Fallen assets

So far this year the S&P is ahead almost 14%, the Dow’s added 8% and the Apple-heavy Nasdaq has gained 16%. The laggard Toronto market is up a mere 3%, thanks in large part to oil. But that still beats the poop out of a GIC, especially since capital gains are taxed at half the rate of interest. Savings accounts? Pshaw. They’ve all lost money.

In the same year gold has returned zero. And now real estate is following a sales dive with a price correction. A SFH in Van or 416 is 12% cheaper than it was last Spring. The latest sale in North Toronto was a converted bungalow, which started at $1.379 million two months ago and finished last night at $1.17 million. That’s 15% below original list, whereas eight months it would have sold for 15% above asking. So the actual decline (in the seller’s pocket) is about $415,000. That’s 30%.

Here’s the thing: real assets are falling in value, and will do so in future. Financial assets are rising, and will continue. It’s a roadmap I gave on this blog a couple of years ago, and I sincerely hope you’ve been following it.

This means, simply, all those timorous beasties, doomers, nihilists, metalheads and tinfoilers who post here and sate each other with guns-&-god web sites, are nuts. There will not be another 2008, which should be crystal by now with both employment and housing on the mend in the US and nothing more serious than a miserable recession in Europe. No major American banks will collapse. No Canadian banks will even stagger, let alone fail. No hyper-inflation, because the world is closer to deflation. But no depression, either, thanks to central bank coordination.

If we were going over a looming financial cliff (and Washington’s fiscal cliff is a non-event), it would have happened in 2009. Not now. Monetary policy prevented that. Corporate profits have cemented it. All over the world, but not in Canada, consumers and companies have paid off debt, cut back spending and atoned for past excess.

Meanwhile big gains are being made by emerging markets (India is up 35% this year, for example), plus small companies, while bond yields have started to rise and prices fall. There’s no credit crunch anywhere, unless you’re trying to buy a condo in Calgary without a down payment, while Chinese growth has resumed and Apple plans on building computers in the USA.

Across most of the western world, real estate has careened lower. There are so many houses for sale in Spain that if you buy one you get free residency. UK properties are double-dipping. French housing is recessionary while American values – while starting to recover – are still 30% below 2007 levels.

Everywhere, except here of course, people have done what they felt the times demanded. Pay off debt fast. Get liquid. Become diversified. Learn the lessons of a recent time when borrowed money chased expensive assets. It’s called deleveraging and that – not any inbred economic malaise – is why the US economy was on its knees for four years. As debt is retired, spending and growth resume. This is 2013, and beyond.

All this also means those who believe Canadians can run up record debt buying houses at nosebleed levels while our incomes stagnate and we depend on a world that’s severely deleveraged, are also nuts. As lovely as she is, Adrienne Warren, fetching economist for Scotiabank, falls into this category. This week she correctly noted the American housing renaissance but missed the mark saying we will have a ‘soft landing.’

There was a bumpy landing for the Toronto couple who last night took 30% less for their home than they might have received two seasons ago. And it could be a crash landing for sellers going to market next summer. As I’ve said so many times that it scares me, we don’t need to have a ‘US-style’ housing bust to destroy the personal finances of hundreds of thousands of recent homebuyers, and seriously reduce the equity of most others. All of a sudden that strategy of aggressively paying down a 2.5% mortgage on a house which will devalue, when you could have earned 7% or more investing the money in liquid assets (and trashing the mortgage upon renewal) ain’t so smart.

In the years to come, real estate will morph once again into shelter. It won’t be a financial plan or a tax shelter, an investment trophy or a retirement strategy. Like your car, it’ll be a necessity of life that you address as required. Maybe then houses will be affordable again, and life more predictable.

Maybe we’ll even stop being scared and greedy.

But I doubt it. That’s like meeting a monkey in IKEA.

215 comments ↓

#1 SmarterThanYoo on 12.11.12 at 9:58 pm

I win, you suck, I’m first!

I see we’re off to a good start. — Garth

#2 Nodebt on 12.11.12 at 10:01 pm

Dr. Wayne sucks !

#3 Bob on 12.11.12 at 10:03 pm

Grandma got run over…
http://www.youtube.com/watch?v=MgIwLeASnkw

#4 Inglorious Investor on 12.11.12 at 10:07 pm

#150 Old Man on 12.11.12 at 6:16 pm

Nothing new from Fitts last night, but she’s always edifying to listen to. I heard her speak on many other shows and conferences where she delves deeper into themes like:

• the Black Budget –– the trillions of (stolen) dollars in off-book expenses
• Mr. Global
• The Breakaway Civilization
• corruption in federal housing programs (of which she had direct knowledge)
• how they are using labour price deflation to stave off hyperinflation (witness Michigan today, and Wisconsin and other states recently)
• her ‘Red Button’ allegory that explains how we are all willing participants in a system that is using debt to ‘enslave’ us and drain equity from our communities
• how she believes the powers-that-be are moving us toward digital money and how the information about money is more valuable than money itself

But more important, she has a real solution on how to rebuilt the American economy outside the grasp of Wall Street. I’ve never heard anyone who offers quite the analysis and ‘big picture’ outlook that she does. You’re absolutely right, she’s an amazing person, and one people should listen to.

#5 Tony Right on 12.11.12 at 10:12 pm

I took a finance class at Ivey and the professor once told us a story about how silver was once the world’s gold. He said they ended up finding so much silver in the world that it became severely devalued, making it essentially useless, so useless that people started to make eating utensils out of it, hence the word silverware. He told us that apparently Russia is sitting on so much unmined gold that is too expensive to mine because it is in the far reaches of the north and east that if one day it ever gets mined we’ll be eating with gold utensils. The point he was trying to make is that you can’t mine anymore GE stock, for example, but you can certainly mine more gold. He recommended no more than 5% of a portfolio held in gold.

#6 Smoking Man on 12.11.12 at 10:15 pm

Gartho didn’t see you at the Sheraton at lunch. You black listed no pun intended. Lol

#7 FYI on 12.11.12 at 10:16 pm

Here you go

http://edmontonhousefinder.com/edmonton-foreclosure-listings.html/details-27138394

#8 a prairie dawg on 12.11.12 at 10:17 pm

I’d give the dog the benefit of the doubt. It fell over.

#9 FYI on 12.11.12 at 10:18 pm

Foreclosure with Reduced Price!

http://edmontonhousefinder.com/edmonton-foreclosure-listings.html/details-27138394

#10 sluggo8 on 12.11.12 at 10:21 pm

“In the same year gold has returned zero”

Incorrect.

Gold opened 2012 at ~1548US, it is currently 1711US.

That’s about 10%.

Gold one year ago $1712. — Garth

#11 renters rule on 12.11.12 at 10:27 pm

the cat did it

#12 Chasicakes on 12.11.12 at 10:28 pm

I used a rent to own calculator in the Globe today. If I change the appreciation value to zero (it won’t give me the option to depreciate..funny huh) and I add reasonable maintenance cost of the condo I presently rent in Vancouver. My condo rental would have to come down in value by 60% in order for it to make sense for me to buy (and that assumes there would be no special assessments). This is going to be nastier than I thought in the condo world. Glad I sold a year ago!

#13 ChickenLittle on 12.11.12 at 10:29 pm

I watched Suzie Orman 2 nights ago when I was in Michigan. She sure is singing a different tune these days. A few years ago she was on Oprah berating a couple who were renting. Her advice was to scrape together a downpayment of 10% and buy, because renting was a crazy idea. This was 1 or two years before the meltdown in the states. 2 days ago I heard her actually ask one woman if she planned on buying or renting, and her advice was for the woman to rent….There is just something about that woman I don’t trust…I like Garth better. He’s funnier.

Cuter, too. — Garth

#14 Sean on 12.11.12 at 10:46 pm

Garth, I love the blog, but your incessant bleating that this is not 2008-2009… it’s almost comical. It’s never backed up with any logic. Worse, trying to lump gold and Canadian real estate together, claiming that it is now the era of financial assets, as opposed to tangible, is laughable. We have come off six years in which certain tangible assets (US and much global real estate) diverged wildly from other tangibles (metals).

Parroting “official” statistics is also laughable. To applaud US “growth”, while conveniently ignoring exploding public debt inexplicable.

Claiming that REITs will be unaffected by a real estate collapse, is to ignore all historical evidence, as recent as it is. Likewise, to claim Canadian banks will survive what amounts to economic meltdown largely unscathed, is to ignore both recent history and to deny common sense.

The arguments presented on this blog, on some of the most fundamental issues, seem to essentially boil down to an “it’s different here” view of Canada’s ability to weather what is essentially the same storm that decimated many other economies world wide.

I guess we should all hope you are correct in your benign outlook, although based on the evidence, hope is about all we have.

I will await your predictable (and unsubstantiated) attack on dissenters).

You blew 2012 being afraid. I’d be angry, too. — Garth

#15 Mr Buyer on 12.11.12 at 10:46 pm

From yesterday…
#79 Gunboat denier on 12.11.12 at 10:55 am
51 Mr B – so they built before/at start of the bubble then when they sold in the bubble they didnt have enough to repay the loan and there are huge numbers like this?

This makes no sense.
……………………………………………………..
The many stories like this entail sellers that could not be sellers after all as there were in fact no buyers at any price really. The particulars of this story are unique in that they could no longer carry the burden and cashed out before further gains were realized. The lions share of stories I am referring to were set in and after the bubble rather than before and prior to the collapse of the bubble. I hope I have made somewhat more sense as I am approaching the limits of my intellectual capacity and am about to descend into gibberish.

#16 martin9999 on 12.11.12 at 10:48 pm

If we were going over a looming financial cliff (and Washington’s fiscal cliff is a non-event), it would have happened in 2009. Not now.

never say never dude.

Not in this lifetime. — Garth

#17 ChickenLittle on 12.11.12 at 10:50 pm

Just waiting for our local oracle Smoking Man to deliver one of his timely and always accurate state of the universe statements…..I can hardly wait….Every post of his reminds me of Homer Simpson’s drunk love letter to Marge in “Bart the Lover”.

#18 Rick in gta on 12.11.12 at 10:51 pm

USA is still in trouble, this president will drive the USA into the ground. Company’s are not doing as well. The health care costs is unmanageable.

#19 Vamanos Pest on 12.11.12 at 10:54 pm

Tony Right #6
Dude, really? This was an economics professor? It’s just that the point she was making about gold completely ignores the basics of supply/demand on pricing. Another way to look at it if we ever bothered to go mine the “way too expensive” gold in Russia, it would be only because it there was profit to be made, i.e. the price of gold was high. As the gold hit the market, supply would increase lowering prices, and once those prices made further mining economically nonviable, the mining would stop (such a case may also stop mining in other areas for similar reasons). This would lower supply and tend to put upward pressure on prices. The story just doesn’t make sense once the most simple principles of economics (supply/demand) are accounted for.

Second, YOU BET YOUR A$$ THEY’RE MAKING MORE GE STOCK!! Was your prof joking?! Companies create more stock on a regular basis. (Granted they don’t mine it, they just make it magically come into existence (insert clever book of Genesis reference here), but it dilutes your stocks’ value just the same.) It’s not even an uncommon thing, it’s an absolutely routine part of running a publicly traded company.

Dude, not blaming you as you were just telling a story your prof told you, and that’s fair enough. But, if you were told that story by a professor of economics in a university class, you should get your money back.

#20 Seriously? on 12.11.12 at 10:55 pm

I totally agree, the cats did it.

Who the hell voted for the cats anyway.

This is exactly what cats do when they get into office.

They blow-up the Christmas tree and then blame the dogs for not saving enough of their new christmas chew toy for a rainy day.

F****** Cats.

#21 Ronaldo on 12.11.12 at 10:56 pm

#9 FYI – I would guess that this foreclosure’s list price is still $100,000 over what it sold for back in 06. No bargain here.

#22 Trader on 12.11.12 at 10:56 pm

C’mon Garth, that 30% housing drop you refer to, is the kind of numbers I would expect from that condo King realtor. You know your tweaking it to fit your story… Should have been 15% over listing, but now 15% below listing = a 30% less for your home??
Fire your proof reader, they must write those gold bug blogs too….

As written. The sellers’ hit. — Garth

#23 Old Man on 12.11.12 at 10:56 pm

This posting is the best I have ever seen, so nothing to add.

#24 drydock on 12.11.12 at 10:57 pm

You all suck … and blow.
Seasons greetings here’s some festive music.

http://www.youtube.com/watch?feature=player_detailpage&v=EFUgRRYmLvk

#25 periwinkles on 12.11.12 at 10:57 pm

Cats run up trees dogs don’t.

#26 Sherwood Park on 12.11.12 at 10:57 pm

There will be another 2008 … not in 2013 or 2014. Maybe not for 20 years. Long after the GFC has faded from the pre frontal lobes of the masses and the bubble du jour turns frothy, the markets will tank and the great reset button will be pushed yet again.

Now you’re worried about 2032? — Garth

#27 Brad in Cowtown on 12.11.12 at 10:59 pm

“So far this year the S&P is ahead almost 14%…
…In the same year gold has returned zero.

Then down a little further to justify gold being flat…

Gold one year ago $1712. — Garth ”

LOL, nicely done!
You almost got away with it, too Darn.
No worries… most still won’t notice it.

And it is 200 less than last autumn. Great asset. — Garth

#28 renters rule on 12.11.12 at 10:59 pm

they also eat tinsel…. not pretty…..

:-o

#29 City Slicker on 12.11.12 at 11:04 pm

US debt in 2008 was 9 trillion, now in 2012 it’s 16 trillion and going strong with a raised debt ceiling in a couple months.
It’s called deleveraging eh? See you tomorrow for another QE announcement from the FOMC, sure it will boost my 800% return in gold since 2001.

Hope you took profits. — Garth

#30 Asse on 12.11.12 at 11:05 pm

By capping mortgage insurance at $1mil buyers must have at least 20% downpayment, along with a landtransfer tax of probably $70-80k on $1.2 mil. That, along with a property tax bill that’s been reassessed probably 20-25% to between $11k-13k a year. Better have some money in the mattress. If interest rates move it will get much more interesting. Just a couple of months ago a couple of bungalows were marketed at $800k with bidding selling at $1.2.
Took all my investments out of equity a year ago. Not enough volume, prices are being played by a few and not in a mood to play hot potato. In 2008 accredited investors were offered cdn bank bonds at 8%. Have since expired but we’ll see what the new year brings.
Merry Christmas!

#31 Inglorious Investor on 12.11.12 at 11:06 pm

At this point, it looks like ‘slow burn’ is more likely than hyperinflation. But that does not preclude very high inflation, i.e. the marked decline in the purchasing power of money against products and services, if not real assets.

By any measures, it’s already well under way. In fact, from a long-run historical perspective the inflation we’ve experienced since the ’60s is far, far greater than any we’ve ever seen, except perhaps for isolated, short bursts of hyperinflation here and there.

The simple fact of the matter is we have to pay for the future wealth (plus interest) that we spend yesterday. We cannot escape reality. The bill must be paid. The only questions are, how? and buy whom? Increased wealth? Default? Inflation? Probably all three.

The US and Canada are both vey rich, with resources that can be turned into trillions of new wealth. But when one considers the total debt and liabilities that America is drowning in, plus the fact that the banks will not be allowed to fail, the most likely scenario (barring a black swan) will be relatively high, sustained inflation for many, many years. Central banks will increase their inflation targets in order accommodate reality. Most people’s living standards will continue to drop, given the fact that it seems the reservoir of cheap labour around the globe is nowhere near exhausted (will Africa become the new China at some point?) and technology continues to smash barriers.

Outside of a hyper-expansion of real wealth (via cheap, domestic energy, for example), the only other thing that could mitigate lower living standards is technology that makes living far more efficient than it is today. No doubt there is much room for improvement in this area, therefore there is much potential there also.

But it is possible. Already in the US there are millions of jobs that need to be filled. Canada too has many jobs to fill. The labour markets need to adjust. We have oil, gas, water, wood, land, coal, technology and educated people. America can kick ass again, economically at least, even while its influence in the world declines and the globe fractures into power blocks, with members who individually cannot yet challenge America, but in blocks they can shun the dollar and raise up other currencies on the world stage.

Or will America deny reality and embark on one last adventure to retain global domination? Given that the outcome of that could be the end of civilization as we know it, I’m guessing (hoping) America will bow slowly, if not so gracefully. But bow it will, and make room for others on the world stage.

What happens along the way will be interesting. And don’t look now, but I think I see a drone overhead with your name on it.

#32 Bill Gable on 12.11.12 at 11:07 pm

I personally am sick of Smoking Man, and in particular, use of the appelation “Gartho”.
Have some respect, please.

I suggest you get help for your alcohol problem, shut up and sit down.

You are making an ass of yourself.
Jerk.

#33 Dr. WAYNE on 12.11.12 at 11:08 pm

“Maybe we’ll even stop being scared and greedy.

But I doubt it.”

There is ‘absolutely no’ doubt about it. The human condition has no room for gaining experience in matters of finance, particularly limitations on greed.

#34 Dr. WAYNE on 12.11.12 at 11:09 pm

#2 Nodebt on 12.11.12 at 10:01 pm

Dr. Wayne sucks !
============================

Such adoration … thank you, thank you, thank you … I have goose bumps …

#35 Sean on 12.11.12 at 11:13 pm

You blew 2012 being afraid. I’d be angry, too. — Garth

——

Very good. As predicted, an insult as opposed to an intelligent rebuttal. In fact, across my various asset classes, I would wager my returns blew away yours by hundreds of basis points. Again, I am a fan, Garth … don’t attack me for simply pointing out where your arguments fall flat.

#36 chaser on 12.11.12 at 11:18 pm

S&P is less than it was in 2008 and 2001. Great asset. haha

You do buy-and-hold? Explains a lot. — Garth

#37 Dr. WAYNE on 12.11.12 at 11:19 pm

#1 SmarterThanYoo on 12.11.12 at 9:58 pm

I win, you suck, I’m first!
=========================

High IQ Heaven has struck again … you win, we suck (assuming you weren’t singling me out … naaaa), and you are a Brobdingnagian A$$hole …

#38 Fortunate Fool on 12.11.12 at 11:21 pm

The world is deleveraging? It seems that the Hong Kong Monetary Authority Chief Executive Norman Chan disagrees with you…

Hong Kong Monetary Authority Chief Executive Norman Chan said Monday that if the process of deleveraging is disrupted by quantitative easing, asset prices might drop sharply and remain volatile.

When delivering a speech entitled the Global Deleveraging: The Right Track at the Hong Kong Economic Summit 2013, Chan said that excessive leveraging, or over-borrowing, in major industrialized countries was the root cause of both the global financial crisis and the more recent sovereign debt crisis plaguing Europe.

Chan said quantitative easing is not a panacea, but it is the exact opposite of deleveraging. In the past three years, quantitative easing had limited stimulating effect on the real economy. “In order to solve the structural imbalances built up in the past two decades, we must get to the bottom of the problem.”

There is a possibility that quantitative easing produces the desired results, which is a very desirable scenario as global economy will return to its normal growth path, he noted.

However, there is a possibility that the process of deleveraging is disrupted by quantitative easing, leading to sharp increases in asset prices in the first place. Yet, since such increases are not supported by economic fundamentals, any increase in wealth will be seen as transient.

As a result, households are unwilling to increase spending and in the end, the real economy fails to rebound, if inflationary pressure builds up alongside asset price increases, central banks may consider exiting the market and raise interest rates, the authority’s head said.

When economic performance, inflation or monetary policy falls short of market expectation, asset prices might drop sharply and remain volatile, he added.

Chan said he was certain that since the outlook for macro economic and financial environment is very uncertain, it is highly possible that large fund inflows and outflows as well as sharp fluctuations in the financial markets will continue to be seen.

“We should all take precautionary measures and get to the bottom of the problem, learn from others’ experiences and avoid overstretching ourselves. Otherwise, we may find ourselves being trapped in the debt abyss with no way out,” he said.

#39 mark on 12.11.12 at 11:21 pm

Suggesting bank economists are nuts gives them too much credit.

Pinocchio would be a more apt description because they know what is happening.

#40 Vangrrl on 12.11.12 at 11:30 pm

Awww sweet poochie!
He looks like the Burmese Mtn dog lost for two weeks on Mt Syemour after bolting from his owners in a parking lot- looking very humbled when he was found. Actually this one just looks a bit stunned :0 hehe

#41 Canadian Watchdog on 12.11.12 at 11:31 pm

QE keeps getting bigger while equity returns keep getting smaller. Chart

Trade or get slaughtered.

#42 Hoof-Hearted on 12.11.12 at 11:35 pm

#34 Dr. WAYNE on 12.11.12 at 11:09 pm

#2 Nodebt on 12.11.12 at 10:01 pm

DELETED

#43 FredMcGriff on 12.11.12 at 11:41 pm

“All over the world, but not in Canada, consumers and companies have paid off debt, cut back spending and atoned for past excess.”

“Everywhere, except here of course, people have done what they felt the times demanded.”

I like your bravery in calling out canadians for being the low IQ dumb fks that they are.

Thank you for your honesty.

#44 AK on 12.11.12 at 11:42 pm

#29 City Slicker on 12.11.12 at 11:04 pm
“US debt in 2008 was 9 trillion, now in 2012 it’s 16 trillion and going strong with a raised debt ceiling in a couple months.
It’s called deleveraging eh? See you tomorrow for another QE announcement from the FOMC, sure it will boost my 800% return in gold since 2001.”

Gold will be suffering the same fate as the Toronto condo market – “Oversupply”.

It should be around $1,450 a year from now.

#45 Led on 12.11.12 at 11:42 pm

some interesting background info on that monkey at the ikea – he was an anglo-quebecker leaving QC now that the PQ are in power. unfortunately, he couldn’t find any affordable housing in T.O., and was forced to simply go to an ikea and dream of furnishing a condo with cheaply made, fashion forward furniture.

But didn’t he look good all dressed up?

#46 Soylent Green is People on 12.11.12 at 11:45 pm

You said, ikea monkey !!

………………

Canada loves Ikea Monkey. ◘ Members of Parliament? eh, not so much. My advice? Dress the Conservative caucus up in little shearling coats and diapers, and make them visit shopping centres on weekends. They’ll do a hell of a lot less damage to the country.

http://www.winnipegsun.com/2012/12/10/newsmaker-of-2012-ikea-monkey-provides-a-cautionary-tale-for-harper-and-his-government
.
.
.
.

#47 Inglorious Investor on 12.11.12 at 11:45 pm

Regarding gold and stocks, let’s try to be fair and objective.

You can always pick time frames to “prove” a point and justify a bias. Gold may be flat this year and India up 25%, but over the past ten years gold is up almost 500% (even more if you go further back a couple more years); and since inception in late ’09, INDY is up only about 1%. YTD, Shanghai is down almost 6%. TSX small caps down about 20%.

S&P is up almost 14% this year, and over 50% from tens years ago. But it’s down about 3% from year 2000. And if you measure the S&P priced in gold, it’s about 50% lower today than in 1929, but about 500% higher than in 1980.

Why price the S&P in gold? For one thing, fiat currencies are not money. It was JP Morgan himself, the godfather of American banking, who said, “Gold is money and nothing else.”

But as with everything in finance and economics, it’s all relative. Sometimes it’s not about how much you’ve gained, but how much you didn’t lose in real terms (as a gold-priced S&P can attest). I’ve said it before: if everyone’s house goes up in price, is anyone really richer?

As for time frames and bias, the only time frame that matters is not YTD, or one-year, or ten-year––no, the only time frame that really matters is your own.

“Fiat currencies are not money.” Money is what you spend to live. Gold has spending value only when converted into it. Currencies, alone, are money. — Garth

#48 renters rule on 12.11.12 at 11:46 pm

I’m with Bill Gable….smoking man’s inebriated rambling, which contain ridiculous upside predictions re sfh in some select t.o. area neighbourhoods, are a bore….it’s all going to tank and he is going to need a liver transplant, which no doubt MY TAX DOLLARS will bankroll…sigh…..

#49 SM_YYC on 12.11.12 at 11:48 pm

For calgary pumpers – here is the latest spin. we are not that different afterall:

http://www.calgaryherald.com/business/real-estate/Slower+pace+growth+2013+forecast+Calgary+resale/7681825/story.html

http://www.660news.com/news/local/article/430572–balanced-forecast-in-calgary-housing-market-for-2013

#50 Smoking Man on 12.11.12 at 11:56 pm

DELETED

#51 wes coast on 12.11.12 at 11:58 pm

Garth said:
Everywhere, except here of course, people have done what they felt the times demanded. Pay off debt fast
———————-

Garth,I find your post hard to reconcile. (With all due respect).

It seems to me that there was no debts paid off but rather a shift of debt from households (that suffered foreclosure) to banks (that went or were near collapse) to Government (US, EU, et al.).

The delveraging you speak of would have been great as debts should have been wiped out but the opposite has occured – government has preserved as much debt as possible in the name of liquidity.

I would love to hear you speak about these massive debts, the structural deficits, massive fed balance sheets that would need to be unwound once the money supply volicity picks up – and the fact that these mass interventions into the market are experimental at best. Are these not massive risks to the financial markets?

As a blogger that has been so astute at pointing out risks in housing – I don’t feel as though you are accounting for the same risks when you speak of the financial markets.

It almost reminds me of George Bush Jr. Standing on the deck of the battleship declaring the war in Iraq won – 9 yrs prior to the real war being over.

We are not in a conventional downturn, so conventional ‘warfare’ against the great financial correction may not work other than in the short term to shock and awe.

Japan is a prime example of decades long – unending monetary policy to bring back normal- and its failed. Japan is drowning in debt. Why is America and the rest of the established economies any different?

I would love to hear you tackle these issues with the same dilligence and depth you have with housing.

Respectfully,

Wes_coast

#52 Smoking Man on 12.11.12 at 11:58 pm

its been a while. Lol still got it. A ha ha ha.

#53 Paulzen on 12.11.12 at 11:59 pm

Hello from cowtown,I just want everyone on this blog to know that everything is just dandy in calgary and expected to just keep getting better,courtesy of our local kingpin realtard:
http://calgaryrealestatereview.com/2012/12/11/2013-calgary-real-estate-forecast-preview/

#54 robert on 12.12.12 at 12:01 am

The latest from Kelowna. Remax realtor advertises that if you list with them and they donot sell your home in 45 days they will waive all commissions. Do you think that they will take over priced listings? Yes this will help push prices lower as they donot want a listing that is not properly priced. Things in Kelowna are getting worse not better and by spring it will be the first city in BC to have taken a 50% haircut. Salmon Arm is in the same boat. Huge overhang of listings and the foreclosures are building quickly. Oh and did i mention the Banks donot want to get exposed so they are appraising every home and this is causing huge problems as the appraisals are coming in well less than assessment values.

#55 Inglorious Investor on 12.12.12 at 12:02 am

“Fiat currencies are not money.” Money is what you spend to live. Gold has spending value only when converted into it. Currencies, alone, are money. — Garth

Like so much in ‘the dismal science’ (e.g. inflation, deflation) different people have different definitions of money. However, in our monetary system, our currencies are actually debt. As a tradable instrument in the form of notes, debt can have currency (as can sea shells, feathers, and long, wooden sticks with notches cut into them) but debt is not money.

Work is not exchanged for debt. — Garth

#56 Jim on 12.12.12 at 12:03 am

Garth is right on gold. I’m generally positive on it, but the last 12 months have been dismal for precious metals investors. Long term I think it will hold value better than fiat currencies, but at present it is trending sideways at best.

#57 Form Man on 12.12.12 at 12:04 am

watching this video, I was struck with how silly and inexplicable our fascination with gold really is. There in an ugly underground room stacked on rows of industrial shelving, sit all these bars of gold. Year after year, it doesn’t produce anything. Just sits there.

http://www.telegraph.co.uk/finance/financevideo/9734551/Inside-the-Bank-of-Englands-gold-bullion-vault.html

#58 Aussie Roy on 12.12.12 at 12:05 am

Aussie Update

RBA big cheese says “Using momentary policy to put downwards pressure on asset bubbles as they grow could affect growth in other sectors, but no action could cause pronounced instability and far greater consequences if left unchecked”.

But there is no house bubble in Australia – LOL

http://www.rba.gov.au/publications/confs/2012/stevens.pdf

http://www.whocrashedtheeconomy.com/blog/2012/12/lean-on-bubbles-before-they-get-too-big/

#59 Smoking Man on 12.12.12 at 12:13 am

Watching the news while on Floyd. Head phones on. I see the sell. Body language. Try it just once. You won’t get fooled again.

#60 shanks on 12.12.12 at 12:13 am

Hey Garth, check it out, just what i was saying last week..
http://www.cbc.ca/news/canada/story/2012/12/07/f-rich-immigrant-investor-limbo.html

BTW i want to say thanks to you for your great financial advise, it has been sinking in over the years! nothing like the upcoming holidays to feel appreciated by the family by telling them things that they all feel but really dont want to hear.

#61 DJIM on 12.12.12 at 12:17 am

Canada has been admired for four years the world over, for our fiscal restraint of the previous fifteen years, paying down debt while all others ran it up. When the crisis hit we were the only ones in shape to survive. So why did Harper hit the gas on spending, not only gov’t but private? Now everyone else gets to recover while we look like idiots with record levels of gov’t and personal debt. No wonder he wants to sell the family jewels.

#62 Smoking Man on 12.12.12 at 12:21 am

To all you basement dwelling smoking Man haters.

You are just goating me for another epic post. They don’t come every day. I I’m trying, having lunch with C today fks me up, I feel included, do my best on the out side. You got to wait….. Till I’m in the mood

#63 Smoking Man on 12.12.12 at 12:25 am

Garth 51 deleted, you are not worthy of a Harley or cowboy boots.
Disappointed. Was just trying to give CLAIR TORRY her due. The rest was fiction.

Damn it grass hopper. I have such a long way to go with you.

#64 BramptonSux on 12.12.12 at 12:33 am

One year ago we sold the house and invested the $1M in a balanced portfolio with a top financial advisor (guy’s a VP) from one of the big banks. Year to date return: 1.6% (after his fees). So not only is our money worth less today accounting for inflation, but we’ve had to cough up a bundle to cover rent. We’re now reconsidering this financial model…

Reconsider the advice. — Garth

#65 Keith in Calgary on 12.12.12 at 12:36 am

Governments can and will continue to print as much paper as they need to, and tax the populace as much as they need to, in order to to service their continually accumulating debts, and indirectly fund the banksters to support the false markets called the TSE, NASDAQ and the DOW.

Homedebtors cannot print money or tax anyone.

What else did you expect to happen ? Really………I am serious.

That IKEA monkey had better have a great resume, because today I read that Apple’s new factory might create 200 new jobs in the US……..WOW !!……some economic comeback that is…..hardly worth mention IMHO.

#66 Form Man on 12.12.12 at 12:40 am

#62 DJIM

good post. Harper and Flaherty have spent considerable time patting themselves on the back for results that are far more to do with Paul Martin. The next 3 years may end some of the gloating……

#67 GTARealEstateCorner on 12.12.12 at 12:44 am

To all the readers, new and old, I urge you on one thing. Please be nice and accepting of Smoking Man. He’s probably a good guy, but has never had a lucky break in his life. It’s kind of sad, but he has delusions of grandeur. This is a sign of impaired mental faculty. Please, no judgement, no harassment. Live and let live.

#68 Ralph Cramdown on 12.12.12 at 12:44 am

Long term I think it will hold value better than fiat currencies

I imagine it will, since ~2% inflation is the aim of many central banks. But who, pray tell, sticks their money in… money? We’re generally invested in stocks, bonds, real estate, a small business, educating ourselves or our children, or we spend the stuff on things that make us happy. I suppose there’s some pathological cases who just pile it up in a bank account earning less than inflation, but for most of us, money is just the yardstick we use to measure our productive assets.

And that’s a key — productive assets. It’s a bit of a bore watching ‘bugs and their ilk comparing metal prices with the S&P without considering the S&P’s dividends over the period in question.

#69 Inglorious Investor on 12.12.12 at 12:48 am

“Work is not exchanged for debt. — Garth”

Well, I suppose that depends on what the worker is being paid with.

The debate hinges on whether real money must be imbued with intrinsic value derived from energy already expended, or whether real money can derive its value from the input of future energy. Put another way, in order to be real money, it cannot be someone else’s liability. In actuality if not technically, our currency is everyone’s liability.

You might think this is a semantic argument given that today we trade what is technically debt just like it was real money. However, reality does reassert itself from time to time. For example, in a deflation, debt-money can be quickly destroyed. But the destroyed debt-money can easily be off-set with new debt-money, as Bernanke showed us. You could never do that with real money in such a short time-frame because first you would have to generate the wealth to back it up, at least partially.

All wealth is fundamentally derived from energy. The fact that trillions of debt-money units can be created literally out of thin air in such a short time-frame as happened in 2008-09 proves that debt-money is not real money.

It may even be argued that in some way stocks are more like real money than our currency. Even though stocks are discount priced to future wealth, they are still a kind of real asset backed by actual, current productivity.

When asked whether gold was money by Ron Paul, Bernanke ducked the question. He conceded that gold is a store of value, but he did NOT say that gold is not money. I suspect that secretly Bernanke agrees with JP Morgan.

“The debate hinges on whether real money must be imbued with intrinsic value derived from energy already expended, or whether real money can derive its value from the input of future energy. Put another way, in order to be real money, it cannot be someone else’s liability. In actuality if not technically, our currency is everyone’s liability.” Beer, gas & food money = real money. Are you so divorced from reality? — Garth

#70 Ralph Cramdown on 12.12.12 at 12:55 am

“with a top financial advisor (guy’s a VP) from one of the big banks”

No. A VP at a bank is somebody who sits in a big office on a high floor of a tall building with thousands of people reporting to him. A VP at the bank’s brokerage arm is someone who’s done a good job of gathering a lot of assets, and has a few people working for him. Sort of like how half the agents at your local Remax are members of the President’s Club.

I worked at a startup once that got this wrong — they hired as VP of marketing a girl who’d worked as the marketing assistant for a VP “at a bank.” Ah, no. She mailed letters for a stockbroker.

#71 City Slicker on 12.12.12 at 12:59 am

#58 Form Man on 12.12.12 at 12:04 am

watching this video, I was struck with how silly and inexplicable our fascination with gold really is. There in an ugly underground room stacked on rows of industrial shelving, sit all these bars of gold. Year after year, it doesn’t produce anything. Just sits there.

http://www.telegraph.co.uk/finance/financevideo/9734551/Inside-the-Bank-of-Englands-gold-bullion-vault.html
———————————————————-
You are a dunce…..end of message.

#72 Grim Reaper/Crypt Speculator on 12.12.12 at 1:00 am

Why is it windy…

Cause Dr Wayne sucks and Smoking Old Man/Old Man Smoking/ Smoking Man Old blows

#73 geminiRX on 12.12.12 at 1:01 am

Yes, ’cause Japan central bank intervention has worked so well……and quickly running out of policy tools. Really….how long before JPY blows? Crisis in markets happens quite regularly every 7-8 years (1989 BF, LTCM, 911, GFC). These events are actually very therapeutic to markets….central bank intervention is just kicking the can down the road (and according to Harper himself….the road is getting shorter).

#74 Mel on 12.12.12 at 1:02 am

My Dear Garth, you do whatever you wish with your $$$, however, I am not pleased with your attack on people who do not follow your roadmap to riches.

As for my little pile, I will not follow your roadmap to riches. I still believe 2013 will be a turning point for the worse in the U.S. and the world economy.

Europe is in recession right now. U.S. has entered recession in July of this year. Next year it will be confirmed.

Time will tell who is right. Until then, all we do is utter our own predictions.

#75 Grim Reaper/Crypt Speculator on 12.12.12 at 1:02 am

#63 Smoking Man on 12.12.12 at 12:21 am

To all you basement dwelling smoking Man haters.

You are just goating me for another epic post. They don’t come every day. I I’m trying, having lunch with C today fks me up, I feel included, do my best on the out side. You got to wait….. Till I’m in the mood
=====================================

Take this threat/act to Gitmo…..true torture.

#76 Telecon on 12.12.12 at 1:03 am

Your first paragraph is a bit deceiving. The CAD has gained nearly 7% on the USD over the last year so technically the TSX has only lagged the S&P by about 4%.

#77 Dr. WAYNE on 12.12.12 at 1:04 am

#43 Hoof-Hearted on 12.11.12 at 11:35 pm

#34 Dr. WAYNE on 12.11.12 at 11:09 pm

#2 Nodebt on 12.11.12 at 10:01 pm

DELETED
=====================================

So … no class, eh Goofy, I mean Hoofy.

#78 Grim Reaper/Crypt Speculator on 12.12.12 at 1:08 am

Metal$….

Brass baby BRASS

http://gangstersout.blogspot.ca/2012/12/christmas-shopping-in-surrey.html

#79 Tony on 12.12.12 at 1:11 am

Just like in a game of poker you may need a big initial stake the same can be said for shorting stocks and the indexes. Plenty of powder in the keg to reap the benefits of the coming worldwide crash in stock valuations in the coming years. Once again many suckers will be conned by the pumpers who trade shares with their corporate friends hoping to lure in the newbie investors and at some point in time fleece them out of their life savings. What we’ll see in the near future will probably be a repeat of the crash of ’87 but to the power of 2 or twice as deep to the downside.

#80 THE CELIAC HUSBAND on 12.12.12 at 1:15 am

….’French housing is recessionary while American values – while starting to recover – are still 30% below 2007 levels.”

The Turnster is right. The French housing market is ripe for the picking (xcept bloody Paris), if you have any desire to leave the Tundra behind you, come, look, offer 30% below asking and you just may get rewarded. We did.

http://theceliachusband.blogspot.fr/2012/09/for-sale.html

The triplex next door with a retail space for ROI is at 107K all in, but I bet you 70K will take it home.

#81 Tony on 12.12.12 at 1:17 am

Re: #66 Keith in Calgary on 12.12.12 at 12:36 am

The manipulators seem to have forgotten the venture exchange which in a true bull market with quantitative easing would be up like 500 or 1,000 percent this year. Yet the opposite happened reflecting the people in the know realizing the world is headed into another great depression far worst than the dirty thirties.

#82 Tony on 12.12.12 at 1:31 am

Re: #54 Paulzen on 12.11.12 at 11:59 pm

With Vancouver and Toronto dropping at least 20 percent next year apiece the chances of Calgary eking out a gain are zero.

#83 Barry Lainof on 12.12.12 at 1:53 am

Mr. Turner, thank you for your insight. However, I am concerned about the rosy picture you paint of the US economy (which will effect Canada going forward). The concern is not federal debt – Mr. B will print to infinity. The real concern is State and Municipal Debt. Taxes are poised to go up at the state level, property taxes, user fees and increased dividend/capital gains tax liabilities.

In fact, I would ask you to look at a longer time line of 10 or 20 years when you quote the benefits of “equities”, bonds or commodities. Although Ed Yardeni is more positive on the stock or “equity” market (I.e ETFs, Preferred Shares, REITs), Both Bill Gross and Ray Dalio are less than enamoured with the Dow, S&P or Russell or any other exchange you use for ETFs). Note that both Mr. Gross and Mr. Dalio feel 5-10 % in PM is insurance against government stupidity. All of the above suggest some cash is wise, “keeping their powder dry” for inevitable dips in the US equity market that is currently overvalued. They note that the majority of successful corporations are also retaining cash or buying back their own stock (to the benefit of shareholders, and more importantly option heavy executives). No great use of capital being used to build businesses, just moving cash around to avoid tax grabs by governmental agencies.

Balanced investing – YES. Liquidity – YES. Trust in government financial policy in the fractured USA – please give you head a shake.

#84 hangfire on 12.12.12 at 1:57 am

Well dude….one may look at 3% being better than a GIC if they were in generic ETF’s that tracked the overall TSX….but the fact is that it is still a stock pickers paradise and has been for several years…..and if you’ve been smart…you would have made out like a bandit. Look at the performance of AGU…THI….CP…and I could name dozens of others that have been a joy to hold for fat gains…( I bought Timmys at $18….a nice double bagger plus) . ETF’s are for deadheads. If you can’t ppick stocks you should really not be invested in the stock market. You know what they say about the market not being a stocl market per se….but rather a market of stocks…..learn up…or get out.

Here’s a no brainer…..trade the roll between 12200 and 12500……long and gone……with zero expertise…even a blind chipmunk can deduce this trade. Why? With a zero growth economy we’re in a political market…not fundamental. It is not in the best interests of the Obama administration to grow the economy…..people with money make differant decisions than people without. Those who are poor will vote for more handouts ( Obama) ergo the leftists will insure there are as many poor people as possible in the pipeline leading up to the next election. What you say? Didn’t we just have an election? Perhaps you didn’t notice but the 2016 campign is well underway.

#85 Nostradamus Le Mad Vlad on 12.12.12 at 2:18 am

At least the post strays from RE, so may as well continue — Smoking Man (and anyone else so like-minded), this one’s 4 U. Nothing like a laugh a day!
*
2:18 clip Damn this is so much fun! NKorea launches their missile. This planet is being trashed by military fairies, and Chinese boats enter waters near the islands; Small business optimism plunged after the election, and On The Road to Recovery Not; Stuff the workers That’s what is happening in Wisconsin, Michigan and several other places; Pensions What all good communist govts. do; 1:17 clip F-35. “It costs more than the annual GDP of Australia – And the U.S. is broke. Makes perfect sense.”; Yes Ma’am Take a dump on me; Food Wonder whether HAARP is playing a part in all this? 1:03 clip JPM’s thanksgiving; Money Laundering If the wash is finished, just iron the clothes; FedEx Don’t leave home without it; EZone recess- / depression not good for US mfgrs.; Hwsfw Funds buying, Mom and Pop selling; 46:22 doc. Overdose. More fiscal crisis down the road; Buffett joins Soros What next?
*
Healthy Baby Girl Man has no face, mother one leg; Return Post Guaranteed A different way of how to lose yourself by escaping from reality; Hells Grannies Contrary to Garth’s view, they’re an evil, noisy bunch; Rubber Duckie Squeezing through; Question See headline for answer; Globalization Praise the lord and pass the bucks; Targeting Children US military is running short of bodies; The Cheerios are listening So they are good for something; 1:17 clip Medicaid and ObombaCare; Seven new planets discovered. Hell, I might just check ‘em out to see what they’re like! Good for Mozilla Firefox, Thunderbird etc.; Decriminalizing all drugs An excellent idea. Takes the pusher and money out; 9:33 clip How the last ice age finished.

#86 cynically on 12.12.12 at 2:38 am

#18 Rick in gta – you see on TV only the negatives of Americans and form your opinions on their entrepreneurial character from that but when it comes to survival, they’ll be around after Canadians are long gone and they will come out of the present situation better than ever, mark my words.

#87 Investx on 12.12.12 at 2:41 am

You do buy-and-hold? Explains a lot. — Garth
—-

Doesn’t that mean you’re a market-timer, Garth?

As stated here, it means maintaining weightings for assets in a diversified portfolio and rebalancing as prices change. Simple. — Garth

#88 Guy1 on 12.12.12 at 2:46 am

“Maybe we’ll even stop being scared and greedy. But I doubt it. That’s like meeting a monkey in IKEA.”

To be generous and selfless… to have a society predicated on the mutual reciprocity of generosity… like my grandmother and mother ‘with a service to others’ approach to life forcefully but warmly arguing in front of me when I was a child about who would pay for dinner or a movie with a “no, please I insist let me pay”… or like the fireman having the reflex to sacrifice himself to save a family in a burning building… requires a paradigm shift/some mass re-socialisation… and I think your blog in its blunt honesty is helping to defuse greed and empower those who, like you, value such moral candour. You are a wonderful human-being Garth.

#89 drydock on 12.12.12 at 2:48 am

Cats might have felled the tree and set the dog up to take the fall,but that’s no reason to denigrate them.
Desist, if not….. you suck and you’re dickwad breath.
Oh and Happy Holidays.

#90 Bailing in BC on 12.12.12 at 3:21 am

Where is Mr. Lahey? I have yet to receive my invite to the Christmas party. You bastards aren’t planning one without letting me know, are you?

#91 Zoronqueen on 12.12.12 at 3:23 am

where is all the gold http://www.cnbc.com/id/43391588/Is_Gold_in_Fort_Knox_Real_Ron_Paul_Wants_to_Know

#92 polar bear on 12.12.12 at 3:27 am

I carry a modest mortgage with a 1-month variable rate. Every month my bank sends me a message stating the next month’s rate. For over a year now, the rate has been under 1% and is currently at 0,661%. Crazy times, but I don’t mind. And yes, this is outside Canada.

#93 Freedom First on 12.12.12 at 3:37 am

#63 Smoking Man

Take all the time you need. Forever would even be ok.

#94 Joe on 12.12.12 at 3:44 am

Gold like stocks can be bought and sold in peaks and valley’s. It’s really no different. On average gold has out performed the stock market in the past few years. Don’t be afraid people, dealers choice.

#95 Bailing in BC on 12.12.12 at 3:49 am

#20 Seriously? You’ve got to be kidding. The cats did not do this. They inherited this mess from the dogs. If the dogs were still in power the Christmas stockings would be torn to shreds and someone would have pooped on the carpet. The cats have got to be given a chance to turn this around. They were the only reasonable choice of the thinking voter. The dogs are constantly appealing to the average man on the street but when it comes to hanging the Christmas lights they are off somewhere licking their nuts.

#38 Yes Wayne, he’s talking to you.

#96 Humpty Dumpty on 12.12.12 at 4:34 am

Richards simply explains why the US is in a Depression..

http://www.bloomberg.com/video/rickards-fed-is-trying-to-import-inflation-CM9Q89pFRPWHUe~E1CuLzg.html/

#97 Devore on 12.12.12 at 5:29 am

#6 Tony Right

He said they ended up finding so much silver in the world that it became severely devalued, making it essentially useless, so useless that people started to make eating utensils out of it, hence the word silverware.

Sounds like an urban legend.

And it’s “silverware” because it’s tableware (which includes other “wares” such as flatware, stemware, etc) made of silver. Or rather silver alloy, because silver itself is rather soft.

The situation you describe has happened before. During the American gold rush, so much more gold was mined and added to the local “above ground” supply, that it became severely devalued. It is, after all, just another commodity, albeit with some unique properties (like conductivity) that make it more suitable for some purposes than other metals.

Commercial and industrial uses of gold (unlike silver) are 100% recoverable/recyclable, so the supply of gold for industrial and jewelry uses has never been a problem, aside from price due to speculative demand. Some people made good supplemental income extracting gold and silver from electronics and such, but not so much anymore, because it is more difficult to obtain the raw junk material, and very little of it is used these days.

#98 Canuck Abroad on 12.12.12 at 5:33 am

#37 chaser on 12.11.12 at 11:18 pm
S&P is less than it was in 2008 and 2001. Great asset. haha
*****
You do buy-and-hold? Explains a lot. — Garth
*****

Garth, that is a bit rich, no? You yourself tell people to buy and hold, and to not try and time markets. So people aren’t supposed to daytrade the markets (hence your frequent chiding comments about traders) yet they are not supposed to buy and hold (or they are just dopes).

So clearly, your audience is supposed to time markets perfectly for big long term swings to catch the major moves. Oh, and buy the right etfs while they’re at it. All while holding down their regular jobs which usually have nothing to do with the markets. C’mon people, catch up!!

Day traders court short-term risk, buy-and-holders define long-term risk. Smart investors establish target weightings for assets in a balanced portfolio and rebalance as prices change. That way you always buy low and sell high. And if you don’t have time, you hire somebody smart to do it. How hard is that? — Garth

#99 Buy? Curious? on 12.12.12 at 6:27 am

Garth, You certainly have the pulse of the country. We were wondering how long it would take you to incorporate the Monkey From IKEA into your post. You’ve got the turn-around time of a bartender in Hull, Quebec at 2am.

Who’s “We”? Some of the blog dawgs are my friends, OUTSIDE, of this blog. “Beach Girl, wear the Mare Antoinette outfit on Saturday and Dr. Wayne? you have no one else to blame but yourself if you pass out, ok?”

People! You should check out Garth’s earlier work. He’s so smooth to those that are in his sightline until he surprises you with a straight-jab, zinger!

http://www.youtube.com/watch?v=F9-l71vUer0

Ooops! Wrong one. Here’s the right one. Look at him go!

http://www.youtube.com/watch?v=19ni70g6t3I

#100 MarkC on 12.12.12 at 6:30 am

As it happens I’m sitting in an IKEA in Edinburgh, Scotland, right now having breakfast while my wife continues her one-woman attempt to restart the economy.

Plenty monkeys here, believe me.

Also your nice Mr Carney was on the BBC news last night; the Beeb has decided it loves him and is hailing him as the superhero to cure all our ills. Did you know Canada has the healthiest economy in the Western world?

Regards, aye

#101 Dave B on 12.12.12 at 8:25 am

BAN smoking man. His comments are utterly useless

#102 Tony Right on 12.12.12 at 8:28 am

My own conclusions against a large percentage of gold in my portfolio (though I do keep a small percentage under 5% in my portfolio):

1. All the Sheeple are yelling to buy gold.
2. Gold doesn’t pay you to own it.
3. You have to pay to store the gold or risk having it on your property.
3. Byron King, a Harvard trained Geologist, former White House staffer, and editor of the most profitable newsletter of the last decade recommends nothing more than 10% (and he’s bullish) in your portfolio
3. The biggest one: The U.S. They seem to be on the verge of a comeback. It seems housing has hit the bottom, they are on the verge of a natural resource boom (oil and gas) due to a process of extraction called fracking that Harvard professor Niall Ferguson calls a “game-changer”, corporations are sitting on billions of dollars in cash that they will eventually start to use, and labour costs in the U.S. have become much more competitive. This all points to a strong rebound which will drive up the U.S. dollar (the world’s most used safe haven) which has an inverse correlation with the price of gold.

Again, just my own thoughts.

To me,

#103 AK on 12.12.12 at 8:29 am

#79 Tony on 12.12.12 at 1:11 am
“Plenty of powder in the keg to reap the benefits of the coming worldwide crash in stock valuations in the coming years.”

How many years are you talking about?
Everybody is already on the sidelines. They have been in Bonds and Bond funds since 2008.

#104 neo on 12.12.12 at 8:30 am

Work is not exchanged for debt. — Garth

And that is the problem society faces Garth. Companies, countries and citizens themselves are using leverage, dangerously high levels in recent history, instead of “work” to accelerate their wealth. That leverage is debt/credit. The distortion of assets as a result of that leverage causes those that do “work” to be forced to join that leverage game to be able to own those assets/services. Thus causing instability within the underlying asset and system. The latest leverage game about to go bust in the U.S. is student debt.

#105 Risk Analyst on 12.12.12 at 8:44 am

Well if she was an assistant or a VP the what did you excpect. I think you need to read your resumes twice. Besides I know VPs at major banks and I would not trust them with my money.

Why? — Garth

#106 Danno on 12.12.12 at 8:47 am

Hi Garth,

How much do the banks lose when all these people whom have purchased over priced homes suddenly have to write proposals or go bankrupt? If there’s not enough money to cover the debt with the government sponsored insurance who foots the bill? How will this affect future bank stock prices? Btw, I’m not trying to be a jerk, these are honest questions.

CHMC covers high-ratio mortgage debt, plus the asset itself is sold. Don’t sweat the banks. — Garth

#107 Steve on 12.12.12 at 8:55 am

“Reconsider the advice. — Garth”

This is the frustrating problem that many investors have. How in heck do we find a good advisor? If we don’t have the knowledge to manage our own portfolio, we also probably don’t have the knowledge to evaluate the expertise of advisors. They all can do a good job of marketing their skills and selling themselves. Basically, we need to know the right questions to ask, and the proper answers to those questions. And most people don’t know either one. So they don’t have the ability to weed out the bad ones. And there are more bad than good. I totally agree with you, Garth, that most people need a good advisor. But they have no clue how to begin the process of finding one.

Regarding the comment made about the advisor who returned 1.6% after fees: There is much we don’t know, such as how long the money was actually fully invested (weeks? a few months? calendar year?) or what the investor instructed (like, “I want want a safe, gauaranteed return…”) or whether that return is a gross increase in assets only, or includes distributions. Also remember that the advisor’s fees (which should have been no more than 1% of the amount invested) are fully tax-deductible. As well, did the guy give tax minimization advice? Help with planning for kids’ education, retirement, real estate or elderly parents’ needs? A good advisor should advise on financial success, which is always more than the percentage gain in invested assets. Having said all of this, I will devote a post to the subject. — Garth

#108 T.O. Bubble Boy on 12.12.12 at 9:12 am

Gold has traded in a range between $1500 and $1750… saying that it has been ‘flat’ is a pretty accurate description. Only those who bought at the precise bottom are “up 15%”.

Many gold miners are actually down over the past 1 year… much worse than “flat”.

S&P has been moving up from near 1200 to 1400-1450 throughout the past year… and hasn’t been close to touching the 1200 levels since 1 year ago.

#109 fancy_pants on 12.12.12 at 9:15 am

#88 Ralph Cramdown on 12.11.12 at 11:41 am

Ralph, I understand what you are saying. It’s not overly complicated to set yourself up with a good savings strategy. But EVERYONE can’t do that; see how that worked out with real estate when EVERYONE decided it was their right to own RE?

exactly. Be thankful there are lots of folks out there who stuff $ in the orange shorts or you may be priced out of making your 7% profit.

I was speaking for society in general who as a whole behave and save like children, not for guys like us who know and do better.

#110 TurnerNation on 12.12.12 at 9:28 am

What Garth is saying today:

http://themashcanada.blogspot.ca/2012/11/sold-163-silver-birch-avenue-beaches.html#!/2012/11/sold-163-silver-birch-avenue-beaches.html

“This is a cute house on a good street in the Beaches.
It is 4+1 bedrooms, 4 bathrooms on a 49.91 x 118.5 foot lot.

It was first listed in September for $1,849,000.

Guess buyers thought that was too high because the price was dropped at the beginning of November to $1,769,000.

Again, it didn’t sell so they dropped the price 4 days ago to $1,699,000

It has now sold….

For $1,670,000.”

#111 Ralph Cramdown on 12.12.12 at 9:30 am

#108 skeptical — your REITS are still BELOW their 2007 Peak. that’s 5 years and counting still.

I just set up a portfolio on Google finance. 1000 shares of XRE bought at the peak, February 23, 2007, would be up 16.8% today even assuming you didn’t reinvest the dividend, just cashed the cheques and kept the money under your mattress. Reinvesting would’ve added a fair bit to that.

Why is it that every day, another goldbug shows up, makes like just because HIS favourite asset doesn’t pay dividends, nobody else’s do either, and I have to squash him with the heel of my shoe?

#112 You should be so mad at Garth on 12.12.12 at 10:01 am

#65 BramptonSux and his 1.6% return

Let me get this straight. You read a blog (offered for free), retain a planner (probably based on his big title because it made you feel good to be a “millionaire”), gave him some directions that you are not sharing with us then write back to the blog to “question the financial model”. Based on such quality logic, you should take legal action and take this blog down. A fool and his money…..

#113 Paully on 12.12.12 at 10:04 am

The dog would not knock over the tree, but he just might pee on it once it was down.

#114 Nemesis on 12.12.12 at 10:13 am

…”But no depression, either, thanks to central bank coordination.” – Hon. GT

Tyree Johnson would beg to disagree, OldPol.

[BloomBerg] – McDonald’s $8.25 Man and $8.75 Million CEO Shows Pay Gap

…”The wage gap between CEOs and store workers wasn’t always so wide. Twenty years ago, when Johnson first started at McDonald’s, the CEO’s compensation was about 230 times that of a full-time worker paid the federal minimum wage. The $8.75 million that Thompson’s predecessor as CEO, Skinner, made last year was 580 times, according to data compiled by Bloomberg.

McDonald’s is part of a larger trend of Standard & Poor’s 500 companies, according to data from the American Federation of Labor-Congress of Industrial Organizations. The pay gap between the average S&P 500 CEO and the average U.S. worker, which was 42 times in 1980, widened to 380 times in 2011 from 325 times in 2010, the umbrella group of 56 unions said.

http://tinyurl.com/bsxzrqf

#115 dingus gittens on 12.12.12 at 10:13 am

If you are relating gold to housing, being a real asset, and real asset prices are falling, then why isn’t gold falling in all those markets where real estate has fallen. US home prices are increasing, European home prices have been dropping for years (Ireland, Spain, UK) but Gold has held pretty firm (yes I know, still down from its high).

Wouldn’t a margin call calamity be required to bring gold down? A crash of all assets?

Otherwise, an increase is interest rates would be required – historically, high rates have been bad for the shiny metal but isn’t that still a few years away?

Housing markets are local. Commodity markets are global. And this blog is embarrassing. — Garth

#116 jess on 12.12.12 at 10:19 am

lords of green

How Too-Big-To-Jail HSBC wriggled out of money laundering indictments

“A money-laundering indictment, or a guilty plea over such charges could cut off the bank from certain investors like pension funds and ultimately cost it its charter to operate in the United States, officials said.”

http://taxjustice.blogspot.ch/2012/12/senior-hsbc-bankers-need-to-face-jail.html
Wednesday, December 12, 2012

===
HSBC faces inquiry into stolen Swiss accountsAuthorities seize data on 15,000 private clients, but bank insists it will not be seen by tax investigators

http://www.guardian.co.uk/business/2010/mar/11/hsbc-inquiry-stolen-swiss-accounts
===============
US and UK unveil failing banks plan
Dec 10 2012 – 11:26am
“US and UK regulators will unveil the first cross-border plans to deal with failing global banks on Monday, outlining proposals to force shareholders and creditors on both sides of the Atlantic to take losses and to ensure sufficient capital exists in the banks’ headquarters to protect taxpayers.

#117 Steady Eddie on 12.12.12 at 10:19 am

Pride comes before destruction

#118 We all hate Dr Wanker on 12.12.12 at 10:19 am

Even in small-town prairie locales, prices are adjusting downwards.

#119 Ralph Cramdown on 12.12.12 at 10:22 am

#110 fancy_pants — [...]set yourself up with a good savings strategy. But EVERYONE can’t do that [...] I was speaking for society in general who as a whole behave and save like children, not for guys like us who know and do better.

Here’s what you actually said: “The problem is gov’ts cater to the mainstream – and the mainstream is naughty; savers are punished.” This ‘savers are punished’ meme is FAR too prevalent, and I don’t see too many people using it ironically. Here’s another few ways my family is ‘punished’ for saving: Contribute $2,500 to an RESP and the government kicks in another $500 for a risk free 20% return, plus, again, the money compounds tax free. My wife’s employer offers a stock purchase plan, up to 10% of salary at 5% off, and they will match her contributions to a savings plan up to 4% of salary. So we’re saving 14% of her salary every year, but accumulating 18.5% plus the reinvested dividends from the stock. (Not for everyone, obviously, as you have to believe that your company is a good investment, at least short term).

It’s true: For every dollar saved, a dollar must be spent, globally. But that doesn’t mean that Canadians, on balance, need to be saving as little as we are. Why do you think I had to watch our Feckless Leader on TV explaining why we needed to sell our ass(et)s to China and Malaysia, because we “needed the capital”? Because those countries run savings surpluses and are able to go on overseas shopping trips when assets are cheap!

#120 Nemesis on 12.12.12 at 10:32 am

“The U.S. has never been as unequal as today. The American dream has become an American nightmare over the past 20 years.” – Marino Valensise, chief investment officer at Baring Asset Management

[Reuters] – Analysis: More pressure on global wages could backfire

…”While the share of U.S. gross domestic product going to wages and salaries has fallen 10 percentage points to about 43 percent since 1970, the slice going to companies in after-tax profits has surged, doubling to 12 percent since 2005 in what HSBC described as “one of the most chilling charts in finance.”….

http://tinyurl.com/d43enfl

#121 M on 12.12.12 at 10:34 am

Re: the pic
We all know the cat did it.

#122 TonyMontoya on 12.12.12 at 10:37 am

Your funny Garth. The world economy is perfect, and Ameirca is enjoying a rebound. Are you series, the US and most major western econonimies are bankrupt. As for American Home sales, they are almost all part of a carpet bagger investment agenda by the elites. As for stock markets, they are almost all being buoyed by crooked traders and computers that buy back and forth from each other.

The fear and alienation on this blog is stunning. So many commiting financial suicide. — Garth

#123 };-) aka Devil's Advocate on 12.12.12 at 10:44 am

#157 Form Man on 12.11.12 at 7:42 pm

seems DA has realized the hopelessness of his pointless cheerleading of a lost cause, rendering him speechless………( or in this case, keyboardless…)

maybe in this case ‘less’ is more

Pretty much. Although I’d suggest it more abandonment than the acquiescence you imply.

It has been proven time and time again there is great opportunity for others to profit immensely through the ignorance of Greater Fools. The question is; ‘Who are the Greater Fools?’ That only time will tell. In the meantime, I’ve come to realize it far better to mine the profits to be had from such foolish thinking than try educate the fools who think it. Education is, after all, a bargain at any price and the best education of all is experience.

Prepare to learn. But understand; it’s gonna cost ya, as does any worthy lesson.

};-)

There is that which you know you know, that which you know you don’t know and then there is that which you don’t know you don’t know.

#124 Inglorious Investor on 12.12.12 at 10:45 am

In a previous comment I opined that central banks would start increasing their inflation targets in order accommodate their current expansionist monetary policies and inure the public to higher, sustained levels of inflation going forward.

Well, today we get this: “New Bank of England governor Mark Carney mulls end of inflation targets”
http://www.guardian.co.uk/business/economics-blog/2012/dec/12/bank-england-mark-carney-inflation-targets

All during this crisis, TheBeard@TheFed kept insisting that one of the main functions of a central bank is to maintain a stable currency. Anyone who has ever studied a chart of the US dollar since the Fed’s inception knew that was either a lie, or just a huge fail. Unless, that is, you define “stable” as relatively constant, controlled devaluation.

But just as the collapse of 2008 turned the tacit policy of a public backstop for private banking losses into a stark reality, it is now admitted by the money masters themselves that the very reason stated for having central banks in the first place is also a sham.

#125 };-) aka Devil's Advocate on 12.12.12 at 10:45 am

#157 Form Man on 12.11.12 at 7:42 pm
seems DA has realized the hopelessness of his pointless cheerleading of a lost cause, rendering him speechless………( or in this case, keyboardless…)

maybe in this case ‘less’ is more

Pretty much. Although I’d suggest it more abandonment than the acquiescence you imply.

It has been proven time and time again there is great opportunity for others to profit immensely through the ignorance of Greater Fools. The question is; ‘Who are the Greater Fools?’ That only time will tell. In the meantime, I’ve come to realize it far better to mine the profits to be had from such foolish thinking than try educate the fools who think it. Education is, after all, a bargain at any price and the best education of all is experience.

Prepare to learn. But understand; it’s gonna cost ya, as does any worthy lesson.

};-)

There is that which you know you know, that which you know you don’t know and then there is that which you don’t know you don’t know.

#126 ChickenLittle on 12.12.12 at 10:46 am

“To all the readers, new and old, I urge you on one thing. Please be nice and accepting of Smoking Man.”

I WAS being nice! I told him he was a timely and accurate oracle…whats wrong with that?

Besides, he’s freaking hilarious (on occasion).

#127 Susan London Area on 12.12.12 at 10:48 am

Old man or Inglorious Investor
This Cathy Fitts sounds interesting how or where could I connect with her articles ect.
Thanks

#128 };-) aka Devil's Advocate on 12.12.12 at 10:49 am

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

#129 futurologist on 12.12.12 at 10:52 am

The public worker costs in average $114K for taxpayers.
It’s only wages.

You could easy to multiply it by 2 or 3.

Take in account costs of buildings, rented offices, electricity, tons of papers, phones, equipments etc.

#130 };-) aka Devil's Advocate on 12.12.12 at 10:55 am

#157 Form Man on 12.11.12 at 7:42 pm
seems DA has realized the hopelessness of his pointless cheerleading of a lost cause, rendering him speechless………( or in this case, keyboardless…)

maybe in this case ‘less’ is more

Pretty much. Although I’d suggest it more abandonment than the acquiescence you imply.

It has been proven time and time again there is great opportunity for others to profit immensely through the ignorance of Greater Fools. The question is; ‘Who are the Greater Fools?’ That only time will tell. In the meantime, I’ve come to realize it far better to mine the profits to be had from such foolish thinking than try educate the fools who think it. Education is, after all, a bargain at any price and the best education of all is experience.

Prepare to learn. But understand; it’s gonna cost ya, as does any worthy lesson.

};-)

There is that which you know you know, that which you know you don’t know and then there is that which
you don’t know you don’t know.

#131 AK on 12.12.12 at 10:58 am

#119 skeptical on 12.12.12 at 10:29 am
_______________________________________
“The Bull Market in gold is not over. anyone selling their gold has made a mistake.”

It’s over. Even Barrick Gold believes it’s over. That’s why they diversified in Copper.

#132 hangfire on 12.12.12 at 10:59 am

Investing is for suckers….a point proved by a professional investment analyst here

http://business.financialpost.com/2012/12/12/the-best-rrsp-money-can-buy/

In Canada there is only one investor elite…that is the civil service….no one else can possibly achieve the same levels of affluence in retirement. So…the moral of the story is to claim refugee status..get plastic surgery to change your ethnicity….get a government job and enjoy the lavish lifestyle offered by the civic service. Let them eat cake !!!!!

“Claim refugee status..get plastic surgery to change your ethnicity…” Bigot. — Garth

#133 Inglorious Investor on 12.12.12 at 11:06 am

#112 Ralph Cramdown on 12.12.12 at 9:30 am

FYI: Here are the numbers for XRE, which has a current yield of 4.38%:

Total Returns (As of 12/11/2012)
Cumulative
1 Month: -1.64%
3 Months: -2.52%
6 Months: 2.60%
YTD: 11.78%

Average Annualized
1 Year: 13.97%
3 Years: 31.28%
5 Years: -38.46%
10 Years: 26.06%
Since Inception (Cumulative): 12.26%

(Source: National Bank)

#134 Eaglebay - Parksville on 12.12.12 at 11:08 am

Don’t bet against America.

http://www.entrepreneur.com/article/224977-3

#135 futurologist on 12.12.12 at 11:09 am

Globalization means that standards of living and wages would be approximately the same in USA/Canada/Europe and China/India/Africa.

For illustration, if household in USA/Canada has $100K per year, but in China/India $10K – they will not meet in the arithmetical middle of $55K, but they will meet in statistical middle of $20K, because there are much more households in China/India than in USA/Canada.

Globalization also means that the level of corruption, crime and social unrest will be the same in USA/Canada/Europe as in China/India/Africa.

#136 jess on 12.12.12 at 11:12 am

Ditching targets
http://www.guardian.co.uk/politics/2012/dec/12/mark-carney-growth-measures

nominal GDP targeting vs inflation-targeting

balancing balance
http://neweconomicperspectives.org/2012/12/an-alternative-meme-for-money-part-7-framing-deficits.html#more-3955

#137 refinow on 12.12.12 at 11:14 am

We won`t have a US style housing correction, it will be a CDN Style Housing correction.

#138 Form Man on 12.12.12 at 11:19 am

#71 City Slicker

Gosh ! where is all your anger coming from my sad little friend ?

if indeed you have made 800% on your gold, why so defensive ?

more likely you are a fool who bought at the peak…….

#139 dv8 on 12.12.12 at 11:20 am

President Obama is out campaigning the notion that we need to increase taxes on those who earn more than $250K per year. According to the Congressional Budget Office, Obama’s current proposal would raise an additional $83 billion in taxes per year.

The US budget deficit is over $1 trillion per year. It has been ever since Obama took office. So his proposal would not even cover one month of deficit spending. And this is supposed to represent a “solution.”

Mathematically, the only way to cut the Federal deficit would be to either raise an additional $1.2 trillion in taxes (politically impossible, no one would go for it) or cut Federal Spending by $1.2 trillion (again, politically impossible).
lmao the americans are screwed just do the math Garth I’ll be betting against USA

#140 Devore on 12.12.12 at 11:30 am

#105 Risk Analyst

Besides I know VPs at major banks and I would not trust them with my money.

Why? — Garth

They manage multi-billion dollar corporations, not some punter’s money. Seems like different skill sets.

#141 Franke le Skank on 12.12.12 at 11:35 am

I have a small amount of money sitting in the bank ($10,000) which I will be using in 1 year. Am I better off leaving it in a savings account or is it worth investing into ETF’s? Will potential profits be drowned in commissions and fees or is it actually worth investing such a small amount for a short period of time?

#142 Devore on 12.12.12 at 11:36 am

#97 Devore

I see my confusion now, I have never seen people refer to non-silver cutlery as silverware, specifically sterling silver.

#143 Burnt Norton on 12.12.12 at 11:40 am

Look, it’s all the cat’s fault. Leave the poor dog out of it.

http://www.fugly.com/pictures/31184/forgot_to_pick_up_carl.html

#144 Ralph Cramdown on 12.12.12 at 11:41 am

#120 Victoria — So your 12% growth on some stock is NOTHING compared to 3-4% growth in equity, considering that your invested capital in the first case is 20,000 or so, and in the second – at least 400K

I’m in! Buying a place in Victoria for $400k, $20k downpayment. OK, $1,500 legal fees, $6,000 land registration, $200 to set up the mortgage, $500 for a home inspection and pizza for my buddies who are helping me move. Total $8,200, I’ll put it on my credit card.

One year on, my house went up 4% (which is 3% more than Remax’s national average estimate for next year) to $416,000, and I paid $12,000 in interest to the bank and $2,600 in property tax. Luckily, I completely avoided all maintenance costs. Woohoo, let’s lock in that gain, baby!

I get full asking price! Another $1,000 in legal fees, the agent wants $15,000 in commission and the bank says I have to pay $20,000 in fees for breaking the mortgage early, plus a $100 mortgage discharge fee.

On my initial $20,000 investment I’m down $42,900, so $22,900 in money that I have to come up with to pay off my credit card and bring to the closing table. House goes up 4% in a year, I’m down 214%. Feel free to deduct what I would have had to pay in rent, ‘cuz hey, we all have to live somewhere! Idiot.

#145 Smoking Man on 12.12.12 at 11:48 am

http://www.zerohedge.com/news/2012-12-12/what-billion-dollar-patent-lawsuit-does-you

Bubble Heads don’t say I’m not geourous. Rember back in Sep . And again, in Oct. I said long SAMSUNG short APPLE, See above link.

Merry Christmas to me……………

#146 Blair Elliott on 12.12.12 at 11:53 am

Garth, can we get a positive blog post, its almost Christmas…

#147 NoOneOfConsequence on 12.12.12 at 11:55 am

#118 Ralph Cramdown – stock purchase at a discount…or stock options are taxable benefits. Every 5% you save on the stock price is income….income which is taxed at the max.

#119 Skeptical – You have made nothing until you cash out. Your “theoretical” earnings are probably impressive…much like the “theoretical” earnings on all that equity in the McMansions.

We all know where that’s headed….

#148 Hoof - Hearted on 12.12.12 at 11:56 am

#91 Zoronqueen on 12.12.12 at 3:23 am

where is all the gold http://www.cnbc.com/id/43391588/Is_Gold_in_Fort_Knox_Real_Ron_Paul_Wants_to_Know

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

I think that is next major SHTF. The Banksters know people would buy gold in kneejerk fashion. ….or certificates.

Many are saying get the real gold in your hands ASAP…as that each ounce may have been sold several times in another ponzi scheme and thus that paper certificate is as worthless as the money.

Countries like Germany have continually requested to see their Gold deposits in NYC, and denied.

Kinda reminds me of the plot in ” Die Hard with a Vengeance “(1995)

I think a lot of the Gold “on deposit” is missing, and when the truth comes out, even more hell will break loose. Or given what has already happened why wouldn’t this sound plausible?

#149 Mad Scientist on 12.12.12 at 11:58 am

Garth, I gotta give you credit for sticking to your guns and calling that the market will stay steady and not flop, and so far you have been spot on. But I gotta let you in on a insider secret, my wife works for a major investment firm in Toronto – staff has been on edge the past few months – layoffs have continued and a few high profile brokers have spoken to my wife that she better have a simple exit plan in her investments…They sense the books are cooked and governments around the world are withholding info in not spooking the market.

There is alot of “off the books” accounting and you can only push this problem down the road for so long. I agree garth, this Fiscal Cliff drama is a non-event – what makes today any different from tomorrow – they have this mountain of debt – just like Europe – this issue is not solved by issuing more debt, I will believe we are in a true recovery when governments actually pay down debt – it reminds me of when I was a kid with a paper route – I was given a bill each week and it was up to me to collect from a bunch of deadbeats who thought nothing less of cheating a 12 year old kid – I always found ways to make up my shortfall but it just became more of a problem as time went by – you gotta pay the piper eventually – and the world has come to the “don’t see – don’t worry attitude”

Love the blog Garth – just wish some stop using this forum to whine about other’s – everyone has a opinion – if you don’t agree with it – just scroll to the next blogger…

#150 IM in C on 12.12.12 at 11:58 am

Gold. That is what I , a hobby prospector, sluice out of the rivers of Alberta and BC; and then exchange for —money—!! I use the money to buy the products and services I want.

#151 Dr. WAYNE on 12.12.12 at 12:45 pm

#117 We all hate Dr Wanker on 12.12.12 at 10:19 a

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

I love it ………..

#152 Dr. WAYNE on 12.12.12 at 12:49 pm

#101 Dave B on 12.12.12 at 8:25 am

BAN smoking man. His comments are utterly useless
===================

Calm down Dave. If a ban were instituted on ‘utterly useless’ comments, the vast majority of posters would be banned, probably including me. BUT … Mr. Moderator has a sense of humour along with genius financial perspectives, so deal with it.

#153 martin9999 on 12.12.12 at 12:50 pm

The fed will not throw more money. Simple, the markets are at their highest. Get ready for a sell of in the next few sessions

#154 Seriously? on 12.12.12 at 12:54 pm

Wait until F-35’s start dropping out of the sky at a billion dollars each because the cat used the wiring harness as a scratching post.

For sure the dog is going to get blamed.

#155 jess on 12.12.12 at 12:55 pm

capital controls

http://www.taxresearch.org.uk/Blog/2012/12/11/capital-controls-an-essential-tool-is-were-to-maintain-economic-sovereignty-and-democracy/

#156 :) :( Ying Yang on 12.12.12 at 12:56 pm

Bought RIM back in Dec 2002, heard about Apple in 2008, sold RIM Dec 2008, made a ton of money, Invested in Apple in Dec 2008, just unloaded Apple this month, made a ton of money. I can’t believe I’m saying this but I think I’m going back to RIM. Must be crazy but I am going in small to test the water. Made some good money in gold but you are correct Garth I don’t see it going anywhere quickly. Both RIM and Apple have one thing in common they both require some rare earth minerals to function. I believe the rare earth mineral market is key to some big cash and countries like Canada have ample supplies. We just need to get our proverbial asses in gear and exploit them. The hovering giant of course is China who controls the market. As soon as other countries join the race the price will come down, that is unless the Chinese flood the market with lower prices driving everyone out of the investment of the mines and refiners. They win, we loose and they are back in control to name any price they want.

#157 Julia on 12.12.12 at 1:05 pm

BSTREET condos under construction on Bathurst just south of Bloor is now offering 3 months of free maintenance fees and there are lots of units still available. This is just the beginning of what is to come i’m sure!

#158 Julia on 12.12.12 at 1:14 pm

#120 Victoria on 12.12.12 at 10:32 am

Indeed! And if the value of your 80% leveraged million dollar house goes down in value 12% and you get divorced and have to sell…

#159 Stoopid Idiot on 12.12.12 at 1:18 pm

Wow Form Man…. Struck with Silly? Inexplicable?? To who ?… oh ya… you? May explain why the bank has the gold and you don’t. Ugly underground room’s…. should we try and paint the place to impress the gold??? You should see were it cam from … the Gold is grateful, oh my god… industrial shelving.. the inhumanity of it all… year after years. You could get a job writing for CNN… your good

#160 Smoking Man on 12.12.12 at 1:30 pm

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

In case no one believes the great Oracle of the markets.

Applause please…….

#161 Oceanside on 12.12.12 at 1:34 pm

I have two friends with substantial piles of gold, one has just a small portion of his sizeable portfolio, the other probably 40% of his total wealth. It seems to be like some of my art, worth a lot only if you sell it. The one with the high percentage is always selling off a few ounces every time he needs a new car, washing machine or a holiday. As well as nervously waiting for it to go up to $2,000 an ounce, which it may well do eventually. Both these people are in their 60’s with no dependents to worry about. It seems a waste to always be waiting, especially at this age…

#162 Smoking Man on 12.12.12 at 1:53 pm

To all those chirping me.

Since when does a Tiger worry what sheep think.

#163 Form Man on 12.12.12 at 1:54 pm

#147 stoopid idiot

your name says it all…….

#164 Stickler on 12.12.12 at 1:54 pm

I agree with you on Canadian housing but this part should be rewritten -> from:

“All over the world, but not in Canada, consumers and companies have paid off debt, cut back spending and atoned for past excess.”

To: All over the world, but not in Canada, consumers and companies are in the process of paying off debt (because they are forced to / or are borrowing even more at lower rates – because they can), cutting back spending (because they are uncertain, / or have no money or credit) …

No, actually, it is as written. Corporate and personal debt levels are falling much faster elsewhere. — Garth

#165 Inglorious Investor on 12.12.12 at 1:55 pm

As expected by the market, today TheBeard@TheFed announced that the magical monopoly counterfeiter (aka the Fed) of America’s un-money will pixie-dust into existence a total of 85 billion currency units (calling it the ‘dollar’ is now an insult to what used to be real money) per month for the purchase of Treasurys and mortgage bonds. Portfolio managers, nominal stocks and gold rejoice. For now. And yes, I’m getting some.

#166 Stickler on 12.12.12 at 1:59 pm

…you also forgot the part where the US becomes desperate and is in the processes of changing all states to “right to work” states…which means right to pay the workers less and reduce their standard of living in every way.

Race to the bottom.

The union makes us strong, right? — Garth

#167 Inglorious Investor on 12.12.12 at 2:00 pm

#130 Susan London Area on 12.12.12 at 10:48 am

solari.com

#168 JohnS on 12.12.12 at 2:01 pm

Fed Expands Asset Buying, Links Rates to Joblessness, Prices

http://www.bloomberg.com/news/2012-12-12/fed-boosts-qe-with-45-billion-in-monthly-treasury-purchases.html

US is doing great and recovering faster than any time in last 1000 years…right Garth?

keep servicing debt..thats what gets us ahead?

The Fed knows what it’s doing. Resume crayons. — Garth

#169 Old Man on 12.12.12 at 2:16 pm

#129 Susan London Area – google Solari for the website.

#170 Ralph Cramdown on 12.12.12 at 2:16 pm

#148 NoOneOfConsequence — stock purchase at a discount […] is taxed at the max

It’s true. But it’s free money, subject to having to risk it in the company stock for a period. As the Oracle said recently:

‘SUPPOSE that an investor you admire and trust comes to you with an investment idea. “This is a good one,” he says enthusiastically. “I’m in it, and I think you should be, too.”

Would your reply possibly be this? “Well, it all depends on what my tax rate will be on the gain you’re saying we’re going to make. If the taxes are too high, I would rather leave the money in my savings account, earning a quarter of 1 percent.” Only in Grover Norquist’s imagination does such a response exist.’

I bet even Smoking Man tips the dealer.

#171 Form Man on 12.12.12 at 2:22 pm

wow,

I post a rather benign comment about my personal thoughts on gold, attach a relevant video…………

and the gold bugs go berserk…..!

disclosure:
I own physical gold ( weighted to my portfolio as per Garth )

Nevertheless, it makes more sense to me to own things that pay me to own them…….

#172 Pr on 12.12.12 at 2:29 pm

World risks fresh credit bubble, Switzerland’s BIS warns

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/9733547/World-risks-fresh-credit-bubble-Switzerlands-BIS-warns.html

Nothing to worry about.

#173 Picasso on 12.12.12 at 2:34 pm

#55 robert on 12.12.12 at 12:01 am
The latest from Kelowna. Remax realtor advertises that if you list with them and they donot sell your home in 45 days they will waive all commissions.
……………………………………………………………………

but if you lower the price after 45 days and it sells do they still waive all commissions?

#174 JohnS on 12.12.12 at 2:52 pm

Fed Expands Asset Buying, Links Rates to Joblessness, Prices

http://www.bloomberg.com/news/2012-12-12/fed-boosts-qe-with-45-billion-in-monthly-treasury-purchases.html

US is doing great and recovering faster than any time in last 1000 years…right Garth?

keep servicing debt..thats what gets us ahead?

The Fed knows what it’s doing. Resume crayons. — Garth

Ofcourse they do. Bloating corporate profits.

#175 Snowboid on 12.12.12 at 2:55 pm

#122 Victoria on 12.12.12 at 10:32 am…

Or maybe you sold your home and instead of $20K had net proceeds of $400K+ to invest.

Not to mention watching the same home you sold lose about 15% of its’ value over the last two years! It will take quite a few years to get back to 3-4% annual increases in ‘equity’!

Another bonus now is Okanagan rents are very low in comparison to ownership costs, and may continue to be for a long time, especially in condos.

Patient as ever…

#176 Old Man on 12.12.12 at 2:56 pm

I have created an interpretation for the lead picture, and here is what came done. Rover was sniffing around for his xmas gifts under the tree, and cheapo Garth had none for his dog. Rover crashed the tree out of frustration, and says this is just the beginning of woes, so get with the Santa Claus agenda or else.

#177 Canadian Watchdog on 12.12.12 at 2:58 pm

Poor Bernanke can’t even kill the dollar with a printing press. Now Congress may have to intentionally allow a credit rating downgrade to spook investors out of the dollar.

That’s how absurd things are.

#178 Smoking Man on 12.12.12 at 3:07 pm

So the fed will keep rates at zero till jobless numbers go sub 6.5

Hum so 2016 and what will Boc Do?

Zip nada, nothing but follow the big dog.

USA housing up? Google trends ie track6ers sing a different song

What do I know? .

#179 Marnic on 12.12.12 at 3:10 pm

“The Fed knows what it’s doing…”

Well one would hope so…it’s just a pity that what they are doing is so ruinous.

#180 Risk Analyst on 12.12.12 at 3:48 pm

Well if she was an assistant or a VP the what did you excpect. I think you need to read your resumes twice. Besides I know VPs at major banks and I would not trust them with my money.

Why? — Garth

I work for them(below them on the corporate ladder(, they are we’re they are because of the connections they made, and not the other things.

Do they all write like you? Then I’m worried, too. — Garth

#181 mel in victoria on 12.12.12 at 3:51 pm

Garth…….have you considered opening a blog for gold and silver bugs?……..(just kiddin’)

#182 skeptical on 12.12.12 at 4:16 pm

The Fed knows what it’s doing. Resume crayons. — Garth
___________________________________________

of course the fed knows what it’s doing. it knew what it was doing when it created the US housing bubble, it knew what it was doing when Lehman collapsed, it knew what it was doing when the Nasdaq bubbled, it new what it was doing when LTCM collapsed, … etc etc.

sure it knows what it’s doing ..

#183 bucky on 12.12.12 at 4:26 pm

“The truth, however, is that nobody on the committee, nor on our staffs at the Board of Governors and the 12 Banks, really knows what is holding back the economy. Nobody really knows what will work to get the economy back on course. And nobody—in fact, no central bank anywhere on the planet—has the experience of successfully navigating a return home from the place in which we now find ourselves. No central bank—not, at least, the Federal Reserve—has ever been on this cruise before.”

http://www.dallasfed.org/news/speeches/fisher/2012/fs120919.cfm

#184 bucky on 12.12.12 at 4:29 pm

Debts paid off?
Today the FOMC announced it will be printing $85 billion every 30 days to increase jobs and buy toxic real estate. Since when does a central bank print unprecedented amounts of money to affect the job and real estate market? The government cannot create jobs, it’s a myth.
And who ultimately has to pay for that $85 billion every 30 days? The taxpayer, who is back in deep hock.
Printing is all central banks around the world can do and will do.
Central banks are also now buying unprecedented amounts of gold in the last 40 years, a reversal from selling over the last 10 years. If gold is an asset class not worth having, why are they stocking up? Gold was around say $1600 Jan 2012 and say $1700 today = 6% gain. Precious metals remain the best performing asset class over the last 10 years.
The dollar in your pocket is debt, how else did it come into existence?

#185 hangfire on 12.12.12 at 4:35 pm

Does someone need to get out into the real world more often……?

“Claim refugee status..get plastic surgery to change your ethnicity…” Bigot. — Garth”

I guess you didn’t hear Jason Kenney announce that skilled work will be found anywhere other than in Canada or through Canadian training programs? Heres the truth…..the entrance requirements for Canadian students wanting vocational skills are blocked by politically correct programs favouring the immigrant lobbies…..front of the line every time while Canadian born students must have university entrance math skills and wait several years for an interview to apply. The only criteria for entrance from the third world is ‘2 years experiance’….a skill set any immigration broker in China can dummy up in five minutes on a copy machine……we’ve seen thousands of these frauds where a factory worker suddenly becomes a finishing carpenter based on the ‘skills’ he picked up handling pallets on the shop floor…the broker picks up his commission and Canada gets another 20 mouths to feed once we allow family reunification to apply……this is public information. With unemployment at 10++% why not stop this madness until every Canadian can get a trade or an education first? Is it OK to not educate Canadians and instead bring in tradesmen from elsewhere? Would it be too expensive to educate Canadians? What is really going on in the minds of the civil service liberals who design these twisted programs?

Try asking second generation Canadian educated Chinese from Hong Kong wht they are being displaced by policy in favour of newer immigrants from The Peoples Republic of China with questionable educations….and skills that simply don’t refer to the civil service either vocationally, socially or vocationally….and still the cities have been performing a federal mandate to hire only immigrants for civic positions…..for civil service jobs in local governments. Or is that ruffling your politically correct feathers. Don’t get me started on why it is that Caucasians are being told not to apply for civic work…as a matter of policy.

Bigot you say………Proud Canadian say others…..but nice try with the knee jerk liberal ad hominem……Maybe next time you’ll call me a baby killer eh? Why do you Liberals hate the truth?

Like I said….you might need to get out more.

Like I said, bigot. — Garth

#186 bill on 12.12.12 at 4:36 pm

#174 Form Man on 12.12.12 at 2:22 pm
no doubt had you said buy gold at $276, these same people would be saying that you shouldnt….
gold and silver were once a good bargain.less so now as per Garth’s reasoning.

#187 Amazed on 12.12.12 at 4:38 pm

#183 Garth’s comment- hilarious )

#188 Mixed Bag on 12.12.12 at 5:52 pm

#184 mel in victoria on 12.12.12 at 3:51 pm

Now that was funny.

#189 jess on 12.12.12 at 5:53 pm

i didn’t know coffee shops needed imported labour?
http://www.cbc.ca/news/canada/story/2012/12/11/f-temporary-foreign-worker-program-tim-hortons-canada.html

#190 Julia on 12.12.12 at 6:09 pm

#160 Julia on 12.12.12 at 1:05 pm
Oops i meant BSTREET condos are offering 3 years of free maintenance fees, not 3 months.

#191 Julia on 12.12.12 at 6:20 pm

189 hangfire on 12.12.12 at 4:35 pm

And the skilled workers from outside Canada are allowed to stay only 2 years and not allowed to get their permanent resident status and are paid less per our than Canadian union members. It’s just another form of outsourcing and exploitation.

As long as we want our kids to go to University rather than acquire a trade we will have to get skilled workers from elsewhere while our kids come back to the nest and sit in the basement jobless.

#192 AK on 12.12.12 at 6:21 pm

#174 Form Man on 12.12.12 at 2:22 pm
“wow, I post a rather benign comment about my personal thoughts on gold, attach a relevant video…………

and the gold bugs go berserk…..!

disclosure:
I own physical gold ( weighted to my portfolio as per Garth )

Nevertheless, it makes more sense to me to own things that pay me to own them…….”

LOL.. I have been hearing that Gold is going to hit $5,000.00 per ounce since 1980.
It’s been 32 years and Gold still has not been able to match the 1980 highs in 2012 dollar terms.
And the sad part is, they are still calling for a $5,000.00 Gold price today.

#193 Dr. WAYNE on 12.12.12 at 6:29 pm

#169 Stickler on 12.12.12 at 1:59 pm

The union makes us strong, right? — Garth
=======================

The union makes us lazy and full of entitlement.

#194 Hoof - Hearted on 12.12.12 at 6:43 pm

#165 Smoking Man on 12.12.12 at 1:53 pm

To all those chirping me.

Since when does a Tiger worry what sheep think.
=====================================

Still going “commando” with your kilt? baaah baahh bahhh

#195 IM in C on 12.12.12 at 7:13 pm

The union makes us strong, right? — Garth

Yes , it does!

– and I say that as an upper middle class individual who doesn’t like unions! Sadly Mr. Turner, you will not understand what I mean until it’s too late

#196 mel in victoria on 12.12.12 at 7:21 pm

AK 197…..

“#174 Form Man on 12.12.12 at 2:22 pm
“wow, I post a rather benign comment about my personal thoughts on gold, attach a relevant video…………

and the gold bugs go berserk…..!

disclosure:
I own physical gold ( weighted to my portfolio as per Garth )

Nevertheless, it makes more sense to me to own things that pay me to own them…….”

LOL.. I have been hearing that Gold is going to hit $5,000.00 per ounce since 1980.
It’s been 32 years and Gold still has not been able to match the 1980 highs in 2012 dollar terms.
And the sad part is, they are still calling for a $5,000.00 Gold price today.”

Patience my friend…..you’ve waited 34 years…..what’s another couple more?

#197 Ralph Cramdown on 12.12.12 at 7:25 pm

#186 Victoria — on 50,000 initial investment I made 300,000$ in just under 5 years

I can claim comparable asset accumulation, but with nowhere near your 48% IRR, a lot more of mine came from saving. Congratulations! It just goes to show that there’s more than one way to achieve financial independence, or at least a comfortable retirement. Best of luck in your further endeavours.

#198 Devore on 12.12.12 at 7:26 pm

#122 skeptical

the Bull Market in gold is not over. anyone selling their gold has made a mistake.

What’s the plan, then? What’s the sell signal? What’s the exit plan? When do you take your profits?

#199 IM in C on 12.12.12 at 7:28 pm

Mr. Turner

@189 Hangfire is a bigot
He is also correct.

So why are we importing workers into this country when we have over 8% unemployment, with an even higher percentage unemployed amongst our young people?

#200 Trt on 12.12.12 at 7:29 pm

#139 futureolgy,

Bang On! To further add, the next 5 years are the only time to make money (raise your economic status). After that, you..your kids…their kids will be permanently stuck in an economic class. Welcome to India and China where moving up doesn’t happen without corruption.

Cant wait to see the bewildered faces of Canadians in 5 years…they were warned but chose not to listen. Oh well.

#201 Smoking Man on 12.12.12 at 7:32 pm

#199 hoof.

That the name of you’re shoes. Ah sheeple ………

I’m in a firee mood, hate this time of the year sun is at its lowest point.

Plus family get togethers I would rather dig ditches bear handed.

#202 EIT on 12.12.12 at 8:04 pm

the aliens are coming… THE ALIENS ARE COMING

#203 TRT on 12.12.12 at 8:07 pm

Today:

1) Union busting going on in House of Commons…vote going on right now. End result: Lower wages/benefits for workers eventually. Corporate profits will go up.

2) US Fed WILL print $85,000,000,000.00 per month for as long as it takes. Sucks to be holding cash. Bankers/Financial Planners love this as it will boost equities.

3) Interest rates will stay at ZERO until unemployment in the USA below 6.5%. Translation : LOW RATES FOR VERY LONG TIME. 1.99% 5 year rate or 2.49% 10 year rate in Canada??

4) The mining company in the news….has stated they are committed to using foreign workers for at least 14 years. Good for mining equities! Sucks to be a skilled CDN tradeseperson.

#204 TurnerNation on 12.12.12 at 8:15 pm

The other bearded one, down South, gave us some economic news today. Yeah I mean Santa.

Anyway,

“Canada Housing Trust Reopens 5-Year Bond to Raise C$5 Billion – Source

By Ben Dummett

TORONTO–Canada Housing Trust reopened its five-year bond maturing December 2017, aiming to raise an additional five billion Canadian dollars, according to a person familiar with the planned issue.
Pricing is expected Thursday. Spread guidance is for about 35 basis points over the Government of Canada 1.5% September 2017 benchmark bond. The bonds carry a coupon of 1.7%.
Canada Housing Trust is part of Canada Mortgage and Housing Corp. It uses proceeds from issuing Canada mortgage bonds to purchase mortgages packaged into National Housing Act mortgage-backed securities…”

#205 jess on 12.12.12 at 8:17 pm

mr. o’leary’s happiness may be short lived

… according to the Michigan Constitution, voters have “the power to propose laws and to enact and reject laws…” with a higher number of signatures to get onto the ballot. In other words, Michigan workers can restore the unionization rights they lost yesterday by gathering enough signatures for a ballot initiative. It would take roughly 260,000 signatures to put Right-to-Work-for-Less up for repeal by putting it to a citizen vote..
http://truth-out.org/news/item/13306-on-the-news-with-thom-hartmann-michigan-can-restore-unionization-rights-by-gathering-enough-signatures-for-a-ballot-initiative-and-more

#206 Julia on 12.12.12 at 8:18 pm

My partner and I owned a duplex together for 13 years starting out with a measly mortgage of $180k by todays standards and rented out the upper unit for around $1400 or so per month. One or both of us were working, no kids to support and no extravagant lifestyle or expensive habits or big renos. Still, there were months when the house expenses exceeded our cash flow and we had to dip temporarily into our line of credit. I honestly don’t know how the average couple, especially with a family, manages these huge mortgages, I really don’t!

#207 Oceanside on 12.12.12 at 8:32 pm

#198 Dr. WAYNE on 12.12.12 at 6:29 pm
#169 Stickler on 12.12.12 at 1:59 pm

The union makes us strong, right? — Garth
=======================

The union makes us lazy and full of entitlement.

Obviously Doctor Wayne hasn’t been in a union for awhile, unions may not be the best for everybody but they did, and do maintain a middle class that uses their wages to buy goods and keeps the economy going. If everybody gets $5.00 an hour like some that visit this blog seem to think would be good we would just sink and be another 3rd world economy sans middle class. If a union carpenter gets $24.00 an hour a non union will probably get $19.00…..Take away the union wage and they both sink quickly.

#208 Ronaldo on 12.12.12 at 8:45 pm

#80 Tony –

”What we’ll see in the near future will probably be a repeat of the crash of ’87 but to the power of 2 or twice as deep to the downside.”

87 was a great example of a stock market bubble. You could have thrown a dart at the TSX or VSE listings and you would have picked a winner. It was nutso. Even though the market crashed from its bubble high that summer, it was still up around 10% for the year as I recall.

#209 randman on 12.12.12 at 8:53 pm

“What’s the plan, then? What’s the sell signal? What’s the exit plan? When do you take your profits?”

I’ll take this one……

When the interest rates are at 20%….
When the Dow and the price of gold cross…
When there are line ups around the block at Vancouver bullion
When all the idiots here who berate gold suddenly yell
BUY

That’s when you sell!

#210 Roland on 12.13.12 at 1:39 am

@197

The problem for Canadians competing against “guest workers” is that the Canadian workers can’t acquire the necessary credentials as cheaply as potential foreign-sourced competitors.

To get underground mining credentials is expensive in Canada, but cheap in China. Canadian kids can’t go to China and get their credentials at Chinese prices, so how are they supposed to compete with Chinese “guest workers” ?

Why is it that at every stage of globalization it’s always the workers who have to adjust their prices before everyone else?

Why don’t we make the owners of stocks or real estate or other assets eat a big writedown first, instead?

What’s good for the goose must be good for the gander. All in the name of global competitiveness, of course.

#211 Molson Ukrainian on 12.13.12 at 1:45 am

#10 FYI

Why are you posting this? It’s a duplex first of all, and $300k is for 1/2 a house built in the boom of 2006 with shady contractors. Not to mention its in a neighborhood that charges annual fees for maintenance of a lake. And the bonus is it I next to Millwoods, one of the least desirable murder ridden neighborhoods on etown.

So, what’s your point exactly???

#212 futureexpatriate on 12.13.12 at 8:10 am

The monkey is at Pottery Barn….

#213 Stickler on 12.13.12 at 10:01 am

#214 Oceanside on 12.12.12 at 8:32 pm

#198 Dr. WAYNE on 12.12.12 at 6:29 pm
#169 Stickler on 12.12.12 at 1:59 pm

The union makes us strong, right? — Garth
=======================

The union makes us lazy and full of entitlement.
=================
My point was more like this: make something in Canada and pay $30 hr plus benefits and the illusion / attempt of some job security can not compete with ->pay someone $17 /hr (or less) with little benefits and no job security

This is the trend in the US to get jobs back…and it does not bode well for Canada, and does not suggest these new US workers will have gobs of disposable income.

In a third world country a huge portion of income goes to cover the basics…this is the direction we (developed countries) are heading.

#214 Stickler on 12.13.12 at 3:01 pm

#169 Stickler on 12.12.12 at 1:54 pm

No, actually, it is as written. Corporate and personal debt levels are falling much faster elsewhere. — Garth

>> Garth, I’d love to see a link because according to what I have read US corp debt issuance and debt levels are both at record high levels.

#215 g-unit on 12.13.12 at 8:11 pm

This article is not doomy enough for me.