Relax

Why did stock markets have a cow after Obama won? And what does this mean to your money?

Glad you asked. It’s fairly simple, but first you have to know what the ‘fiscal cliff’ is. American politicians passed laws some months ago mandating federal spending cuts unless new laws are passed changing them (nothing is simple). Meanwhile a whack of tax cuts brought in by George Bush are scheduled to expire at the same time (New Year’s). Plus the US is bumping up against its debt ceiling, which means Washington must raise it or run out of cash.

All of this happens about the same time (in 60 days, more or less). That’s the cliff. It would bring substantially higher taxes and deep spending cuts – a $607-billion hit to the economy. Economists, and even that little beaver, F, believe this will cause a recession in 2013. Recessions bring job loss and crappy profit numbers. So, the markets sold off.

Why after election day? Didn’t we all know this was coming?

Of course, but in recent weeks Wall Street was factoring in the potential for a Romney win as his poll numbers climbed, or a shift in the balance of power in Washington. Didn’t happen. Now Democrats control the White House and the Senate, while Republicans control Congress. Worse, more of those pesky right-wing Tea Party zealots have been elected, who’d be happy if government ceased to exist.

In a word, gridlock. Maybe. But even the chance of a war between the Republicans, who want no tax hikes and spending cuts, and Obama, who wants higher taxes and more spending, is enough to make investors sell equities and go to cash. So, markets tumbled a little over 2% on Wednesday, while oil was smacked with a 4% drop.

What happens if the States dives over the cliff?

Then 2013 would be a tough year in which the deficit would be cut in half, but at the expense of economic growth and a few million jobs. Taxes would rise for individuals and small businesses while government spending would eat into social programs and defence. GDP would sink, and a recession ensue. A few months later, we’d feel it too. If you think condos in the GTA and houses in East Van are unloved now, just wait.

This reminds us of the last debt crisis, fourteen months ago. Republicans and Democrats had a cat fight over raising the debt ceiling, raising fears among the rabble that America would default. Meanwhile US debt was downgraded by S&P and the Dow routinely lost 400 points a day. The Occupy Wall Street people were getting their heads busted. And this pathetic blog was overrun by people telling us to sell everything, buy gold and store toilet paper. The good kind.

What happened? A compromise, of course. Like me, it was late and messy, but it did the job. There was never any reason to believe American politicians would suicide, and those people who bought when others bailed enjoyed a win. In the early days of October, 2011, the benchmark S&P 500 plunged to less than 1,100 amid the wailing and moaning. A year later it was above 1,400, for a gain of 34%.

History is about to repeat.

Fiscal cliff phobia will spread, becoming as commonplace and loathsome as Justin Bieber, Kias or an Aerosmith revival. The impressionable will overact, wait for markets to fall substantially and sell when the moment of maximum despair is reached. This is exactly what happened last October when, ironically, risk came off.

Eventually a political compromise will emerge and the odds of recession melt away. The solution will be imperfect, and set us up for the next mess. But it will also give the economy time to churn out more jobs, have markets rebound, see the US housing market stir (more good news there on Monday) and rescue the Christmas retail trade.

Problems still abound. It looks like Greece will be burning for a while and Germany’s catching fever. The next decade could well yield years of virtually no growth, structural unemployment, deleveraging and incomes not even pacing inflation. But there’ll be no collapse, no failed banks, no reason for cupboards full of Cottonelle, Starkist or Purina. People with balance, diversity and liquidity in their investments will be fine. People with only houses won’t.

Since last October the average Toronto detached home gained 5%. In Vancouver it’s worth 12% less. That’s the cliff to worry about.

167 comments ↓

#1 Don't read his post on 11.07.12 at 10:28 pm

We woke up to these new worries. It’s inna be a long winter!!!!!!

#2 V on 11.07.12 at 10:28 pm

arnold is numero uno

#3 Van guy on 11.07.12 at 10:30 pm

Garth,

This likely means equities will fall and another buying opportunity in the new year?

#4 Tito Santana on 11.07.12 at 10:40 pm

The markets don’t seem rational. Really feels like manipulation of the worst kind. Don’t think Obama or Romney have any control of the “invisible government” just like most of their predecessors!

#5 NKVD Black Raven on 11.07.12 at 10:41 pm

presidents 2nd term always a mess be it stained dresses or gaps on tapes.

#6 Randy on 11.07.12 at 10:42 pm

Hi….My name is Cliff…..Drop over some time….

#7 LH on 11.07.12 at 10:43 pm

C01 SFH market is still hot

http://www.torontomls.net/PublicWeb/CL_CF.asp?link_no=46089281.175000&t=l&fm=F

That’s hot? — Garth

#8 Grim Reaper/Crypt Speculator on 11.07.12 at 10:44 pm

FYI: Proxy 4 SmokingKong/Old Man

Turddddd !

#9 Absolute Zero on 11.07.12 at 10:47 pm

From the Toronto Star:

“It would have an important impact on Canada, without question,” he told CBC-TV. He said uncertainty over the possible financial crunch in Washington is slowing investment and business confidence south of the border. And he said the Bank of Canada, which influences economic growth by adjusting central bank interest rates, would “react if necessary” should the U.S. fiscal crisis begin to be felt negatively in Canada.

Crap! Does this mean even lower rates???!?!?

#10 45north on 11.07.12 at 10:48 pm

arnold is numero uno

so I guess Arnold Schwarzenegger is in the picture. It doesn’t load on my Mac (relax1.jpg)

#11 Dave on 11.07.12 at 10:51 pm

Great article.

Most of the predictions made by analysts that I have heard on CNBC and BNN have said they are confident a deal will be reached before the debt ceiling is reached.

If a deal gets done soon (within about 3 weeks) that would be very bullish for equity markets and in all likelihood would lead the market into another Santa Claus rally.

If the politics is still stalled into December, rumblings of a US credit downgrade will appear. This will trigger more nervous sellers, volatility in currency markets and would be bearish for the market.

Right now the fast money traders are placing their bets on which of the above scenarios plays out.

#12 Smoking Man on 11.07.12 at 10:54 pm

Sorry Garth, Market sold off because of Greece, rumors where the rage on Bloomberg chat , that defection were rampant for the Greek vote on the Austerity. Well it passed.

So if we have another sell off tomorrow, you can put a feather in your cap that you where right.

Now if we have a huge rally, then you know it
was all Greek silly

I’m calling a Rally

#13 DaleFromCalgary on 11.07.12 at 10:56 pm

After JPMorganChase finished short-selling gold on Friday, it came back up. Stock market down a couple hundred points but gold up slightly. No moonshots for gold in the near future but physical gold is the ONLY investment that has never gone to zero.

A word of warning. The American unemployment rate will apparently decline in the next few months but that is because Obama redefined full-time work as 30 hours per week or more. This means companies have to pay $5,000 per year per employee for Obamacare, or a $2,000 penalty if they don’t offer health care, so they will reduce everyone’s hours to 29. Businesses will then hire extra part-timers. This will be trumpeted by the mass media as proof the economy is recovering but it isn’t so.

#14 Rainman on 11.07.12 at 10:59 pm

This is all way to confusing?
Crash… soft landing…. ten years of flatness… very bleak..

#15 eddy on 11.07.12 at 11:01 pm

I live in 416 and mpac has just sent out it’s new assessement letters. One of mine said ‘your house value has ‘changed’ in a 4 yr period by $126,000′
That’s right, more tax for me. What did I do to deserve more tax? Absolutely Nothing. Folks, Market Value Assessemnet is the BIGGEST scam of all time (After the central banking scam of course), and it’s everywhere, and anywhere it isnt, it will be very soon:
Haarper pumps the bubble, Ford and Dolt On e-Guilty both tax the bubble via property taxes and land transfer taxes (data entry), it’s a tax on inflation. Sweet? People should be in the streets.

#16 mac on 11.07.12 at 11:05 pm

Stocks tanked because of ongoing European woes.

Where’s that? — Garth

#17 bsallergy on 11.07.12 at 11:09 pm

I’m glad you’re an optimist. Makes me feel so good to go on with my cockeye dividend seeking.

#18 Not 1st on 11.07.12 at 11:12 pm

So Garth, in other words, its going to be a zombie economy for the foreseeable future aka Japan 2.0.

Best thing Obama can do is do nothing, lets the cuts come in, take the pain for a few years and then have a real revival in the economy. Its his last term, he doesn’t need to be loved. Some president is going to have to sacrifice himself to right the ship, might as well be him.

#19 Canadian Watchdog on 11.07.12 at 11:19 pm

“This reminds us of the last debt crisis, fourteen months ago.”

More like 2008 without the Lehman Brothers crisis. The election is over. Reps have nothing to fear and will make this dramatic and a dangerous situation just to get their point across. The fiscal cliff will most likely get kicked down the road another six months to a year, but not before the eleventh hour and shaking the markets up in fear. If tax hikes, spending cuts and sequestration are postponed, expect i) another credit rating downgrade ii) businesses to hold off on spending and hiring again and iii) extreme market volatility.

Trade and tweak your portfolios accordingly.

#20 The end is nigh on 11.07.12 at 11:23 pm

Again, no one will take action to tackle the deficit and debt.
Compromising and meddling along, recipe for financial disaster.
I think Germany should opt out of the EU, showing the world that only decisive actions will solve the financial problems in the long run.
Better an end with terror, than a terror without an end.

#21 Celine on 11.07.12 at 11:27 pm

A decade of virtually no growth…Just when I thought I had a hope and prayer to bail myself out based on putting into action much of your advise (as I understood it anyway). Here is the situation: I am single and 49 and have come to realize through reading your ceaseless and amusing tirades that I am a statistic. I am house rich (ish) and cash poor. But now I have a plan which could work if I can see a 7% gain per year on my diversified self directed investments. I have 130,000 invested in REITS, CAN DIVS and some ETFs for diversification (US tech, S&P). House may be worth 500 – 600,000 – I still own 90,000 but will be paid off in 3.5 years. I took your advise and borrowed 85,000 on my HELOC to invest (part of the 130,000). I also recently got a job after floundering financially for a number of years as the film industry died and I looked for a new career. My new job is an unbelievable gift for a second chance and to avoid having to live on cat food (though I thought i might do well to write a cookbook on 100 great recipes for purinas since seems so many folks may be eating from the same menu). I will have a company pention it turns out (if I can stay with this company for the next 10 years or so) I also have a rental suite in my house which I get 900$. Anyway, thank you so very much for the wake up call. Any comment on Rate of Return in a no growth world would be appreciated.

Find a financial advisor you can pay in cat food. — Garth

#22 KenR on 11.07.12 at 11:28 pm

Another good post Garth.

A co-worker asked me today what I was doing as a result of the election. He knows I read a decent amount on various business sites. He checked the markets this morning and was looking for some comfort, I guess.
I have no idea what he is invested in, but it can’t be balanced by his queries. I recommended your site. I suspect he will gain some enlightenment after a few reads. He’s bright, he’ll catch on.

#23 45north on 11.07.12 at 11:29 pm

eddy: People should be in the streets.

if you aren’t in the streets, you don’t go in the streets

#24 Bottoms_Up on 11.07.12 at 11:32 pm

#15 eddy on 11.07.12 at 11:01 pm
————————————-
That sucks if you think that’s not the value of your home. You can fight it if you want, but you have to provide proof that indicates their assessment is wrong. And anyway, your taxes are based on the ‘mill rate’, as we have often heard on this blog, therefore they can raise your taxes anyway by raising the mill rate, even if the price of your property stagnates. Welcome to the future, higher taxes and lower property values.

#25 HDJ on 11.07.12 at 11:33 pm

“….even the chance of a war between the Republicans, who want no tax hikes and spending cuts, and Obama, who wants higher taxes and more spending…” Garth

Obama will obviously push for tax hikes and spending cuts.

#26 JSS on 11.07.12 at 11:35 pm

Ok,so Who bought Atlantic power shares (ATP) lately?

#27 Ryan Tynd on 11.07.12 at 11:36 pm

Stock Markets / Bond Markets / Real Estate will all Fail as countries Print Print Print their Currencies, hoping to save their countries – but instead making problems worst.

Buy Physical – GOLD SILVER OIL FARMLAND

Its the only way to protect you from the forthcoming disasters…

Sheep make good friends. — Garth

#28 Smell on 11.07.12 at 11:36 pm

Could it have been the Fed pumping up the market for Obama pre-election? For some feel-good wealth effect… Sell off this morning was because it’s no longer needed.

Not again… — Garth

#29 Celine on 11.07.12 at 11:36 pm

Garth can you please not post my long winded message I just sent – I realized Its kind of too personal (for me) to share and would rather email it to you instead for advise.

Thank you in advance.

Too late, cat lady. I’ve already received two marriage proposals by email for you. — Garth

#30 Dave on 11.07.12 at 11:39 pm

I read this blog every day. I practice a lot of what gets preached here. I buy income paying stocks. I buy low MER funds. I have cut back on how much I put towards my mortgage and have started allocating it elsewhere. I do this all the time and wonder why others are out buying the big houses, financing the cars, buying the iPads and the suits and stuff and how they can afford it. I know they’re using credit to do it all but I always wonder why knowing what we know when finally one day it hit me.

People don’t care. They live for the moment. If there is one thing that is quinetessentially human about most of us, it’s our lack of foresight and impulse to go after what we want now rather than plan for what we would like later on. This blog is brilliant. People are not. End of story.

#31 GTA Engineer on 11.07.12 at 11:53 pm

Garth,

Your opinions seem to be flip-flop’ing, or at the very least, you’re losing confidence in them quickly.

11/5:
“My conclusion: the winner’s irrelevant. US growth in the next four years will be substantial, punctuated by sharply higher consumer spending, a real estate renaissance, several million new or restored jobs and an economy expanding by at least 4% by 2015.”

11/7:
“The next decade could well yield years of virtually no growth, structural unemployment, deleveraging and incomes not even pacing inflation.”

You sounded very sure a couple of days ago about the prospects for the next four years, and today you seem someone against that assessment.. What gives?

First was US, second Canada. We will lag. — Garth

#32 GTA Engineer on 11.07.12 at 11:55 pm

By the way, your blog doesn’t seem to have registered daylight savings in the posting timestamps..

First world problem. Deal with it. — Garth

#33 EIT on 11.08.12 at 12:01 am

The stock market is currently volatile, its pounding back the laxatives, don’t be so surprised, there’s been a lot of movement.

#34 Mark on 11.08.12 at 12:10 am

I think you got it wrong on this one. S&P futures were rising as it became clearer that Obama was going to win. It wasn’t until early morning that the market started going down, at a time where the election results had been clear for hours. The market started going down when news of Europe heading back into recession came out.

This has nothing to do with the fiscal cliff.

Disagree. — Garth

#35 Form Man on 11.08.12 at 12:11 am

#157 DA yesterday

ok. it is all sunshine and ponies then

#36 GTA Engineer on 11.08.12 at 12:12 am

#32 GTA Engineer on 11.07.12 at 11:55 pm
By the way, your blog doesn’t seem to have registered daylight savings in the posting timestamps..

First world problem. Deal with it. — Garth

————–

You’re welcome :)

#37 Hurly on 11.08.12 at 12:13 am

Cat Lady,
While Purina is tasty I have found that Fancy Feast is far superior, and always has 50 cent off coupons.

#38 DON on 11.08.12 at 12:14 am

#30 Dave

Well said!

Some practice ignorance on purpose as they do not want to deal with the less than rosy outlook. I, on the other hand would prefer to know where I stand (baseline).

Some people still amaze me, however I am taking notes to capitalize on their mistakes.

#39 Retired Boomer - WI on 11.08.12 at 12:24 am

OLD MAN….

How was your cake?

So, now the BS we call election season is finally over. Karl Rove, and the “Conservative Constantly Constipated Crowd” got handed this butts, very deservedly with a Romney loss.

If we was SOOO great as Governor of MA why did Obama beat him there by 209 pts?

Despite rumors, and examples galore, the American populace is not as stupid as FOX News would like us to be.
Romney was inconsistent, and his speeches showed that.

Today’s stock market sell-off was a Greek event, not an Obama one. Tomorrow, who knows? My crystal ball is dead, like many Republican’s dreams for now. If they can develop a REAL platform not dominated by dim-wit tea baggers they may win a national presidency, if not join the defunct Whigs.

Cut spending, raise Taxes…in other words GO OVER the fiscal cliff. One or two quarters suck, but we’ll be alright.

#40 Canadian Watchdog on 11.08.12 at 12:25 am

Top stock pick for Garth. SWHC

DOOMER WAS HERE
$10.37 Nov 7, 2012.

#41 Jay_Huhman on 11.08.12 at 12:27 am

Dale from Calgary #13, at least since the 1970s US insurance companies used 30 hours as the standard for full time work for medical insurance purposes. When I worked for General Cinema back then, with hair and in smaller jeans, we were forbidden to work more than thirty hours because GCC would then have to kick in money for insurance.

#42 Smoking Man on 11.08.12 at 12:29 am

Gartho you need to go a bit off the track, you are coming across too status quo. Know your not, I think

Those of us, grey hairish, or in my case no hair all the way to my toes ladies:) I, know your a worthy rebel. Bitch slapping Hosney Harpo like you did, not much you can do to lose my respect for you.

But The chirp show is becoming more dominant here, lucky for us you’re are one democratic bad ass.

That’s why I feel like this is a second home.

#43 happy renter on 11.08.12 at 12:30 am

Max Keiser who’s been a stockbroker for over 25 years and he says we have know until 6 months for the implosion.Just be prepared for a financial holuacost.

#44 Scott in Gibsons on 11.08.12 at 12:35 am

Stock market volume is now 90% computerized hi-freq trading. Most days are boring not events as the banksters shave micro-pennies from investors with occasional computer glitches that flash-crash individual stocks. There is no real stock market any more.

If you see anything that looks remotely like a sell-off its done intentionally to put pressure on pols and regulators to do the bidding of the banksters. They can “crash” the market at will to blackmail those in power. This is why the market routinely shrugs off bad news and falls post election when little was happening.

#45 City Slicker on 11.08.12 at 12:37 am

There is no worries about a fiscal cliff, QE is alive and well and to infinity. Very bullish for gold. What ever is needed will be provided

#46 squidly77 on 11.08.12 at 12:41 am

http://www.huffingtonpost.com/eric-barker/which-professions-have-the-most-psychopaths_b_2084246.html

Via the Canuck WatchDawg.

#47 Jounce on 11.08.12 at 12:44 am

The next decrepit step in the money rot game is that interest rates will dive below zero as the next credit crunch urps up.

Savings and cash will be officially declared a ‘social evil’ because they are not in circulation and you bad home debtors are not doing your part to keep the ‘ponziconomy’ up.

Being a central banker is causing catastrophe to catastrophe without loss of enthusiasm.

#48 T.O. Bubble Boy on 11.08.12 at 12:44 am

Lesson from the U.S. Election: demographics matter.

pssst – someone should tell the Canadian housing market that boomers are retiring, and they don’t all want to buy “rental unit” condos next to nightclubs in Toronto or cookie-cutter burbs houses in Milton.

(wait, didn’t Garth write a book or two on that?)

#49 Hawk on 11.08.12 at 12:47 am

#27 Ryan Tynd on 11.07.12 at 11:36 pm

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

How can you buy and store physical oil?

Refined gasoline cannot be stored indefinitely (should be good for some months)………. and crude is useless at an individual level.

Gold / silver within reason, a balanced portfolio is better.

Farmland is OK if you know what the hell you’re doing, ordinary people, can’t magically become farmers.

#50 Hawk on 11.08.12 at 12:51 am

#30 Dave on 11.07.12 at 11:39 pm

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

It’s more than just living for the moment. It’s because the risk / reward factor is skewed in favor of misconduct.

In the days of “debtors prisons”, people didn’t generally go on borrowing binge fests.

#51 JR on 11.08.12 at 1:00 am

Anyone have any tips on a good Bond ETF or ticker that does not include anything related to CMHC? If you look closely at the holdings of most canadian bonds, they all have a component of this…
Thanks!!
Also if anyone has some great strategies for the fixed income component i am all ears..

#52 Bob on 11.08.12 at 1:03 am

Minister Harper. Make sure you know who you are planning to let into our country. And that they know our rules. And they leave theirs in their homeland.

http://www.chicagotribune.com/news/plus/chi-nsc-e-india-forced-labor,0,4238336.story

#53 n1tro on 11.08.12 at 1:11 am

“Eventually a political compromise will emerge and the odds of recession melt away. The solution will be imperfect, and set us up for the next mess. But it will also give the economy time to churn out more jobs, have markets rebound, see the US housing market stir (more good news there on Monday) and rescue the Christmas retail trade.”

Yes the comprise will be that both parties already know that “hey if we don’t kick the can down the road a little further, we won’t get paid!”. The lead up to the deadline will be just political posturing.

How is it that the “fiscal cliff” is presented like it just came out of the blue and that is why the market sold off?? The selloff is a classic “buy the rumor and sell the news” event. The fiscal cliff was there the day after the last compromise was put in place. Obama just did a temporary increase and all they did was hand in a pitiful bipartisan list of “planned” cuts over the next 10 years that didn’t amount to anything substantial.

The can kicking will not allow for jobs to be created because the US has no real plans to to reduce their spending. The only way to get more money to sustain the government is print or tax. Don’t forget that the US may be downgraded again because over this mess. Which of those options is good for the US economy?

#54 martin9999 on 11.08.12 at 1:15 am

SMOKING MAN -
I’m calling a Rally
————–

no rally. and i dont think greece has that kind of
impact on the equities any more.

i am voting a tight range. we shall see

#55 martin9999 on 11.08.12 at 1:18 am

and i think the market is starting to price in the cliff already. we might se a little retracement tomorow but that’s about it.

trade safe, bet more and grow the positions

#56 Bob on 11.08.12 at 1:20 am

I don’t know… everyone now knows that there will be compromise and there won’t be a fiscal cliff… so everyone will either be holding tight and waiting for the slightest drop to buy in. Will certainly be glad if there is a buying opportunity, but I sincerely doubt a huge one. e.g. if you’re thinking “let it drop 15%” perhaps not… maybe single digit drops?

#57 metal-nut#756 on 11.08.12 at 1:27 am

Well done Garth, right on the $ for the last minute messy compromise on the debt cliff. But this doesn’t mean we won’t have a minor stock cliff dive, since the media will be airing this 24/7 for at least the next 1.5 months. Nothing sells ads like fear mongering news, and politicos love the grandstanding and political theatre opportunities. Free airtime after all. Speaking of plugs… should be a great opportunity to load up on GOLD! *grin* (Looks like we may end up, up **A-N-O-T-H-E-R 10% in 2012. How many years in a row is that now? I forget… and BTW, you *can* eat gold! Look it up.

As for no banks will fail, I think you must be refering to Canada, because in the states… well one just failed last week.. and we’re up to 569 according to the http://bankimplode.com website.

#58 Teulon on 11.08.12 at 1:39 am

#15 Eddy
Depending on the mill rate,your house assessment can increase by $126K and your taxes might DECREASE! Think about it – doesn’t your taxing authority explain this?

#59 Riding the Pine on 11.08.12 at 1:59 am

History will repeat itself, as long as there are still humans in the White House.

The Cliff issue will not get solved in 3 weeks (as one commented), and will be slow and messy. This, of course, will scare the market at least a little before the new year. Opportunities will come to hedge against S&P in the short term, and then pick up some deals in 2013.

An interesting comment was made very recently by a real estate “expert” on Global. He said the Vancouver market would be fine, and required a major economic problem to cause a correction – another short-sighted human with a bad memory!

#60 Nostradamus Le Mad Vlad on 11.08.12 at 2:04 am

-
“Recessions bring job loss and crappy profit numbers. In a word, gridlock. Maybe.”

Curious. If, as spoken of here by others, companies on both sides of the border are swimming in and hoarding cash, consistently turning healthy profits, why isn’t some of that liquid moolah being reinvested in modernizing / updating plants or mfg. facilities?

Is it because labor costs are too expensive here, and mfg. costs are way cheaper in ‘third-world countries’?

“History is about to repeat. That’s the cliff to worry about. The next decade could well yield years of virtually no growth, structural unemployment, deleveraging and incomes not even pacing inflation.” — Stagflation for a decade? Factor in the unexpected (which no one knows anything of), and there will be plenty of cats on hot tin roofs!

#13 DaleFromCalgary — “Businesses will then hire extra part-timers.” — That’s how mgmt. gets rid of unions, by letting full-time workers go and replacing them with McJob wages. It’s the full-timers who keep economies chugging along, by having the cash available to spend. Not so much the part timers, such as here. Right to work? ‘Owzaboud the right to a decent living wage?
*
Apple Smoking Man right on the money again; 4:52 clip Nigel Farage tells Ms. Merkel that the UK can shove it right where the sun ain’t shining; Headline is interesting Computer virus costs trillions; 1:34:23 doc. The new American century; Beggars Banquet Ms. Merkel wants UK in the EU; Fiscal Election Cliff and EU cuts forecasts; Citi Economic growth first, austerity for workers and sheeple next; Boeing Shake ups; China’s Flaherty? Unlikely. This person has an IQ, F hasn’t flushed his toilet yet; Disturbing Obomba’s cover.

Mr. Money Mustache on The Difficult Life; Keystone XL pipeline and Obomba; Westjet New regional carrier; Spend like there’s no tomorrow One day, there won’t; Fiscal Cliff? There are nine of them; Obomba Helping his energy friends out.
*
Political enthusiasm knows no bounds, 45 Declared Goals in The Communist Takeover of America, The Day Russia Attacks America, 6:01 clip Marxism in the US, from a retired US military person, 6:14 clip Obomba has four more years to destroy America and Birth and Death of the US; Gallup’s Polls So much for polls. The only one that matters (not really) is election day; Shake & Quake BC coast (6.3) and Guatamala 7.4; 8:17 clip The Solar System is shifting, as are the pole shifts. We don’t know, that’s all; 88 Years Married Finally taking some wedding pix; Peanut Butter Banana Chocolate Chip Cookies And that’s just for starters; The Value of Hard Assets during hard times; MSoft using Skype; Who is Valerie Jarrett? The brains behind the Obomba administration; Prop. 37 defeated in California; NOAA confirmation If GW and CO2 have been ruled out, what about HAARP? Sexy Coffins Ask Jimmy Savile about necrophilia; Dad’s Army For those who remember the ’70s BBC sitcom; Charles de Gaulle?It’s actually a well-preserved woolly mammoth; Got Milk? Get mad cow disease as well.

#61 Dazed & Confused on 11.08.12 at 2:33 am

This is the reason Washington & Colorado states has voted to legalize marijuana…to pay off the US debt. Unlike other products shipped offshore to manufacture, it’s home-grown, it will now be taxed, and the lower classes won’t give a damn what hits the economy because they will be stoned. Just sayin’.

#62 alberto on 11.08.12 at 2:36 am

PResident Evil: Apocalypse

The second game of the survival series.

very fitting title I think.

#63 earlybird on 11.08.12 at 2:50 am

Risk on…risk off markets…same ol same ol…They are not going to let the tax cuts expire, they are trying to grow their way out of debt. They will raise the debt ceiling again, because they have to! Buying opportunity for sure….

#64 Grim Reaper/Crypt Speculator on 11.08.12 at 2:54 am

Mitt Romney Style

http://www.youtube.com/watch?feature=player_embedded&v=yTCRwi71_ns

#65 groovin123 on 11.08.12 at 3:38 am

Earnings are absolutely crumbling at this juncture, more than even I had anticipated (being the doomsdayer and all LOL), capital spending being reduced severely from many corporations as they brace for impact.

Here we go. I have to admit that 2008 caught me with my pants down, and all this absolute horse-crap of currency debasement disguised as recovery and green shoots over the last 4 years allowed me to regain previous highs in the trading portfolio. I’m sincerely sorry some people bought it. Actually, no I’m not.

2008 was a “near miss” – now that the US government has printed enough money to pad all their buddies for the main event are we ready to drop the drawers for showtime? Nothing hedges a portfolio better than being stupidly rich to begin with, right?

Short S&P, long the GLD through options on election day was such a no-brainer I’d call it free money.

Anyone balsy enough to call a timeline on the demise of the long bond market?… That trade is so crowded those idiots almost deserve the financial blast furnace – although those in over their heads with debt and completely illiterate to markets will suffer the most.

STAY LIQUID MY FRIENDS.

#66 groovin123 on 11.08.12 at 3:47 am

#26 – Re: Atlantic Power Shares.

Another “blue chip” paying a huge dividend from assets they acquired through massive debt financing.

SCU.T was another taken to the financial blast furnace this week – it’s a coffee shop.

PWT, and PGF also taken out behind the woodshed.

One day, when the trade is cooked and it’s far too late, the main stream media will pick up on “currency induced cost-push inflation”. It’s something you learn in Economics 101 (literally not even trying to be smirk). Unfortunately, the majority of the muppets out there will have it beaten into them.

Imagine all this at a 5.0% central bank rate?

#67 Freedom First on 11.08.12 at 4:33 am

Nov.26/2010……How To Invest……..Greater Fool

Balance, diversity, liquidity. All covered. An excellent beginning for anyone. Expand your reading and knowledge from there. Simple. Tweak this portfolio as you go along and new opportunities arise. It is amazing how people can go 100% gold, or 100% RE. Even more amazing……the myriad of ways that people can financially screw themselves…….or by making yourself vulnerable to F doing it to you. It doesn’t have to happen, ever.

#68 futureexpatriate on 11.08.12 at 4:57 am

Driving over the cliff is, unfortunately, politically expeditious and quite necessary due to one corporate whore idiot named Grover Norquist and his groveling pledge from every right win politician to never raise any taxes for any reason, ever.

By going over the cliff, and ALL taxes being raised to prior Bush levels, IMMEDIATELY the GOP will be free of their pledge to Norquist, can compromise and vote to lower taxes on the vast middle class, leaving the taxes where they are on the 2%.

It’s mere semantics, but it will work.

And it has to be done. The 1950′s prosperity (one bread earner, millions of acres of brand new modern suburbia for almost everyone, two cars in every garage, and stay at home moms) was created by MUCH higher tax rates on the top 2%. It’s the only way to get even a semblance of that back. Plus increased prohibitive corporate taxes on outsourcing.

Yes, product prices will inflate. But so will salaries, and factory jobs will return by the hundreds of thousands.

The adults are in charge of the US now. They know very well what they are doing.

And that’s why Garth is wise to bet on the US.

And why I will probably never be my name again.

#69 Buy? Curious? on 11.08.12 at 5:25 am

Wow! Smoking Man has only posted once so far? It must be the Obama Hangover. And to think how insightful his post was too. The Market’s pull back was because of yesterday’s of Greece’s government passing €15billion in Austerity Measures, NOOOTTT the re-election of Barak Obama? Really? (tilted head and sympathetic smile) That’s so insightful, man! And there’s going to be a rally up today? Getouttahere! You’re so righteous, man. How many points? Wait, go over it again. “Markets rally…Obama….Greece….” Say it slower and in a deeper voice instead of the whiny voice you have. “GGGGRRREEEEECCCCEEEEE…..”

You should have your own blog. Oh wait! You do, let me open up a new tab here. Well, you’ve got a manly background. Purple? sure, whatever. Ooooh, you’ve got some charts! Good work, professor. Hmmm, oh there’s a picture of 3 girls in a bar with their lesbian friend with her face blotted out. She must be UGLY. Oh wait, is that you? I thought it was a woman who has let herself go. Great work, Smoking Man! I’ll make sure I come back every 6months when you update your blog with the same insightful posts you post here. Your wrists must be sore from all that cutting and pasting. I’m sure you’ve built up some significant endurance in those wrists using your computer in other ways.

Well,as a tribute to Smoking Man’s animated self.

Enjoy.

http://www.youtube.com/watch?v=OjZr3jRwLFg

#70 Smoking Man on 11.08.12 at 7:56 am

#70 Bi? Curious?

You’re creeping me out.

Stalker im thinking. every post in hounor of Me.

creepy

#71 David B on 11.08.12 at 8:06 am

The more things change the more they remain the same.

What to do? Get up put both feet on the floor and get on with your day ….. In mid 1800′s we had only one billion people doing it …. To day we have over seven billion people doing it, 7 billion! Think, there is money to be made ladies and gentlemen just selling toilet paper alone!

#72 yorel on 11.08.12 at 8:28 am

Please explain why they have a “debt ceiling” if they keep raising it.

#73 Ret on 11.08.12 at 8:29 am

Appealing MPAC assessments.

Do if all of your improvements have been legal. No basement renos, garages, etc not under permit.

Look up your neighbours’ assessments and permitted improvements on the MPAC site and check the accuracy of the info. My neighbour in Hamilton had built a 1000 sf, $125,000 addition on a $8,000 building permit. I was paying more taxes than he was! (The MPAC official almost dropped their clipboard when they saw this one.)

Three of my neighbours openly advertised student basement rooms on McMaster’s website. The MPAC info showed totally unfinished basements. Another neighbour, who is a local contractor, built a $30,000 garage with on a $10,000 permit, but that permit info. never got passed on to MPAC. (Friends at City Hall?) Another clipboard dropping moment with the MPAC official. The look on their face when they saw that garage was priceless.

Of course I sent lots of pictures of work done under those undervalued permits and copies of those rental ads for those basement rooms in with my appeal. The time window in Ontario is fairly short to do so – two or three months???

MPAC visited my home and verified my residence info and then we walked the ‘hood. They were amazed. None of their records on neighbouring properties matched what they were looking at.

The Appeal was very successful and worth the effort. I have now paid $350 or about 8% less in property taxes for two years. The appeal that pays back every year!

If you are legal, an MPAC appeal is a no brainer in any large city where thousands of illegal unpermitted construction is going on on every street. Google your neighbours’ addresses and start collecting hard copy info on those illegal suites.

#74 mythbuster on 11.08.12 at 8:30 am

The ‘great’ thing about post-mortem market opinions is that they can never be proved. Anything that ‘sounds logical’ is accepted by the financially ignorant – which is to say most ‘investors’.

Consider an alternative view to Garth’s opinion of why the markets tanked the day after the elections:

Going into the elections, Obama represented inflation (rising nominal stock prices and commodity prices) and Romney represented deflation (rising purchasing power of the US$, declining commodity prices and rising desirability of US$ denominated equities). The markets were betting on an Obama win. And he did. Once he did – it was time to cash-in the profits. ‘Buy the rumor. Sell the news’. As simple as that – or, actually, not quite so, but this explanation would do just as well as Garth’s.

#75 EIT on 11.08.12 at 8:32 am

If people want to learn more about the drawbacks of high frequency trading, they can search Dave Lauer. He recently participated in a lengthy discussion on financialse sense..

http://www.financialsense.com/financial-sense-newshour/guest-expert/2012/11/08/dave-lauer/flash-crash-will-happen-again-regulators-outgunned-and-outsmarted

.. it will cost you a buck or two… capitalists!… what can you do?

#76 Arse on 11.08.12 at 9:21 am

I beleive there will be a compromise in the U.S. where Bush Tax Cuts above $1,000,000 will expire(instead of above $250,000) and minor cuts to the budget.

In Canada we could see a slow down in GDP growth and a 5% to 10% reduction in house prices.

#77 House Horny Housewife on 11.08.12 at 9:22 am

Garth,

What you are telling us depresses me to no end.

Those next 10-15 years with little to no growth happen to be instrumental for me since they are leading up to retirement. I would like to be able to put that liquidity somewhere where it will work and earn more. Otherwise, I might as well just put it under my mattress and wait it out.

A recession/depression (at this point either word is adequate) would mean that even a diversified portfolio won’t earn nearly as much as what we were all used to seeing a decade or so back.

Depressing news indeed. Where is the opportunity in such a situation ? That is the key. Big changes always bring new opportunities but finding them is the real challenge.

HHHW

Aim for a 7% average annual growth rate over the decade, which will double your funds. I hope you have a competent advisor, because with your emotional swings you’ll fail on your own. — garth

#78 FTP - First Time Poster on 11.08.12 at 9:38 am

Here is the fiscal cliff no one has to worry about:

From Zero Hedge “Last month alone, the first full month of Fiscal Year 2013, the US government accumulated nearly $200 billion in new debt– 20% of the way to a fresh trillion in just 31 days.”

and…… “Bottom line, the US government is legally bound to spend more money on mandatory entitlements and interest than it can raise in tax revenue. It won’t make a difference how high they raise taxes, or even if they cut everything else that remains in government as we know it.

This is not a political problem, it’s a mathematical one. Facts are facts, no matter how uncomfortable they may be. Today’s election is merely a choice of who is going to captain the sinking Titanic.”

That pretty much sums up why the US is in such a predicament. It’s only the least ugly girl at the dance – for now. Read the rest here:

http://www.zerohedge.com/news/2012-11-06/it-doesnt-matter

#79 TurnerNation on 11.08.12 at 9:38 am

#12 Smoking Man

As I always say, we’re not going to rally/breakout until TLT.US gets and stays under 120 for good. For 6 months now it has not done this. And the indices have middled around a range. Still 80% in bond funds in my work RSP plan, until then. And still long TLT via calendar spreads.
Range trading. Go for time decay, spreads, covered calls, etc.

#80 Buy? Curious? on 11.08.12 at 9:43 am

Smoking Man/ Randy Marsh, I’m creepy? Let’s see, hmmm, here’s your second post of the day. You make Uncle Fester look like he runs a daycare compared to you.

#42 Smoking Man on 11.08.12 at 12:29 am

“Those of us, grey hairish, or in my case no hair all the way to my toes ladies:) I, know your a worthy rebel. Bitch slapping Hosney Harpo like you did, not much you can do to lose my respect for you.

But The chirp show is becoming more dominant here, lucky for us you’re are one democratic bad ass.

That’s why I feel like this is a second home.”

If we were to take the Pepsi Challenge on who’s creepier, you’d win. Hairless Hands down.

#81 tim time on 11.08.12 at 9:50 am

Canada housing starts fall

http://ca.reuters.com/article/topNews/idCABRE8A407B20121108

#82 Randy on 11.08.12 at 9:57 am

If you have half an acre lot and you grow some pot….enough to yield over $7,000 in sales you qualify to be a farm.

MPAC will adjust your assessment to reflect the agricultural nature of your property and voila ….your assessment and taxes will go down…

What’s the food like in jail these days ?

#83 daystar on 11.08.12 at 9:58 am

The U.S. fiscal cliff is a negative narrative for markets, without question. I’m not worried about the debt ceiling being raised, it will be raised as the U.S. government has no choice but GWB tax cuts expiring is a big problem persay depending on the context and timelines. The preamble:

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

Congressional Republicans will want GWB tax cuts to remain. Democrats will want tax increases to the rich similar to the Clinton era while maintaining tax cuts to middle class families. There may not be a comprimise and as a consequence, GWB tax cuts will simply “expire”. A clip:

Based on figures from the CBO and Joint Committee on Taxation, federal taxes would increase by a total of $423 billion in 2013, if the tax cuts are allowed to expire.[54] The non-partisan Tax Policy Center has estimated that for 83% of households in the U.S. there would be an average tax increase of $3,701[56] and The Heritage Foundation stated that those impacted by the tax cut expiry are primarily in the middle- and low-income groups, with its research finding that families would experience an average tax increase of $4,138.[57]

Lets think for a moment what this scenario (Bush tax cuts expire with no changes) would do. The U.S. dollar would rally as a consequence. After tax U.S. consumer buying power would increase. Gold will sink like a stone from a double wammy of fiscal stability and a higher dollar and since the TSX/ventures is heavily laden with gold stocks and commodities are priced in U.S. dollars, Canadian markets here would take a big hit dragging down portfolios and as a consequence, the market as a whole.

2013 growth would be moribund in the U.S. at best but at worst, a modest recession since a strong dollar helps their consumer driven economy but commodity reliant Canada would spin into a prolonged recession as a result of a higher U.S. dollar. Tanking commodities and housing would all but seal Canada’s fate likely for the next 2 years until currencies, fundamentals, markets and commodity values reset. From there, its likely that the U.S. economy would begin to ignite specifically in 2014 with a recovery in housing and jobs, only to fan interest rate flames in both nations (save U.S. housing, Bernanke has seen to it with QE3) as money velocity increases in the U.S. and with housing values where they are in Canada, Canada’s RE market would continue to tumble as credit tightens.

Canada, due to greedy banks and power hungry governments juicing RE markets to unhealthy overvalations and a commodity reset caused by a strong U.S. dollar would get hammered. Hard. Government deficits could worsen into 2014 as tax revenues decline, unemployment rises and a currency crisis could brew pushing rates higher on currency fears. If the Canadian dollar falls below .90 cents (I think it will), we could and should see modest rate hikes from the BoC before rates begin their ascend in the U.S. . While the U.S. economy ignites in 2014, 2015 and beyond, Canada’s economy spins into chronic recession until supply/demand in commodities strengthens against a high U.S. dollar, likely 2015, 2016 and manufacturing comes back with a weaker loonie. Even so, as rates climb, RE markets will drag the economy likely until 2017, 2018.

There is very little we can do to steer from this course now should GWB’s tax cuts expire but should we be surprised? It takes time to shift productivity from RE to other sectors. Where will banks go, where does the loonie need to be in relation to the U.S. dollar to shift back to manufacturing and how long will it take? This is what happens when governments and financials put their self interests ahead of the health of the system as a whole and allow, through regulation, unsustainable overvaluations in RE. We are vulnerable and can’t do much to change this outcome scenario. The only thing thats up for debate (at least with me) if GWB tax cuts expire with no comprimise is projections of how high the U.S. dollar will go against the Euro, Yuan, loonie and Yen, how far gold will fall and how long it takes to get there.

Thats the risk and what do I believe will happen? No comprimise gets worked out, GWB tax cuts expire and everything you’ve just read later comes to pass. I see changes in payroll taxation and thats it. Think about it. Are we to expect a new congress to be organized enough to comprimise with Obama and a Dem senate with less than 60 seats by the new year? I don’t expect it, not this close after an election. Both parties want what the each party is unwilling to give and there’s bitterness between them that is fresh off an election and what, they’ve got 7 weeks to do it.

Should GBW’s tax cuts expire, this means great buying opportunities in 2013 with stocks as a whole and commodities that have good demand fundamentals but for base metals (copper and nickel are my picks), only after gold nears its trough and that might not happen really, until 2014. Same goes for energy. I was bullish on energy until realizing the true extent of drilling in the U.S.A. so its no safe haven either.

As I’ve said before, the differences between an Obama administration vs Romney’s is profound particularly in oil, gold (fiscal policy) and defence. People who say there’s no difference economically aren’t paying full attention, especially with long term consequences. Sorry about the bad news bears dear gold bugs, I’m just trying to save your fanatical, all in, shiny is best cause all else is danger, behinds. Romney lost. Try using your imaginations gold bugs, with this chart instead of the usual mix of fanantic doom, paranoia and greed:
http://en.wikipedia.org/wiki/File:Deficit_or_Surplus_with_Alternative_Fiscal_Scenario.png

#84 daystar on 11.08.12 at 10:04 am

#69 futureexpatriate on 11.08.12 at 4:57 am

You nailed it. Name change or no, I hope you participate more on this site.

#85 Smoking Man on 11.08.12 at 10:27 am

As I wait for the market to open could not help going back last few weeks
posts. well Buy Courios. has been a busy lad.

Got you figured out.

no real content to contribute. just a chirp show. any idiot. can take anyones post and chirp. no skill required.

You definatly make a living in the educational industrial complex. my guess a teacher. you are a renter or still live in moms basment. rather than learn to imporve your life and learn from great men like me. you chose to surf the web for cartoons and take pot shots at people you incorectly identiy as mobing matierial.

when are you going to get it. next to garth im the show here. thousands love me. handfull dont.

you try and come accross as a intelectule but in reality you a swallow little child. opening bell time to make some loot

#86 Editor on 11.08.12 at 10:56 am

The word “Congress” is sometimes loosely used, as in the column, to mean the House of Representatives but the US Congress comprises both the Senate and the House. It’s a bicameral legislature with upper (Senate) and lower (House) bodies. Perhaps the term Congressional Representative for people elected to 2-year terms to the lower house led to the confusion, but Congress itself is both the Senate and the House.

So there you go.

Yes, but the vernacular rules. In Canada “Parliament” refers to the Senate plus the House of Commons, but has evolved to denote only the later. Similarly, ‘Congress.’ However, thos blog likes language wonks. — Garth

#87 Buy? Curious? on 11.08.12 at 11:05 am

Hey Smoking Man! Tell us agin why you said there will be a rally tuh-day? Are you positive (HIV)?

http://www.youtube.com/watch?v=5_2IR454jQg&feature=related

#88 randman on 11.08.12 at 11:20 am

Well here’s an interesting take from a Wash state journalist….

“The WSJ is wrong in saying that the government tried to stem the bubble, in fact, the (Stephen) Harper administration deserves much of the blame for their “light touch” regulatory posture that will wind up costing credulous homebuyers a great deal of money on vastly overpriced real estate. The combination of low rates, lax lending standards and laissez faire regulations are largely responsible for the unprecedented and reckless credit expansion that’s pushed the market to the cliff-edge.”

http://www.counterpunch.org/2012/11/02/canadas-housing-bubble-springs-a-leak/

#89 Frank on 11.08.12 at 11:26 am

Aim for a 7% average annual growth rate over the decade, which will double your funds. I hope you have a competent advisor, because with your emotional swings you’ll fail on your own. — garth

I do not call 7% average annual growth, virtually no growth. You make no sense. I will take 5%-7% a year even at the best of times.

Then you need help. — Garth

#90 };-) aka D.A. on 11.08.12 at 11:42 am

Now this is a development which will have a negative impact on a significant economic engine of the local Kelowna economy. That Kelowna industry has likely lost a couple of its key markets. And make no mistake, this is BIG industry in Kelowna.

http://tinyurl.com/baaa7n6

#91 The Tree Hunging Froggy on 11.08.12 at 11:42 am

Not many of them around here, eh?

You’re posting a ten year forecast… what about resource depletion? You know, farming land, oil, water? Sure, climate change is a myth, but still…

Saluts from Québec!

#92 Uwinsome on 11.08.12 at 11:43 am

Goldman warns that housing market risks could be greater amongst some in the “high flyers” category including Canada

http://www.cnbc.com/id/49740329

#93 };-) aka D.A. on 11.08.12 at 11:43 am

Sorry here is the direct link to that story…

http://www.castanet.net/news/Kelowna/82962/Activists-on-a-high-after-US-dope-vote

#94 oups on 11.08.12 at 11:46 am

that should be “Tree Hugging”

Thanks, Garth… 8-)

#95 gold is money on 11.08.12 at 11:49 am

wrong. markets tanked yesterday because the banksters and their media partners tanked them, then the banksters picked up all the stock sold into the mini panic, which they will sell back to the marks on up days when the media plants feel-good stories.

You are also wrong about the market factoring in a romney win in the past few weeks, the market for the most part, like the gamblers on all those gambling websites predicted an obama victory for quite some time now.

the fiscal cliff is already factored in, why?- because it is a known entity and widely hyped. A possible expansion of QE3 in december and beyond is not hyped, thats why the shorts will be surprised when commodities and equities go much higher, and Garth gets another shot at hating on crazy gold prices …… well above $2000

#96 Buy? Curious? on 11.08.12 at 11:54 am

Bwahaha!!! Smoking Man, you are serious? Bwahaha!!!

http://www.youtube.com/watch?v=QhTiJEYqqY8

You’re so right about being the second biggest thing on this blog!

How much money did you make already? A million shorting Assholes shares? Sorry buddy, In your case especially, Supply out-weights Demand.

T.K.O via my intellectual hammer.

#97 Not 1st on 11.08.12 at 12:08 pm

Garth, this fiscal cliff is a foregone conclusion. The Republicans just said they will allow revenues only to increase under tax code, not rate increases. This is just tinkering around the edge and might raise maybe 25-50 billion a year or so. Assume Obama brings a similar amount in spending restraint and you have maybe a total 100 billion “Grand Bargain”. The annual deficit is 1 trillion so they just continually lose ground albeit a slightly slower pace.

Obama will have to wait 2 years to knock the republicans out of the house to do anything more drastic.

#98 arctodus on 11.08.12 at 12:18 pm

Forest and trees…..people can never tell the difference.

The USA is not, will not and cannot ever stage a “recovery”. Funny thing is…neither can any other nationstate on this planet.

Energy wall…hit in 2005/2006…..downhill since.

545 (read pres/supreme court just/senate/congress) overentitled individuals will not change this hard fact of existence.

For all the pontificating, hand wringing, whining, cringing, lying, jabbering of tailless monkeykind…….there will never be an acknowledgment of this gigantic beast crouched over the carcass of modern civilization….

Keep on, keeping on folks…..just do not think that things will ever be even close to what your parents were born into…..

and do not think you are “entitled” to sweet f all,
entitlements belong in fairy tails and to those with the guns.

#99 Tony on 11.08.12 at 12:22 pm

Re: #28 Smell on 11.07.12 at 11:36 pm

To put it mildly, hint get short U.S. housing stocks that will be the next big opportunity.

#100 Uwinsome on 11.08.12 at 12:29 pm

Condo sales dropping on Toronto

http://www.citytv.com/toronto/citynews/life/video/234763–condo-sales-dropping-in-toronto

#101 Steve on 11.08.12 at 12:31 pm

New home prices reflect labour and material costs, and constitute a small part of the overall market. Regardless, this ‘increase’ equals prevailing inflation. Irrelevant. — Garth
_____________________________________________
New home prices also reflect what the market will pay. The price of new homes still edging up is consistent with the idea that prices will continue to rise/hold for some time after volume drops and inventory increases. As resale prices slide, pressure will build on new home prices too. Enough pressure (slow sales) will lead to incentives first (free this’n’that, decor bucks, etc) and eventually to lower declared prices. The incentives track will delay the drop in prices for new homes and this is the path the developers will most likely follow as far as they can ride it out.

#102 alohajim on 11.08.12 at 12:38 pm

” But there’ll be no collapse, no failed banks, no reason for cupboards full of Cottonelle, Starkist or Purina. People with balance, diversity and liquidity in their investments will be fine. People with only houses won’t.”
If balance and diversity means stocks and bonds and liquidity means fiat currency I respectfully disagree. Bankers creating currencies from nothing in shocking amounts worldwide and an overload of debt everywhere is the problem. One fine day people will begin to question and have some doubts about banker credit. When they do they will want some gold and silver. Look at the PM charts and more importantly the chart tracking purchasing power. Then protect yourself.

#103 What R U Smoking on 11.08.12 at 12:51 pm

Good news Smoking Man

http://www.vancouversun.com/news/national/Supreme+Court+Canada+rules+Pfizer+Viagra+patent+invalid/7518320/story.html

#104 live within your means on 11.08.12 at 12:51 pm

#74 Ret on 11.08.12 at 8:29 am

Years ago we tried to convince an elderly couple next door to appeal their assessment. Their home, in comparison to others on the street, was over assessed in value. They never did. When they both ended up in nursing homes, their 3 children, all Drs., got rid of everything very quickly & put it on the market. A contractor we know finally bought it, did some renos inside & out – too open concept – & it took 6+ mos. to sell it. Both DH & I visited it & just said Yuck. We like open concept, but it was too much. We think our contractor friend lost money on it as we know what our new neighbours paid for it. BTW, contractor owns 9 homes – most of them rentals & he’s told us horrifying stories of tenants.

And yes, he did outside renos on our house – thankfully – as he discovered our house would have collapsed because the original builder didn’t grade the land properly so carpenter ants ate the un-woolmanised (?) sills. We even discovered dead mice (many babies) that ate through several areas of the gyproc in the back basement & behind furniture in the heated family room in the basement. We seldom spend time there so didn’t smell them.

#105 picasso on 11.08.12 at 12:58 pm

He’s obviously a Brit

#106 Form Man on 11.08.12 at 1:01 pm

#102 Steve

you are correct. In our development in Kelowna, we have lowered prices for new sfh over 20% from where they were in 2008. The actual construction costs have remained constant, so we are achieving the savings by lowering the land cost. This is possible for us as we aquired the land in 1996. For those developers who aquired land at the peak………..not good……..

#107 anotherwhistleblower on 11.08.12 at 1:15 pm

I believe that the stock market malaise and debt is a structural end game by liberal governments around the world to confiscate private wealth. The stock market like gold represents a threat to liberal hegemony and to the liberal mind set all freedoms must be eliminated. Government and the power of the unions can only grow if the rest of us are so dependant that we cannot resist the lure of welfare cheques and handouts.

Of course the civil service dan’t worry about wealth confiscation of assets …they know they don’t have to save for a rainy day…they have their fat greasy pensions till death and spend like drunken sailors because of it. It’s as if we have a two tier tax system…the people have 80% of their net clawed away taxes and fee’s and the civil service has all it’s paid taxation rreturned to them by way of fat guaranteed monster pensions…net result…workers end up with nothing and the fat elite unions carve both the turkey and get to slather the feast with gravy…..it’s a really sick system.

Meanwhile……investing in the stock market is a thing of the past…dead money will be inflated away while people see government handouts increase. Old age for working people will become like a scene from Main & Hastings.

You have been warned in the past, under other pseudonyms, of dumping this crap here. This is the last one. — Garth

#108 Doug in London on 11.08.12 at 1:17 pm

So it’s the same drill as in August to October last year. In the same way that a governor responds to a drop in speed (haven’t I described this idea before?) by pulling the throttle open to produce more power to restore the speed to the desired value, if and when a drop in the stock market occurs, BUY MORE!

By the way I’m disappointed. I heard that with the re-election of Barack Obama (whose government stopped the Keystone Pipeline project) that shares in TRP had dropped. It only went down $1 to $45 and change. I was hoping for more, and thus a good buying opportunity! Time to sign off now and see what else is on sale.

#109 Humpty Dumpty on 11.08.12 at 1:17 pm

History always repeats itself….

http://www.theglobeandmail.com/report-on-business/international-business/fear-of-catastrophic-event-holding-back-global-recovery-harper-says/article5032578/

Currency wars = trade wars = world wars….

Them sheep and gold look pretty good in a couple of
years from now there G….

#110 Grim Reaper/Crypt Speculator on 11.08.12 at 1:20 pm

# 106 live within your means on 11.08.12 at 12:51 pm

Let me guess…the contractor was either Greek of Italian..only difference is one tend to have more homes before Grade 7 than the other.

BTW I am an excellent landlord…never had any complaints…other than the odd practical joke.

#111 Canadian Watchdog on 11.08.12 at 1:27 pm

Frank Stronach resigns from Magna board to pursue political career in Austria Link

Time to flee Canada. Thanks for all the taxpayer subsidies. Bye bye.

#112 anotherwhistleblower on 11.08.12 at 1:33 pm

Harper bows to Sikh extremists hiding in Canada and using Canadian funds to promote violence in India…taking a page from the Liberal handbook….HUH? He has allowed the iliberal mmigration policy of huge numbers of Punjabi radicals to raise money and send it to India. He has continued the practice of allowing the organized criminal element to shelter here and raise money through drug production and money laundering
. If another FLQ were to hide in Vermont and be fomenting violent revolt wouldn’t we demand the US to stop them and send them back for justice?

http://news.nationalpost.com/2012/11/08/harper-says-he-wont-interfere-with-rights-of-canadian-sikh-separatists-unless-they-turn-violent/

He wants trade with India but panders to the few hundred thousand radicals that the Liberals imported into BC by the Liberals when they were trying to establish an immigrant based beachfront here? If we want to trade with India we should respect that the Sihk murderers hiding in Canada must be extradited back to India….just as we would expect if a murdererous rabble from Quebec went to hide in Cuba. What hypocrisy !!!! Sihk ectremism has murdered hundreds of thouands of innocents in the Punjab and around India…..why is Canada asking for trade when we are sheltering criminals and openly supporting a terrorist cause?

Any further posts in this vein will be deleted. — Garth

#113 Barry Lainof on 11.08.12 at 1:42 pm

Let’s assume that the US politicians are smart (I know a big leap). Lawyers, MBA’s, business owners, Ivy League schools, etc. (sound pretty smart to me)

Politically, no party can be seen to give in or “lose face”. So they agree to what they called a deal regarding sequestration. Taxes go up, spending goes down automatically without an agreement.

Neither party wanted to upset the US voters prior to the election and the next election of any politician in the federal government is two years away as of today. So they agree to this massive cut in the deficit (note that they still don’t deal with the debt of 16 Trillion plus).

So what happens at the fiscal cliff. They both jump !!!

What results ? Reduced growth ? Already happening, look at commodity prices. Look at the trend of Canadian oil and gas exports to our largest trading partner. Forget about any pipeline going south or west for the next 2-3 years.

So with the fiscal cliff – taxes go up federally, government reduces employees (military, high priced government workers with high priced pensions, education transfer payments from DC, etc.).

Desired result achieved and blame can be equally sent to both political parties. This sounds like a pretty smart deal politically to me.

I agree with Garth about being liquid, however US dividends may be under pressure 2012-13. With 2012 tax loss selling, potentially higher dividend taxes, yield being chased by all investors and institutions, mortgage lending tight in the US and boomer demographics forcing withdrawals from ETF’s – the US stock market and real estate market may be under immediate downside pressure.

Canadian REITs, bank preferreds and insurers may be good down the road, but as all boats rise with high tide – the opposite will most likely occur in the short term (investors may sell their profitable stocks to cover for resource stock losses, remember your investment companies will do what is necessary to get their yearned bonuses) Be safe out there fellow semi-retired and retired investors. As Warren Buffet preaches, don’t lose money and when the tide goes out – we find out who has been swimming naked.

#114 anotherwhistleblower on 11.08.12 at 1:46 pm

The Consumer Disaster

The most important financial story of the morning is the Federal Reserve’s misnamed “Consumer Credit” report. Not just because it’s really about consumer debt – how deeply in hock we are, but because it paints a horrific picture for just about every listed stock in the USA. Why? Because spending is dead.

The Fed is skirting a very dangerous area which happens in every Depression: When consumer spending collapses, the right/proper role of the Fed is to lower rates and try their damnedest to push money into circulation so that spending resumes and – with any luck – jobs are created.

BUT that isn’t happening. What last night’s lackluster report showed was that while nonrevolving spending was up 9.2% in the most recent month, September, we need to recall that this is the month when what happens? People go back to school. And since student loans are in the non-revolving category, the August and September figures (tuition is required in advance by most schools) we can account for a majority of the blip this way.

Overall, then what’s the picture?

“Consumer credit increased at a seasonally adjusted annual rate of 4 percent in the third quarter. Revolving credit decreased at an annual rate of 1-1/2 percent, while nonrevolving credit increased 6-1/2 percent. In September, consumer credit increased at an annual rate of 5 percent.”

All of which would be hunky-dory IF money held its value, but, of course, it does not. Instead, when we look at the Fed’s H.6 Money Stocks report, we see that over the past year, M2 has increased 6.8% while M1 is up 12.2%.

To be sure, the swindle of the Taxpayer was set up by Bubblemeister St. Al when he decided to bury the M3 report – which is a really good measure of things for reasons that don’t pass the smell test. Except central bankers don’t do well with transparency – they have an aversion to it since ifs totally revealed, their pumping schemes would scare the hell out of the public, effectively neutering them. Whether that is a good idea, I will leave to your judgment.

Still, M3 is out there – over at my friend Trader Bart’s site where he diligently reports it on a periodic basis. And if you ogle the annual change rate of M3b (reconstructed) you’ll see M3b is going up about 4.2-4.3% annually.

So now we look back at the Consumer Debt report: “Consumer credit increased at an annual rate of 5%) and this was with school tuitions in the mix.

With America facing the imminent fiscal cliff come year end, and despite the appeasement talk from John Boehner offering pseudo-compromise, with the likes of Harry Reid lurking about, our confidence in a workable solution that will provide for job and income growth is (try to look surprised here) about zero.

So here’s what we might reasonably expect: The market is losing confidence in future earnings which still dictate prices to some extent. As a response, company managements will blow out as many employees as they can in Q1 and Q2 in order to “make their numbers” and this, in turn, will result in persistence/pernicious unemployment which is continuing to climb as the service economy feels the lack of discretionary income.

Worse? As the lack of discretionary craters the services sector and the internet continues to offshore both remaining jobs in America, we see the headlines already beginning to roll; Caterpillar is planning ‘em, Beechcraft is planning some (and plant closures), SUPERVALU is planning to whack 700 from one of it’s subsidiaries…and the tearful list is just ramping up. There’s Research in Motion, TurboCare, and on it goes.

Horrific? As the layoffs are coming as a time when what is the largest tax increase in history (Obamacare) shows up, we expect to see even more personal bankruptcy filings.

If you look at figures from the American Bankruptcy Institutes web site, you’ll see that non-business (humans) bankruptcy filings last year totaled 1,362,847. I’m willing to bet that the number will be going up this year, especially as we move forward in 2013 – 2015 where the collapse of the service sector seems likely to pick up speed.

Don’t me to start crying in the coffee this morning, but the reason the markets tanked yesterday was that it’s telling us something about the outlook for next year. And oh surprise, surprise: It ain’t pretty.

What We Need Is….

A new Tax! Why, sure! When common sense and existing laws don’t move along a balanced budget mythology, what not just jam up taxes? Latest rumored move is a Carbon Tax.

No, I’m not an environment-wrecker – I get that. I’m an economists sort and that means when I see something like Carbon Tax I immediately go to “Rut Roh…Scooby sees another reason for the six remaining US manufacturing companies to flee overseas….”

And with that go even MORE of our pitiful manufacturing base. FMTT – what we need is a tax on everything from China that was ever made in America to pay the unemployment of those screw out of jobs here by VC outfits that are cutting a fat hog on destroying America. New World my butt. Why don’t we have import and export fees on money?

Good going globalista slime….Seriously: Who’s gonna call ‘em out on it?

Weakly Unemployment

Just out:

“In the week ending November 3, the advance figure for seasonally adjusted initial claims was 355,000, a decrease of 8,000 from the previous week’s unrevised figure of 363,000. The 4-week moving average was 370,500, an increase of 3,250 from the previous week’s unrevised average of 367,250. The advance seasonally adjusted insured unemployment rate was 2.4 percent for the week ending October 27, a decrease of 0.1 percentage point from the prior week’s unrevised rate.

The advance number for seasonally adjusted insured unemployment during the week ending October 27 was 3,127,000, a decrease of 135,000 from the preceding week’s revised level of 3,262,000. The 4-week moving average was 3,227,750, a decrease of 38,500 from the preceding week’s revised average of 3,266,250. ”

Change…speaking of which it’s….

National Sour Grapes Week

Say, don’t know so’s you’d noticed, but I’m no particular fan of the Obamanistas in Washington. BUT, at the same time, I’ve still got some confidence left that America will decide at the polls what’s best for America, but only just some since I know that a billion dollars went into buying this week’s outcome.

Still, once the vote is in, I’m willing to get back on task, and refocus on the way ahead – whatever that is. Seems, though, like I’m one of the few. For example there was a reelection of Obama protest at the University of Mississippi which resulted in some arrests.

At some point, we just gotta move on…

The Extraterrestrial Investor

I got to thinking this morning about what would be a really good measure of humans – I mean overall – as a planet. I think it would come down to making an investment pitch to an extraterrestrial visitors that wandered by from another dimension.

So how does Earth and Earthlings look this morning look? We have a still contested election, though the majority was clear. We have a monetary system that doesn’t “store value” unless you are constantly “flipping” to avoid the underlying money’s nasty habit of becoming worthless slowly over time.

And then we have global markets like China (down 2.4% last night), Japan, (down 1.5% overnight), Europe which is a whole septic tank of finance in and of itself (though remarkably France and German are up a bit, as are the Brits).

#115 Penny Henny on 11.08.12 at 2:01 pm

To #106live within your means.

Re:Both DH & I visited it & just said Yuck

Question- What does DH stand for?
Dumb Husband?????

Penny Henny

#116 ronthecivil on 11.08.12 at 2:08 pm

There will be no comprimise. It’s over the cliff.

It will make for some good buying opportunities next spring.

The cliff is good. Well, in the long term at least.

#117 };-) aka D.A. on 11.08.12 at 2:22 pm

#108Form Man on 11.08.12 at 1:01 pm
#102 Steve

you are correct. In our development in Kelowna, we have lowered prices for new sfh over 20% from where they were in 2008. The actual construction costs have remained constant, so we are achieving the savings by lowering the land cost. This is possible for us as we aquired the land in 1996. For those developers who aquired land at the peak………..not good……..

Interesting….

So if, for example, you had a $300,000 product you were offering for sale in better times you are now offering that same home today for 20% less or $240,000?

For example: Land cost might constitute a third of that once $300,000 homes value or $100,000 which you are suggesting you have now discounted by 20% of the whole to $40,000 ($100,000 – ($300,000 x .2) = $40,000). So now you’d have a $200,000 cost to construct home on a $40,000 lot for a total of $240,000.

Let’s do the math for a $500,000 home ($165,000 lot and $335,000 build cost) which would now be a retail offering of $400,000 after the 20% discount so what you are suggesting then is a $335,000 build cost on a $65,000 lot?

Bullshit. DCCs alone (Development Cost Charges) would eat up too much to make that anything but a charitable endeavor. And I don’t believe you to be such a philanthropist.

#118 World View on 11.08.12 at 2:34 pm

Garth seems pretty optimistic about the US growth prospects. But one should measure it in CAD. The CAD has significantly appreciated vs USD and if you measure it in swiss francs then S&p 500 had hardly appreciated until the Swiss decided to kill their own currency. I suspect 4% growth will happen!!! But even if it happens, it may not mean anything (for us) if other currencies appreciate w.r.t USD. The assets in US have to appreciate at a rate faster than the depreciation in USD vs other currencies. And I strongly recommend looking at forecast errors by pundits and the FED in the past.

When did we turn into Switzerland? — Garth

#119 GTA Engineer on 11.08.12 at 2:50 pm

#120 World View on 11.08.12 at 2:34 pm

—————-

Good point, and the main reason I watch and invest not in SPY but XSP -> S&P500 indexed to the Canadian dollar.

#120 Form Man on 11.08.12 at 2:59 pm

#110 DA

construction costs vary my sad little friend, and you forgot to account for markup. A home we would have sold for $500,000 in 2008 now can be had for $400,000…….

pay attention DA ! things have changed. Prices are continuing to fall because the MOI is well above 7. In addition starts are falling in Kelowna. So far this year starts are down 16% from 2011. Sales volumes are at 2001 levels ( when the population was 20,000 less ).

Now with the oil patch slowing down and Vancouver’s housing bubble popping, there is little on the horizon to suggest any change for Kelowna anytime soon.

Be a responsible realtor and tell your buyers of these facts so they make informed decisions……..

https://www03.cmhc-schl.gc.ca/catalog/productDetail.cfm?lang=en&cat=58&itm=1&fr=1352400845193

#121 World View on 11.08.12 at 3:01 pm

@Garth…Hey… I talked about Swiss Franc because I thought Garth kept his money in Swiss bank account :-)

#122 jess on 11.08.12 at 3:03 pm

Scott in Gibsons

i agree that machine algo’s replacing the million $ traders
=========================

…”Wall Street salivates at the prospect of any privatization of social security. This would lead to them being able to charge tens of billions of dollars in fees annually and the banks that administered the privatized program would be systemically dangerous institutions (SDIs) because the consequences of allowing bank failures to cause tens of millions of Americans to lose their retirement savings would require either that all such deposits be federally insured or that the failing banks be bailed out by the federal government. Privatization, therefore, is a convenient fiction. The banks’ profits will be private; any catastrophic losses will be borne by the public. The SDIs’ already massive political power, often exerted through front groups like Third Way.”….

http://neweconomicperspectives.org/2012/11/wall-street-urges-obama-to-commit-the-great-betrayal.html#more-3643

=
http://www.thirdway.org/about_us
http://www.huffingtonpost.com/eric-laursen/the-can-kicks-back_b_1848474.html

#123 Dupcheck on 11.08.12 at 3:27 pm

China the biggest communist country owns the biggest democracy in the world, the US by owning its debt. What does that tell you?

Communism owns democracy, we are all slaves pretending to be free. There will always be another box outside of the box.

#124 TheBigLebowski on 11.08.12 at 3:28 pm

Don’t believe your lying eyes. Believe self proclaimed experts. Sell low and keep selling whenever it drops. At least that is the advice for the shiny money

#125 Daisy Mae on 11.08.12 at 3:29 pm

#38 Don: Some practice ignorance on purpose as they do not want to deal with the less than rosy outlook. I, on the other hand would prefer to know where I stand (baseline)….

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

I agree. Garth isn’t responsible for the present state of affairs. He’s keeping us abreast.

#126 Old Man on 11.08.12 at 3:37 pm

I had a bad day today at the shopping center, as this man was sitting outside with a sign being homeless, asking for help, so gave him $5.00; he said thanks. We talk about real estate, but some do not have a place to live. So this cop came up, and told him to move along, and saw something, and said see you have been to the east and have travelled those parts myself, so go give out some traffic tickets, and leave this man alone. He saw something too – scottish rite -. I said you can leave now, as will make a phone call for him to get a place to live, and all will be well.

#127 anotherwhistleblower on 11.08.12 at 3:54 pm

DELETED

#128 JustTryingToProtectEquity on 11.08.12 at 3:58 pm

Hi Garth, no need to post this. Just wanted to say thanks for what you’re doing. It must be very difficult to read all of these posts. But you have helped many, many people and you must be commended for it.

#129 Uwinsome on 11.08.12 at 4:01 pm

David Rosenberg is bearish -surprise. Watch him on Squawk Box this morning.

http://video.cnbc.com/gallery/?video=3000127074&play=1

#130 Smoking Man on 11.08.12 at 4:22 pm

old man that was a shibilith of a story bro

#131 Old Man on 11.08.12 at 4:40 pm

I will never forget about the pump and dump scam with Rona via Lowes at $14.50 a share, and the Quebec pension fund went in with the franchise buyers to buy this dog at the top, and is now selling at $9.30 – omg what a scam with $100 million to be written off over time called the new plan to reorganize it all – LOL.

#132 Buy? Curious? on 11.08.12 at 5:05 pm

Smoking Man showing some half-assed empathy? Gwan, tell us how you faced some similar hardship? Was it the time you told a teacher that they were wrong? Or the time the Tim Horton’s cashier wouldn’t accept your winning Roll Up The Rim cup?

Thousands love you, handful don’t? Bwahahaha!!!!

Don’t do a blog, do a reality show! Oh wait! You’re shy.

#133 peter on 11.08.12 at 5:09 pm

Stocks down for a 2nd day in a row. SPY celebrating the Obama victory down over 4% in the last 2 days. AAPL getting crushed now below 200 day MVA and off 23% from its highs.
Gold picks up some traction. This must all be Greece’s fault.

#134 live within your means on 11.08.12 at 5:20 pm

#109 anotherwhistleblower on 11.08.12 at 1:15 pm

You have been warned in the past, under other pseudonyms, of dumping this crap here. This is the last one. — Garth

………………

Thank you Garth. I’m so sick of the likes of posters like him.

#135 Victoria on 11.08.12 at 5:24 pm

This might have already been posted – Rick Mercer on the secret China deal.

http://www.huffingtonpost.ca/2012/11/08/rick-mercer-canada-china-deal_n_2094126.html#slide=389005

#136 live within your means on 11.08.12 at 5:25 pm

#117 Penny Henny on 11.08.12 at 2:01 pm
To #106live within your means.

Re:Both DH & I visited it & just said Yuck

Question- What does DH stand for?
Dumb Husband?????

Penny Henny

It means Dear Hubby. He is anything but dumb.

#137 Tony on 11.08.12 at 5:49 pm

Re: #133 Old Man on 11.08.12 at 4:40 pm

I’m of course still short RONA it’s just like Yahoo but at least Yahoo looked like a company with a future. Takeover talk but very overpriced just like RONA. Both takeovers fell apart because of absurd valuations. I still think the smart money will be the people who get short RONA when it falls below 2 dollars. Don’t worry RONA will still trade at a few cents for quite awhile before the company packs it in.

#138 live within your means on 11.08.12 at 5:52 pm

#128 Old Man on 11.08.12 at 3:37 pm
We believe in donating to those less fortunate than us. Year I retired, I was told by a lady who was in charge of the United Way Campaign, that I had donated more than anyone in our office of about 150. I’ve seen many street people begging. I refuse to give to the young ones, begging at certain intersections with their dogs. One morning on the way to work, a middle aged man was begging. Instead of giving him money, I said come with me & I’ll buy you breakfast as I wasn’t sure, if I gave him money, what he’d spend it on. Thought over the years of donating time at a ‘soup’ kitchen, but our local one is in a bad area of town & I’d worry about my safety, etc.

#139 Lawrencej on 11.08.12 at 6:16 pm

“A compromise, of course. Like me, it was late and messy, but it did the job.”

I’m a big fan of your blog, Garth. Although on occasion I tire of your shtick. In this case however I think you have delivered one of your most priceless lines yet. It was worth the pain.

#140 Snowboid on 11.08.12 at 6:21 pm

#116 anotherwhistleblower on 11.08.12 at 1:46 pm…

Wow, 1263 words, why not use a link instead…

http://urbansurvival.com/week.htm

Aren’t you supposed to be chilling in Thailand now, anyway?

#141 brainsail on 11.08.12 at 6:43 pm

I was reading the following article today and one of the responding comments jumped out at me. Wow!

“Two-Tier Global Housing Market Could Lead to Bubble: Goldman”

http://www.cnbc.com/id/49740329

“In Canada you can buy a house with as little as 5% down on a maximum 25 year mortgage, however, that is considered a high ratio mortgage and you must buy insurance through CMHC which adds a monthly charge onto your mortgage costs. If you have 20% or more down you qualify for a conventional mortgage and you don’t have to pay insurance. The reason that housing in Canada didn’t crater is that we have not allowed home owners to use their homes as cash machines. Out of the entire 1.5 Trillion in consumer debt fully 1.3 Trillion of it is mortgage debt, so really the remaining 200 billion is the total indebtedness of the population (think car loans, cottage loans, home improvement loans)

This low level of consumer debt makes things much more stable. “

#142 Smoking Man on 11.08.12 at 6:54 pm

#141 live within your means on 11.08.12 at 5:52 pm

Why would you ever give to an organized charity, that’s insane. only 25% makes it out to the ones that need it.

In Vegas young guy on the bridge had a sign kick me in the balls 10 bucks. I gave him 100. and never kicked him. shot the shit, he lost everything but con-fest he was wearing a jock. LOL Now that’s creative

If a homeless any age, or even pretend homeless who ask will get from me anywhere from 2 to as high as 100 bucks if they have a good story and take time to tell it.

#143 Trev UK on 11.08.12 at 6:56 pm

Whistleblower is you or your family must of come from somewhere? why don’t we ship you back? Sikh here in the U.K as in Canada are hardworking respected citizens. They worked low pay hard jobs the locals here didnt want to do and it’s paid off they own more property second only to the Jews in U.K and they came here with nothing only 50 years ago! I know your kind in Canada hide behind curtains to spew your hatred (you chicken shit). I can’t wait to come to Vancouver again and meet all those great Sikh (Punjabi), chinese, Iranian , black & white Taxi drivers. So much still to learn our kid : )

#144 Old Man on 11.08.12 at 7:07 pm

# 140 Tony – close out the short position as greed can become a killer, as I did today. Now how many know that Rona trades in USA under rona.f. us OTC? Ok so who controlled the pump and dump with a non binding offer? The Board of Directors, and all their family members with shell accounts just before the Quebec election to make untold $millions. It is time to take profits and run on this dog called Rona.

#145 Smoke Free on 11.08.12 at 7:14 pm

Smoking Man always says
to look for the Batman in the share price graphs
’cause those are the companies,
who are going to make or break…

So look, and keep the Batman in your memory,
so you can give the police, or the hypnotist
a damn good description!

And don’t forget, to watch for the Smoking Man on Garth’s blog
He sends messages you know —-
like who’s gonna be the next Obama!

So if you watch and learn,
You can predict all the great market gains and losses
and Canada will sing your praises
YOU’LL BE A HERO!

Nostrademus watches the share price index
Bet you knew that, right?
Well he does!

And careful with the Real Estate agents,
the ones who pimp debt, I mean
’cause its all a big conspiracy!

And one day those HELOCS have to be repaid
and will suck away all the middle classes’ wealth!

#146 Herb on 11.08.12 at 7:24 pm

#143 Snowboid,

well done.

#147 };-) aka D.A. on 11.08.12 at 7:45 pm

Form Man;

I get your industry a lot better than you know Form Man. The new house market is quite different than that of resale. They do teeter totter back and forth though and with some patience your day will return.

I don’t disagree with you that today you can have built a home for $400,000 which would have cost you $500,000 in 2007/08. But resale not so much. Prices are fluid on the way up but very sticky on the way down. There are two things sellers hate most: 1.) selling for less than they paid and 2.) selling for less than their neighbor did. Of course a non existent dwelling does not suffer from either of those two influences. And maybe more pertinent is that often there is no wiggle room ‘profit’ available affording the owner of a resale to adjust their price.

New construction today is cheaper than it was for a variety of reasons:

During exuberant times developers are quick to create new lots for builders to build upon so that they can sell to buyers who are panicking that if they do not buy they might be priced out of the market forever. Where do many of them buy when inventories are so low? They buy on the fringes where land is available to build the new inventory of homes that fill the void. This might be why you are so fixated on the 7 M.O.I. stat as being a builder with new product on the fringes in the face of a demand that is now two thirds what it was you are no doubt experiencing some hardship. “Ice cream truly does melt from the outside in”. The lost demand is that for new on the outskirts Form Man not so much the established neighbourhoods.

New construction is less expensive today because we have more inventory and there is no need for additional units to be built. So many subtrades – - those typically who work out of their truck – - are dropping their rates to attract work thus reducing the total cost of construction. Additionally many of the materials are less expensive today due to that supply and demand situation but also technology and economies of scale too are pushing those prices down too. All one has to do is check out the price of hardwood, granite and stainless to see this is true. Sure copper is up along with some other inputs but it’s a moot point as we both apparently agree the cost of building a home today is less than it was five years ago. The real question is “WHY?” The reason why is that, as you pointed out and I do agree, demand is back to where it SHOULD be which is two thirds what it was at the peak of the market before it increased by 50%. Get it? Up 50% back down 33% puts us back where we were to begin with.

Yes volumes are indeed back to 2001 levels and so they should be as we did build too much inventory when times were exuberant and we do need to work through that inventory just as you say. BUT, in the resale sector closer to the inner core of the ice cream we are not at all experiencing so much of a ‘melt’. The homes which were built in the time 2002 to 2008 were so built because there wasn’t at the time enough inventory in the resale market to service that 50% increase in demand. The lack of homes closer to the core of the ice cream drove frantic buyers to the fringes where yes indeed they are now experiencing a melt as demand has, rightfully dropped of 33%.

But more to my point Form Man is that you dabble in that area of the market which is so susceptible to such ‘melts’ that you rely upon exuberant times to make your product a more viable alternative. You are having trouble competing with that inventory, of which today there is ample, that which buyers typically prefer not so far out on the fringes. I see it every day in my business as people from the fringes come to me with desire to move closer in to a more established and convenient neighbourhood.

In short 7 M.O.I. means NOTHING to me as I am not so dependent upon one product as you and can focus my time and attention on that segment of the markets where there exists a relatively good demand. You on the otherhand are a one trick pony and your trick just isn’t so entertaining now that buyers have more shows from which to choose.

Do you get it now?

#148 Smoking Man on 11.08.12 at 7:49 pm

#136 peter on 11.08.12 at 5:09 pm
Stocks down for a 2nd day in a row. SPY celebrating the Obama victory down over 4% in the last 2 days. AAPL getting crushed now below 200 day MVA and off 23% from its highs.
Gold picks up some traction. This must all be Greece’s fault.
…………………………………………………………………

It is Greece’s fault, more over the EU, Greece aint getting the money Till they pass a budget. Doggy wants to cut em off completely.

As far as Apple goes. My call from Oct 14

http://www.greaterfool.ca/2012/10/14/macho-in-markham/#comment-201296

I could not go long on Samsung, but this short trade is a beauty. BUY Curious, I’m up about 4 years worth of teacher salary.

Turner Nation hope you diffident Short DOL.TO as per my advice.

#149 jess on 11.08.12 at 7:53 pm

Robots

Foxconn ‘may open factories in US’
Taiwan company reportedly evaluates LA and Detroit as site for TV assembly plants owing to labour costs

=

mis selling a weasel word

http://www.guardian.co.uk/money/2012/nov/08/ppi-expose-banks-drove-staff-mis-sell-insurance

http://rowans-blog.blogspot.co.uk/2012/11/why-ppi-scandal-must-be-called-by-its.html
http://rowans-blog.blogspot.co.uk/2012/11/why-ppi-scandal-must-be-called-by-its.html

#150 };-) aka D.A. on 11.08.12 at 8:02 pm

Form Man:

You have my sympathy and I fully understand your plight but that’s the risk you take for having all your eggs in one basket. If you did indeed buy the land in 1996 maybe you were being too greedy in what you asked for each lot that you did not sell out in time to avoid being left holding the bag when the market dropped from under you. ‘Timing has a lot to do with the outcome of a good raindance’. In any event the Potlatch afterward was a success as ‘pigs did get slaughtered’.

#151 Spiltbongwater on 11.08.12 at 8:08 pm

Why would you ever give to an organized charity, that’s insane. only 25% makes it out to the ones that need it.
#145 Smoking Man on 11.08.12 at 6:54 pm

I would be surprised if an organized charity gave 25% of the money it recieves to the cause. United Way CEO earns over 600K annually, so I am sure they are happy with Live Withen Your Means donations. I gave to Make a Wish foundation, and I got so much junkmail from them, I have not given a cent since. I asked to be removed from their mailing list so that at least the kids could have a bit more money, got a reply from the CEO that it only costs 27 cents to send out the junkmail. Ya, 27 cents? LOL that is the postage, how about paper, printing, paying the printing company to send it, and to say 10K doners money adds up to $2700. Could send a kid to Disneyland.

#152 TurnerNation on 11.08.12 at 8:14 pm

Reits.

A “mini Eaton Centre” is being planned for the King West district. According to Business News Network, Riocan and Allied Properties REIT are close to finalizing a deal to purchase land owned by The Globe and Mail near the corner of Front and Spadina. The two companies plan to develop the property into “about 500,000 square feet of fairly unique and high end retail.” In addition, the project will include office and residential space, and possibly a boutique hotel. More details are expected to become available over the next year.

http://www.torontostandard.com/the-sprawl/a-mini-eatons-centre-to-come-to-king-east

#153 Ballingsford on 11.08.12 at 8:16 pm

So, I read/scanned through Garth’s blog and comments today, the different News sites, and it looks like a so/so situation.

Should I do the investment now or wait a few weeks. I’m talking Mutual Fund RESP stuff. The answers though could lead me to advice to my own investment direction.

I hate it when I buy high and it drops afterwards and think if I buy now I’ll be buying into a high period when the shits about to hit the fan.

#154 Old Man on 11.08.12 at 8:28 pm

#141 live within you means – good for you, as do all I can with the homeless, and helping the youth, as the youth in Canada will determine the future for us all. I had this problem years ago with an older woman at UofT coming unto me, and she asked me to pay a visit at her home, so said ok. I rolled up into a 100 acre estate with a huge mansion.

I cannot give this all away, but several women rushed me into a drawing room for tea, as we became friends, and called her several years later about a business deal, asking who is the CEO there, the one who makes all the financial decisions, and got the shock of my life as said that is me; she said come as we need to talk, as the deal amounted to $10 million.

One never knows who is who in life, and was shocked by it all, as she had the hand on the purse. Now must be honest as when an older woman invites me to her home in the back of my mind thought I just might get lucky, as was thinking about something else :).

#155 Pr on 11.08.12 at 8:28 pm

the Federal Reserve has refused to allow German inspectors to even view the country’s massive gold reserves “in the interest of security and of the control process“.
NOW, i am 100% sure the federale reserve is a very suspicious, share olders, organization, soon, the rest of the world will realize it too. Got physical gold!

Listen to this:
http://www.youtube.com/watch?v=lu_VqX6J93k

Are you can read this book: The Creature from Jekyll Island.
http://www.realityzone.com/creature.html

#156 Grim Reaper/Crypt Speculator on 11.08.12 at 8:29 pm

#145 Smoking Man on 11.08.12 at 6:54 pm

In Vegas young guy on the bridge had a sign kick me in the balls 10 bucks. I gave him 100. and never kicked him. shot the shit, he lost everything but con-fest he was wearing a jock. LOL Now that’s creative

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

Is Wayne Newton getting that desperate?

Anyway…..speaking of &*$%

DELETED

#157 I'm stupid on 11.08.12 at 8:31 pm

Smoking man you wrote:

Sorry Garth, Market sold off because of Greece, rumors where the rage on Bloomberg chat , that defection were rampant for the Greek vote on the Austerity. Well
So if we have another sell off tomorrow, you can put a feather in your cap that you where right.

Now if we have a huge rally, then you know it
was all Greek silly

I’m calling a Rally

Then you wrote

Stocks down for a 2nd day in a row. SPY celebrating the Obama victory down over 4% in the last 2 days. AAPL getting crushed now below 200 day MVA and off 23% from its highs.
Gold picks up some traction. This must all be Greece’s fault.
…………………………………………………………………

You have no idea what you are taking about. Keep smoking because dada land is where you live.

#158 Nostradamus Le Mad Vlad on 11.08.12 at 8:33 pm

-
#148 Smoke Free — “Nostrademus watches the share price index
Bet you knew that, right?
Well he does!”

Holy sheepshit! You know more about me than I do about myself! Gotta get myself on to Dr. Phil’s show — need major therapy!
*
9:34 clip “Bankers love wars, and they don’t care which side wins or loses.” wrh.com; Collapse “A collapse is coming. When it occurs, it will be sudden and instantaneous, much like a light switch being flipped.” and Obomba’s fiscal mega disaster plus Montana “Citizen’s United may have already destroyed itself. Wall Street donated to Mitt Romney about 8 times what they donated to Obama. And for all that cash, like Sheldon Adelson, they got nothing. Like Israel, Wall Street is waking up this morning realizing Obama is a second term President who does not need them any longer, and will not forget that they backed his opponent.” wrh.com; Second Term Ciao, western civilization; 2:06 clip I was under the impression that the US Fed was printing beyond infinity, such as here; Bristol Myers cutting 480 jobs, Russia Spending to arm satellites; US Cellular cutting 640 jobs and Husqvarna losing 600 plus Daily Job Cuts; Ludicrous Straight talk for David Cameron;
*
Chna Loading their subs up with nukes; Anti-Gun Forces Obomba’s victory means the UN can continue as planned; Iran We have only the word of the Pentagon about that “over the Persian gulf” part. And if the drone was inside Iran and headed back out, the Iranians are still justified shooting it down. Just because the burglar gets outside your home with your wife’s jewelry doesn’t mean you stop chasing him. wrh.com; Record Snow in wake of Sandy; Oz cancels full-time ‘net censorship; Tokelau 100% self-sufficiency in energy; Twitter is twerped; Global Supremacy but cycles change; Right to Farm in NDakota; Scientists Ban GMO testing in India. Banning all GMOs everywhere is better; Pakistan should be more ticked at Soros.

#159 mel in victoria on 11.08.12 at 8:33 pm

Daystar #84…

Sorry, but I have to disagree with you respecting what will happen if the fiscal cliff is not resolved well before the end of this year. In all liklihood there will be some compromises but the way I read the markets and what the charts are saying, it’ll not be enough.

In my opinion, this will result in the US$ falling,not rising as you suggest, along with global stock markets possiblly plunging and because there will be great uncertainty, and the precious metals esp gold loves uncertainty, both gold and silver will move up, possibly significantly. How the PM stocks will do in that scenario is not certain but there have been occasions the past decade they’ve done well when domestic and global markets decline.

Hey, nobody knows what will happen tomorrow never mind in a couple months. Me, I’m diversified especially into what I believe to be ‘safe’ investments…. Wish good luck to all you folks..

#160 Smoking Man on 11.08.12 at 9:00 pm

#135 Buy? Curious? on 11.08.12 at 5:05 pm

Smoking Man is Curious?

Is this you Teacher Boy?

http://www.thestar.com/news/gta/article/1277483–brampton-vice-principal-charged-with-impaired-driving-possession-of-controlled-substance

#161 Form Man on 11.08.12 at 9:05 pm

#154 DA

DA ! such anger and bitterness. It isn’t healthy for you….

That is 1996 DA, not 2006. We made out like bandits. The ones who did not do well on our Kelowna development were the MLS realtors. We always market in-house……..We would rather pass the commission savings along to the buyers, and they appreciate that……

I note you conveniently ignored the facts I presented which completely destroyed your various absurd proclamations. Looks like you have a hard winter ahead of you DA.

I will think of you while I am on the skihill……

#162 Junius on 11.08.12 at 9:09 pm

#126 Dupcheck,

You said, “China the biggest communist country owns the biggest democracy in the world, the US by owning its debt. What does that tell you?”

It tells me that you don’t know your definitions.

China is an Oligarchy whereas the US is a Corporatist Plutocracy.

#163 Ballingsford on 11.08.12 at 9:32 pm

Why not just get China to buy Canada? They are buying our Oil companies, Real Estate, and now our forests/timbrland in BC. Why not sell them the rest of the Country.

It’ll get us out of debt and back to a balanced budget.(sarcasm intended)

Or, can we as Canadians, manage our debt ourselves without the temptation of easy money and be influenced by another Country? The preservation of our resources,with Canadian ownership, should be our #1 priority!

#164 Smoking Man on 11.08.12 at 9:43 pm

#160 Grim Reaper/Crypt Speculator on 11.08.12 at 8:29 pm

This is the guy , how is that for of &*$%

watch the clip

Nope. — Garth

#165 futureexpatriate on 11.08.12 at 10:07 pm

#85 Thanks!

#166 daystar on 11.09.12 at 12:23 am

#163 mel in victoria on 11.08.12 at 8:33 pm

Time will tell. What I believe is that if the fiscal cliff is allowed to pass, the U.S. dollar will strengthen as a result of the fiscal bottom line (most widely held, 1 of every 4 dollars in currency equivalents are american) but we shall see! I like to make predictions of variables because thats what investors essentially do. If we can’t predict cause and effect then we have to play it safe right, and stick with the golden rule, buy low sell high or chase yield. What establishes low and high in the investors mind is another thing all together but I look and cause and effect and thats where I’m coming from!

Best of luck to you too mel.

#167 daystar on 11.09.12 at 12:50 am

#137 live within your means on 11.08.12 at 5:20 pm

Yeah. He’s a political operative who was likely Truthhammer reinvented. Note the change in characters the writer provides, flipping through monikers of the narrative with the same general theme. The dude is bought. Pathetic. Not hard to figure out where it truly comes from, its engineered for the same propaganda campaigns with transparent goals like this:

http://news.ca.msn.com/top-stories/controversy-over-chinese-miners-in-bc-prompts-review