30.12 at 12:52 pm

#133 Not 1st,

You said, “A very large percentage of boomers will hang on to their house and work part-time or seasonally to fund whatever retirement they can get.”

You don’t make your case. It makes sense that boomers would hang on to their houses over the past decade because more than any generation they believe this is the path to financial success. However when the market cools and begins to drop they will start looking to realize their gains. Furthermore you underestimate the number who want to sell and move to a more affordable and warmer location.

One thing is for sure, they will not hang on to their homes forever.

#142 Junius on 04.30.12 at 12:57 pm

#131 John Saccy,

The Canadian bank bailout was discussed on this Blog throughout 2009, 2010 and 2011 as was the heavy involvement of banks such as TD and CIBC in US subprime.

The MSM rhetoric of the Canadian banks being conservative and prudent is pure fiction. The Canadian banks are not the worst of the gang but they are members of the club. If we did not have better regulation than the US and Europe then they would have been just as bad. Thank you Paul Martin.

It is not so different here.

#143 Mister Obvious on 04.30.12 at 1:01 pm

#109 diciple

I see you are now quoting the great philosopher and mathematician Bertrand Russell. Good for you. May I suggest you check out Russell’s essay: “Why I Am Not A Christian”. I highly recommend it. Here it is for your convenience:

http://www.users.drew.edu/~jlenz/whynot.html

#144 The Opportunist on 04.30.12 at 1:04 pm

“A quarter of Americans now say they’ll retire after 80 – about two years longer than most will live. On average people have saved only 7% of their modest retirement goal ($350,000). Thirty per cent of people aged 60 have about twenty thousand saved. Only one in nine is confident about retirement. And 60% have a net worth, outside of real estate, of $25,000 or less. Yikes.”

Hey Garth, who’s your source for this info? – new guy to this pathetic blog

Then you will quickly learn I make everything up, to save on research and have more time for Amazonian sponge baths. — Garth

#145 John on 04.30.12 at 1:04 pm

Just one more thing…about what “Coastal” wrote:

“Canadian banks got $114B ‘bailout’ during recession”

Of course they did, but no one wanted to spoil the party so the world was led to believe Canada was the Rock of Gibraltar. What a load of crap. Now watch the real estate industry try to bury this but it’s too late, the cat is out of the bag and the house of cards is about to crumble. Many young and dumbers are about to learn a life-long and very painful lesson. Talk about being F’ed.”
—————

What is the specific counter-argument for this? Not generally. Not a one-liner. Not an emotional fuzzy retort. Not some “bullshit baffles brains” crap. Just a simple ABC counter-argument. So as not to lose the vigorous spirit of a good debate.

Here’s a framework for a potential counter-argument ( a real one):

A.

B.

C.

Really, I can’t even imagine what would go in front of this letters…and it’s even more complex now because I’m not stupid. Hell, a lot of people aren’t stupid now. Kind of inconvenient aint it?

#146 disciple on 04.30.12 at 1:04 pm

Here’s another example of why I only listen to the MSM to find out what they’re lying about now… Larry Silverstein, the twit who “pulled” WTC7 is Jerry Stiller.
http://www.youtube.com/watch?v=ESDqcqZ6QkQ&feature=uploademail

All of these “actors” that have been uncovered recently probably went for training at the Tavistock Institute in England, just like Hitler did for 5 years.

The red phone that the “Commander-in-Chief” has in the Oval Office, connects directly to the Tavistock Institute, a “charity”. Look at how sparse the info is on Wikipedia on this propaganda arm of the global war machine. They thought up euphemisms like, “collateral damage”, “quality of work-life”. Hmmm, those 300 families are popping up again…

#147 Victor on 04.30.12 at 1:10 pm

The age of easy credit gives rise to ‘grandpa debtor’

April 26, 2012

“We’re seeing a growing number of older people that are carrying debt right into retirement, and a lot of the time it’s credit card debt,” Mr. Elyea said.

Mr. Elyea said that frequently it’s a triggering event that pushes “grandpa debtor” into a debt crisis situation. “It’s usually a function of them getting sick or losing their job or getting divorced, and they can’t replace that income,” he said. “All the financial planners will say you should have three or four months [of income] saved as a safety net, but typically what we’re finding is that they’re using credit as their safety net.”

“People don’t have the savings.”

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

http://www.theglobeandmail.com/globe-investor/personal-finance/home-cents/the-age-of-easy-credit-gives-rise-to-grandpa-debtor/article2409310/

#148 Smoking Man on 04.30.12 at 1:11 pm

Another beuty example of the machine at work

Headline in financial post

Canadian big banks flee nonprime market amid signs of a housing downturn

So if it aint Prime what is it? Lmfao

Getting the word out will keeping credit worthy as they have wrote many times. Canada does not have a subprime mortgage market

#149 debtified on 04.30.12 at 1:11 pm

#121 Not 1st on 04.30.12 at 10:49 am

Garth, how about some real evidence of this boomer housing sell off and reinvestment into equities, like a poll or something. I think if you did some questioning you will find that most boomers will hang on to their family home no matter what. The property markets up for 10 years straight and this group is still not unloading in mass yet. What are they waiting for?


An argument time will prove is limp. People need cash flow, not illiquidity. But, granted, some folks will hang on to their homes until it is too late to save them. I trust you will be one? — Garth

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

Guess what? When prices do start to come down, that is when these boomers will be convinced that it is time to sell. Predictable.

#150 John G. Young on 04.30.12 at 1:15 pm

#67 penpal on 04.30.12 at 12:21 am

Seems to me that everything you wrote could just as easily be describing you.

Especially the last line.

#151 zeeman1 on 04.30.12 at 1:17 pm

Food for thought:

These rates are driving a false economy that has brought about the creation of trillions of dollars of relatively worthless derivative investments that are backed by highly over valued real estate and investment certificates, many of which are based on the value of portfolios heavily weighted with these same investments.

And that is being supplemented by creating a larger and larger money supply based on how much credit can be extended. Credit becomes assets and when that happens the economy has a false bottom that no one wants to look at. All they want to do is keep on doing the same things and hope that nothing happens to upset it and bring it crashing down.

In the US right now, for example, more Quantitative easing is being discussed by the Fed while other leading financial experts within the Democrats are discussing severe budget cuts to the tune of $4 trillion.

One will drive inflation the other will stagnate the economy. See where it will go?

Meanwhile they are all looking over their shoulders at Europe and pondering the mess there. Italy and Spain are headed for IMF and EB bailouts but they don’t enough money to do it. France is heading for major upheaval too and the UK is officially in recession again. Many have a wary eye turned toward China as well, mostly due to their reliance on exports and a real estate bubble of their own.

Ridiculously low interest rates are now at the heart of all of this false economy.

#152 zeeman1 on 04.30.12 at 1:20 pm

More food for thought:

http://business.financialpost.com/2012/04/30/did-canadian-banks-receive-a-secret-bailout/

Little cracks are starting to become apparent even to MSM.

#153 edmonton mortgage broker on 04.30.12 at 1:26 pm

tax sale list (auction for Edmonton was held on April 19th) is 600 long each for city of Edmonton and city of Calgary. i’ve been tracking these numbers and every year since 2008 it’s continued to grow.

currently in the greater Edmonton area, out of 4600 listings on MLS, about 220 are foreclosures. that’s roughly 5%.

CMHC has been stressed tested to be able to handle a doomsday scenario of over 3% default rate before becoming insolvent itself, according to Canadian mortgage trends.

shall we be loading the women and children into the lifeboats yet or damn them all and save ourselves?

#154 truth hammer on 04.30.12 at 1:29 pm

So….Toronto has a ‘budget surplus’ of tax revenue from a booming real estate sector….and Carney announces ‘that rate hikes may have to be put on hold’…..nothing coincidental here……go back to sleep…..raise all around in the civil service…buisiness as usual.

Lets see…….the savings rate nationally has plumetted…….money supply is off the hook……..consumer spending has gone parabolic……the national debt has skyrocketed……..personal debt has eclipsed global basket cases………………hyperinflation in food, housing, energy, transportation, taxation, fee’s service levies……..but as long as the civil servants in Toronto get their efficiency bonuses this year it’s all smooth sailing for interest rates and the economy in Canada?

http://www.vancouversun.com/business/Bank+Canada+repeats+message+reducing+stimulus/6540906/story.html

Every paper printed a conflicting story today…..an exercise in mass confusion you think? Now I know that Garth hates when I write anything about the starving seniors on this blog…..but does anyone with an IQ over 40 not recognize that you simply cannot get through the month on a non indexed pension 10 years old? This adds up to hundreds of thousands of Canadians shivering in the dark because they cannot afford to pay the outrageous hikes on heating oil tax, carbon tax, hydro etc etc….and eat?

It’s immoral not to be turning up the heat on government.

#155 edmonton mortgage broker on 04.30.12 at 1:31 pm

http://www.taxsaleproperty.org/Alberta/Tax-Sale-Alberta-29-Feb-2012.html

link to tax sale properties for anyone interested.
FYI, you need to be 2 years in arrears on property taxes before the city places your property on the chopping block. and the reality is the vast majority of people figure out some way to come up with the funds to make good on their arrears.

but these numbers still serve as a leading indicator that folks are financially stretched to the limits and holding on by their fingernails. and this in a province where we have tons of jobs and apparently it’s boom times again.

#156 Bottoms_Up on 04.30.12 at 1:32 pm

#10 LS in Arbutus on 04.29.12 at 9:12 pm
———————————————-
Cars don’t last forever either. A retiree at 65 may have an 8 yr old paid off car…but they’ll need another one by the time they’re in their 70′s…and really, do people picture themselves driving a beater around town at that age, one meant for a high school student?

#157 Canadian Watchdog on 04.30.12 at 1:39 pm

Go to 36min: http://www.cbc.ca/video/#/News/Business/Lang_&_O%27Leary_Exchange/1319430780/ID=2228033832

“The market isn’t going to roll over, it already is rollng over”

“80% of condos that had been sold in central Toronto have been sold to investors to be rented out.”

Hold, on, let me repeat that. 80% OF CONDOS SOLD IN CENTRAL TORONTO HAVE BEEN SOLD TO INVESTORS TO BE RENTED OUT.

This will be an absolute disaster.

That stat was reported here a year ago. — Garth

#158 Bottoms_Up on 04.30.12 at 1:39 pm

#28 penpal on 04.29.12 at 9:51 pm
—————————————-
That’s why Walmart is popular. A jar of vitamins at ‘Robber’s’ Drug Mart is twice what it costs at Walmart ($20 vs. $10). That amount of money sure adds up over time.

And funny thing happened near where I live — the Walmart brought in lots of food, fresh produce, huge refrigerated and frozen food section and guess what? The Loblaws up the road has started lowering prices and giving out freebies to shoppers. That has never happened before. Competition can be good.

And yes Loblaws is the ‘Shoppers Drug Mart’ of grocers.

#159 truth hammer on 04.30.12 at 1:41 pm

Credit Agency reports that Fraser Valley Tri cities home owners entirely underwater……nice to get a pronouncement from a non aligned source eh?

http://www.theglobeandmail.com/globe-investor/personal-finance/home-cents/the-age-of-easy-credit-gives-rise-to-grandpa-debtor/article2409310/

#160 Not 1st on 04.30.12 at 2:08 pm

If a poll says that a high percentage of boomers expect to work until 80 and retire after, then it holds that same group will probably be hanging on to their houses as well.

Boomers have rode 3 or 4 of these bubbles before and they are always worse off afterwards. Very few of them ever cash out and take advantage. They have already watched the U.S implode in 2006-07 and the canadian market seriously wobble in 2008, yet they did nothing.

#161 MarcFromOttawa on 04.30.12 at 2:08 pm

#144 The Opportunist

http://money.cnn.com/2011/11/16/retirement/age/index.htm

#162 Look Out on 04.30.12 at 2:13 pm

Canadian GDP Surprisingly down!!!

Rates aint going anywhere fast folks..The madness will continue..

#163 disciple on 04.30.12 at 2:14 pm

Banks got a bailout. Why is this news? We’ve known this for many years. Chossudovsky was among the first to break the news. Too bad he’s also an actor. See? Controlled opposition. Predictive programming. Like the Lone Gunmen pilot episode prior to 9/11.

http://www.youtube.com/watch?v=z3WW6eoLcLI

#164 Canadian Watchdog on 04.30.12 at 2:28 pm

“That stat was reported here a year ago. — Garth”

Still hard to believe the number is that high with all the estimates thrown around, although recent data such as BILD sales down 40% and Red Pin’s listings soaring 65% are confirming it.

Even more problematic is the number of condos in the pipeline shown here https://docs.google.com/open?id=0ByrPFSoPLahJOVZyVGtCZGc5UlU

I believe we’re possibly looking at a 25-40% price decline over the next few years, with 2-3 bedroom condos taking the biggest losses.

Good luck to Brad Lamb.

#165 dgb on 04.30.12 at 2:45 pm

it’s not that you are right or wrong – it is that anyone who has been in bonds and housing for the last two or three years made a fortune – eventually you will be right – just don’t say i told you so

Anybody who ‘made a fortune’ in real estate or bonds in the last 24 months needed to start with a fortune. Try to be credible. — Garth

#166 Blacksheep on 04.30.12 at 2:52 pm

“The system is not broken.”

Of coarse it’s not, It’s functioning EXACTLY as intended.

“Most people are financially illiterate in a world which demands more and more knowledge.”

Agreed. The SYSTEM is designed to indoctrinate, not educate, as the masses spend 12 to 16 years in school
and yet learns absolutely nothing on how the REAL financial world, actually functions.

“The tools are widely available. Most people choose to watch HGTV and SportsNet instead. — Garth”

Agreed. Our corporate owned media SYSTEM, stupefies the masses, promoting Hockey and Houses as religion. Programming has de-evolved to “Ow my Balls!”
Idiocracy, type garbage.

Like George said:

“They don’t want people who are smart enough to sit around a kitchen table and think about how badly
they’re getting *bleeped* by a system that threw
them overboard 30 *bleepin’* years ago. They don’t
want that. You know what they want? They want
obedient workers.”

take care,
Blacksheep

#167 Frank on 04.30.12 at 2:55 pm

I am now a believer. There will be a crash and it could be big.

#168 AACI Home-Dog on 04.30.12 at 2:58 pm

97 Market Bull said…

“It is a capital mistake to theorize before one has data. Insensibly one begins to twist facts to suit their theories, instead of theories to suit facts.”

~Sherlock Holmes

Very good advice, in most facets of our lives…

#169 David B on 04.30.12 at 3:02 pm

Banks got $114B from governments during recession
Support for banks ‘more substantial than Canadians were led to believe’: CCPA report

Fr CBC news ……nothing to this point from the Globe and Mail ……

#170 PoorgEoisie on 04.30.12 at 3:03 pm

Disciple, I’m not sure if B-Russ is right for you, the Alex jones crowd thinks he’s an architect of eugenics and an NWO foot soldier. Quoting this Nobel prize winning, intelligent agent of peace might make you appear to be a CIA shill to the ALCAN all-stars

#171 Devore on 04.30.12 at 3:07 pm

Hmm, Sandra’s new show, Buy Herself (haha, get it?) is focusing heavily on budgeting and living within your means, rather than couples horny for stainless and granite. Times, they are a-changing.

#172 cramar on 04.30.12 at 3:07 pm

#143 Mister Obvious on 04.30.12 at 1:01 pm
#109 diciple

I see you are now quoting the great philosopher and mathematician Bertrand Russell. Good for you. May I suggest you check out Russell’s essay: “Why I Am Not A Christian”. I highly recommend it. Here it is for your convenience:

http://www.users.drew.edu/~jlenz/whynot.html

——————————

Great philosopher!? This article written in 1927 is extremely juvenile in its reasoning. Very superficial and silly.

#173 David B on 04.30.12 at 3:12 pm

UPDATE: The Canadian Bankers’ Association has responded to the CCPA’s report, telling The Huffington Post that no Canadian banks were in danger of failing during the financial crisis, contradicting a claim in the CCPA’s report.
“They seem to be implying that liquidity support is the same as a bank bailout and this is not the case,” CBA spokeswoman Rachel Swiednicki said in an email. “These funding measures were put in place to ensure that credit was available to lend to businesses and consumers to help the economy through the recession. These funding measures were not put in place because banks were in financial difficulty.”

More of the CBA’s response to the report can be found at the bottom of this article.

From Huff Post … for many newcomers to this Blog we talked about this years ago …. and for what it is worth there is more to come ….. How do y’all like King Steve and his little supper finance man he put in charge or your wallet?

#174 Harlee on 04.30.12 at 3:20 pm

#158 Bottoms_Up
In Western Canada Loblaws is known as Real Canadian Superstore. Saskatoon has three Walmarts but I rarely shop at them so I wouldn’t know how their prices are,but I don’t doubt that they are cheaper. I do know that Superstore has much more favourable prices than Sobeys. I’ve been to Sobeys maybe three times (open 24 hours -good for shift workers)and it’s always – “Ouch”. Fresh food okay but canned and packaged goods always expensive. Superstore on 8th Street always busy,but Sobeys rather pokey. Safeway and CO-OP are pricey but have their loyal customers.It will be interesting when the Target stores move in.
But I’m an “old-timer”…I miss the Woolworths and Kreseges stores and Eatons too when they had the “bargain basement”. Times change ,sometimes for the better,and sometimes not…

#175 Bill Gable on 04.30.12 at 3:31 pm

To find out just how screwed we are – have you checked how much private health care nursing and old age homes (*reputable one) cost?
We are are under prepared for the economic tsunami just off shore!

#176 Nemesis on 04.30.12 at 3:40 pm

Well!… Revealed at last… Why the Hon. GT prefers Harleys to TheRideTeutonic… It is, of course, only a matter of time before a similar suit is filed in Toroncouver by a PreSalesEvent patron…

[CBS Detroit] – Calif. Man Sues BMW For Persistent Erection

http://tinyurl.com/c7zwvdl

#177 Devore on 04.30.12 at 3:43 pm

“The age of easy credit gives rise to ‘grandpa debtor’”

16 per cent of debtors who filed a bankruptcy or consumer proposal were “grandpa debtors” – over the age of 55, an increase from 12.5 per cent in 2008.

People don’t have the savings.

There’s also the trap of considering your home to be your retirement nest egg, said Mr. Elyea, which can backfire because of the unpredictability of the housing market.

http://www.theglobeandmail.com/globe-investor/personal-finance/home-cents/the-age-of-easy-credit-gives-rise-to-grandpa-debtor/article2409310/

Garth, do you ghostwrite for the G&M?

#178 Blacksheep on 04.30.12 at 3:48 pm

“Gold will never again be currency. Stop dreaming.
— Garth”

Agreed. Gold will never replace fiat currency, as
Sovereigns will not relinquish the ability to print
after witnessing events unfolding in the
PIIGS nations.

Gold is and always will be, a medium of exchange
or settlement, accepted internationally by major
Central Banks, which tells me everything I need
to know.

PS: sell yer bullion, now.

take care,
Blacksheep

#179 new_era on 04.30.12 at 3:52 pm

You know its not going to be pretty when the Blame game starts!!!

Even accusing news of government bailouts during the recession. Info was already there, but now its come to light.

F and C is running for the hills, they have been playing the “Cover My Ass” card for at least a year. But no one was listening. So who is really to blame. I believe they played the game well and now are going to wash their hands to this complete abortion and let the banks deal!!! You know what this means, the consumers are screwed!!

I would say its the consumers, will to take bigger debt, not listening to the warnings shots that were fired over their heads.

#180 jess on 04.30.12 at 3:56 pm

Our corporate owned media SYSTEM and the hackers who like to play with the power grid.

Can an Algorithm Write a Better News Story Than a Human Reporter?
Wired News‎ – by Steven Levy‎ – 5 days ago
Extra! Extra! AI software takes over sports reporting and financial journalism! Humans panicked!Predicted: In 15 Years, 90% of News Stories Will Be Written by Algorithms
The Atlantic‎ – by Jordan Weissmann‎ – 5 days ago

#181 Timbo on 04.30.12 at 4:00 pm

http://www.youtube.com/watch?v=VOMWzjrRiBg&feature=player_embedded#!

good little video to help keep your mind at ease.. ;)

#182 NoName on 04.30.12 at 4:13 pm

#165 Blacksheep on 04.30.12 at 2:52 pm

The Internet and internet minute.
–Friend or Foe of Learning–?

http://i48.tinypic.com/xm72ug.jpg
Amount of information we are able to extract, to learn from internet is huge, but problem is our BIAS.

#183 jess on 04.30.12 at 4:17 pm

Francis Weyzig
Tax Treaty Shopping: Structural Determinants of Foreign Direct Investment Routed Through the Netherlands

Many multinationals divert Foreign Direct Investment through third countries that have a favourable tax treaty network to avoid country withholding taxes. This is referred to as tax treaty shopping. The Netherlands is the world’s largest pass-through country; in 2009, multinationals held approximately €1,600 billion of FDI via the Netherlands. This paper uses microdata from Dutch Special Purpose Entities to analyse geographical patterns and structural determinants of FDI diversion. Regression analysis confirms that tax treaties are a key determinant of FDI routed through the Netherlands. The effect of tax treaties on FDI diversion partly arises from the reduction of dividend withholding tax rates, which provides strong evidence for treaty shopping.
Francis Weyzig is a PhD candidate at Radboud University, Nijmegen, Netherlands.
=

“Minister Jim Flaherty acknowledged that Ottawa doesn’t have a good grasp on the amount of foreign money in the Canadian housing market”(globe and mail)

tax (gap) codes
Can you guess which company was the “pioneer” of an accounting technique known as the “Double Irish”

#184 Furst on 04.30.12 at 4:45 pm

#61 Smoking Man on 04.29.12 at 11:54 pm
_____________________________________________
Smoking man, I sense a lot of repressed anger and resentment towards the world. It’s unlikely you have the necessary qualifications to provide your children with the appropriate level of knowledge. To put it bluntly, it would be the blind leading the blind. And I’m assuming you’re not a degree granting institution ;). If you don’t want your children to follow in your footsteps of underemployment and anger at the world for not being able to keep up, then put aside your pride. Encourage them to go to university and get a job. This will allow them to get on the right path and maybe get a head start in life and improve upon your current situation. Again, no disrespect intended. I have a friends who are also under or unemployed like yourself. Big difference though is that they are encouraging their offspring to get a higher education. Hopefully you can find the strength to do so too.

#185 penpal on 04.30.12 at 4:46 pm

@ # 113 Tiny Bottoms

This is a very, very, very important piece of information for anyone thinking that “its different here” to read and comprehend.

We were no different, we are no different and we will be no different than the USA when it comes to the banking industry.

This mafia is borderless.

#186 penpal on 04.30.12 at 4:50 pm

@ # 117 Smoking Boy

Do your worst loser.

I hope you write an epistle, because I’ ll be scrolling past all of your posts in future and you’ll be just wasting more of your time.

I guess you really have nothing better to do , do you genius?

#187 NoName on 04.30.12 at 4:51 pm

A grant can also be any service provided at no charge by the government for which you would ordinarily have to pay.

http://www.worldwealthbuilders.com/top-canadian-grants-rebates-for-real-estate.html

Residential Rehabilitation Assistance Program ($24,000)
The RRAP (Residential Rehabilitation Assistance Program) was set up by Canada Mortgage and Housing Corporation to encourage homeowners to create “secondary suites” in their homes, and rent them out to low-income seniors and people with disabilities.

#188 Devore on 04.30.12 at 4:52 pm

#133 Not 1st

You could have saved yourself all that typing, and just said “the trends of yesterday will continue tomorrow”. You should know better. You DO know better.

The short answer to your “points” is that boomers aren’t doing anything, because… they don’t have to (yet). No one does anything unless they have to, change is difficult.

#189 penpal on 04.30.12 at 4:56 pm

@ # 124 Babblemaster

I don’t disagree with the facts, but history will not reflect well on either Greenspan nor F.

I stand by my suggestion to read ZeroHedge – pretty good and prescient reporting by people who know the industry.

#190 Sebee on 04.30.12 at 5:06 pm

Home ownership at lowest level in 15 years in US, down to 65.4, from peak of 69.2 reached in 2004.

GFC happened 3-4 years after peak. Perhaps we will have this 3-4 year period of “price stability” after our 70%+ peak, then the drop like in US?

http://money.cnn.com/2012/04/30/real_estate/home-ownership/index.htm?iid=HP_LN

#191 Arshes on 04.30.12 at 5:11 pm

#121 Not 1st on 04.30.12 at 10:49 am Garth, how about some real evidence of this boomer housing sell off and reinvestment into equities, like a poll or something. I think if you did some questioning you will find that most boomers will hang on to their family home no matter what
——————————————————–
Most people will try to stay in thier home as long as they can when they retire, but a certain point comes when they will need to move to a Assisted Living or Long Term care, and most people will be using the proceeds from thier home to pay for that. So I predict your gonna see sell offs in the future as more and more boomers reach the ages of 70-75. Right now all the Boomers are starting to retire, in about 10 years or so they’re gonna start selling as they start hitting their 70′s, which in a “normal” situation is when the housing would start to recover from its bursted bubble. But this time all these sells off are gonna prolong this eventual real estate downturn.

My father is currently 67 and in the hospital for a stroke after having recently having had heart surgery. Many seniors wil have no choice but to sell thier homes in the future, no savings, no Long Term care insurance, cost of maintaining home, expense of Home nursing etc. Strokes, heart disease, Alzhemiers etc, isnt cheap, plus to maintain a home in top of that??? Not feasible.

#192 Just In Viber on 04.30.12 at 5:27 pm

2002 prices?
http://www.missionmeadows.ca/

#193 Mike Rotch on 04.30.12 at 5:29 pm

Bottoms_Up on 04.30.12 at 1:32 pm

“…………and really, do people picture themselves driving a beater around town at that age, one meant for a high school student?”.

See, as a blog dog, that’s actually a sane plan.

Garth preaches buying assets that pay you to own them, and renting assets that cost more to own than they’re worth. If funds are tight, own the minimalist car, rent the status car.

When you’re retired, the consequences of an in-town car breakdown are lower than they are when I’m employed. All you’re going to be late for is the grocery shopping, the AA meeting or the nude reverse massage.

That’s not good, but it hurts less than being late for an important sales meeting with a prospective client!

A small rice-grinding beater is perfect for short trips around town. When you want to roll in style, you can rent the deluxe pimp mobile for long roadtrips or other special occasions.

Nice to always have exactly what you need, yet not be stuck with the premium payment/insurance/gas all year.

#194 penpal on 04.30.12 at 5:30 pm

@ # 150 John G Young

You know, I thought you were a busy body with a chip on your shoulder.

I guess I am correct again.

A little sensitive are we to the drug and drink references.

There is nothing worse than the bleatings of the reformed.

Don’t bother directing your self loathing sourced venom at me – try looking in the mirror.

Sucks to be you too!

#195 Blacksheep on 04.30.12 at 5:35 pm

NoName,

“Friend or Foe of Learning–? Amount of information
we are able to extract, to learn from internet is huge,
but problem is our BIAS.”

Interject some doubt, not bad, but don’t you really
mean the problem is my bias? I’m sure you can do
better than that. Shite, why don’t we censor certain websites to avoid dangerous misinformation of the masses, for the greater good of the people, of course.

Heard some fool on CBC-2 actually suggest this.

George Orwell rolls over.

take care,
Blacksheep

#196 I'm stupid on 04.30.12 at 5:49 pm

101 Don
108 No name

101 What I meant is that I wish the situation was different. Granted I am fortunate to be able to do it but it is not without sacrifice. 10k is not a lot of money 10k of disposable income is. I’m not rich, I own a small business and work 60-70 hours a week except for two weeks in jan-feb when I go on vacation.

108 I absolutely agree with you. I do it because if I didn’t I would feel guilty. I cannot in good conscience go on vacation or have a luxury while my mother struggles
with bills. She is a wonderful person and a great mother, and for that she deserves the respect of her son.

#197 G-Unit on 04.30.12 at 6:30 pm

“In our Tri-Cities practice [covering Coquitlam, Port Coquitlam and Port Moody], that’s where a lot of people bought houses at the height of the market when anybody could get financing, and now they’re all [valued] below what they paid for them,” he said.”

Globe and Mail article about “grandpa debtor” people.
http://www.theglobeandmail.com/globe-investor/personal-finance/home-cents/the-age-of-easy-credit-gives-rise-to-grandpa-debtor/article2409310/

#198 Realtors and mortgage broker's know the crash is here! on 04.30.12 at 6:40 pm

Look out #162

The housing crash is here and now. You just don’t get it. Even if interest rates goto zero with no more CHMC mortgages will be alot higher and banks will not lend to anyone who is not credit worthy . The condo ponzi will crash harder the the housing bubble.

#199 Realtors and mortgage broker's know the crash is here! on 04.30.12 at 7:02 pm

Look at all the realtors on this blog hoping to fool someone to a life of ruin. The crash is here and now and will be more obvious when the 2.99% easy money goes bye bye. CHMC limit not increased and soon stopped altogether. TPTB are looking to now crash the ponzi. Look out below .

#200 JB on 04.30.12 at 7:03 pm

Can’t help but feel we’re still four or so years away from this all coming to a head…

#201 Don on 04.30.12 at 7:18 pm

#198 I’m stupid
Amen

#202 Smoking Man on 04.30.12 at 7:31 pm

#186 penpal on 04.30.12 at 4:50 pm
@ # 117 Smoking Boy

Do your worst loser.

I hope you write an epistle, because I’ ll be scrolling past all of your posts in future and you’ll be just wasting more of your time.

I guess you really have nothing better to do , do you genius?……………………………
……………………………………………………………………
Skip them all especially the one that’s coming after this one.

Obviously you have no skin in the game (Markets) cause if you did you would hit ctr + F and type smoking on all post everyday , my almost near perfect record of picking tops and bottoms in the markets.

Where is dude would that was laughing at my pick on ERF O is up almost 8% over the last 3 days, in spite of news today that should have crushed it.

So feel free to Skip all my Posts.

#203 Smoking Man on 04.30.12 at 7:33 pm

#109 disciple on 04.30.12 at 9:43 am

Awesome Nicely done.

#204 Nostradamus Le Mad Vlad on 04.30.12 at 7:41 pm

-
#60 miller — “Could someone please send a link to the story about the gulf island off the grid program.” — Try this and this.
*
“Surely you are not justifying willful ignorance. Most people choose to watch HGTV and SportsNet instead. Getting out will be good for you. — Garth” — I try to constantly avoid my own ignorance by getting sucked into SportsNet. HGTV is pawn, adult entertainment, so I will go outside and get some fresh air!

#139 Andrew Norman — Interesting and timely post. Goes with –
#100 Stephen — “. . . suggests that it is going to be a rough summer for investors.”

Things sure are speeding along. Good idea to prepare oneself. #100 Stephen has the right approach.

#137 GregW, Oakville — G’day Greg. Thanks for the post and link.

#176 Nemesis — “Calif. Man Sues BMW For Persistent Erection” — Where does Viagralis fit into this sack of shit?!
*
California and Detroit It’s actually California and Michigan that are both broke; Signs Spain headed to a depression? Destructive Mechanics for the west’s economies; TARP “Apologists for government bailouts push two main myths: That all of the bailout funds have been repaid; That the bailouts helped the average American.”; Scavenger Pupils.
*
Russia destroys a ton of its chemical weapons; CC (Colony Collapse) For humans, not bees; Syria “The alleged UN “peace plan” has been engineered to fail.” wrh.com; 8:53 clip Delegates are Ron Paul’s secret weapon; Pope Al Goregonzola was a scientific failure in skool; Fukushima Reactor #2 – hydrogen levels rising, and Molten Lava melt through.

#205 Dan in Victoria on 04.30.12 at 7:41 pm

David B @ 173
Maybe Rachel and her buddies could cut us, the taxpayers a cheque for what they got from Flaherty.
You know we’ll give you the paper you gave us, and you give us the money back, after all the recession is over….Is’nt it.

#206 Onemorething on 04.30.12 at 8:07 pm

25% is likely 40% or more since those boomers are commenting on how they feel today. They have no concept of what will happen down the road but it’s pretty clear they will be too old to find work.

The only thing that will reduce the rate is life expectancy. We are living longer but boomers wont make 80.

Those who own homes for retirment are going to get swallowed up in this “work till 80 crowd” as deflation for the a good part of the next decade will slaughter any plans to pay for it.

Do the opposite, in the big scheme of things yes but making money on the herd 10% before the top is key and buying again 10% before the bottom. We’ve already reached the top, slid back and recovered based on new money in the system. We are now sliding back again and eventually there will be no more money printed and if so those with it wont spend it.

USD is the opposite play, but that’s the play you need to make so your ready to buy assets 10% from the bottom 5 years from now. That’s also when I’ll pick up the shiny stuff again.

#207 Mr Buyer on 04.30.12 at 8:11 pm

#199 Realtors and mortgage broker’s know the crash is here! on 04.30.12 at 7:02 pm
The crash is here and now and will be more obvious when the 2.99% easy money goes bye bye
………………………………………………………………………
What is coming and happening is largely independent of the interest rate. The only effect interest rates may have is upon time line but even that impact is decreasing exponentially with each day past the top of the bubble. BUYER BEWARE. NOW IS NOT THE TIME TO BUY A HOUSE. THE BUBBLE HAS TOPPED. SALES ARE FALLING ACROSS CANADA.

#208 Mr Buyer on 04.30.12 at 8:13 pm

I would venture to say that even 0.0001% interest rates would hit a wall and very quickly. Bubbles are devastatingly simple single cell creatures.

#209 TnT on 04.30.12 at 8:27 pm

If you’re thinking of buying property in the United States, buy now because prices won’t stay in the basement much longer, says a BMO economist.

“While there’s little urgency, now is likely a good time to buy U.S. real estate in regions with relatively low foreclosure rates, as conditions should improve enough to put a floor under prices this year,” said Sal Guatieri, senior economist, BMO Capital Markets.

Almost two in 10 (16%) Canadians would consider buying a home in America, according to a BMO survey. Just under half (44%) of these potential buyers cite affordability as the attraction, while one third see the property as a long-term investment.

http://business.financialpost.com/2012/04/24/time-running-out-to-buy-your-dream-home-in-u-s-economist-warns/

#210 TnT on 04.30.12 at 8:30 pm

Forgot to add – I find these articles funny given that there are many other articles showing that housing prices are still falling in the US.

#211 toronto on 04.30.12 at 8:40 pm

The Canadian government needs to crack down on the fraudulent sales that are done by real estate agents in Canada through other countries( Iran, China etc.) that are laundering money through home sales. This is happening, that’s why there are ridiculous high prices in Toronto. Because real estate agents are laundering money through the sale of houses in Toronto. They list the price on MLS and have people back home that buy the properties at extremely over priced. To launder illegal money into Canada. Then everyone on there street thinks there house is worth a million dollars when in reality the house was bought from sine in another country.

#212 penpal on 04.30.12 at 8:44 pm

@ # 202 Smoking Boy

Don’t make assumptions about others.

Instead, go with the facts or, in this case with what you see posted in the past on this blog.

My remarks about you are based on what you have presented to us on this blog in your postings.

Therefore, not a big stretch for me to describe you as I have because you have directly and indirectly described yourself as such in your own postings.

I “call’em the way I see’em” as they say.

My posting was not an ‘ad hominem’ attack. It was simply an attempt to hold up a mirror to you to see yourself as you present yourself to others., something which I am not sure you are capable of doing.

As to your call on ERF, a number of people I know have been following this security, including myself, so you are hardly unique in your powers of observation, but probably have some good instincts.

Where you sound like an a-hole is in bragging about your ‘call’ on ERF as if you are the only one smart enough to buy it.

And 8% in a couple of days? Big deal – did you buy TCK.B below $6 and held it to $60 plus? Now that’s a ten-bagger and I’d say you would have a right to brag a bit for that success.

Well unless you bought 997,242 shares of ERF and did all 7,384 trades that day it hit $17.15 , then you were not the only one who found it to be a good value, but had a lot of company in the trade.

And what about your unfortunate call on Yellow Pages?
Securities have super high yields for a reason – generally not good reasons either. This is a basic truth in investing and you make such an amaterish mistake?

And as to me having no skin in the game, you just have no way to know who I am and what I trade.

You may have even rubbed shoulders with me at one time when I was starting out on Bay Street, if in fact you are a current denizen of that gutter.

So, Smoking Whatever, I am sorry to disappoint you, but I am simply just an old truth teller.

Let’s hope you can say the same.

So, go on, impress us all with your investment acumen and do some good by helping the “bubbleheads” you decry here and save your contempt for lady luck at the casino.

#213 TurnerNation on 04.30.12 at 9:26 pm

Me, track6ers still riding tradable ERF.TO bottom up – to 19, in my opinion. I’ve marked it with my yellow highlighter!

#214 The Thing in the Basement on 04.30.12 at 10:03 pm

153 edmonton MB. 220 foreclosures? That’s it? I guess
there could be a few more but I would think the intent is
to sell foreclosures, so it must be a large percentage of
them.

There must be 300K+ housing units in Edmonchuk.
Something more than 40% of those are owner occupied with a mortgage. And given CMHC covers half of the countries total mortage debt, we could caclulate say about 65K owner-occ’d houses with CMHC mortgages. So that’s less than 0.4% in foreclosure.

Just of the top of my head. Your mileage may vary.

#215 disciple on 05.01.12 at 10:29 am

#170 Poor goosie… Not sure what you mean. Alex Jones is a fraud, see my blog for more info. Were you making false assumptions about me, and trying to put me in a little box with a nice little label, so as to make yourself feel better? Oh, ok, carry on then…

#216 disciple on 05.01.12 at 10:43 am

#143 Mister Obvious… Thanks for the link. I read it. You do realize the difference between quoting someone and agreeing with everything they have written, right? Russel was a closet hedonist, as are your real rulers. He did not hold sacred the clear distinction between good and evil, which has nothing at all to do with religion, so in effect, he was employing the straw man. In it’s various forms, it’s still quite the popular logical fallacy…

#217 daystar on 05.01.12 at 2:06 pm

my almost near perfect record of picking tops and bottoms in the markets. – Smoking Man

Ohh? You mentioned skin… I’m listening… meanwhile, I may as well talk for a while.

The reason why Garth’s economic micro financial planning works is because he understands macroeconomics and risk. Lets put it in a nutshell. Does Garth invest in stocks that don’t generate earnings? No. Does he invest in bonds that don’t pay a decent yield relative to near/medium term environments? No. Listen closely, readers…. rich people rarely, if ever, do.

Companies that don’t generate earnings carry much greater risk, especially in a market downturn like we’ve seen for example, in junior mining stocks since Valentines Day. In case readers have missed it, investors have derisked from their riskiest assets which are nonprofitable corps like junior miners and I don’t blame them. Portfolio’s made of nothing but juniors are suicide portfolio’s perverbially speaking. To fish for bottoms on these stocks is to catch a falling knife and freeze capital indefinitely until the next bubble or big “news announcement” comes along. Thats not to say that I don’t like current valuations as a junior mining stock investor. Its just not an all in moment.

I do like these valuations to a degree and I am a buyer (CLQ this morning at .495 and AAA at .465 last week , PCY at .34 and .36 last week and EGZ at .295 yesterday, NOT at .49 last week and I’m bottom fishing for others. Nat gas I haven’t looked at much but I should, the sector is badly beaten and some have to be oversold. Balance sheets tell the story there. Tech’s… one would have to look south and I still like my money in Canada. I like green energy but its still too soon for some of it. All the time in the world to prepare and early bird gets the worm!). What I am saying quite simply that these stocks always will carry the greatest risk and when markets sell off, wealth can evaporate overnight. If it doesn’t generate earnings, it carries great risk that can only be derisked through much lower valuations and again… its like trying to catch a falling knife.

Its been talked about… the growing disparity between Canada’s richest and the rest who are…. not so much. The top 1% of this nation’s richest people 2.5 x their wealth in the last 10 years. Its not hard to see why. RE has doubled or moreso. Oil… Gold… so many commodities I don’t know where to begin really, have done well. So…. do rich folks need to gamble with their wealth? No! They don’t. They can ride out market fluxuations and avoid unnecessary capital losses. They can hire pro’s and invest in stuff that’s safe like bonds with desirable yields and grind out 100% growth over 10 years with compound interest or wait for these opportunties if needed and invest in large market caps that generate good dividend/gain income (and volume) and cash flow and they can double (or more) every 10 years and not worry one hair from their heads unless that is their desire.

But for the rest of us… for those who are not as fortunate… for those who have far less to invest, far more reason to gamble as it were… we need quicker growth or we burn through what savings we have and many of us will go broke trying or burn through it regardless because we don’t have the education, don’t put in the time to self educate, don’t know what to look for, get too emotional… impatient… buy high, sell low… (its not the end of the world, lol, to die broke, lol, but its not desirable)

The smart investors, the DIY’s…. of which maybe… 3 to 4% will do well over the first few years (most if they are lucky hang onto a bubble too long and get hammered and the rest, not so lucky. Like our beloved gold bugs, poor buggers) and 10% of DIY’s better than that if they are still investing after 10 years… the DIY’s that take the time to learn the markets, to identify the true risks/potential, do way better than 100% over 10 years, rich or once poor.

What does the educated DIY look for? The next junior that is destined to become a mid cap, on its way to a large cap. The junior with a 5 to 50 mil cap on its way to a billion+. How many stocks are there in Toronto that can accomodate? Maybe one in a hundred over 5 to 7 years… maybe 2 in a hundred if its a sector in a bubble…. maybe. What kind of gains are we talking about? 1000 to 1500% growth within 7 years. (last high flyer I spotted watching volumes/gains was EKG, check the chart) Will there be stocks that grow 30, 50, 70 times initial investment within a year? Maybe 2 or 3 out of a 1000 over 5 a year horizon including warrants. Will there be events that can breed millionaires? Yes, of course. The dot.com bubble bust, 911, 2008 crash, once or twice in a lifetime commodity supercycles, sure…. if cash is on the sidelines and your timing is right. Markets are all about timing, especially stock by stock and patience once the cards are played but these events are 2, 3 a decade? Such events are all in moments and the only all in moments out there, really. Otherwise, even like Oct of 2011, its a gamble to go all in (and I’m a gambler).

The rest of the small caps (2 to 150 mil) and some mids (150 mil to 500 mil) will fluxuate on average around a 300 to 500% range from their lows to highs and many, through dilution risk, will, through share financings, be unable to rise like they once did past their first 3 to 5 year horizon as shares outstanding grow. HMO’s and mining are the equities most vulnerable because they dilute the most. Dilution, as they say, is the end of dreams.

So there you have it. It doesn’t pay to be one dimensional through forever investing in just one sector. All bubbles bust. True investors have to be multidimentional. It doesn’t pay to go through a high volume of trades each year. If you do more than 50 trades a year (especially 100), you need to rethink what you are doing in a big way, thats too many trades.

It doesn’t pay to invest in any sector (or sector of a sector) until one has really looked at every equity within that sector meaning true success takes time and effort and one has to know what to look for. Some investors fall into the trap of “specializing” for example but every sector regardless of what it is, has a downfall sooner or later. One can’t get addicted to the luck and timing of a sector bubble only to ride that bubble to bust. Really, its about picking where the next bubble is going to emerge and being there before it grows.

We shouldn’t get lost on potential “discovery” stocks either when it comes to juniors. Invest in stocks that have already “discovered” and look for large pools/deposits, one’s that create large caps through development. The market sometimes misses the potential such already discovered resources hold and for God sakes, learn some understanding of macro economics. As one climbs out of risk and into safer investments, one needs to understand bond markets at some point.

If readers have been following what I’ve been saying, the last few weeks, its this. I think interest rates will hit double digits with our chartered banks within 6 years. Readers… this isn’t a far reach. Right now, the Bank of Nova Scotia is offering 5 year mortage terms at 6%. CMHC is finally getting out of backstopping risky loans (at least… they say they are… eventually…. after they hit their 600 billion cap) Intergovernmental debt to GDP is in the high 80′s in Canada. With currencies now at par, 100% gross public debt to GDP is possible in 3 to 4 years especially if the loonie falls and that tells it all in terms of where rates are headed because it spells risk in bond markets and Canadians have to pay special attention because if we don’t have a sovereign government in there, left, center or right, we are in big trouble and I can tell you all flat out, Harper doesn’t have a sovereign bone in his body. he’s a lobbyist all the way and needs to be replaced and F is an F.

Now is a bad time for bonds but I think it will be the place to be in a few years depending on the government of the day and what would high rates do to the markets? To RE? You all should know the easy answer. It will redefine the winners from the losers in a big way with balance sheets defining the future for equities and RE has been a dog with fleas since last spring.

Garth, please pass this onto Mark, you already likely have but Canada should be going long on bonds. We are presently averaging a 7 year rollover. We need to average 10 years and build up a greater cash reserve than 10 billion for where this housing market is headed. 25 billion would be better, possibly more. Gross public debt ratios, currency risk, you know the reasons why. Pass this onto him next time you both ride together please and I’m already sure he’s on it, but just because… (should have some nice spring days coming up for a good ride, I wish you the best ;)

http://www.budget.gc.ca/2012/plan/anx3-eng.html

#218 Alister on 05.01.12 at 6:27 pm

“Over 50% in Ontario and BC – where real estate costs the most – said yes. Of those making between eighty grand and $100,000, 41.2% are worried. And across the country, among people taking home more than $100,000, almost 23% admitted they may fall short.”

AND THE REST OF THEM HAVEN’T LOOKED AT THEIR FINANCES AND DON”T KNOW THERE IN DOODOO.