High risk

So my theme this week has been sunshine and puppies, hugs and canoodling. Clearly this  enraged half my readers, which makes it all the more fun. An astonishing number of people simply don’t want to hear about record bank profits, US rebounds or the sensual joys of a balanced and liquid portfolio.

But let’s be clear. Simply because investors can do very well today not owning real estate or hiding in a buried school bus with four virgins (trust me, it’s stressful), does not mean the world is over its funk. It ain’t. There’s more volatility ahead. Years of it.

Ben Bernanke made that clear when he gave a keynote this week. Unemployment is grave, he said. The economy is tepid. Without a foot on the gas pedal, this condition could last a long, long time. And so the US Fed will bring in yet another stimulus program in mid-September – opening itself to charges of political interference, coming just six weeks before the presidential election.

This means stock markets will roil, shooting up, then toppling back. Meanwhile the elfin deity known as F told reporters on Friday things are still screwed up. “There are risks in that big world out there and we’re part of the world,” the finance minister said. And he had this message for real estate addicts: “At some point, interest rates are likely to rise and that means residential mortgage rates will be going up over time. I think Canadians are increasingly getting that message.”

In fact, risks abound. Europe’s recession could deepen. Chinese growth could falter. Commodity prices could swoon. Unemployment could spike. Romney might win. After all, you wouldn’t have government officials like Bernanke and F saying this stuff on the same day if things were going according to plan. So while banks make bloated profits, the indebted masses struggle – which brings me back to yesterday’s basic point: own the banks, don’t owe them.

Real estate’s at the epicentre of this mess. House horniness in the US precipitated the GFC, and the same fetish will end up goring the Canadian middle class. The staggering pile of mortgage indebtedness means a continuous flow of wealth from families to lenders and, as F alluded, this will only pick up steam as interest rates inevitably recover to normal levels.

It’s all changing fast. Eight months ago, for example, the BC real estate association forecast a 2% price decline in 2012. This week it upped that to almost negative 8% – a four-fold increase. Of course, even that’s suspect, with Vancouver sales tanking and prices eroding 1% every two weeks. As I’ve said a few times, BC’s housing meltdown (Van, Victoria, OK) will sooner or later be replicated across the country. And if Quebec goes PQ on Tuesday, Montreal will be headed there by Wednesday at noon.

By the way, BC’s realtors have also given their prediction for 2013, which is flatline. Now imagine you bought a $500,000 starter, baby condo in Burnaby with 5% down. How would you feel after two years of an 8% slump, then a real estate recession, living in an illiquid investment?

The real risk we face is not the stuff doomers worry about. There will always be gas in the pumps, food in the stores and money in the ATMs. Nobody will be buying Jeeps with doubloons and no bank will fail. You don’t need $100,000 CDIC insurance, nor is there any reason to have a GIC. The risks are not systemic, global or exterior. They are what you bring upon yourself.

Real estate is a highly dangerous asset class at this time and into the future. Its typically bought with extreme leverage, increases living costs dramatically, and has the potential for large capital losses. In days of slow growth, quasi-deflation and debt there is no argument for capital appreciation. This is a lesson seven-tenths of the population, with varying degrees of heartache, will learn.

The next greatest risk comes with the flight from it. As people scramble to avoid risk they lock up money in dead-end investments paying less than even meagre inflation, like GICs, HISAs and savings bonds. They fork over usurious management fees for segregated funds which guarantee no loss of capital. They give money to financial packagers who promise to give it back with ‘guaranteed’ payments in retirement. And most folks (especially women, sadly) forget the greatest risk of all. Running out of money.

My posts of the last few days were intended to show how you can tap into the cash being spun off by banks or real estate trusts. How to be a real estate contrarian. How financial assets like preferreds can give stability, yield and low taxes at the same time. And how rolling the dice on Canadian real estate or trying to short systemic collapse with PMs is a high-stakes play.

Risk is the consequence of your own actions. Confront it.

236 comments ↓

#1 g-unit on 08.31.12 at 9:58 pm

FFFFFFFUUUUUUUURRRRRRRSSSSSSSSSSSSSSSSSSTTTTTTTTTTTT!!!!!!!!!!!!!!!!!!!

#2 bruce on 08.31.12 at 10:05 pm

The hardest home type to sell in a flat or tanking market is a condo.

#3 LH on 08.31.12 at 10:06 pm

Seems parts of c01 are doing fine, thank you!

http://www.torontomls.net/PublicWeb/CL_CF.asp?link_no=45087013.175000&t=l&fm=F

554 bathurst selling for a lucky 1.0838 mil
A rich price to pay for the privlege of hearing the clanging of 512 streetcars all day and night!

On the other hand, if the 96k gross income is real, then this beats the pants off boardwalk or can apt REITs, even after property taxes and expenses.

Your thoughts Garth? Does a diversified portfolio of financial assets have room for rooming houses?

#4 Frank on 08.31.12 at 10:09 pm

Lately I have been seeing articles on the public sector pension time bombs. Reading your blog tonight makes it seem like it might blow in the next 5 years or so. Just when you think we are out of the woods, the bears pull you back in.

#5 vish on 08.31.12 at 10:11 pm

first!?!

#6 Painted Toenails on 08.31.12 at 10:11 pm

Tapping in bank profits and divies while tapping out on corporate meetings and bosses.

My ultimate high.

However – I’m not seeing the growth. My portfolio is flatter than I was in junior high.

I’d like to blossom like it’s grade 12 all over again.

Flat is boring! Let’s see some curvature on the linear…

#7 Ron@Delta on 08.31.12 at 10:13 pm

QE3? Darn you Bernanke, there goes my bond etf. Any opinions on US REITs and Preferred Shares for RRSPs? Hoping for low point opportunities on Septembe dips.

#8 Drill Baby Drill on 08.31.12 at 10:14 pm

Dear pathetic blog : I do not see the Calgary RE market following the rest of this debt bloated country. I realize if oil prices fall below $80/bbl there will be a retraction in RE prices but as yet no go. If prices remain at or above $90/bbl Calgary RE prices will remain robust. Forget nat gas prices Oil is King.

#9 soho ne on 08.31.12 at 10:15 pm

garth, are you buddys with splitbongwater? your just having to much fun.keep blazing!

#10 Jonno on 08.31.12 at 10:16 pm

Anybody home?

#11 Smoking Man on 08.31.12 at 10:18 pm

Puppies and sunshine nice.

Gartho the doom and gloom crowed don’t like these kinds of stories. They want revenge (You reading this LaughingCon)

They drank the cool aid, memorize regurgitate, obey, be polite, work hard, be honest, go to a good school and the world will be yours.

Well then they discover it aint so.

The machine, ie education industrial complex, big business, and very wealth people don’t want competitors. they want dumb down stupid customers. the whole system is by design a fraud.

Think for a moment, say 50% of the population bought into our investment ideas. The economy would come to a grinding halt. GDP would have a big minus sign in front of the number.

Economies need stupid people for growth. The machine is so good at what it does, its educators (teachers) can’t even see the obvious.

So what do you want to be, predictor or prey. those are the only choices in a global economy.

#12 Randy on 08.31.12 at 10:21 pm

It was announced today that 12,000,000 DEAD PEOPLE have decided not to vote for Obama this November….

#13 ohgod on 08.31.12 at 10:24 pm

The real risk we face is not the stuff doomers worry about. There will always be gas in the pumps, food in the stores and money in the ATMs. Nobody will be buying Jeeps with doubloons and no bank will fail. You don’t need $100,000 CDIC insurance, nor is there any reason to have a GIC. The risks are not systemic, global or exterior. They are what you bring upon yourself.

Wrong….but whatever, all of the interventionist are going down long term.

#14 EIT on 08.31.12 at 10:26 pm

That’s what i’m talking about. Awesome post.

#15 Old Man on 08.31.12 at 10:30 pm

I have no idea who this F man is, but have a hunch it is Caesar’s financial expert who is a puppet on a string who is clueless, but will obey as a slave in the name of reform.

#16 City that smells like it sounds on 08.31.12 at 10:30 pm

When are you going to do a piece on Regina or southern Saskatchewan in general? Brad Wallet is going to be the end of this province.

#17 DJB on 08.31.12 at 10:31 pm

Seems like Hoesgen Investment Partners have the same idea, this showed up in my inbox today. Look up the symbols yourself but they all trade on the TSX

Portfolio Solutions for a Volatile Market

Economic uncertainty and market volatility have once again prompted investors to exit the market in a frantic search for safe investment vehicles. This has left many investors with a large unsatisfied appetite for yield as government debt securities, bankers acceptance notes and bonds are trading near all-time lows. The US 5-year treasuries, for example, are yielding 0.67%, versus the US inflation rate which is approximately 1.3%.

At Hoesgen Investment Partners, we have presented some high yield portfolio solutions recently in the REIT sector. The following is a list of some our latest new issues.

True North REIT yield: 6.56%

Dundee International REIT yield: 7.58%

Allied Properties REIT yield: 4.4%

KEY REIT yield:9.83%

PURE Multi-Family REIT yield 7.0%

Healthlease REIT yield: 8.5%

Dundee REIT yield: 6.11%

Additionally, regardless of where we are in the market cycle, dividend investing has proven to be an all-weather strategy. We believe investors should hold a portfolio of high dividend-yielding stocks at any phase of the market. These companies typically participate in market upswings while still providing underlying dividend support if market conditions falter. In the near term, we expect defensive shares whose cash flows are largely unaffected by volatile commodity prices to likely become increasingly attractive.

#18 Pr on 08.31.12 at 10:33 pm

…And if Quebec goes PQ on Tuesday, Montreal will be headed there by Wednesday at noon…

ahahah! This is the funiest blog on the net!

#19 EIT on 08.31.12 at 10:35 pm

@#3, Silly Frank bears don’t pull you back in, despotism does.

#20 Ken S on 08.31.12 at 10:35 pm

Thanks Mr G, for getting the lights on again, and clearing
a path thru the broken glass.
The best anyone can hope for is a short term ‘Maybe’
optimism and be thankful for that.
But thanks for that. Without it we would be reading
the most turgid, arcane self-serving Canadian Establishment pontifications. Thanx

#21 Canadian Watchdog on 08.31.12 at 10:40 pm

My forecast for Vancouver’s August sales based on daily data and some models.

Sales: 1710 to 1740
Y/Y Change: -26% to -28%

#22 Canadian on 08.31.12 at 10:40 pm

#1 g-unit
Speaking of high risk, I bet you were messing your depends adding those extra F’s, U’s, R’s, S’s, T’s and especially those last few !!!!!!!!!’s. You risked losing that golden…..er……sorry Garth……preferred and most coveted and lofty accomplishment of the Greater Fool braindead……being first.

#23 Mark W on 08.31.12 at 10:49 pm

I had the strangest discussion with someone the other day about real estate in Vancouver vs Winnipeg.

I stated that one of the many arguments for Vancouver housing prices was demographic pressures on the local market with limited land (none of which I really agree with) & HAM, Etc.

However, in a place like Winnipeg where prices have gone up 250% none of this holds.

There is no shortage of land and zero demographic pressures … Winnipeg today has really no more productive citizens than it had in 1975; so why would prices go up so much there, if not for the availability of really cheap money that they give to anyone who can fog a glass.

Then the other person said the following: “Well of course Winnipeg’s housing prices have to go up because the prices of homes in Vancouver have gone up also and Winnipeg’s prices will go up to keep pace with Vancouver.”

Seriously … !!! :-)

Pegged logic.

#24 Elmer on 08.31.12 at 11:11 pm

Garth, you always mention the big banks but what about the insurance companies like Manulife, Great West Lifeco, Sunlife? If your predictions about real estate come to pass, these companies would do very well, no?

#25 Rasputin on 08.31.12 at 11:15 pm

Is Morgan Stanley considered a major bank? Get ready. It’s coming again. MS will be toast within a month. The J-Hole meeting was mostly to decide how to carve up the carcass. Be thankful you are in Canada.

#26 Phil Indablanque on 08.31.12 at 11:22 pm

…”Meanwhile the elfin deity known as F”…

Classic Turner, Classic. One for the Friday night fans!

#27 aggie on 08.31.12 at 11:27 pm

8% sounds pretty accurate, from my own experience here in the burbs outside Vancouver. I’m the cashless, naive, idiot woman Garth kindly wrote about a couple months ago. Here’s my sorry tale…
◆ May 2007: broke and broken, yet still find myself buying a condo just to stay near my kids & g-kids, 248K+10K cmhc (0/40/5.04%)
◆ May 2012: time to renew mortgage, owe 244.5K, panic at being trapped in an impossible negative equity situation w shaky career, in desperation drop our dear G-man a note, blew off the (so nice, but so persistent) broker, swung into default open 6 mos @ 6.2%
◆ June 2012: tidied up, listed at 238, added my red dot to the many for similar props @ ~245, had about 10 showings, no offers
◆ 1st 1/2 July: no showings this month at all, decluttered like crazy, rented a storage locker & filled it, moved ‘puter desk out of LR, replaced faucets, carpet, light switches. Started buying fresh flowers weekly, learning fast how to really stage, working hard at keeping strong presence & interest on CL and KJ… and DS borrowed a wide-angle lens, took great pix
◆ 2nd half July: increased mortgage payments and started making’m weekly, dropped price to 233K, realtor hosted open house w 6 visitors, I put out good coffee & cookies, stopped shy of offering free beer for a year
◆ 1st half Aug: did up my own colour flyer, spread it around, had a handful of showings — hooray, they were repeats! Getting really good at cleaning, noticing and cleaning every smudge, repairing every little crack and crevice, spit’n polishing for >2 hrs before each showing (yes, productivity at work suffered, but they understand. My spirit’s still strong, careful to eat well, exercise, etc.)
◆ mid Aug: Realtor (who promised a commission cut) leaves on vacation w a note saying he’s back at end of month, another guys covering in his absence, and to expect an offer from last viewers this Saturday. Narry a call or text or email from anyone on yay Saturday. Sucked into a few days of despair, palpitations, nightmares, losing it…
◆ THEN: another viewing (again a repeat), followed by an offer
◆ ….and SOLD at 228K; subjects lifted on Aug 25, completion end Sep.
◆ NEXT: Selling scheit on CL, moving into a little basement rental @ $500, much closer to work, further from family, nose to grindstone to pay down closing costs debt (>20K). Learning to drive the money road, will be moving my truly pathetic little RRSPs out of GICs, starting up a TFSA, when I have enough, start looking at things like REITs and bank preferreds… strange new lingo for me, new territory, trepidation and HOPE and FAITH that things will all work out in the long run.

Cheers, dogs, you know this story; it’s just one of many idiot ones you’re hearing — worse ones to come in the not-distant future.

And to you dear newcomers, especially pathetic idiot (but not hopeless) single women like me: Listen and LEARN. Believe that there is no one perfect answer, that we’re living in somewhat unpredictable times, even Garth says so, which is why he says to diversify. And be liquid enough to be able to adapt to sudden changes in our economic, political, military, and climatic (earthquakes anyone?) environment.

It’s all starting to make such perfect sense.

Trust and listen to our Garth, bless him (I sure do), and to our own (perhaps buried) inner common sense and wisdom, bless us.

Hard at first, but it gets easier.

#28 T.O. Bubble Boy on 08.31.12 at 11:31 pm

Should the Silver Bugs take profits from this month’s 15% rise?

#29 Industrial Guy on 08.31.12 at 11:31 pm

if Quebecers elect a PQ majority Government on Tuesday, the entire country will suffer. Real estate prices in the English suburbs of Montreal will collapse … again. Nothing short of Pauline Marois swearing on a stack of Jos. Louis that there will not be another referendum during this term would stop the Canadian dollar from taking a good hit too. Sadly, even this doesn’t guarantee the province won’t go through this nightmare again. In the PQ platform, they are committed to “providing the holding of national popular initiative referendums at the request of at least 15% of voters.” Basically, if 850,000 people sign a petition demanding a sovereignty referendum, the Government of Quebec is obliged to provide one.

Most Canadians outside of Quebec are unaware of how destructive the two past referendums have been to Quebec society. Families split along political lines. Marriages ended. Except for a few zealots, no one in Quebec wants to revisit these painful episodes in Canadian history again. It’s the fear of another sovereignty referendum that has lessened the likelihood of a PQ majority Government.

A minority PQ government with the Coalition Avenir Quebec playing power broker could be very interesting. The province has not seen such a right wing party since the days of the Union Nationale. CAQ grew out of the ashes of the wonky, sometimes right, sometime left and always ambiguous on separation Action Démocratique du Québec.

One thing is for certain. Without the Quebec Liberals operating behind the scenes, there will be many more shocking revelations at the Charbonneau inquiry into allegations of corruption involving, construction firms, governments, political parties and organized crime.

#30 wes coast on 08.31.12 at 11:42 pm

Great Post. I think doomers and contrarians get lumped into the same category. While they share the same sense of risk that comes from blindly following the crowd, contrarians look to profit from their enlightened position while doomers salivate at the thought of the wolf coming in and slaughtering the heard. I think that stems from a fear of taking a risk – so they’d rather see the risk takers punished in order to prove that taking risks is risky and always ends in demise; except – it never does end in demise. Maybe for a few. But for the whole the economy still moves forward.

Recognizing risk without profiting from it is like getting an MBA and applying for welfare.

#31 Trader on 08.31.12 at 11:56 pm

“Risk is the consequence of your own actions”… Love it!!

Isn’t it about time to open your own fund?

#32 squidly77 on 09.01.12 at 12:06 am

Look who’s begging on the internets.

I hate to ask for anything, and yet I am literally reduced to begging

Yup all this from the bubblelistic Phoenix realtor Greg Swann who claimed ‘its different here ‘

Oh yeah, did I mention the comments he made concerning bubblebloggers…

“The BubbleBloggers will someday bawl balefully in private, but they will never, ever admit that they have been very publicly very foolish. You will know and I will know and in the secret chambers of their hearts they will know they were wrong all along. But as long as you don’t hold your breath waiting for that contrite admission of error, you should be fine.”

Of course the realtor modified his original post. Sounds awfully familiar to me. – Read all the realtors rage here….

Rage, anger and hate all wrapped up in one.

#33 Canadian Watchdog on 09.01.12 at 12:17 am

#28 T.O. Bubble Boy

“Should the Silver Bugs take profits from this month’s 15% rise?”

No.

#8 Drill Baby Drill

“I realize if oil prices fall below $80/bbl there will be a retraction in RE prices but as yet no go”

Alberta warns deficit could be higher than budgeted

You guys can’t even balance a budget at $95. Good luck.

#3 LH

“Seems parts of c01 are doing fine, thank you!”

There was 4 detached homes sold in C01 last month.

#34 squidly77 on 09.01.12 at 12:20 am

The problem with realtors.

It was Greg Swan’s self-serving economic analysis and hype (and tens of thousands of other Realtors as well) that helped lure dumb speculators into “can’t lose” Phoenix. Prices are now 54.7% off the peak in June 2006.

#35 DJB on 09.01.12 at 12:29 am

#24 Elmer: You mention the Life Co’s the problem ewth them is their annuity payouts require them to be in super safe investments like bonds and the return on bonds has been killing their bottom line.

Until bond yields rise Life Co’s are not the place to be.

#36 george on 09.01.12 at 12:30 am

August 30 – Bloomberg (Mark Deen): “Yale University professor Stephen Roach said Federal Reserve Chairman Ben S. Bernanke shouldn’t be given a third term because of his role in managing the U.S. economy before the financial crisis. ‘I think Bernanke tried his best post-crisis, but he’s part of the problem pre-crisis,’ Roach said… ‘He and Alan Greenspan condoned asset bubbles at a time the economy needed more discipline.’ …For Roach, Bernanke’s work to calm markets following the financial crisis doesn’t mean his part in inflating asset bubbles in previous years should be overlooked. ‘To reward him for post-crisis, very valiant efforts of public service completely overlooks the role he played in getting the U.S. asset markets and an asset-dependent economy into this mess in the first place…”

http://www.prudentbear.com/index.php/creditbubblebulletinview?art_id=10702

#37 Carpe Diem on 09.01.12 at 12:32 am

For some reason RE at crazy prices go so fast on my street! Why?

As a renter, this place is very nice. I am having BBQs with the affluent. But the newbies on the street pay more for mortgages and taxes than I do in Rent. If you add in repairs … I win (and do not have to take care of landscaping or snow removal).

I have neighbors on the brink. Meanwhile, my kids RESPs are full.

I’d love to buy on this street but renting seems a better bet.

Can I be wrong? Buy now or forever be a loser?

#38 Nostradamus Le Mad Vlad on 09.01.12 at 12:40 am

-
“It’s all changing fast. Running out of money.” — Got that right!

Reading #11 Smoking Man — “they [TPTB] want dumb down stupid customers. the whole system is by design a fraud. Think for a moment, say 50% of the population bought into our investment ideas.” — Just suppose your posts were daily required reading / studying and following basic advice in the public education system, how many would fly the coop to ChIndia, Brazil or Russia and places like that, after they turn 21?

There would hardly be anyone left to turn the lights out When Kanada Inc. shuts down.
*
Cdn. Friday links; Verbals count Last will and testament; Condo Market or Joke of the Week; Buffett’s Railroads keep moving; Isaac Expensive date; 1/3 of Americans say will die on job; EZone Unemployment Try 25% or higher; Morgan Stanley Embarrassed? Seems so; Breakiing Up is hard to do; A New Concept in parking the car; US – China stocks (chart).
*
Aston Martin Like me, a classic and a Porsche Carrera GT; Skydiving Long fall but survived; John Baird in his usual, rip-roaring style; Prawnriders Of The Purple Sage or shrimps; Plague Of Mice and Men; Thyme Off For Good Behavior Jailhouse restaurant; Large Underground Pyramid? This is where all Starbucks are created; Nothing happened, boring as hell; Great Whites near Cape Cod? The real Jaws; Hypersonic Bomber for Russia; Romney Probably why TPTB have already chosen him to replace Obomba; The Fourth Reich Explained a little better; Russia boosts military spending; 9:05 clip Fourth Dimension explained by a high school student; Assange Interesting points.

#39 Fartweezel on 09.01.12 at 12:45 am

Good read!

But Romney winning? Fat chance of that! Obama is pretty disappointing but has great handlers. Obama reminds me of Mulroney…

#40 Mic D'angelo on 09.01.12 at 12:50 am

A guy named J Snip on YouTube is saying that big U.S. banks are going to be devoured and bank shareholders are going to loose big. The federal reserve will destroy the dollar with hyperinflation. Garth do you believe this and if you don’t the deflation you talk about could it be like Japan’s lost decade+ and a stock market bursting of a bubble Nikkei 225 index at 8969 when it was 38,000 20 years ago.

#41 Click Here, Its different on 09.01.12 at 12:56 am

#20 Industrial Guy

I dont think the RE market in QC need anymore reasons to abuptly cool down than BC or Ont does.

What happened in Vancouver this summer to explain the 15% correction (and still spiraling down) ? Or in Toronto ?

Buyers in Montreal are clearly overextended. Prices jumped 150-200% in ten years with wages under national average and the highest taxes. The economy is flat. Condos in MTL are spawning like crazy and “For Sell” signs pops everywhere in and around Mtl.

Even if Prince William present himself and win as a last minute candidate, prices would go down anyway.

#42 Freedom First on 09.01.12 at 1:10 am

#27 Aggie

Thank you for sharing your heartfelt story with us. You are a strong woman, a good woman, and doing the right things for yourself now. I hope that everything works out really, really well for you! All the best, sincerely……

#43 Aussie Roy on 09.01.12 at 1:13 am

Aussie Headlines

The speckers are back in the market, so get out there the bottom is in – lol.

“Figures from mortgage writer AFG shows that investors (speculators) are currently 35.2 per cent of all home loans being written. In NSW the figure is 44.4 per cent – the highest in the country,” Mr McGrath said.

And that is a good thing?..

http://www.news.com.au/realestate/why-springs-the-time-to-jump-into-the-market/story-fncq3era-1226462853471

Negative gearing which pushes up prices will stay because we have an affordability problem, how dumb is that.

FEDERAL Housing and Homelessness Minister Brendan O’Connor has ruled out changes to negative gearing for property owners in the face of a housing affordability crisis.

http://www.heraldsun.com.au/news/breaking-news/housing-crisis-negative-gearing-will-stay/story-e6frf7kf-1226462610490

#44 TRT on 09.01.12 at 1:30 am

Some Math for the numerically inclined:

$300,000 home. 5% down. 5 year term at 2.99 percent.

Buy it and after 5 Years — $242,000 left to pay off.

Factor in inflation at 2.5% and in Real terms there is $214,000 to pay off after 5 years.

Factor in the difference between rent paid a the percentage going towards interest on the mortgage…and you are further ahead.

Then pay off amount becomes $200,000.

If you are waiting for a crash, then minimum 33% is what is needed very soon and quick. A melt or stable prices just don’t cut it.

Oh yeah…property taxes, maintenance….well theyre countered by having ur own place.

#45 dv8 on 09.01.12 at 1:31 am

Im confused Garth says that money is getting more valuable ,so when gold and silver go up as a result of printing money or in benny’s case even just a promise to print money (easing). does the value of money also go up ??

#46 TRT on 09.01.12 at 1:53 am

Why the effects of immigration and RE are nevr talked about on this blog..

http://www.theglobeandmail.com/globe-investor/banks-look-to-immigrant-market-for-growth/article4513104/?cmpid=rss1

#47 THE CELIAC HUSBAND on 09.01.12 at 3:20 am

Cash out, move to Europe. Live mortgage free. Be happy. We are.

http://theceliachusband.blogspot.fr/2012/03/la-maison.html

#48 Jay Currie on 09.01.12 at 3:33 am

Industrial Guy:

“Most Canadians outside of Quebec are unaware of how destructive the two past referendums have been to Quebec society. Families split along political lines. Marriages ended. Except for a few zealots, no one in Quebec wants to revisit these painful episodes in Canadian history again.”

Actually many of us are…and here’s the thing: we really wish Quebec would just pack its bags and leave. There is nothing more irritating than whiney students in the streets protesting the lowest tuition in North America and $5.00 a day day care financed by the rest of Canada.

Good bye, Adieu, À bientôt. We’re just so done on the Quebec thing. Leave already.

#49 Rob now in Nova Scotia on 09.01.12 at 4:10 am

@#28, TO. Sell your silver after a 15% rise? Heck NO! If you think a monthly 15% increase is impressive just wait until the US Fed announces QE3. PMs will skyrocket and in fact QE3 is already being factored in, which is why we’re just starting to see the liftoff.

Google “Alf Fields” gold for a great explanation as to why gold (and remember silver follows gold more or less) has been flat for the last year.

@Garth: what about land prices? Do you also believe that land prices will drop?

#50 P & T S on 09.01.12 at 4:53 am

QE3? Bring it on (and on, and on . . . . QE333 anyone??)

Meanwhile back on earth, seems “The Machine” is getting VERY smart and VERY quick – or at least the trading algorithms are -

http://www.zerohedge.com/news/algos-set-new-speed-reading-record-4549-words-20-milliseconds

and the EU just isn’t looking that great either (for the 99%)

http://www.testosteronepit.com/home/2012/8/29/the-pauperization-of-europe.html

and an honest, so non-MSM assessment of this year’s financial jamboree for the Central Bankers Club –

http://market-ticker.org/akcs-www?post=210935

Oh, and seeing as we’re keen on “talking up” the “big” change in US Housing sentiment – perhaps this might be worth a look too.

http://www.zerohedge.com/news/3200000000000-question-why-housing-has-much-more-drop-it-bottoms

Seems the inequality message is getting quality airtime in Canada too – and from the comments any “revolution” is going to be a far from pleasant time for everyone, particularly the downtrodden. . .

http://www.nakedcapitalism.com/2012/09/chris-hedges-hear-the-99-roar.html

#51 ianwatt on 09.01.12 at 5:21 am

Vancouver 5% down but not 10%! never!
http://ianwatt.ytmnd.com/

#52 House Horny Housewife on 09.01.12 at 6:41 am

Garth,

Indeed many of us choose to put our investments in a place that at least guarantees our principal. At this time in our economic history, I think it is wise to put at least a portion of one’s investments in products such as these. Even if it means that this percentage of your portfolio grows at a slower rate than the rest.

Quite frankly I see no problem in investing in something that will guarantee an income for life at retirement. For those of us without a pension from an employer, it is a good idea to have something that is guaranteed for life. You yourself have just mentioned the risk many women have of outliving their money. This type of investment helps to cushion against that risk.

Of course I do not think that these types of “safe” investments should be used for 100% of one’s savings. The price to pay for having a guaranteed income for life, a guaranteed rate of return and a protected principal is a lower rate of return and higher management fees .. you never get something for nothing.

However, these products are a way to manage certain risks in one’s life because when one retires, the market may be going well or it may not.

Many of us have learned from our parents’ experience that when your age 65 arrives, it may or may not be feasible to start withdrawing your investments. Many 60 somethings have had to remain in the workforce simply because their investments dipped at exactly the wrong time, when they needed to begin withdrawing. Had they withdrawn their funds at this time, they would have realized huge losses. If these people had had the option of buying into what you call “dead-end investments”, they would have still been able to retire as planned because a guaranteed income payment gives you the choice of either withdrawing your other investments or letting them ride until the economy is performing better.

This is simply good retirement planning and I take great issue with you ridiculing those of us who choose to play it safe with at least a portion of our retirement funds. These days it is definitely not as simple as you make it out to be to get a decent return on your investments and unless you plan to watch your money every hour on the hour, you need to choose an investment that will not only guarantee your principal investment but that will also grow over time and not have to be sold at the drop of a hat because of the market’s reaction to the latest economic headline.

I do enjoy reading your blog, Garth, but I have to say that your over confidence sometimes gives off the wrong vibe. I am extremely wary of financial consultants that seem to have it “all figured out” and that ridicule other financial products in favour of their own “time tested and guaranteed” methods. All of the investments you describe come with a certain amount of risk and if making great returns was as simple as you seem to make out, we would all be making money hand over fist.

And please don’t tell me that the reason mutual funds are not doing well is because management of these funds is incompetent .. no one is under more pressure to earn investors a better return than these companies and the best of them all seem to move in the same direction, more than likely because they are trying to be careful with their clients’ money and to minimize their risk.

Having a portion of your investments in less volatile, guaranteed financial products can be a part of a good retirement planning strategy, especially for those of us who do not have a guaranteed pension plan. The fact that many companies offering these products have recently had to withdraw or adjust these products for new buyers because it became less profitable for them only reiterates how volatile the times we are living in are.

HHHW

#53 Julia on 09.01.12 at 8:02 am

“Risk is the consequence of your own actions”

Well, strictly speaking, “risk” is a statistical term about the probability of coming to harm. The possibility of suffering harm or loss. Putting yourself at high risk by your actions could make harm a likely consequence.

Funny thing i learned about the concept of risk when i was working on a project that involved translating some educational materials about risky health behaviours into different languages… Guess what? Many languages don’t have a word for risk or even an easy or common way to express the concept. Go figure…

#54 COW MAN on 09.01.12 at 8:20 am

#48 Industrial Guy

My wife and I visited Quebec City in February. Just magical. It is a “distinct society” for certain. I wish they would join the Euro after leaving Canada. Then the street protests could flourish.

#55 TurnerNation on 09.01.12 at 8:43 am

Benron Bernanke! The guy with his hand on the $USD Plunge-o-meter. Like the slack jawed carney (no pun) running the Clink and Plunge rollercoaster of your youth – with a smirk he’d ratchet forward the lever to see how much loose change he’d later collect from the ground below.

Good news for equities.

#56 TurnerNation on 09.01.12 at 8:49 am

You Are Richer Than You Think buying the Orange Guy’s Shorts. Surely indicative of a market inflection point. But in whose favour. Is it ever?

#57 Buy? Curious? on 09.01.12 at 8:51 am

In celebration of a PQ majority, I’ll be having steak, with plenty of Pepper sause.

#58 Craig Kellough on 09.01.12 at 8:56 am

Hi garth, I like your style, you’re a funny guy and entertaining.

A few comments;

Q – What happpens to US debt when rates start going up?
A – They will have to print $Zillions of more dollars just to service the debt, which will push they into a worse recession then they’re already in. $Trillions and trillions of debt goes where…payed off by whom?

Q – New is flowing out of the US that things are improving, house prices are moving up…happy days are here again…..What has changed to create this turnaround?

A- Nothing! PS – What happens in the US in Nov? Hmmmm

Q – If you print $Zillions and throw out another QE in the US, where does that cash come from? European countries are dropping like flies, paper money is becoming worthless so where do we go Garth?

A – Silver brother, lots of it and a large % of the silver mines that produce it. It’s going to a $100 on the next leg, then higher.

You say metal heads are dummies, I’ll buy the metal and the mines that produce it and call me in 3 years. We’ll compare your US real estate investments and your REITS to my dumb metalhead investments.

God Save the Queen

Craig

You live in paper money. The goal is to have lots of it, not unpredictable rocks you need to convert to paper. — Garth

#59 Francis on 09.01.12 at 9:32 am

Every time the Elfin deity speaks he makes me want to vomit. He simply brings to mind that he is the architect of the problem that he know pretends to help save us from. Dishonesty personified.

Any reference to a revival in the U.S. housing market is a hoax ( Michael Lombardi )

#60 Susan from London area on 09.01.12 at 9:32 am

I’m loving your book Garth “Money Road” it’s a lot to take in for me, real estate has been my only investment strategy for 30 years, so the learning curve right now is pretty much straight up. Oh I splurged and bought myself a cute little sports car 2 seater convertible used of course I ‘ll be wearing it all weekend lol first toy in 30 years, too busy being responsible. A girls gotta have some fun haha. Thanks Sue

#61 TurnerNation on 09.01.12 at 10:00 am

The GFC will truly end with Garth, bigarider, and Blog Dog Carney taking a nice long Harley ride together. But when?

#62 IM in C on 09.01.12 at 10:01 am

Check this article
http://business.financialpost.com/2012/08/30/canadas-hot-condo-market-set-to-get-even-hotter/

The best part is all the commenters taking the financial post and Gennworth to task

#63 John on 09.01.12 at 10:06 am

Smoking Man wrote:

“So what do you want to be, predictor or prey. those are the only choices in a global economy.”
——

Well that might be true if a guy is totally alone and offering nothing…and getting nothing. Sure, that’s the deal of a global economy.

It sounds like you’re not graduating. If you actually get the message of the fraud you can move on. Start living, instead of manipulating.

If you don’t get and process the message, there’s one hell of a lot of hard drive used up trying to react the right way.

The global economy is about personal isolation and separation. Trying to control what can’t be controlled. Looking to protect money and “assets” in an absolutely rigged game. Looking to retire and be left alone and “have enough”. Even worse it can mean cheating by feigning legitimacy in the hide out….being an example of “committment” and “stability” and “family loyalty” as seniors of the family. Meanwhile the fraud is starving out the new up and comers.

So why all the talk of the old way? What’s the optimistic flip side of the real estate bubble.

What works….or do you actually believe people can only be fake and afraid, offering nothing in a dog eat dog system? Only the fake and afraid see others as fake and afraid. It’s something to grow out of. An opportunity. Human.

Who said you were powerless? What’s up with all the giving away of power to your bosses? The extreme focus on them and the “world they built for you to live in and manipulate”. What about your own world? That would be something other people could relate to. Relationship.

The global economy isn’t life…hopefully the bubble is revealing this.

#64 Spiltbongwater on 09.01.12 at 10:16 am

I am curious about the picture. Was the man having an affair with 2 women at the same time, like 3somes? If so, can the wife really blame her husband for indulging in that?

#65 John on 09.01.12 at 10:45 am

Wes coast wrote:

“contrarians look to profit from their enlightened position while doomers salivate at the thought of the wolf coming in and slaughtering the heard. I think that stems from a fear of taking a risk – so they’d rather see the risk takers punished in order to prove that taking risks is risky and always ends in demise; except – it never does end in demise. Maybe for a few.”
——–

I don’t think you’re going anywhere with this, although your definition of a doomer is accurate in my opinion.

Your problem is with the concept of “contrarian”. Looking to “profit from an enlightened position”? How is that any differen than those that put together the reap estate bubble ( Goldman Sachs et al and Puppets for Muppets…the “government”).

There is nothing contrarian about taking Goldman’s “money” and rolling it back into bank and commerciap real estate ponzis. The banking cartels don’t give a rats ass about society or humanity or community or anything at all. So explain how your position is “enlightened”(in the real sense of the term) and “contrarian” because it’s really muddy. How cynical are you?

Sure..avoid getting screwed by the casino everyone is playing in because you “get the angle”. Would or could you go on a tour of Ontario highschools sharing with them your “enlightenment” and “contrarianism”.

What would they say to you?

Doomers…yeah it’s around the same vibe as your pseudo-contrarianism. I call BS.

The real estate bubble and all it means is now up on the table. The problem-opportunity is there.

You suggest turning your back and walking away.

#66 Daisy Mae on 09.01.12 at 10:48 am

#52 House Horny Housewife: “And please don’t tell me that the reason mutual funds are not doing well is because management of these funds is incompetent .. no one is under more pressure to earn investors a better return than these companies and the best of them all seem to move in the same direction, more than likely because they are trying to be careful with their clients’ money and to minimize their risk.”

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

The ‘management’ of these mutual funds is pathetic. The 2% management fees are outrageous. The advice from these so-called ‘advisors’ is just awful. I’ll have nothing more to do with mutual funds….ever.

#67 Tony on 09.01.12 at 10:51 am

The fed may make a few moves before the U.S. election but QE3 would be political suicide and will never take place before the election that i can assure you. If QE3 ever takes place and of course fails to do anything except make things worst than they already are then the fed will think twice about any future moves. Take a good look at the Canadian venture exchange to get a clue as to the probability of QE3. Doesn’t seem very probable now does it?

#68 NoOneOfConsequence on 09.01.12 at 10:53 am

To TRT…

If you are going to post something for the mathematically inclined, you should do your math properly. After all, you wouldn’t want to be outed as a realtor spouting more BS to draw in the hornified…

$300,000 home. 5% down. 5 year term at 2.99 percent.
Buy it and after 5 Years — $242,000 left to pay off.
Factor in inflation at 2.5% and in Real terms there is $214,000 to pay off after 5 years

You forgot to add 3.25% of CMHC insurance to that amount…since you only had 5% down. That is a little over $9,000.

You somehow magically reduced your mortgage by 12.5% due to inflation? WRONG. People are NOT getting inflation rate raises every year. You will have LESS available $$$ because your buying power is eroded and your wage hasn’t increased to match.
Instead, your monthly expenses have increased by 12.5%…so your mortgage ACTUALLY CONSUMES A HIGHER PERCENTAGE OF YOUR INCOME than at the start.

Your mortgage is $294,000 since you only have 5% down, but the bank demands CMHC insurance at 3.25%.

After 5 years, you actually owe closer to $260,000.
Add in 5 years at $2500 per year in property taxes…that’s another $12,500 hit.

Assuming that your teaser interest rate hasn’t increased (after all you conveniently use the lowest variable rate – which is gone forever in another 1.5 years)

So….let’s sum up…..

You dropped $15,000 into an “investment” that will return zero percent over 5 years. When you sell, you will pay another $15,000 for fees.
You have paid $12,500 in taxes on this investment, without realizing a nickel in growth.
You have paid an average of $650 per month in interest fees, for a total of around $40,000 in interest.
$40K interest + $12K tax + $8K maintenance = $60,000 in carrying costs. Divide this by 60, and you come up with $1000.00 in COSTS for your investment.

Hmmmm…it just don’t work out when you put reality into the mix does it?

Now…$15,000 into preferreds and reits returning 6%….reinvest the dividend payments into more dividend stocks and you get this:

$15,000 investment = approx. $75 / month income
$15,750 at end of year 1
$16,600 at end of year 2
$17,500 at end of year 3
$18,450 at end of year 4
$19,400 at end of year 5

Conclusion…when we are in a deflationary environment…real estate is a very poor investment indeed. If you had stock performing this badly, you would sell it and buy something else.

But…since it’s a house…you can’t sell it at a profit as prices are declining!

#69 Daisy Mae on 09.01.12 at 11:05 am

#52 House Horny Housewife: “I take great issue with you ridiculing those of us who choose to play it safe with at least a portion of our retirement funds….”

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

I believe Garth is talking about savings accounts and GICs earning less than inflation rate.

He suggests we should be cautious with our investments, limiting our exposure to volatility….and that’s where diversification comes into play.

#70 Tony on 09.01.12 at 11:06 am

Re: #7 Ron@Delta on 08.31.12 at 10:13 pm

Your bond fund is safe as TLT is still moving higher meaning rates will fall in America. What you’re seeing right now is the great snow job before the U.S. election. QE3 could take place but after the U.S. election. The odds of QE3 before election day in America are beyond infinity to one. The PE ratios on the U.S. REIT’s are still very low as just as the saying goes buy U.S. real estate and sell Canadian the same can be said for REIT’s. Sell all Canadian REIT’s and if you’re very good at sizing up companies pick the ones that will go bankrupt and sell them short. U.S. REIT’s such as Annaly Capital Management have had a good run and it will likely continue but the stock market in general should get trounced after the U.S. election meaning you’ll have to hedge against the market to protect your position in U.S. REIT’s.

#71 dv8 on 09.01.12 at 11:10 am

What I will point is that at no time in recorded history did a monetary regime end in “hyperdeflation.” infact there have been 56 documented cases of HYPERINFLATION

http://www.zerohedge.com/news/monetary-endgame-score-date-hyperinflations-56-hyperdeflations-0

#72 T.O. Bubble Boy on 09.01.12 at 11:11 am

The latest Post City Magazine showed up on my doorstep today, and the ‘real estate roundtable’ was interesting… Sherry Cooper (and her new face) saying that a 10%-15% drop in GTA prices would be a good thing!

Garth had the best zinger – calling out Harry Stinson’s comment on young couples using a property as their principal residence by saying: “Get real. Nobody stays in a 500-square-foot condo for 30 years”.

Other than that, all of the comments were quite predictable… Realtors saying that Toronto is a world-class city like New York and London and rich foreign buyers will drive the market into the stratosphere, and Garth pointing to macroeconomic factors like the economy and stalled incomes as to why the market is in trouble.

#73 Drill Baby Drill on 09.01.12 at 11:13 am

#33 Canadian Watchdog
“You guys can’t even balance a budget at $95. Good luck.”

- You are right CW but being a so called watchdog you realize there is not a gov’t in sight that can balance their books. If the income is less than the expenditures then the outcome is a debtor province.

#74 Basil Fawlty on 09.01.12 at 11:22 am

“You live in paper money. The goal is to have lots of it, not unpredictable rocks you need to convert to paper. — Garth”
Garth, you continually use this argument against investing in precious metals , however it has no legs. One could also use your point to argue against investing in preferred shares, since thay have to be sold to raise money.
There are certainly pro’s and con’s associated with precious metal investment, but the fact that they have to be sold to raise cash applies to all investment classes.

#75 pareto optimal on 09.01.12 at 11:27 am

44 TRT on 09.01.12 at 1:30 am
Some Math for the numerically inclined:

$300,000 home. 5% down. 5 year term at 2.99 percent.

Buy it and after 5 Years — $242,000 left to pay off.

Factor in inflation at 2.5% and in Real terms there is $214,000 to pay off after 5 years.

Factor in the difference between rent paid a the percentage going towards interest on the mortgage…and you are further ahead.

Then pay off amount becomes $200,000.

——————————————————————–

Your arithmetic is OK, but perhaps it would be prudent to sign up for some remedial mathematics……. or better yet, economics .
The use of the inflation rate as a discount coefficient on the value of an asset is incorrect if the value of said asset you are paying for is deflating even though the “inflation rate” is positive.
You have a future with a real estate board son…….

#76 willworkforpickles on 09.01.12 at 11:36 am

Not too worried about the other side of the world yet?
Imagine a brand new city built for 18 million people—yet only 4.5 million live there. Imagine massive, state-of-the-art university campuses—15 of them—in a city that nobody… DELETED

Do not come here to copy and paste a 1,000-word article, which you pass off as your own. — Garth

#77 wing on 09.01.12 at 11:36 am

#52 hhhw
i think garth deliberately acting touch and overconfident just to spice up this pathetic blog, and it works. No body wants to come here everyday and listen to a polite and gentle guy gives out so so advice.

as for your reasoning, i agree there is a place for guaranteed income for life portion in your retirement portfolio, namely Annuity. but its unwise to purchase such a policy when the rate is as low as now. Perhaps when the rate goes up in the near future, one can include some.

Annuities suck. There is no reason to purchase one, other than fear. — Garth

#78 joe on 09.01.12 at 11:44 am

TRT quit pumping and humping.

#79 Junius on 09.01.12 at 11:57 am

#46 TRT,

You said,”The effects of immigration are never talked about on this blog.”

No, they are relentless pumped by you as a reason to believe house prices will go up forever. No one else is believes this so we don’t bother with you.

#80 willworkforpickles on 09.01.12 at 12:00 pm

If China crashes as a result of the factors in the article above – world trade for an extended period along with the US dollar will be toast, assets will deflate, the staples to sustain life across North America will inflate beyond what many can even afford.

But China will not crash. — Garth

#81 };-) aka DA on 09.01.12 at 12:07 pm

No one can predict the future. Risk is a fact of life. Deal with it. Enjoy the ride. Saving all your shuckles for an uncertain future at the expense of today? Don’t waste this day, it may be your last. Invest in your ability to recover. The best defense is an offense. History has a way of repeating itself at the least opportune of times. What goes up eventually comes down and so too, in time, will go back up – unpredictably.

#82 Canadian Watchdog on 09.01.12 at 12:15 pm

Charts:

Canada Historical CPI

Food Price Index
Shelter Price Index
Transportation Price Index
Services Price Index

Alcoholic Beverages & Tobacco Products
Meat
Dairy Products and Eggs
Bakery and Cereal Products
Vegetables and Vegetable Preparations

Clothing & Footwear
Health & Personal Care
Women’s Clothing
Men’s Clothing
Jewellery
Child Care and Housekeeping Services
Homeowners’ Replacement Cost

Communications
Electricity
Water*

All in exchange for this.

Now ask yourself: what is value, and what is wealth?

#83 Deb on 09.01.12 at 12:26 pm

F told reporters, “There are risks in that big world out there and we’re part of the world.”

Well, yes, from his perspective the world probably does look quite large. In fact, the world has become smaller, which should serve to make F appear, or at least feel, bigger. In any case, so long as we know that Canada is part of the world, that’s the main thing.

What I know is that Canadians do not appreciate being talked down to. In addition, if he wants to comment on risk, I would like to actually know what this guy’s idea of risk is?

I do not like this dude at all.

#84 Daisy Mae on 09.01.12 at 12:34 pm

#59 Francis: “Every time the Elfin deity speaks he makes me want to vomit. He simply brings to mind that he is the architect of the problem that he now pretends to help save us from. Dishonesty personified.”

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

Will we remember this when we have the next Federal election?

#85 Poorboy on 09.01.12 at 12:43 pm

Those of you under 50 buying REITs, preferreds and other income investments that have a portfolio smaller than 250k should probably do some basic mathematical projections for portfolio growth, inflation and your own life expectancy.

Garth’s financial advise, in my not so humble opinion, is only useful for a small subset of readers on this blog.

For everyone else, step #1 set a realistic goal and then work backwards to figure out if you can get there with your $10,000 portfolio invested in preferred shares.

A guaranteed return of 5% with little volatility and the least amount of tax is inadequate? — Garth

#86 TNT on 09.01.12 at 12:51 pm

North and West Vancouver’s local rag, The North Shore News a paper fueled by RE propaganda showed its inside trading hand this week in the Fri 31 issue.

This is the same News Paper that weekly puts out the RE papers for the North Shore listing$

Front page caption, West Van “tear down” fetches 1M over asking.

Its front page article scripted by local realtor Shelly Williams who is pumping the house rich, cash poor seniors.
It is a slick RE ad disgised as an article.

Shelly Williams is a former North Shore Newspaper sales rep who must of pulled some strings for this front page+ad/article placement.

Also on page 14 of the same paper another big RE pump fest for the show URBAN Suburban a RE pushing show hosted by one time Surrey realtor’s Daniels and Dumoulin, recently wrapping shooting in Vancouver.

Don’t considering renting, just move to where you can afford buying and commute is a suggestion given by a producer of the show.

Maybe hitchhike from Hope to work also, to save a bit more cash….is a suggestion given by me.

The heat is on.

#87 Daisy Mae on 09.01.12 at 12:51 pm

#77 Wing: “….as for your reasoning, i agree there is a place for guaranteed income for life portion in your retirement portfolio, namely Annuities….”

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

Stay AWAY from annuities. You will not win…

#88 Canadian Watchdog on 09.01.12 at 1:02 pm

#73 Drill Baby Drill

“If the income is less than the expenditures then the outcome is a debtor province.”

What’s worst is the fact that cash-strapped Alberta is in deficit with one of the lowest borrowing costs of all the provinces. No surprise here. This is why historically when governments intervene with the free market, it is absolutely guaranteed to FAIL. And that includes housing.

The only time in history where the government spent its way out of debt was in the 1930s, which resulted in World War I and II. They then imposed an unconstitutional income tax (by force) which we all still pay today.

Surely you can see there is nobody left to tax in order to balance the budget, other then corporations who are in bed with the government. Not happening.

#89 Dr. WAYNE on 09.01.12 at 1:18 pm

Garth, I must complement you on your good heart and kindness to allow those who have the mental capacity of a mushroom to view their ‘FIRST’ postings, and not simply deleting them. Your good heart must give untold happiness to these poor cretins.

#90 Hoof - Hearted on 09.01.12 at 1:22 pm

Re China:

Saw an Old FRONTLINE episode from 2004 re Wal Mart:

http://www.pbs.org/wgbh/pages/frontline/shows/walmart/view/

We all know the rags to richs story of Sam Walton..

However, prior to 1991, Wal Mart purchased much of its products within the US. It got to a point that various manufacturers set up offices and or factories in the same town as Wal Marts head office, more convenient when deals negotiated.

They interviewed many parties that once worked for Wal Mart and who were intimate with the Companies inner workings.

However, Wal Marts stock price was taking a hit…they dreaded it going under $20 share. Almost overnite, they started importing volumes of products ” Made in China ” . The profit margins were now from 3-4 X’s that of “Made in US ” products.

Then other manufacturers got the message to move plants offshore…as the theme in the video was Wal mart tells you what they will pay, not much negotiation.

The timeline is interesting, as I recall a major lull in the early 1990′s here in BC…after the Hong Kong money dried up.

Then the Mainland Chinese started coming in droves..buying op RE ……I’m sure much of it due to Wal Marts lead in outsourcing offshore.

Their was a lull that the low prices perhaps balanced out the decline in buying power, but that race to the bottom can only go on for so long.

Seems the economy globally was propped up by Dot.Com Bomb and RE bubble…The last economic wad has been shot.

That said, not sure the future bodes well for China or Wal Mart. Bigger they are the harder they fall.

#91 TNT on 09.01.12 at 1:23 pm

Virgins….you sound highly speculative.

#92 leo on 09.01.12 at 1:23 pm

For you Aussie Roy

http://www.hangthebankers.com/the-ultimate-visualization-of-australias-housing-bubble/

#93 TNT on 09.01.12 at 1:27 pm

@ Randy,

Perhaps he will try to raise them from the dead.

#94 Mithan on 09.01.12 at 1:35 pm

#27 aggie:

Glad to see you got out.

#95 Derek R on 09.01.12 at 1:37 pm

#81 };-) aka DA on 09.01.12 at 12:07 pm wrote:
No one can predict the future.

That sounds like a prediction to me.

#96 willworkforpickles on 09.01.12 at 1:46 pm

China will bring the Western economies house of cards down and Europe will finish us off. You can bet on that.

I’ll take that bet. — Garth

#97 Barry Lainof on 09.01.12 at 1:48 pm

Great post. Still concerned about US Fed, state and municipal debt, however maybe Ben will convince club Fed to buy state and municipal debt in Operation Twist III. Thoughts on Basel III and the effect on Canadian banks. Gold as Tier I asset?

#98 Westernman on 09.01.12 at 1:52 pm

Jay Currie @ # 48,
I second that statement…
The rest of Canada has been footing the bill for these bums in Quebec at least all of my lifetime and it probably has been going on long before that.
If it was up to me they won’t have a choice about leaving, the rest of Canada should send this millstone an eviction notice and then refuse to let them back in.
You left wing Liberal crybabies may now start with the “hater” nonsense…

#99 TNT on 09.01.12 at 2:00 pm

Took some nice gold profit this week.
Ka Ching.

#100 Daisy Mae on 09.01.12 at 2:13 pm

#83Deb: “F told reporters, “There are risks in that big world out there and we’re part of the world.”

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

Duh! That IS profound, isn’t it?

I can’t stand him, either. As a matter of fact, I won’t read any statements made by these three stooges. They’re so full of shyte, their eyes are brown…

Disgusting.

#101 Industrial Guy on 09.01.12 at 2:13 pm

Click Here, Its different – yes, the Montreal R/E market is no different than Toronto or Vancouver. It’s over priced and a major correction would be happening without the election. The election of a majority PQ Government will just hurry things along and deepen the market correction.. As someone who lived through the first PQ election of 1976, I can remember the mass exodus of Anglophone and Allophones (immigrants) out of the province. Housing prices plummeted in the West Island area of Montreal. PQ leader, Pauline Marois is planning major changes to Law 101, the french language charter which will no doubt drive more companies out of the province. Quebec does have very high provincial taxes but …. Municipal and Provincial corruption has a price tag.

Jay Currie – As someone who has travelled extensively across Canada as a middle level manager in the Federal Public Service, I stand by my statement … “Most Canadians outside of Quebec are unaware of how destructive the two past referendums have been to Quebec society. The “whining” students in the streets protesting the lowest tuition in North America are only asking for what their parents had. Some members of of the CLASSE student union may be Hell bent on revolution …but they are very much in the minority. The media tens to focus on them because they perform well for the cameras. I guess you don’t understand the Quiet Revolution, the Parent Report and how significant these changes were to the development of Quebec society.

The Federal Government of Canada does not provide funding to Quebec’s garderie programme. Pierre Fortin, an economics professor at the University of Quebec at Montreal studied the cost / benefit of the $7 a day program. He found that for every dollar Quebec invests in child care, it recoups $1.05 in tax benefits. The Federal Government also receives a 44-cent windfall in Federal Taxes. So your “financed by the rest of Canada” comment is baseless. Try to get your facts straight.

COW MAN – I was in Quebec City this summer too. I have friends living in Beauport, not far from Montmorency Falls. It’s as nice a city as any in Canada. Yes, it’s a distinct society …. but so are the societies in Newfoundland, Western Canada and Nunavut. Canada’s first Nations are a distinct society. I suspect the cultural differences in Quebec are what prompted you to choose it as your holiday destination. As for your comments about joining the EU, well … you do know Prime Minister Harper is negotiating a free trade agreement with the EU?

#102 TRT on 09.01.12 at 2:19 pm

#68 Nooneofconsequence

Wrong…you really don’t understand numbers..

regarding inflation…what would $200,000 be equivalent to in 2017?? Now do a reverse analysis.

Sorry, but go retake Math.

and prices arent going down like you wish. Maybe 15% like garth says and maybe a slow melt. Thats why he call people like you pathetic posters…you just dont understand numbers

#103 TRT on 09.01.12 at 2:21 pm

#68

and also, where you gonna live ? pay rent where rents will be rising..

how else can you borrow 95%? not for preferred and reits..

#104 Daisy Mae on 09.01.12 at 2:22 pm

#89 Dr. WAYNE: “Garth, I must complement you on your good heart and kindness to allow those who have the mental capacity of a mushroom to view their ‘FIRST’ postings…”

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

Tiresome, isn’t it?

#105 Robert on 09.01.12 at 2:24 pm

All one has to do is take a look at the number of court ordered sales to understand that the deep correction has already begun. Recent discussion with a Small City Banker put a spotlight on this very seldom talked or written about event. His exact words were ” I am shocked at the significant increase in foreclosures ” He went on to say that what was the norm for a monthly timeframe is now the norm for every three business days. Hmmm.. You know Garth we all have children and we fear for them as they begin their lives with small children and I am sure you are no different. I for one donot want to see a full out crash but I think it is too late to hope for this and have chosen to prepare for what seems so inevitable. Either way I will be happy I prepared for this and on the other hand if it turns into a mild correction I will be happy that a painful time for so many families has been averted..

#106 doc on 09.01.12 at 2:26 pm

Re: 88 Canadian Watchdog Newsflash: World War I was earlier than the thirties

#107 KW T800 on 09.01.12 at 2:28 pm

Here is something to watch, just something to think about.

http://www.youtube.com/watch?v=vvATZF3-JcI&hd=1

Realestate where I live has come to a stop the good days are over with. Time for the area to find a new way of creating an industry, realestate wasn’t it.

I think many people are in for a long long period of time of suffering with debt. Now that employment is dropping off in the construction industry people are becoming job-less.

We are really seeing the effects of boomers that can’t retire around here. They are hanging on to their jobs they can’t afford to retire. That causes a problem there is no employment oppertunities for the younger generation. The younger generation has to move away leaving the area with nobody to take over for the boomers when they do retire at 75.

Going to be interesting come the next few years there are some companies taking on younger people to train. They see what is coming if they don’t take on and train some younger employees.

Many companies don’t want to give up their older employees those companies will go out of business. Starting to see that already many carpenters have left for the north.

It is what happens when boomers get greedy all they were thinking about filling their own pockets. Kinda funny their own generation screwing themselves.

#108 Hoof - Hearted on 09.01.12 at 2:40 pm

Warning by CRA after over-contributions to tax-free savings

http://www.news1130.com/news/national/article/397338–warning-by-cra-after-over-contributions-to-tax-free-savings

More than 70,000 Canadians have recently received letters reminding them of the strict rules surrounding over-contributions to their tax-free savings accounts.

The letters, sent by the Canada Revenue Agency, demand more tax be paid from those Canadians who broke the rules of the popular tax shelter.

Tax-free savings accounts, commonly referred to as TFSAs, allow Canadians to earn tax-free interest, growth and dividends on money invested within.

Even when money is withdrawn from the accounts, those who stayed within the limits will be sheltered from paying tax on capital gains.

Tax-free savings accounts became available on Jan. 1, 2009, with an annual maximum contribution room of $5,000.

Because contribution room accumulates yearly, regardless if you use it or not, that means that anyone who was 18 years or older at the start of 2009 should now have a total of $20,000 contribution room in their TFSA.

etc.

#109 TNT on 09.01.12 at 2:46 pm

HAM out mowing the lawn of the house he can’t sell right now.

#110 dd on 09.01.12 at 2:48 pm

#80willworkforpickles

But China will not crash. — Garth
—————————————————————
China will pump so much cash into the ecomony it will not be funny. They crash and revolution will develop. Top officials will not allow to happen.

#111 Poorboy on 09.01.12 at 3:07 pm

A guaranteed return of 5% with little volatility and the least amount of tax is inadequate? — Garth

5% of 50k is more pathetic than this pathetic blog. Given what appears to be widespread mismanagement of personal fiances, its a stretch to assume most canadians even have 50k liquid.

When their capital is small, preservation of capital should not be the primary concern. Aggressively growing that capital is priority number one. Once you have a sizeable portfolio 5% with capital preservation becomes a useful return to work with.

Oh you mean gambling, not investing. I understand now. — Garth

#112 Poorboy on 09.01.12 at 3:09 pm

Also the return is not guaranteed when you factor in capital loss potential of reits and preferred shares.

Lots of ignorant investors suffer capital losses on prefereds

Ignorant investors suffer losses on everything. — Garth

#113 Canadian Watchdog on 09.01.12 at 3:12 pm

#106 doc

Correct. Take out World War I and I’ll have another espresso.

———

This is August data from Guava.com for those who follow.

http://i46.tinypic.com/9rsmxw.png

#114 Angelo on 09.01.12 at 3:28 pm

“My posts of the last few days were intended to show how you can tap into the cash being spun off by banks or real estate trusts. How to be a real estate contrarian. How financial assets like preferreds can give stability, yield and low taxes at the same time. And how rolling the dice on Canadian real estate or trying to short systemic collapse with PMs is a high-stakes play.” – Garth

No systemic collapse, just systemic failures, which lead to ‘collapse’ for certain people and institutions.

The straw man of ‘collapse’ that is always battered around is just an amorphous broad generalization, nobody really knows what’s being talked about when we discuss collapse. Nuclear Armageddon is collapse, collapse of civilization under the sheer weight of physical destruction. Economic collapse on the other hand is never quite a ‘collapse’ is it? It’s more akin to a re-arrangement of resources, a shifting of wealth, or even an economic reformation of sorts.

There is no blanket collapse regarding the world economy, but there most certainly is systemic risk, and massive failures that will occur as a result of obscene leverage.

Leverage is the culprit in these financially profligate times, and that which creates risk; leverage as an instrument of wealth creation has been abused and it is in this environment of systemic over-leverage that failures will and do occur.

Garth you may in fact be correct that Canadian banks will not fail anytime soon, or even ever if that’s what you are implying, but one can never say never, all it takes is a culture change at the top and leverage can begin to destroy even the most stalwart of institutions.

“In fact, risks abound. Europe’s recession could deepen. Chinese growth could falter. Commodity prices could swoon. Unemployment could spike. Romney might win. After all, you wouldn’t have government officials like Bernanke and F saying this stuff on the same day if things were going according to plan. So while banks make bloated profits, the indebted masses struggle – which brings me back to yesterday’s basic point: own the banks, don’t owe them.” – Garth

Fair enough, but did you just say commodities could swoon? I like the word swoon by the way, it gives me the impression of a graceful trajectory. We must all recognize by now that gold and silver are commodities yes? So are you saying gold and silver may swoon?

Joking aside, with have a little issue called peak oil, and cheap energy depletion which inevitably leads to serious price implications regarding liquid fuels, the stuff we put in our vehicles, the same vehicles that transport our food, and day to day consumer products. What is the chart saying to us about energy costs Garth? Food costs?

Drought seems to be getting worse, must be environmental mismanagement but things are drying up, larger crop losses across ALL continents have trended, a growing middle class in Asia all wanting pork fried dumplings, and GM cars, and we have a resource war emerging. Resource scarcity is becoming an issue across all commodity sectors.

Even my beloved silver, which is now being used increasingly in novel biomedical applications, as well as newer washing machines and dishwashers, not to mention solar cells, wind turbines and state of the art battery cells…. Did I mention that silver at current prices is not recycled? It goes to waste, land filled, and is a diminishing resource. I can count on one hand the number of large scale mines that are dedicated silver mines, the rest of the silver supply comes from base metal miners which if consumer goods purchases are displaced by energy and foods costs at the wallet level, will lead to a reduction in silver production – in an environment where renewable energy is being built out by countries looking to find energy sustainability! Bullish is a good word for silver, but don’t take my word for it, it is just a rock after all.

We ARE in a commodity bull cycle, the leading trend indication is food and fuel; if day to day food and fuel costs continue to rise as a percentage of income, which they are (fact – check it yourself you lazy tards…) than clearly most if not all commodities will react in a similar price fashion. It’s basic math and physics 101. Growing world population, rising fuel and fertilizer costs, increasing food scarcity for those who cannot afford food hikes, and for those who are cushioned by the goodness of the state are moved down the nutritional ladder – they don’t starve, they just get diabetes…

Now to Garths favourite rock, gold. Gold is a barometer of leverage in the system, that is all, as long as gold’s price mirrors the leverage in the financial system, which it historically has, than gold is bound to do well in the age of the Too Big Too Fails. Money is cheap these days, for those at the faucets that is, and hot money flows push up prices like helium floats a balloon. There is a TON of hot money playing commodities because the returns are phenomenal, stocks are morose, and besides a few tech stocks are basically flat lined in terms of real share price rises indexed to real inflation (not government figures, ugh).

Gold may be a ‘relic’, and ‘stone’, but damn I tell ya, people sure loves those yellow rocks. You know all the wealthy in Greece, Italy and Spain who are moving there money out of the banks, they’re buying a lot of gold, so are those Chinese, the very culture where the word for money and silver are the same, they have a taste for rocks. India too, they love yellow rocks especially, it’s a sign or wealth, dowry’s and all that.

A little secret I was told a while back, is this – the wealthiest families in the world, and this can be documented, all derived the vast amount of their fortunes through the procurement of vital natural resources, commodities, which they than tried to monopolize. Whether it was oil, iron ore, coal, sugarcane, bananas, or diamonds, vast wealth is inextricably linked with control of natural resources, period. No production occurs without oil, or rare earth metals, or steel, etc…Commodities are the gears of the economy, yet so few understand the mechanics of how fundamental these things are even after being in a commodity bull market for 9-10 years! Most are still talking about financials, it is ludicrous to me, a lowly rock dealer and commodity investor.

Certain techs are going to go Apple on us, keep an eye, we’re on the verge of BIG battery technology, commodities are run, run, running, and rare earths are cheap still, oil’s a good bet (geopolitics alone guarantees it), and agriculture, a no brainer. Financials? That was so 90`s, we are in the midst of resource wars folks.

Wakey, wakey?

Hello?

#115 Hoof - Hearted on 09.01.12 at 4:08 pm

Driving home last nite…arounf 11 PM……see a van parked in front of a neighbour’s house. The South Asian owner had sold it about 2 months ago..my guess was to HAM.

As we got closer, saw a person mounting a For Sale sign.

A dark sense of humour will cast its shadow over this market…..as HAM get desperate. I se HAM as least immune to a collapse.

Another thing I have noticed is new Real Estate Companies popping up…likely 1 % etc. Commission types..has to be at least 10 new ones I have never heard of .

#116 Suede on 09.01.12 at 4:19 pm

#82 Canadian Watchdog

All CPI’s you’ve shown have graphs that continue heading up and to the right.

The question is not why do the prices keep going up, but how can we profit from the prices continually going up or at the very least, how can we defend our purchasing power from those items’ cost going up.

#117 live within your means on 09.01.12 at 4:30 pm

#101 Industrial Guy on 09.01.12 at 2:13 pm
Click Here, Its different – yes, the Montreal R/E market is no different than Toronto or Vancouver. It’s over priced and a major correction would be happening without the election. The election of a majority PQ Government will just hurry things along and deepen the market correction.. As someone who lived through the first PQ election of 1976, I can remember the mass exodus of Anglophone and Allophones (immigrants) out of the province.
……………………………………

I certainly remember 1976. I & my elder sis & many friends we had in Mtl. left to go west. We went east. DH has family (from France) in Mtl I still have family & friends who grew up & still live in Mtl. Majority are totally bilingual. We normally visit annually. I just came back from there & feel quite at home in Mtl.

#118 Spiltbongwater on 09.01.12 at 5:06 pm

As we got closer, saw a person mounting a For Sale sign.
#115 Hoof – Hearted on 09.01.12 at 4:08 pm

When you say mounting a for sale sign, what exactly do you mean? Sounds a little erotic imo.

#119 TNT on 09.01.12 at 5:19 pm

How can you guarantee 5%, is this figure yearly or an average over 5 or 10 years…
What happens if the money has to be accessed stat?
It still has a 5% guarantee?
Guaranteed that if its yield is lower that the difference is made up?
I have not read this whole blog so perhaps i missed something.

#120 Canadian Watchdog on 09.01.12 at 5:21 pm

#116 Suede

“The question is not why do the prices keep going up, but how can we profit from the prices continually going up or at the very least, how can we defend our purchasing power from those items’ cost going up.”

Stop buying underwear for $10 that’s made in Asian for fifty-cents; stop buying $60 Crest white strips that is made with a $5 bottle of 3% peroxide; grow a garden; strap some solar panels on the roof, etc.

Why is it that consumers consider themselves ‘cheap’ when they have to cut spending, but corporations look ‘profitable’ when doing the same.

You’re free to choose how you spend.

#121 Poorboy on 09.01.12 at 5:22 pm

Oh you mean gambling, not investing. I understand now. — Garth

Why does someone invest? For specific objectives and goals, the most common being retirement.

If you’re advising someone who wants a retirement nest egg to put their $50,000 of capital into a vehicle returning 5% per annum you’re giving them bad advice, plain and simple. Compounded over 30 years and assuming all of it tax-free they’re still left with a woefully inadequate amount of money to retire on.

If you think growth investing is gambling then you’re as unimaginative and risk-averse (funny since you blast people for being risk-averse on your blog) as the other 99% of financial advisors out there who cater to the lowest common denominator. But we already knew that was the case since you promote balanced portfolios.

Which raises another point – why would someone need to give you 1% in management fees per year if you’re just going to set them up with a balanced portfolio that requires about 1 hour of work and never changes? If you’re not going to adjust portfolios for the macro environment (eg, have unbalanced portfolios responding to what is going on in the world) then what value do you actually offer your clients that makes it worth 1% of their portfolio per year?

Preferreds, like REITs, bonds, ETFs and a few other things, are just one part of a balanced, diversified portfolio. Surely you understand this. — Garth

#122 rp1 on 09.01.12 at 5:36 pm

#80 “But China will not crash. — Garth”

Thanks for tipping your hand. It gives context to your previous posts. Regarding China, I strongly disagree.

#123 jess on 09.01.12 at 5:49 pm

messed up laggards

…when the millionaires take on the billionaire although not for his legacy of pollution and load up the co.’s with debt, suck out the equity and stick the environmental problems on the locals but for his noisy version of the Sikorsky S-92 helicopter which disturbs the serenity of the Hamptons.

According to Crain’sNewYorkBusiness.com’s Aaron Elstein, when Fernando Serrano, a public health expert in Missouri and a professor at Jesuit Institution Saint Louis, University visited La Oroya he “tested” the town’s “ground, air and water, and took blood samples from some of its 35,000 residents,” and he found that La Oroya “was not only laden with arsenic, antimony and cadmium, but an estimated 97% of the children between ages six and 12 had elevated levels of lead in their blood-levels four times higher than amounts considered dangerous in the U.S.”

Mother Jones’ Harkinson reported that, “Rather than cleaning up its mess, Renco has spent $305,000 over the past two years lobbying the US government to help convince Peru not to expropriate the plant. Renco is also suing Peru for $800 million, arguing that its demands for a timely cleanup violate the US-Peru free trade agreement.”
http://www.truth-out.org/buzzflash/commentary/item/11612-class-warfare-gone-wild-billionaire-fights-millionaires-in-the-hamptons

Mother Jones’ Harkinson reported that, “Rather than cleaning up its mess, Renco has spent $305,000 over the past two years lobbying the US government to help convince Peru not to expropriate the plant. Renco is also suing Peru for $800 million, arguing that its demands for a timely cleanup violate the US-Peru free trade agreement.”

http://www.truth-out.org/buzzflash/commentary/item/11612-class-warfare-gone-wild-billionaire-fights-millionaires-in-the-hamptons
http://en.wikipedia.org/wiki/Renco_Group

#124 willworkforpickles on 09.01.12 at 5:49 pm

One only needs to look upon the socioeconomic dismay in Greece today to get a glimpse of what is coming for North America and far worse as the economy unravels and discord here prevails.
Not trying to anger the rose colored glasses set but austerity has not produced favorable results nor will it here.

#125 cynically on 09.01.12 at 6:06 pm

#12 Randy – I hope you were being satirical with your statement that 12,000,000 dead people are not going to vote for Obama. I don’t know the estimated figure but it is several million American voters who are being disenfranchised by the GOP governor and legislatures of at least 3 “swing” states if the states’ courts don’t overturn a voters’ identification law they’ve passed. The citizens involved are for the most part elderly, very poor, mostly black, have never owned a car, travelled outside the US or were born in some other state. In other words they don’t possess identification such as a driver’s license, a passport or a birth certificate although they are obviosly American and have voted in past elections. This is a GOP ploy to carry 3 crucial states which Obama won last election but are too close to predict this time. Rotten politics, never a dull moment and totally unlike the gray, boring Canadian ones.

#126 50% correction predictor on 09.01.12 at 6:17 pm

End result: congratulations France: your Fannie/Freddie-Dexia moment has finally arrived:

http://www.zerohedge.com/news/september-arrives-does-french-dexia-moment-france-nationalizes-its-second-largest-mortgage-lend

#127 dradak1 on 09.01.12 at 6:40 pm

“…” + “And now you think you’re an investment guru on the top of the world in a high rise tower… I say this. Enjoy the drop. You know it’s coming one day. Thing is, you lack the credentials and fortitude you claim to have. You are not a contrarian, you’re an opportunist.” +”And no, I don’t think I’m hurting your feelings.” +some inappropriate comments

Hi Garth – I was away and missed this one – as you can see I made my opinion refined (as George Carlin usually do). But try to keep in your mind that not all of us are descents of “High School Principle” (with all RESPECT) some of us are just those “High School Principle”.

#128 espressobob on 09.01.12 at 6:51 pm

#114

It’s my understanding that demand for gold in India and China has dropped roughly 20%.

Did you remember all the hype a few years ago about 200 dollar a barrel oil & skyrocketing natgas?

Commodities are a real bitch when they correct!

#129 Ron@Delta on 09.01.12 at 7:49 pm

@ #70Tony on 09.01.12 at 11:06 am

Thanks for the info/reply. I’ve had Cdn REITs and Preferred for over 2 years and slowly adding to them with dividend etfs.

#130 cynically on 09.01.12 at 8:19 pm

Saw in a local street paper, The Courier, a colourful picture ad headed – Save Up To 50% then – Luxury Oceanfront Condos Minutes from US Border – THIS WEEK ONLY! 2BR/2BA – FULLY FURNISHED(really!). The usual granite, stainless steel, heated hardwood, Underground Parking, Below Replacement Cost. Was $1,150,000, Now $599,900 Save $550,100. Don’t recognize the location but could be the Fraser River or the White Rock peninsula looking across at Semiahmoo on the US side, as there are boats in the foreground and it says minutes from the border. Don’t rush!!!

#131 chaser on 09.01.12 at 8:28 pm

No banks will fail???

Well maybe you mean Canadian banks, because banks around the world have been failing all year. Dexia failed in France just today, and there will be many, many more bank failures to come.

Canadian banks will not be immune to the bank failures.

None will fail. There is zero evidence. The Big Six just earned $8 billion in 90 days. — Garth

#132 Drill Baby Drill on 09.01.12 at 8:39 pm

#88 Canadian Watchdog
“Surely you can see there is nobody left to tax in order to balance the budget, other then corporations who are in bed with the government. Not happening.”

Ah !! you are wrong CWD the Alberta gov’t does not impose a sales tax on consumables, services etc. This will be the next shoe to drop politically in this province because it is an untapped source of funds.

#133 jess on 09.01.12 at 8:44 pm

Maybe it is just the rich who are the true haters of the government

WASHINGTON – Wolfgang Roessel of Ft. Lauderdale, Fla., pleaded guilty today in the U.S. District Court in the Southern District of Florida to filing a false tax return for 2007, the Justice Department and Internal Revenue Service (IRS) announced.

According to the court documents, Roessel, a U.S. citizen, maintained bank accounts at UBS AG in Switzerland, which he failed to report on his 2002 through 2007 personal income tax returns. He also failed to file a Report of Foreign Bank and Financial Accounts (FBAR) for these same years. In 2002, Roessel opened a UBS numbered investment account in the nominee name of a foreign entity, Neptune Trust, with an opening balance of approximately $4–5 million. In around 2004, this account and subaccounts were transferred into the nominee name of another foreign entity, Cyan United, and traded in U.S. and foreign securities. The defendant met with a Swiss banker periodically to discuss the performance of his accounts.

Court records also established that, dating back to the 1980s and up through the late 2000s, Roessel held accounts at different times at Bank Wegelin and another Swiss bank (Bank A) into which he deposited foreign proceeds from his business, yet which he neither reported on his tax returns nor on the required FBARs. In the early 2000s, the foreign account at Bank A was put into the nominee name of Cyan United. A Swiss money manager made investments on Roessel’s behalf and met with the defendant periodically to discuss the performance of the account. In 2008 and 2009, during which period the defendant was aware of the government’s grand jury investigation into his foreign UBS accounts, the defendant disclosed only the existence of the UBS accounts on his tax returns for those years and did not report the other Swiss account.

The plea agreement includes a tax loss of $312,802.95 for 2002 through 2007, and an FBAR penalty owing to the U.S. Treasury of $5,750,933.99, which is 50 percent of the 2007 unreported foreign bank accounts year-end balance of over $11 million. Roessel faces a potential maximum prison term of three years and a fine of up to $250,000. A sentencing date has not been set.
http://www.justice.gov/tax/taxpress2012.htm
============
According to a recent article by economist Toby Sanger, the finance and insurance sector now accounts for over 51% of Canada’s total direct investment overseas, more than double its share from 1987. A growing share of this money isn’t going into actual economic activity – like when a small business invests in new machinery. Instead it’s going into tax avoidance.
http://www.taxfairness.ca/news/how-do-they-do

UBS banksters

…According to evidence presented at trial, while employed at UBS, Ghavami, Heinz and Welty participated in separate fraud conspiracies and schemes with various financial institutions and with a broker, at various time periods from as early as March 2001 until at least November 2006. These financial institutions, or providers, offered a type of contract—known as an investment agreement— to state, county and local governments and agencies, and not-for-profit entities, throughout the United States. The public entities were seeking to invest money from a variety of sources, primarily the proceeds of municipal bonds that they had issued to raise money for, among other things, public projects. Public entities typically hire a broker to assist them in investing their money and to conduct a competitive bidding process to determine the winning provider.

http://www.justice.gov/opa/pr/2012/August/10-at-1071.html

———–

Education liar loans ATI
http://www.justice.gov/opa/pr/2012/August/12-civ-1068.html
———–

#134 Daisy Mae on 09.01.12 at 8:45 pm

#111 Poor Boy: “When their capital is small, preservation of capital should not be the primary concern. Aggressively growing that capital is priority number one….”

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

All…or nothing at all? Capital preservation is paramount. Leave volatility to those who can afford the risks.

#135 Daisy Mae on 09.01.12 at 8:48 pm

#112 Poor Boy: “Ignorant investors suffer losses on everything. — Garth”

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

…and that’s why we have advisors.

#136 Daisy Mae on 09.01.12 at 8:53 pm

#115 Hoof-Hearted: “Another thing I have noticed is new Real Estate Companies popping up…likely 1% etc. Commission types..has to be at least 10 new ones I have never heard of.”

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

Just about time. Commissions of 7% (on the first $100,000) and 3% (on the remainder) are OVER!

#137 45north on 09.01.12 at 9:16 pm

” this summer prices in Vancouver and Toronto declined by 10 percent, do you think that this decline is a sign of a housing bubble? if you agree press 1 if you disagree press 2″

http://www.forumresearch.com/contactus.asp

Robert: talking about foreclosures: what was the norm for a month is now the norm for three days.

Robert you don’t say what small city, I’m thinking south-west Ontario, anyways the increase in foreclosures reminds me of stories of Florida, 2006

Industrial Guy: The students in the streets are only asking for what their parents had.

except that now their parents are property owners

the election hasn’t happened yet, here’s Chantal Hébert:

If Tuesday’s results bring about more change than the polls are forecasting

http://mcaf.ee/gi436

I think that the Liberals will win a majority, more or less erasing the PQ.

#138 Daniel on 09.01.12 at 9:18 pm

A note to all the Silver, Gold Bulls …

Stop trying to get Garth to switch to the dark (light) side (depending on your preference).

Most of the sites you read and the commentators you follow think Gold is going up, to $2000, $5000 and beyond, many even saying that due to the money they are printing, Gold is worth upwards of $50,000 an oz. if they ever went back to the gold standard. Wherever you land on the scale….
Isn’t it refreshing to come here and listen to a financial advisor that has different views; who’s looking at things from the perspective that gold and silver are just commodities like oil and orange juice? I find it refreshing because it shows me what 90% (or more) of the population thinks. It also shows what most financial advisors think – knowledge is power – it’s great to know what the other side is thinking so that you can invest with a more complete picture.

Why hasn’t Gold and Silver gone to $5000 and $200 like we think it should, because investors are buying and selling it like a commodity. Currently it is just a commodity and will trade in the range that a commodity does, with ups and downs.
If it is ever viewed as a safe haven that supersedes the USD, or viewed as money it will skyrocket to what many commentators predict.
It has been viewed as money for 4000+ years, only in the last 50 years has its monetary value been diminished. Perhaps Garth is falling into the same mindset as many home owners; he believes that the world as he knows it will continue, the past = the future. He’s never lived in a world were Gold=money and believes that we have reached a new level of economics and will never see that time again … perhaps he’s wrong, perhaps he’s right … regardless, it’s great to hear his side of things, there’s more than enough commentary on “our” side – just because you’re in the choir, don’t try to make Garth a preacher.

Amen. Bless you. Praise be. — Garth

#139 IM in C on 09.01.12 at 9:46 pm

http://www.vancouversun.com/business/commercial-real-estate/West+Vancouver+teardown+fetches+over+asking/7174412/story.html

Interesting story. Does this mean the market is rebounding already?

It means there is an idiot loose. — Garth

#140 Fabrega on 09.01.12 at 9:52 pm

#29 Industrial Guy

DELETED

#141 truth hammer on 09.01.12 at 10:09 pm

You’d have to have been getting your information from Global TV if you think that the Fed is going to wait until September to goose the juice

http://www.federalreserve.gov/releases/h6/current/h6.htm

Month over month the juice is being aqueezed out at 11.3%…….no small amount…..which is why the smart money has been buying gold sub 1600 and the resource stocks are up exactly the same amount as the incremental stimulus of this shadow M3 by any other name……..it’s cash being thrown out of a helicopter….but only at dawn…when the early birds are up and eating while the dipshits are still abed.

The fact is that stimulus is already happening and in fact has not stopped since the grennspan invention meant to ‘head off the tech boom collapse” in 2001.

If you’re only half awake you’ll have noticed that real estate prices, bread, meat, cheese, gas, utilities, property taxes, union salaries and pension perks have all been going up at the inflation rate of actual M3……not the stated rate of CPI.

Of course…Garth and the Liberals don’t want to call 20% p/a consumer cost increases hyperinflation….that would settle the spotlight on the pigs….and pigs as you know are thin skinned and sensitive to light.

But ……if you can’t make the connection between the cost of real estate and bread doubling in the same time frame…then go back to sleep…..this is not the kind of truth you’ll enjoy knowing. Hyperinflation ‘Canadian Style’ is very real….statistically verifiable…and quite evident any time you leave the house with cash….yes cash….so that using actual cash makes you think about how much more it’s costing you now as opposed to last year……the societal doping of easy plastic has induced a coma like stupour over the sheeple so that they don’t have to count out loud as to how much they’re really spending.

Wrong. There is no hyperinflation, nor will there be in this lifetime. Do you even know the definition? — Garth

#142 fan on 09.01.12 at 10:10 pm

Garth, if bondholders receive interest payments on government debt, then how is it logical for the bank of canada to set the interest rates. Shouldn’t the creditor be the one who determines the cost of borrowing money? There must be more to it than F saying: based on the info in front of me.. its X.X% today.

The BoC does not set bond rates. — Garth

#143 Angelo on 09.01.12 at 10:12 pm

“It’s my understanding that demand for gold in India and China has dropped roughly 20%.

Did you remember all the hype a few years ago about 200 dollar a barrel oil & skyrocketing natgas?

Commodities are a real bitch when they correct!” – espressobobo

Night the brightest bulb are you? There is currently a yearly global gold supply shortage of between 1500 and 2500 tons that is only met by scrap inventories and central bank leasing programs.

Besides 2008, which decimated everything (short term), oil has advanced steadily and surely, and is well carved into the 90`s and onto the next level shortly. Natural gas is a largely domestic market, so that is a much different game. Do yourself and favour and look at some 10 year charts, throw a dart at pretty much any heavily traded commodity, minus maybe a few, and if you can ever get your head out of your sweaty areas, you may just notice a Trend.

Volatility and short term corrections do not end trends, long consolidation periods are very welcome, thank you very much.

#144 truth hammer on 09.01.12 at 10:20 pm

BTW…#128 EB……The headline numbers don’t take into account the currency fluctuations……check the rupee-dollar spread for the same time frame…..it’s the currencies that have shifted not the physical uptake. China is a net buyer this year……as is India.

#145 Editor on 09.01.12 at 10:28 pm

#125 cynically: Canadian politics aren’t boring, just understated. In the last Federal election, I volunteered to drive people to the polls. This meant the elderly and young who did not own cars, people with disabilities, people living in social housing. Several were unaware of the new voter identification law and we had to return to their homes to pick up additional verification. The law was working precisely as intended, to disenfranchise certain groups of Canadians who might not vote as desired by those who wrote the laws. It was right out of the USA playbook. Please people, help people vote.

#146 truth hammer on 09.01.12 at 10:32 pm

G….Thats why I have called it ‘Hyperinflation Canadian Style’…….an sneaky, insistent 20% per annum as opposed to Zimbabwe …………………….if you were a senior on a fixed income then the doubling of utility costs, prop taxes, bread, milk, meat, cheese, cans shinking etc etc etc over the past 5 years would seem as ‘hyperiflated’ as anyone in Zimbabwe and just as destructive. Do you think that ‘sneaking’ these increases is going buy unnoticed?

No…it doesn’t fit the Websters definition….unless you’re on a fixed income or haven’t had a private sector or disability income raise in the past 5 years. Come down from your ivory tower and pay a few bills like the rest of us.

If we argue about definitions…then what may I ask is your view of an acceptable range of inflation? We know that the BOC CPI is a load of stinking bunk……so what is acceptable inflation for consumables and fixed cost? I have already pointed out the bread, meat, cheese, canned tuna etc etc etc have all doubled…do you dispute that? So…are you ‘one’ with Carney and state that inflation doesn’t exist because the cost of industrial plastic from China and cotton bulk from India has remained unchanged? Sorry but paint won’t run in my car….and I can’t eat bulk cotton…..I live in the real world.

#147 Canadian Watchdog on 09.01.12 at 10:45 pm

#132 Drill Baby Drill

“Ah !! you are wrong CWD the Alberta gov’t does not impose a sales tax on consumables, services etc. This will be the next shoe to drop politically in this province because it is an untapped source of funds.”

And how is that tax plan working out in BC? http://i50.tinypic.com/332cks5.png FAIL

#138 Daniel

“He’s never lived in a world were Gold=money and believes that we have reached a new level of economics and will never see that time again”

You should read a little more history on fiat and world reserve currencies. They thought the world reached a new level of finance when the printing press was invented too.

Sorry but you’ve got it completely backwards. The store of value is the tangible goods or commodity—fiat money is just a receipt.

#148 Angelo on 09.01.12 at 10:47 pm

“Why hasn’t Gold and Silver gone to $5000 and $200 like we think it should, because investors are buying and selling it like a commodity. Currently it is just a commodity and will trade in the range that a commodity does, with ups and downs.
If it is ever viewed as a safe haven that supersedes the USD, or viewed as money it will skyrocket to what many commentators predict.” – Daniel

I like when people use their first (easier) names! Thank ya Daniel! It helps with us dyslexic types….

Making Garth adore yellow rocks might be like getting water from a sand dune in the Sahara, but it does not matter – forget gold for a minute, think about the entire commodity complex, gold is a barometer.

Oh and $5000 gold, “simply cannot happen”, that is what they told me when I bought at $280 and said $1500 here we come! I’m already happy with the relic, and could not care less who else does or does not concur….however for those who advise others professionally to not recognize a clear and present trend, against every grain of evidence, is just beyond my mind to comprehend. Been watching it happen now for over 8 years.

As regards hyperinflation of the Weimar and Zimbabwe type that many are calling for, I would tend to agree with Garth, it will not happen. What will happen is devaluations of 10, 15, 20, 25, 30% as currencies war with one another to secure resources. Check out Jim Rickards book Currency Wars: The Making of the Next Global Crisis.

If anyone is investing OTHER peoples money they should understand the current situation with regards to currencies and competitive devaluations.

#149 John on 09.01.12 at 10:52 pm

chaser-Garth wrote:

“No banks will fail???

Well maybe you mean Canadian banks, because banks around the world have been failing all year. Dexia failed in France just today, and there will be many, many more bank failures to come.

Canadian banks will not be immune to the bank failures.
—–

None will fail. There is zero evidence. The Big Six just earned $8 billion in 90 days. — Garth”

Apart from the very questionable analysis of current short term earnings meaning anything for future trends, the subject of “bank failure” has many facets.

The idea that it’s possible for the ponzi to override common sense, a return to a productivity focus and the social stability is exactly why the banks have already failed.

They could “fail” from a system-wide standpoint ( not counting sacrificial lambs), but as long as the fraud can be socialized to the public, that’s not likely.

Thing is, nobody can really say for sure that societies overrun by the fraud won’t upset the applecart. They might. It is a risk. People would likely respond quite differently to an awareness of their actual power ( near to nothing if playing the ponzi) if enough of those people were out of work and under water.

Since the banks ( very much a social interface for societies) are uninterested in the impact they make on the lives of citizens ( and have been fraudulent), they already have failed.

If citizens are perceiving “bank failure” at a more practical level ( involving ordinary quality of life), it could lead to instability…and that means a scenario for a “bank failure” in the literal sense.

Do they let you out on holidays? — Garth

#150 Nostradamus Le Mad Vlad on 09.01.12 at 11:13 pm

-
Good comments today. And now . . .
*
Five min. clip “There is no €uro crisis, the €uro is a tool used by the banks to suck off the wealth of the nations of Europe.” Merkel is pro-banks, Germany Quit Euro and use gold for money plus 0:48 clip Gold stupidity; Gold Why has it lost its shine? Treasure Hunters find millions of pounds in ancient celtic coins in Jersey, UK; Japan could be outta money in a month or so. Will Japan follow India’s lead in a gold-for-oil deal with Iran? China’s idea of a new gold-backed currency may play a role in this; QE3 Kannaduh could sure use a few quadrillion for xmas presents; Record dole queues plus inflation, or Stagnation; Mediterranean Global energy companies want in, so was Greece taken to the cleaners for this?

Barclaysmade a nice profit on rising food prices, as did GS; Big Biz. (TPTB) are buying the election; Cutting Welfare in UK; PM Mining Miners not happy; US woes More than technological innovaton needed; Switching Insurers each year to save a little money; Lord Rothschild has a few spare bob lying around; Rent or Buy Is it worth it? Art Cashin Never heard of him; QE Is it worth it? Spain Enter the 21% VAT; Walmart Replacing cashiers with apps? Global demise of pension plans; Norway Writes down a nice chunk of mortgage debt.
*
Gobi Desert or Mars WWot’s the diff? Oil Money sure comes in handy; Executive Order Yet another one, which means Obomba bypasses the House and Congress entirely; China developing new guided missile destroyer; Facebook Clamping down on likes / dislikes; Propaganda in the grocery store; 11:10 clip Seven minutes in, “Israel attack on Iran would be suicidal”, and this; 1:05 clip Russia’s new S-400 air defense shield; Tampa RNC Convention PP — Politicos on the inside, Poverty on the outside; Greece Anti-immigration policies (neo-nazis); Buckingham Palace Gee, ya really think so?

#151 Fabrega on 09.01.12 at 11:42 pm

Enlighten us Garth. What is the definition of hyperinflation?

Generally considered to be 50 per cent a month. Not 2.6 per cent a year. The notion of NA hyperinflation is absurd. — Garth

#152 Fabrega on 09.01.12 at 11:46 pm

By the way…the Liberals in BC are still milking the HST.
Isn’t that nice? And nobody conplains. No wonder BC is a disaster.

#153 Hoof - Hearted on 09.02.12 at 12:18 am

#118 Spiltbongwater on 09.01.12 at 5:06 pm

As we got closer, saw a person mounting a For Sale sign.
#115 Hoof – Hearted on 09.01.12 at 4:08 pm

When you say mounting a for sale sign, what exactly do you mean? Sounds a little erotic imo.
==================================

Whats the difference ?..someone is gonna get screwed either way before its over…

#154 Gunboat Denier on 09.02.12 at 12:23 am

Garth – are the Amazons moonlighting?

http://www.lflcanada.com/

#155 Canadian Watchdog on 09.02.12 at 12:57 am

“The notion of NA hyperinflation is absurd. — Gart”

So how will the government pay its debt without inflating or defaulting on its debt?

As of 2011:

-total liabilities including unmatured debt, pension and future benefits stand at $920,900,000,000.
-total revenue $237,091,000,000
-total expenditures $270,463,000,000
-accumulated deficit $33,372,000,000

This is with borrowing costs at an all time low thanks to the Bank of Canada accumulating $71,012,000,000 (May ’12) worth of bonds. Clearly one can see what will happen if rates go up. Let me go a little further. The Harper Government announced it would cut $5,200,000,000 over the next few years; annual public debt charges (interest) was $30,871,000,000 in 2011.

Let’s shrink this down to a household balance sheet for the blog’s sake. You have $920 on credit card; you pay $30.80 annually in interest charges; you lost $33.30 in income last year; you now commit to paying $5.20 over the next few years towards an interest bearing balance of $920 that is growing at $30.80 per annum, AT HISTORICALLY LOW INTEREST RATES.

I challenge anyone on this blog to explain how this debt will be paid without a major crises.

#156 Derek R on 09.02.12 at 1:38 am

#132 Drill Baby Drill on 09.01.12 at 8:39 pm wrote:
Ah !! you are wrong CWD the Alberta gov’t does not impose a sales tax on consumables, services etc. This will be the next shoe to drop politically in this province because it is an untapped source of funds.

Untapped source? No way. The source of a sales tax would be exactly the same as the source of income tax or property tax. In other words ordinary people.

So if you have to raise more tax why go to the expense and work of creating a brand new tax that hits exactly the same people as the existing provincial taxes? Far quicker, cheaper and simpler to raise more money through one of the existing provincial taxes.

#157 John on 09.02.12 at 6:53 am

“Generally considered to be 50 per cent a month. Not 2.6 per cent a year. The notion of NA hyperinflation is absurd. — Garth”
———

This comment could be classified as a classic “headfake”. Hopefully some debate sparks up so there is less confusion. Although ( strangely), even in the light of facts, people still insist on talking about “Flaherty and the housing bubble” ….haven’t heard Carney’s name in weeks though. So that’s good.

Hyperinflation being “ridiculous” in NA. Unfortunately, this might be “true”. Since not having hyperinflation defies gravity…how can this be?

Gravity-defying fraudulent, sustained manipulation of the “economy”. It requires people believing it can be done without consequences….long term. Like taking damaging drugs which appear to mask underlying problems.

This is nonsense.

The vision of never having hyperinflation is just an admission of not minding a repressive, ultra-controlled Canada…at a level that makes China look entry level.

But there’s a big difference. Masses of people really believe that the intervention in NA can go on and on. That middle class non-players are “part of the club”….and if “they’re enlightened” will be allowed to keep casino chips ill-gotten demographically or accidentally or “in a planned way” via Goldman Sachs et al fire sale of phony derivatives cash. None of that is going on in China ( with the delusional belief system).

So. It would be a good debate to spell out, in a simple way…exactly what suppressed hyperinflation is. How helicopters can drop money from the skies and there appears to be no negative impact.

Maybe someone would like to break down the whole supply chain of that. Because it’s hugely relevant to “asset prices” ( housing)

….or just use “group think” as “cover” and pretend a faceless authority will make it go away and keep the casino doors wide open in the same way “forever”.

#158 Mark on 09.02.12 at 9:10 am

#155 Canadian Watchdog “I challenge anyone on this blog to explain how this debt will be paid without a major crises.”

Garth has responded to this numerous times, he says “It’s different here.”

Actually I have pointed out many times that (a) sovereign debt is rarely repaid, nor does it need to be if it can be serviced and (b) Canadian sovereign debt servicing currently requires 11% of tax revenues, far less than the average mortgage. There will be no debt crisis in this country, no bank failures, no currency collapse, no hyperinflation. Just the moaning of homeowners being bled by their personal obligations and illiquidity. — Garth

#159 Hugh Jasz on 09.02.12 at 9:10 am

#44 TRT on 09.01.12 at 1:30 am
Some Math for the numerically inclined:

$300,000 home. 5% down. 5 year term at 2.99 percent………….further ahead

Your theory only makes one “further ahead” if there’s enough left in the kitty after shelter expenses to properly fund an investment portfolio.

If you overbuy, you risk end up like the loser boomers that the G-man occasionally writes about that have nothing other than a house with a HELOC on it.

#160 In GARTH Almighty not God we Trust on 09.02.12 at 9:13 am

#155 Canadian Watchdog

“The notion of NA hyperinflation is absurd. — Garth”

First of all cowboy it is Garth not Gart. Let us get our fearless leader’s first name down right. Second, he is the former MINISTER of NATIONAL REVENUE in this fair land of Canada. Charles DeGaulle said it well many moons ago when he stated that serious countries do not have hyperinflation. Now stop questioning the bearded mystic oracle, all knowing, all wise, sagacious financial tea leaf reading, Amazon bathed and protected, denouncer of parliamentarian peckerheads and peckerettes, NYT best selling author and last but not least, all round jolly good fellow. Sheeesh!

#161 Hugh Jasz on 09.02.12 at 9:16 am

#48 Jay Currie on 09.01.12 at 3:33 am

…………Actually many of us are…and here’s the thing: we really wish Quebec would just pack its bags and leave. …….
Good bye, Adieu, À bientôt. We’re just so done on the Quebec thing. Leave already.

Even if it did stick us with Harper’s idjits, I’m glad that a majority government has finally been formed without Quebec’s support.

If the separatists win, it’s time for some real tough love.

I’d hate to break up a nearly 150 year old confederation, but, I too am sick of enabling Quebec’s largesse and foolishness at the expense of the rest of the country.

#162 Daisy Mae on 09.02.12 at 9:41 am

#152Fabrega

“By the way…the Liberals in BC are still milking the HST. Isn’t that nice? And nobody conplains. No wonder BC is a disaster.”

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

This stall tactic will continue until just before the next provincial election at which time we oust the Liberals –we have no option but to bide our time.

#163 eaglebay - Parksville on 09.02.12 at 9:56 am

#88 Canadian Watchdog on 09.01.12 at 1:02 pm
“Surely you can see there is nobody left to tax in order to balance the budget, other then corporations who are in bed with the government. Not happening.”
_______________

A tax on corporations is a tax on the consumers.
There’s only one taxpayer. You buy, you pay.

#164 Hugh Jasz on 09.02.12 at 10:11 am

#85 Poorboy on 09.01.12 at 12:43 pm
“……………Garth’s financial advise, in my not so humble opinion, is only useful for a small subset of readers on this blog.

For everyone else, step #1 set a realistic goal and then work backwards to figure out if you can get there with your $10,000 portfolio invested in preferred shares…….”

If you have $10,000 plus $500 per month to invest, plus 45 years to retirement, 5% after tax will you can get to the point where you can eat and turn on the lights for a lengthy retirement.

If you only have 30 years, well, you’d better be able to find $1300 a month.

If you only have 20 years and you have a $10,000 portfolio, well, you’d need something like $2500 per month……

…….and given the broad average numbers that are thrown out there by Garth and other personal finance columnists/bloggers, I’d say the vast majority of mid forties folks are hooped! But hey, at least they own their house!

#165 Smoking Man on 09.02.12 at 10:20 am

#63 John on 09.01.12 at 10:06 am

It sounds like you’re not graduating. If you actually get the message of the fraud you can move on. Start living, instead of manipulating.

John

Manipulating, scamming and cheating 9 to 5.

Enjoying the fruits of my brilliance the rest of the time. Hell I’m even charitable.

But as humans are all war to survive. I prefer to do more than that, prosper. To do so, Morality, honesty, fair play needs to be thrown out the window.

It’s hard for most to be comfortable with concept as 12 to 16 years of memorize, regurgitate, obey is hard to shake.

Almost always when someone makes it big, they have suffered some kind of major set back, then they commit to the goal, no prisoners taken. That’s what it takes.

Worked for me.

#166 TO VIRGIN COUPLE on 09.02.12 at 10:31 am

The Toronto market is still a battlefield, especially for newbies hoping to catch a break (yeah right.) We saw an open house last weekend, for a place we almost bid on exactly one year ago. A year ago it was listed for 375k, tenant occupied (by hoarders), needed work. It sold for asking, no conditions. Now, it has been reno’d and is listed for 589k. More than 200k in one year. The thing is – it’s an effing bidding war…and no doubt will sell for the low 6′s. Oh – it’s by the train tracks, and is a semi-detached. Unbelievable.

#167 eaglebay - Parksville on 09.02.12 at 10:45 am

#117 live within your means on 09.01.12 at 4:30 pm
#101 Industrial Guy on 09.01.12 at 2:13 pm
“I certainly remember 1976. I & my elder sis & many friends we had in Mtl. left to go west. We went east. DH has family (from France) in Mtl I still have family & friends who grew up & still live in Mtl. Majority are totally bilingual. We normally visit annually. I just came back from there & feel quite at home in Mtl.”
_______________

In 1976, I lived in Toronto. An anglophone family moved in across the street from us. They stayed 11 months and couldn’t take it anymore. Moved back to Montreal.

In 1993, 4 anglophone retired ladies moved in a condo development around the corner from us.
They didn’t last the winter and moved back to Montreal.

A friend of mine, francophone, moved out of Quebec at the time, 1978, and never went back.

Let’s not assume anything about anglophones and francophones.
Quebec is in bad financial shape and so is Ontario, the center of Canada. Ha…

#168 Derek R on 09.02.12 at 11:07 am

#155 Canadian Watchdog on 09.02.12 at 12:57 am wrote:
Let’s shrink this down to a household balance sheet for the blog’s sake. You have $920 on credit card; you pay $30.80 annually in interest charges; you lost $33.30 in income last year; you now commit to paying $5.20 over the next few years towards an interest bearing balance of $920 that is growing at $30.80 per annum, AT HISTORICALLY LOW INTEREST RATES.

I challenge anyone on this blog to explain how this debt will be paid without a major crises.

Easy. In your household example you forgot to mention that you have a photocopier and are allowed to use it to print money. Use it to print $30 annually and you will be in clover.

#169 Herb on 09.02.12 at 11:12 am

May I suggest a lay definition of “hyperinflation”? Any inflation that cannot be absorbed by the general population.

Whether it’s 20%, 30% or 150% a year is only of academic interest. The roughly 10% inflation we had in the mid-’70s and early ’80s was bad enough to test the limits.

Inflation was 12% thirty years ago, which precipitated 19% mortgage rates. They cured the problem in short order, but created a real estate wasteland in doing so. So, inflation begot deflation. ‘Hyperinflation’ is a well-defined economic concept which describes a continuous destruction of a national currency, usually the result of political decisions. This will not happen in either Canada or the US. — Garth

#170 Rob now in Nova Scotia on 09.02.12 at 11:14 am

@155, Canadian Watchdog:

Excellent analysis. It would help to add that your household only earns $237.09 per year.

Canada has one of the lowest debt to gdp ratios in the industrialized world so our debts are “serviceable”. The national debt becomes more burdensome when interest rates rise or the gubberment must increase spending. Imagine the CMHC needing a $587 billion bailout and our national debt increase double overnight. Here’s a great article on the CMHC’s vulnerabilities:

http://www.mises.ca/posts/articles/a-portrait-of-the-2011-cmhc/

Note to self: its the long weekend and I’m sitting in front of the computer. Need to get a life…

#171 TurnerNation on 09.02.12 at 11:16 am

I was up around the Kawartha Lakes area (1-2hrs of driving, N of Toronto). The decay was noticible. All the little highway gas ‘n eat places which were there forever are shut down. Leaving only American chains in their stead: McDonalds, Subway. Almost all industrial places are gone. Weeds and plaintive for sale/lease signs are found everywhere. The region’s official unemployment figure is 15%. Drugs are rampant, just pick up the local newspaper. GM is slowing winding down in Oshawa.

Gotta wonder about the soon-to-retire Boomers and their 40-80yr old unrennovated houses. Their “retirement savings plan”. Who will buy these? And why, when there’s no local jobs.

Even the legendary cottage hangout The Pattie House is gone, for sale:

http://www.icx.ca/propertyDetails.aspx?propertyId=11682308&PidKey=227247922

Along Hwy 401 the Zellers distribution centre is up for lease; replaced of course by USA’s Target. Yes, Harper and the globalists are content for us to become another US state. Is the fabled North American Union taking over, one chain store at a time? USA’s J Crew and Nordstroms dept. stores are already here. The Bay is owned by the US, too.

And then you reach Toronto where people are paying $350,000 for a downtown 550 square foot condo…

#172 Drill Baby Drill on 09.02.12 at 11:21 am

#147 Canadian Watchdog
“And how is that tax plan working out in BC? http://i50.tinypic.com/332cks5.png FAIL ”

CWD you are not getting the point. The myopic vision of the Alta Gov’t is to implement a provincial sales tax thereby attenuating the up and down spikes in energy revenue. This plan is and will be polical dynamite here in Alta. The latest trial baloon on this was in last Friday’s Calgary Herald and commented on by Yedlin in the Saturday edition. This is very much a new revenue stream for the tax and spend crowd in Edmonton.

#173 TurnerNation on 09.02.12 at 11:23 am

A year old, but I bet nothing’s improved:

“Apr 08, 2011 – 11:07 AM

Unemployment rate hits 15.1%

Unemployment rate in City of Kawartha Lakes stands at 15.1%, last year it was at 10.4%

(KAWARTHA LAKES) Job numbers are out and it does not look good in the City of Kawartha Lakes.
According to Statistics Canada, the City of Kawartha Lakes has an unemployment rate of 15.1 per cent for March, far higher than the national average of 7.7 per cent.
The good news is that 15.1 per cent is an improvement from February when the unemployment rate stood at 16.7 per cent.
The bad news, besides so many being unemployed, is that last March the rate was at 10.4 per cent. “

#174 luke8929 on 09.02.12 at 11:27 am

The BoC does not set bond rates. — Garth

They don’t set them but their policies directly affect the rate bonds are sold at. If the CB wasn’t buying indirectly through Canadian banks the rates on bonds would be much higher as private capital would demand a higher rate for the risk taken. The banks borrow from the CB a a discounted rate and purchase the bonds and pocket the difference in the rate, nice scam if you can get in on it.

Risk is the consequence of your own actions. Confront it.

Unless of course your a banker who relies on the Cdn treasury and credit from the CB to cover your bets, again nice work if your part of the banking cartel.

People are slowly waking up, those record bank profits had a bunch of people take notice and ask why so much money was made when the real economy is in the bowl. It was ok when regular folks where in on the fraud and ponzi through the housing bubble, now they are losing money they won’t be so inclined to turn the other cheek.

#175 Drill Baby Drill on 09.02.12 at 11:28 am

#156 Derek R
“So if you have to raise more tax why go to the expense and work of creating a brand new tax that hits exactly the same people as the existing provincial taxes? Far quicker, cheaper and simpler to raise more money through one of the existing provincial taxes.”

Please refer to #169 – Read my lips “there is no sales tax in Alta.” Alta has been discussing this new sales tax for 4 decades to no avail.

#176 eaglebay - Parksville on 09.02.12 at 11:37 am

#162 Daisy Mae on 09.02.12 at 9:41 am
#152Fabrega
“This stall tactic will continue until just before the next provincial election at which time we oust the Liberals –we have no option but to bide our time.”
________________

HST was a better deal.
If you think that the Liberals are bad just watch the NDP.
You haven’t seen anything yet.
Both party leaders are idiots. What leadership.
We don’t vote for Clark or Dick, only a few people in their ridings do. What a system.

#177 Canadian Watchdog on 09.02.12 at 11:54 am

“Actually I have pointed out many times that (a) sovereign debt is rarely repaid, nor does it need to be if it can be serviced and (b) Canadian sovereign debt servicing currently requires 11% of tax revenues, far less than the average mortgage. There will be no debt crisis in this country, no bank failures, no currency collapse, no hyperinflation. Just the moaning of homeowners being bled by their personal obligations and illiquidity. — Garth”

What you just described is called a ponzi scheme, which is mathematically proven to end up in hyper-inflation or default”’

For an analytical guy you have some glaring blind spots. — Garth

#178 panhead on 09.02.12 at 12:45 pm

#130 cynically on 09.01.12 at 8:19 pm

Not positive but I believe that is on the a Merican side of the border. I live right on the border (literally) in Tsawwassen and am amazed what you get if you cross the street (border.) Prices drop by at least 50% …

#179 Basil Fawlty on 09.02.12 at 12:52 pm

” ‘Hyperinflation’ is a well-defined economic concept which describes a continuous destruction of a national currency, usually the result of political decisions. This will not happen in either Canada or the US. — Garth”

The extreme of hyperinflation is not an outcome that is subscribed to by many analysts and is at the far end of possibilty. However, one would think that people would have some interest in the consequences associated with the current financial situation in the US. Is it not at least interesting that China has quit new purchases of US debt and is instead purchasing gold by the ton? How about the fact the 100 Million Americans are living at or below the poverty line. Is this not evidence of a society in decline? How about the fact that the US is purchasing their own debt, since others are waking up to the deteriorating economy and rising debt levels?
My point is that there is a lot of space between hyperinflation and a rosy economy and the US presently sits somewhere in between. To continually argue about the possiblity of hyperinflation, ignores current realities on the ground, which are real and happening now.

The US economy strengthens monthly, and the case for hiding in alternative forms of wealth diminishes at the same pace. The gold nuts who continuously prattle on about currency collapse and hyperinflation taint every PM zealot as a kook. I have PMs in my portfolio, and in an appropriate weighting which is rebalanced as necessary. — Garth

#180 Fabrega on 09.02.12 at 12:56 pm

#176 eaglebay – Parksville

“HST was a better deal.
If you think that the Liberals are bad just watch the NDP.
You haven’t seen anything yet.
Both party leaders are idiots. What leadership.
We don’t vote for Clark or Dick, only a few people in their ridings do. What a system.”

Don’t get me wrong. I hate politicians of all stripes.
Representatives of the people they are – What a joke.

#181 Canadian Watchdog on 09.02.12 at 12:59 pm

“For an analytical guy you have some glaring blind spots. — Garth”

Luckily for the world, social media and communication has grown faster then the money supply, allowing more information and mobilization amongst citizens, and if you think the government is going to impose taxes and laws to reap more then fifty percent of cash-strapped workers without social unrest, you are dreaming just like them.

Just look at Quebec and remember, if the projectionists win, you can kiss that covered bond legislation goodbye.

Citizens are too busy getting granite and stainless and tats to attempt social unrest. You give the masses way too much credit. — Garth

#182 Hoof - Hearted on 09.02.12 at 1:12 pm

#162 Daisy Mae on 09.02.12 at 9:41 am

#152Fabrega

“By the way…the Liberals in BC are still milking the HST. Isn’t that nice? And nobody conplains. No wonder BC is a disaster.”

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

This stall tactic will continue until just before the next provincial election at which time we oust the Liberals –we have no option but to bide our time.

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

The BC Election is 9 months away….enough time to have a baby.

BC is hooped….and has been since early 1990′s every elected Premier has had to resign.

NDP???? bwhahahahahaah
They couldn’t run a peanut stand.

The HAM $$$ was crack cocaine…false sense of security while BC was, in fact , going down the tubes.

What I foresee is the Liberals know they are toast..but will commence a final rape and pillage with insider deals and political payoffs. With few exceptions….they will all collect huge pensions…more than the average working stiff.

The NDP was complicit with bad accounting of MLA expenditures….they are the last to complain about MLA pensions, they are robo – opposition, they have simply filled the void of opposition, not on merit.

The opposition to the NDP will take years to build.

BC voters have NO real choice.

#183 truth hammer on 09.02.12 at 1:12 pm

OK…enough splitting hairs on the exact definition of hyperinflation…..lets call what is happening in Canada ‘an uncontained explosion in the cost of consumables due to a constant, surreptitious and insidious watering down of the national currency by the printing of paper money and flushing it through the system at a rate of 14% on average for a period of 12 years with no end in sight that has had the net effect of causing basic foods, utility costs, gasoline, heating oil, property taxes and fee’s to double over the same period simultaneously and coincident to the act of quantitative easing’…OK? That doesn’t conflict with the ‘exact’ definition does it?

This is a Keynsian inflation on steroids by any other name….and governments everywhere have become addicted to the spending of the tsunami of revenue their beefed up percentages have brought in……raises for everyone…..huzzzah ! There are more pigs in the trough than at any time in history.

We know what brought the PIIGS down…so why are Canadians standing idly by and watching exactly the same thing happen here? In fact the union elite are complaining that they have fallen behind in the gorging and wallowing.

http://www.vancouversun.com/business/Labouring+ahead+would+government+deal+with+union+contracts/7175509/story.html

While 85% of Canadians can’t pay their bills at the end of the month…while children go to school hungry…while seniors and young families (900,000) are representing millions of people who can’t make ends meet due to the piggish policies of an out of control elite public service wage and pension complex…..the elite seem to think they are entitled to more.

The socialist anser to everything is to raise taxes….that has been historically the route governments have taken…but as we see with the US UK Japan and the PIIGS…..taxpayers are maxed out….debt and deficits are unsustainable even at zero point one rates and there is nothing left but Stalinist collectivism or the strategy of Pol Pot’s Khmer Rouge and move everyone out of the cities and put them to work in the fields in order to support the elites.

We have a nation where

“‘an uncontained explosion in the cost of consumables due to a constant, surreptitious and insidious watering down of the national currency by the printing of paper money and flushing it through the system at a rate of 14% on average for a period of 12 years with no end in sight that has had the net effect of causing basic foods, utility costs, gasoline, heating oil, property taxes and fee’s to double over the same period simultaneously and coincident to the act of quantitative easing”

and this has produced an insane notion that we are awash in wealth…whereas the truth is is we are mired in debt and real wealth has been stolen away and redistributed to the elitist Stalinist unions.

Inflation is 2.6%. Wage gains are 1.1%. Yes, most people are falling behind because of flatlined earnings, but far more significantly because of the debt they have tried to swallow, which will inevitably reset at higher cost. It’s easier to blame the system than yourself. But that’s intellectually bankrupt. — Garth

#184 Dan from Richmond Hill on 09.02.12 at 1:15 pm

“Actually I have pointed out many times that (a) sovereign debt is rarely repaid, nor does it need to be if it can be serviced and (b) Canadian sovereign debt servicing currently requires 11% of tax revenues, far less than the average mortgage. There will be no debt crisis in this country, no bank failures, no currency collapse, no hyperinflation. Just the moaning of homeowners being bled by their personal obligations and illiquidity. — Garth”

If 11% of tax revenues as sovereign debt is OK, when it can become dangerous (30%, 50% … )?

It was 32% in 1990, and we survived. There will be no public debt crisis in Canada. Only a private one. — Garth

#185 John on 09.02.12 at 1:16 pm

“There will be no debt crisis in this country, no bank failures, no currency collapse, no hyperinflation. Just the moaning of homeowners being bled by their personal obligations and illiquidity. — Garth”
——–

The pillar of your argument is the homeowners carrying forward the Goldman Sachs et al derivatives fraud.

The moral tone of “personal obligations and illiquidity”is unfounded. We’re talking outright fraud…of the kind that is illegal in many other areas and activities in Canadian society.

That said, people are at some level responsible for their ignorance. So why not be fair and start to redraw some lines.

You are once again putting reality in a box several sizes too small.

Your half of the debate is weak because the argument is weak. However it does take a lot of intelligence to make a weak argument strong. Add to that telling people what they want to hear…voila. The beat goes on.

#186 Industrial guy on 09.02.12 at 1:27 pm

#167 eaglebay – Parksville on 09.02.12 at 10:45 am
“Let’s not assume anything about anglophones and francophones.” I don’t. The anti-Quebec sentiment voiced by a number of people in the blog hasn’t lead me to believe that every Anglophone is an intolerant boor.

Some of my Francophone friends living inside and outside of Quebec are devout sovereigntists. We may not have shared the save vision for the future of Quebec in Canada, but I respected them as fellow citizens with a different point of view. We’re all democrats and whether you support the seperation of Quebec (Alberta?) from Canada or not … well, it’s your right to voice your opinion. Less than 30% of Quebecers support another sovereignty vote according to the last polls. It’s why Parti Québécois Leader Pauline Marois isn’t running away with the election. Many in the Province will be holding their noses as they cast a vote for the local Coalition Avenir Québec candidate Tuesday.

#187 Mister Obvious on 09.02.12 at 1:37 pm

Things are going swimmingly at the village up the creek this weekend. I am so ashamed of my previous naysaying…

“Raucous laughter could be heard from an oversized patio at the new and popular Tap and Barrel, which was packed with sun seekers, friends cheering each other with sudsy beers and colourful summery cocktails.”

http://tinyurl.com/9cs2b6l

#188 Ayn Rand Army on 09.02.12 at 1:46 pm

I challenge anyone on this blog to explain how this debt will be paid without a major crises.
——-
I would especially challenge all the pension fund managers who work at the CPP and Ontario teachers as well as any professional large fund manager who holds a large portion of their capital in investment grade government debt.

These ‘professionals’ should see the writing on the wall and dumb every dollar of government debt at these current low rates and current high inflation that’s closer to 5-8%.

The fact is all these funds CAN’T sell, there’d be no buyers. Governments know this and the funds know this. The whole thing’s a sham that will eventually implode.

The are essentially debasing the currency and under reporting it. This is how these bonds will be repaid but the purchasing power of the money these pensioners receive will be greatly diminished.

People need to understand basic monetary theory, if they did they would be outraged at theft that is ingrained within our fiat money system.

The fiat monetary system is completely immoral. It’s theft. The government finances it’s activity by issuing debt instead of raising taxes. This allows them to spend way beyond their means and the people don’t notice for many years until inflation kicks in and the debt becomes insurmountable. So welcome to 2012, it’s about to get a lot worse.

Buy gold.

Actually it’s getting better. But enjoy your rocks. — Garth

#189 Basil Fawlty on 09.02.12 at 1:51 pm

Is it not at least a point of interest that while there are economic statistics indicating a strengthening US economy, many contrary indicators exist.
Such as: Marc Faber predicting there is a 100% chance the US is falling back into recession. The consensus from the Fed meeting at Jackson Hole of more QE. The Baltic Dry Index currently at 2008 levels. Billionaires John Paulsen, George Soros and Bill Gross all increasing their gold weightings.
None of the above would be happening in an economy that is improving.

US recession is inconsequential – it means two or three quarters of negative growth. Yawn. The BDI has slumped because of shipping overcapacity. The gold buyers are gambling a dollop of their wealth on a speculative commodity. None of this is compelling. — Garth

#190 TurnerNation on 09.02.12 at 1:53 pm

#83 Deb on 09.01.12 at 12:26 pm

Our leaders look like glum sour-pusses, lecturing us as if we are kids.

Go to google images search.

Type the names, like Vic Towes, Lisa Raitt, F, H, Tim Hudak. You’ll see. Do these people look well rounded?

H’s latest photo op was in front of the sign: “A Strong Canada”.

Really? With gas at a solid 1.30/l level, food on runaway inflation mode, the utility robberbarrons delivering skyrocketing prices for 200-year old technology (electricity). All the while keeping us on edge, with an unseen enemy (Russians and “eco terrorists” in our Actic! Veil-wearing people). OMG scary. Gather ’round our Glorious, Strong, Leader.

The Globe and Mail obliged, in last Saturday’s Toronto edition, with a veil-wearing women’s picture splashed across the front page. I’d expect this from the Toronto Sun, with it’s never ending mantra Our-cops-are-tops-troops-and-vetrans-keep-us-safe-immigrants-are-scary.
Sunshine lists abound. Send more tax dollars now.

#191 VT on 09.02.12 at 1:53 pm

A return to gold standard would be economic disaster: Olive

http://www.thestar.com/business/article/1249998–a-return-to-gold-standard-would-be-economic-disaster-olive

…and will never happen. Might as well be tulip bulbs. — Garth

#192 Ayn Rand Army on 09.02.12 at 1:59 pm

#165 Smoking Man on 09.02.12 at 10:20 am

#63 John on 09.01.12 at 10:06 am

It sounds like you’re not graduating. If you actually get the message of the fraud you can move on. Start living, instead of manipulating.

John

Manipulating, scamming and cheating 9 to 5.

Enjoying the fruits of my brilliance the rest of the time. Hell I’m even charitable.

But as humans are all war to survive. I prefer to do more than that, prosper. To do so, Morality, honesty, fair play needs to be thrown out the window.

It’s hard for most to be comfortable with concept as 12 to 16 years of memorize, regurgitate, obey is hard to shake.

Almost always when someone makes it big, they have suffered some kind of major set back, then they commit to the goal, no prisoners taken. That’s what it takes.

Worked for me.
——-
People like SM are not capitalists, they don’t run an honest business. SM is a fraud and most likely a criminal, just like most politicians. SM would make a great politician. He would vilify the honest business man and steal the loot. That’s exactly the kind of guys who work in government. And it fits well with our monetary policy. Great attitude.

This is why SM drinks so much, he hates himself but has fun doing it. Even though he denies it, he is conflicted.

Real business men have no shame in their success. There’s nothing to be ashamed about because there is never any fraud. The guys at RIM, Apple, Intel and Microsoft etc… are not frauds.

Most people run for public office to accomplish good. That is an indisputable fact. I know. If you believe things need fixing, then you can try this yourself. It beats whining to a pathetic blog. — Garth

#193 Westernman on 09.02.12 at 2:06 pm

Industrial guy @ # 186,

DELETED

#194 Robert on 09.02.12 at 2:08 pm

Drove through Blind Bay in the Shuswap while on holidays last week and was shocked by the number of for sale signs but was even more shocked when I saw a complete condo project sitting empty, not sure if they were completely finished as you could not get to the windows because the weeds were three to four feet high in front of it. Not even a visible for sale sign but I will tell you that it had the look of desperation attached to it.. Talked to a realtor who told me that the only homes that are selling are the ones with very deep discounts. She said that it willnot be long before people come to understand that if they want to sell their homes they will have to think assessed value or lower as a starting point. Realtors hate talking about assessed values but now with appraisals being the norm it is just another hurdle to get over in the financing process.. The picture of what is really happening in the RE market is getting clearer by the day if one chooses to do a little research. No need to listen carefully anymore as the growl of the bear can be heard by all unless of course you choose to cover your ears and pretend.

#195 Hoof - Hearted on 09.02.12 at 2:17 pm

We need a new Ponzi scheme to replace Tulip Bulbs….Carbon Tax….Bre-X ….Dot Com Bomb..Real Estate (except BC) and Cabbage Patch dolls.

Any suggestions? Time share on Mars ?

#196 Ayn Rand Army on 09.02.12 at 2:19 pm

Most people run for public office to accomplish good. That is an indisputable fact. I know. If you believe things need fixing, then you can try this yourself. It beats whining to a pathetic blog. — Garth
——
Good people don’t go into politics, it attracts mostly scum bags, psychopathic know-it-alls and the odd good person who is always outnumbered and usually can’t win an election anyway by being honest. That’s why liars win, they’ll say anything to get your vote and the population is really stupid and gullible.

Me, I’m a business man, my time is best spent running my business and the plans I’m making now are to grow my business. I need to start hiring employees so I must now seriously consider moving my business out of Canada and into Asia where the cost of living and labour is much lower than here.

The fact is I can not grow my business here and remain competitive in the long run, 5-10 years out. So my decision today to relocate my manufacturing outside of Canada is a critical decision for the future of my company.

So, I’m busy and have not interest in FIXING Canada, except for my 2 cents on this blog. This is my contribution and I appreciate the forum.

Let’s summarize: you trash those who try to improve the system calling them scum bags, psychopaths and self-centred liars. Then you move jobs out of your country for your own gain. And we should admire you for what, exactly? — Garth

#197 Angelo on 09.02.12 at 2:19 pm

“Inflation was 12% thirty years ago, which precipitated 19% mortgage rates. They cured the problem in short order, but created a real estate wasteland in doing so. So, inflation begot deflation. ‘Hyperinflation’ is a well-defined economic concept which describes a continuous destruction of a national currency, usually the result of political decisions. This will not happen in either Canada or the US.” – Garth

To be accurate, the measurement for inflation used by the U.S. government in the 70′s was more honest than today’s numbers which only measure ‘core’ inflation, conveniently omitting energy and food prices (like are you kidding me?). Current inflation with food and energy weighted in is very similar to the 70′s yet 19% mortgages today, with the leverage in the system, would destroy so many people and institutions that it would never be allowed to happen. You can’t just go creating deflation by increasing interest rates anymore, the tool has been lost to the leverage in the system, we are stuck with low rates and competitive devaluations. Inflation at relatively high levels continually eating paper wealth is a part of the landscape that’s not going anywhere for awhile.

My reference was to Canadian inflation, not American. Current inflation is nowhere close to that of the 1970s. — Garth

#198 Angelo on 09.02.12 at 2:28 pm

“Most people run for public office to accomplish good. That is an indisputable fact. I know. If you believe things need fixing, then you can try this yourself. It beats whining to a pathetic blog.” – Garth

Most people run for public office to accomplish good (and then get eaten by the machinations of a system built upon cronyism, upon which time they choose to either debase themselves or extricate themselves).

Have you tried? Thought so. — Garth

#199 Old Man on 09.02.12 at 2:35 pm

Garth has me doing my homework about his Preferred dividend scenerio, and am crunching some numbers with one on my holdings. My original capital cost was $24,400 subject to adjustments that paid a dividend yielding 4.65%, but in the past few years is now worth $43,820, and with increased dividends is yielding over 9.00% on the original capital investment.

Now if I sell will have a capital gain of $19,420, more or less, but 50% is tax free , so will be taxed on about $9,710. The TAX MAN is no friend of mine, so will sell him an old dog to offset the taxation to owe him once again nothing; throw him old doggy bones when need be, and he justs throws a fit, but such is life, as am a bookkeeper, and no accountant.

Ok, am talking about a blue chip, so they have lots of Preferred shares, and did I discount the yield to harm my cashflow, and previous tax advantage with the dividend tax credit on common shares? Not really, as now will have about $43,820 subject to adjustments to buy one or two Preferred shares with a tax advantage; and increased capital security at plus or minus 6%.

#200 Ayn Rand Army on 09.02.12 at 2:43 pm

#185 John on 09.02.12 at 1:16 pm

“There will be no debt crisis in this country, no bank failures, no currency collapse, no hyperinflation. Just the moaning of homeowners being bled by their personal obligations and illiquidity. — Garth”
——–

The pillar of your argument is the homeowners carrying forward the Goldman Sachs et al derivatives fraud.

The moral tone of “personal obligations and illiquidity”is unfounded. We’re talking outright fraud…of the kind that is illegal in many other areas and activities in Canadian society.

That said, people are at some level responsible for their ignorance. So why not be fair and start to redraw some lines.

You are once again putting reality in a box several sizes too small.

Your half of the debate is weak because the argument is weak. However it does take a lot of intelligence to make a weak argument strong. Add to that telling people what they want to hear…voila. The beat goes on.

——
It also required an insidious bias and that bias is part and parcel with the financial services industry. The bias stems from the fact that inflation causes the prices of everything to rise year over year and the investment managers then look golden because the nominal values of portfolios also rise which makes them look like they know what they’re doing. Even though the purchasing power of the holdings is falling, the nominal values are good.

#201 Canadian Watchdog on 09.02.12 at 2:49 pm

“It was 32% in 1990, and we survived. There will be no public debt crisis in Canada. Only a private one. — Garth”

Did parliament teach you how to hide debt? http://i48.tinypic.com/34j3p8z.png

Debt servicing is what you should worry about. And no need to be ad hominem. It weakens you further. — Garth

#202 Ayn Rand Army on 09.02.12 at 3:12 pm

Let’s summarize: you trash those who try to improve the system calling them scum bags, psychopaths and self-centred liars. Then you move jobs out of your country for your own gain. And we should admire you for what, exactly? — Garth
———
You should admire me for my accomplishments so far and my foresight to continue my success in a global market place.

And I am not moving any jobs except my own. The jobs I’m going to create will not be created in Canada. I will hire people in another country where the cost of living and cost of wages and the work ethic is better for me as a manufacturer. I have to invest in my employees.

Maybe I could make a go of it here but there’d be nothing left at the end of the day and I’d be working for nothing and a competitor will take me out with lower costs in the long run.

Currently I do everything myself to make ends meet. I do bookeeping, accounting – corporate and personal tax returns, purchasing, sales and marketing, research and development, customer service, trouble shooting, production meaning ALL labour.

So I need HELP! And I need affordable HELP!

Canada is a toxic waste land for me. I don’t want to leave. I HAVE TO LEAVE.

Need some help packing? — Garth

#203 Basil Fawlty on 09.02.12 at 3:12 pm

“US recession is inconsequential – it means two or three quarters of negative growth. Yawn. The BDI has slumped because of shipping overcapacity. The gold buyers are gambling a dollop of their wealth on a speculative commodity. None of this is compelling. — Garth’

May you be 100% correct.

#204 espressobob on 09.02.12 at 3:31 pm

#143

Good comeback there Angilina. Yours comments sound a lot like the usual rhetoric plasterd on so many gold sites, but I digress. Don’t mind me, I must be getting back to my “sweaty area” better known as a diversified and balnced portfolio while you show the rest of us the way.

#205 Old Man on 09.02.12 at 3:40 pm

Garth is correct as debt service is all that matters, and going back in time a first mortgage during the 1970′s averaged between 10 to 12% for anyone to buy a home based upon low wages , and during the 1980′s went much higher with higher wages to cover the payments, most won the battle, and some lost, but life went on.

I bring out my MBA, and there is just one thing that am worried about which has never happened before, as we have an elephant in the house called derivatives, and this is a wild card that cannot understand, and there is no disclosure as to who did what, but it appears with the lastest stats that about $400 trillion is still in place, and this gives me worry – just saying!

#206 Angelo on 09.02.12 at 3:55 pm

“My reference was to Canadian inflation, not American. Current inflation is nowhere close to that of the 1970s.” — Garth

True inflation is running at between 7-8% per year (basic needs cost), that is the real situation, never mind the price deflation of laptops and HDTV’s (luxuries). If anyone simply does a price analysis for their basic costs (luxuries not included) year over year for the past 10 years, you are looking at 7-8% – housing costs, food, fuel, licensing fees, property tax, insurance rates, etc..

Your only fooling the fooled with your government numbers. I trust the math that’s in front of me (basic needs 10yr price chart).

“Have you tried? Thought so.” — Garth

Do you have a time machine? If so fast forward some years and I think your remark will prove invalid. I believe in government, don’t get me wrong, I just like transparency, and right now we ain’t gettin it.

#207 TurnerNation on 09.02.12 at 4:01 pm

Oh no I see the Kelowna Zig Ziglar-styled R/E player is back on the weblog.

I bet our poor forum host endured months of emails from the depth of a derranged mind.

Beggings. Pleadings. Cajolings. Appealing to higher authorities. Straw men. Mocking praise. Sarcarm. Accusing. Insulting. Vaguly menacing.

All of this from someone who is too lazy to start his own weblog for fear of being exposed for who he is.

In another time snake oil saleman would have been run out of town.

#208 Angelo on 09.02.12 at 4:24 pm

“Good comeback there Angilina. Yours comments sound a lot like the usual rhetoric plasterd on so many gold sites, but I digress. Don’t mind me, I must be getting back to my “sweaty area” better known as a diversified and balnced portfolio while you show the rest of us the way.” – espressobob

It’s Angelo not Angilina, that’s why I use my real name so people won’t be confused, but some just remain confounded regardless. By the way what grade are you in? Good comeback? We’re in different leagues Bob, obviously.

In regards to your ‘diversified and balanced portfolio’, what makes it so diversified? If you don’t mind me asking?

Thanks,

Angelo <—–

#209 Ayn Rand Army on 09.02.12 at 4:28 pm

Need some help packing? — Garth
——
No thanks Garth, people in politics have done enough already to help me move. They’ve been the inspiration.

Maybe you missed my point. I’m not moving anything to speak of as it stands today, the business I’m trying to build is not yet formed, it’s very small, so right now is a matter of where do I choose to create my business that currently does not exist. Where to I grow? I’m trying to build a manufacturing company with employees and I need an environment that is conducive to my objective and Canada isn’t it.

Haven’t you noticed? Manufacturing is dead in N.A. and only a fool would think otherwise. Good lord.

They’ll love ya in Guangdong. The land of free enterprise and pure politicians. — Garth

#210 This is Wonderland on 09.02.12 at 4:34 pm

#181 Canadian Watchdogs

Unfortunately I have to agree with Garth. Try and have a conversation with any Canadian today, go ahead ask your fellow colleagues friends or family what Carney and the boys are up to or what’s going on with the CAW or ScotiaBank…..go ahead ask the average Canadian how much money Scotiabank made in the last quarter and why ScotiaBank is eying the guy in the orange shorts. Good Luck getting more than a deer in the head lights look.

God It’s disgusting, we are just a nation of Clock Watchers.

#211 Dan from Richmond Hill on 09.02.12 at 4:43 pm

Debt servicing is what you should worry about.

Then should I borrow as much money as possible and only pay the interest? No need to worry about paying the principal?

If you’re a country, sure. — Garth

#212 Old Man on 09.02.12 at 4:55 pm

Debt Service – In 1972 the average college graduate with an undergraduate degree was getting top dollar at $550 a month, or if you had an extra degree would get $600 a month for a salary as a token. One could rent a nice apartment in Toronto for $125 a month or buy a house for $47,000. Things changed, as wages went up, and a few years later top dollar became a norm at $1000 a month, but was just $12,000 a year, and Real Estate went up – why? The debt service could be made for that same house at a higher cost ratio, and all was well.

Ok, here is my point, as the debt service ratio becomes all, as Garth has stated as it becomes a factor of family income if used wisely, and the problem today with Real Estate is too many people were sucked into under the REFORM formula to pump up the GDP to make things look good going into the next election, so they sold you all out.

The old formula of 5/25 with a GDS, and TDS was thrown aside which was all political, and many of you who took the bait of being horny are going to lose all, and you have nobody but yourself to blame, and thank F, and Caesar for this mess, as it this was done with intent to boost Real Estate will all the spinoffs to make things look good; they won and you lost.

#213 Humpty Dumpty on 09.02.12 at 5:00 pm

Contraian by model but you sound like the later…

Austrians are in key respects the most humble of economists. They understand the limits to knowledge, in particular at the macro level above a complex system. The power of Austrian economics from a trader’s point of view is that it can inform an investment process but also recognizes its natural limits. As such, it helps the trader to avoid the common pitfall of thinking that they know more than they actually do.

As with Marxism, it justifies the creation, maintenance and expansion of a central-planning superstructure. In a Keynesian world, we actually need all those bureaucrats. Without them, society would just fall apart, now wouldn’t it? And we would all be exploited by capitalists. So we need the Keynesian central planners to hold society together and to protect us from rapacious businessmen. In reduced form, it is all very Platonic or Machiavellian, really, or Straussian or ‘neocon’ for those who prefer a more modern reference to such thinking.

http://www.thedailybell.com/4236/Anthony-Wile-John-Butler-on-Free-market-Economics-and-the-Upcoming-Great-Crisis

Humility is a rare character G …

Especially on 53..

#214 espressobob on 09.02.12 at 5:01 pm

#206

Thank you Angeilnu for your sanctomony. I’m sure my fellow “blog dogs” will take great heed in your writings. After all you are an expert “in the field”.

#215 MarcFromOttawa on 09.02.12 at 5:02 pm

What you just described is called a ponzi scheme, which is mathematically proven to end up in hyper-inflation or default”’

For an analytical guy you have some glaring blind spots. — Garth

In my humble opinion part of the problem is a 2% inflation rate eventually goes parabolic.

http://globaleconomicanalysis.blogspot.ca/2012/03/huge-problem-in-bernankes-2-inflation.html

#216 cynically on 09.02.12 at 5:11 pm

#178 panhead – like your joke re Mexican side of the border but in case you’re serious, it was definitely the White Rock area, looking south but not Mexican south.

#217 Angelo on 09.02.12 at 5:15 pm

“I bring out my MBA, and there is just one thing that am worried about which has never happened before, as we have an elephant in the house called derivatives, and this is a wild card that cannot understand, and there is no disclosure as to who did what, but it appears with the lastest stats that about $400 trillion is still in place, and this gives me worry – just saying!” -Old Man

Don’t feel bad there Old Man, it needs to be said!

No one wants to deal with this elephant, because it’s really nasty tempered, and looks more like a woolly mammoth on steroids than an elephant. Central banks cannot let anything deleverage, they are held hostage to the overhanging sword of derivatives, thus they’ll continue with their purchases, they have no choice anymore.

#218 Canadian Watchdog on 09.02.12 at 5:20 pm

#205 Old Man

“Garth is correct as debt service is all that matters, and going back in time a first mortgage during the 1970′s averaged between 10 to 12% for anyone to buy a home based upon low wages”

1) Nope. During the 70′s interest rates were rising, helping homeowners pay off their mortgage from interest earned on savings. Paying off a fixed long-term debt today with a currency that is being devalued (negative real rates) will eventually hit a brick wall.

“but it appears with the lastest stats that about $400 trillion is still in place”

2) As of June 2011, total notional derivatives outstanding is $706 trillion dollars, of which Canadian banks currently hold $18 trillion of. Confused? If anything goes wrong with consumer, mortgage, corporate or government debt, billions (maybe trillions) of credit default swaps will be triggered.

This is precisely why our government is a hostage to banks, hedge funds and pension funds who know that the government is pretty much guaranteed to keep printing.

We’re beyond out of control now.

#219 Angelo on 09.02.12 at 5:23 pm

“Thank you Angeilnu for your sanctomony. I’m sure my fellow “blog dogs” will take great heed in your writings. After all you are an expert “in the field”.” – Bob

I’m sure the ‘dogs’ can form their own opinions without you as their ambassador.

I’ve posted enough for now in any case, it’s been fun.

Cheers,

#220 Ayn Rand Army on 09.02.12 at 5:31 pm

They’ll love ya in Guangdong. The land of free enterprise and pure politicians. — Garth
—–
The choice of country to locate my manufacturing is a matter of which one has the least amount of burden.

Once the choice is made, it’s then a matter of making it work. Still not an easy task and definitely not a free ride, just less free riders.

It’s going to be an adventure that beats sitting around here destined to be miserable and plundered.

#221 espressobob on 09.02.12 at 5:35 pm

#219

Thank the heavens your done! OH and by the way, if you don’t understand diversity and balance in one’s portfolio you really do need an advisor! Espressobob!

#222 Junius on 09.02.12 at 5:39 pm

#209 Randroid,

You said, “Haven’t you noticed? Manufacturing is dead in N.A. and only a fool would think otherwise. Good lord.”

I run a business in Canada that exports worldwide. You just need to know what to make.

#223 jess on 09.02.12 at 5:43 pm

“The notion that a radical is one who hates is country is naive and usually idiotic. He is more likely, one who likes his country more than the rest of us, and is thus more disturbed than the rest of us when he sees it debauched. He is not a bad citizen turning to crime;he is a good citizen driven to despair.” H.L. Mencken”

economics of behavior

Advice from a very wealthy australian woman tells us the world is our oyster if : “If you’re jealous of those with more money, don’t just sit there and complain. Do something to make more money yourself – spend less time drinking or smoking and socialising, and more time working.” Timely words since 20% of unemployed /under employed New Zealanders , are talking about a living wage.

see- ANDEV -”Australians for Northern Development & Economic Vision” Gina Rinehart’s social policies , tax, industrial relations and environmental policies.

Well, I hate lazy ass polluters who buy media corporations in order to control the message.

I wonder if she was speaking from personal experience and projecting her children’s behaviour on the rest of those lazy ass, beer drinking aussies.Perhaps one day those children who have been poisoned and blessed with low IQ’s may come back and bite ya on the ass.
============
For example in “Days of destruction”, chapter 3, Chris Hedges – writes about these criminal laggards.

February 26th, 1972
..”Coal washing often results in thousands of gallons of contaminated water that looks like black sludge and contains toxic chemicals and heavy metals. The sludge, or slurry, is often contained behind earthen dams in huge sludge ponds. One of these ponds broke on February 26th, 1972 above the community of Buffalo Creek in southern West Virginia. Pittston Coal Company had been warned that the dam was dangerous, but they did nothing. Heavy rain caused the pond to fill up and it breached the dam, sending a wall of black water into the valley below. Over 132 million gallons of black wastewater raged through the valley. 125 people were killed, 1100 injured and 4000 were left homeless. Over 1000 cars and trucks were destroyed and the disaster did 50 million dollars in damage. The coal company called it an “act of God”.

http://mountainjustice.org/facts/steps.php/
http://www.worstpolluted.org/fact-sheet-index-2011.html

#224 TurnerNation on 09.02.12 at 6:07 pm

New site from TO SOLDs site:

http://realive.ca/

(aka the Toronto R/E insanity map!)

#225 Ayn Rand Army on 09.02.12 at 6:25 pm

#222 Junius on 09.02.12 at 5:39 pm

#209 Randroid,

You said, “Haven’t you noticed? Manufacturing is dead in N.A. and only a fool would think otherwise. Good lord.”

I run a business in Canada that exports worldwide. You just need to know what to make.
—–
I know what I make, I just need the best place to make it.

#226 OlderbutWiser on 09.02.12 at 6:36 pm

Canadian Watchdog #218

As of June 2011, total notional derivatives outstanding is $706 trillion dollars, of which Canadian banks currently hold $18 trillion of. Confused? If anything goes wrong with consumer, mortgage, corporate or government debt, billions (maybe trillions) of credit default swaps will be triggered.

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

CW, the vast majority of these deriviatives are interest rate swaps to the tune of $553.2 trillion out of the $706.9 trillion that you mention. These interest rate swaps are simply swapping fixed to floating (or floating to fixed) interest rates that the counter party has. Most counter parties are large multinational corporations that may have fixed interest rate debt but would prefer to have exposure to floating rates. To get there, they enter into an interest rate swap. There is nothing immoral, ponzi like, or fraud like to these transactions. They allow business to manage their risk. Stop listening to the MSM.

#227 Daisy Mae on 09.02.12 at 7:20 pm

#176 EAGLE: “HST was a better deal. If you think that the Liberals are bad just watch the NDP. You haven’t seen anything yet. Both party leaders are idiots. What leadership.”

***********

Better deal — for who? Been discussed to death….

Our only hope is the provincial Conservatives. And that party is turning out to be a dud, as well…can’t even remember the dudes name.

#228 Daisy Mae on 09.02.12 at 7:32 pm

#182 Hoof-Hearted: “BC voters have NO real choice.”

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

I may have to spoil my ballet at the provincial level to show my disgust…not that anyone will give a damn or that it’ll matter. But at least I’ll be exercising my right to express my opinion. LOL

#229 Daisy Mae on 09.02.12 at 7:59 pm

#184 Dan: “It was 32% in 1990, and we survived. There will be no public debt crisis in Canada. Only a private one. — Garth”

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

Garth tried to warn us. The government didn’t give a damn…..and led the ‘newbies’ to slaughter.

So no one suffers but the electorate. Which will express itself in the next election.

‘Round and ’round we go….

#230 Devore on 09.02.12 at 8:10 pm

#139 IM in C

http://www.vancouversun.com/business/commercial-real-estate/West+Vancouver+teardown+fetches+over+asking/7174412/story.html

Interesting story. Does this mean the market is rebounding already?

No, means realtor way underpriced the property (perhaps purposely). People really fall for this?

#231 Daisy Mae on 09.02.12 at 8:24 pm

#202 Ayn: “Maybe I could make a go of it here but there’d be nothing left at the end of the day and I’d be working for nothing and a competitor will take me out with lower costs in the long run.

Currently I do everything myself to make ends meet. I do bookeeping, accounting – corporate and personal tax returns, purchasing, sales and marketing, research and development, customer service, trouble shooting, production meaning ALL labour.

So I need HELP! And I need affordable HELP!

Canada is a toxic waste land for me. I don’t want to leave. I HAVE TO LEAVE.”

*********

“Competitors will take me out…” You are on a level playing field with your competitors — you just must COMPETE, regardless.

#232 Daisy Mae on 09.02.12 at 8:33 pm

#209 Ayn: “I’m not moving anything to speak of as it stands today, the business I’m trying to build is not yet formed, it’s very small….”

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

All new business starts out the same way — struggling to get established. Geez!

#233 truth hammer on 09.02.12 at 8:55 pm

You have to be on drugs to think that consumer prices are anywhere near 2.6% amigo. It must be nice to be so far removed from reality so as not have to go into a grocery store or pay any of your own bills from month to month…good for you…..does your driver fill up the gas tank too?

#234 Canadian Watchdog on 09.02.12 at 10:03 pm

#226 OlderbutWiser

“There is nothing immoral, ponzi like, or fraud like to these transactions.”

IR swaps create more complexity and amplify systemic risk—even more so when OTC swaps are not disclosed to investors.

#235 Derek R on 09.02.12 at 10:51 pm

#175 Drill Baby Drill on 09.02.12 at 11:28 am wrote:
Read my lips “there is no sales tax in Alta.” Alta has been discussing this new sales tax for 4 decades to no avail.

Yep, I know. I live in Alberta too. One of the best things about the province is that there is “no provincial sales tax”. I don’t want one any more than you do. If they need more revenue, they should increase property tax, not introduce a sales tax.

#236 cynically on 09.03.12 at 9:29 pm

To #s 182 and 188 – listen to Garth and know thy country.