Doomer alert

turds1

Those who root for the collapse of America think this fiscal cliff means something. It doesn’t. Well, perhaps that’s a rash statement – it could bring a hot little buying opportunity. It’s possible stock markets, after a winning 2012, could swoon like they did in the fall of 2011 when we had the last catastrophe and this blog was overrun with people begging you to buy gold at $1,900 an ounce. (It’s now $1,650.)

Remember that? It was the ‘debt ceiling crisis,’ when the fools among us said the US would default on its federal debt, triggering a systemic financial collapse and a plague of bats. It was, of course, political theatre. When the inevitable solution came, markets recovered and the economy marched on. Those who were smart enough to buy growth assets in the autumn of 2011 have seen them swell in value by about a third. Pay attention. A new gift could be coming.

With scant time left in the year it’s unlikely squabbling US politicians will cement a deal to stop robo tax hikes and spending cuts. Markets have lost ground as the deadline approaches. More significantly, the Vix – which measures volatility – has spiked. Given the big gains investors have scored in recent months, I can totally see a wave of selling that takes them off the table.

Nobody believes politicians will let the American economy fall into recession, and stay there. The tax increases and budget cuts will never hold. What markets do fear are changes to the tax code making investing less lucrative, since part of the cliff involves taxing dividends as income (bad) and raising capital gains taxes by a third (worse). Until that’s resolved, a mountain of money will stay on the sidelines.

This could mean 2011 comes back. That’s when markets were heaving by 400 points a day and the doomers among us predicted a tumbling economy leading to a banking collapse. Today the S&P is 22% higher and gold is 13% lower. US unemployment is down, corporate profits are up and American real estate has bounced off the bottom.

Look at the latest stats. Americans are buying houses again. More new deals than at any time since early 2010, when the government was paying people to make offers. Sales of new houses have just jumped to a four-year high. Bidding wars have returned to Boston, Phoenix, San Francisco and New York. As I mentioned this week, a fixer-upper townhouse in Washington just got 168 offers, and sold for $40oK over asking. Prices in Arizona are ahead 20% in a year. Mortgage rates are at rock bottom, and a jump in both jobs and consumer confidence has people thinking it’s time to pounce on houses which are 32% cheaper than in 2005.

This is exactly what I anticipated, and told you to expect. And look at business demand. New orders have jumped by the most in four months, commensurate with an increase in overall corporate profitability. In the third quarter alone US companies earned $1.75 trillion, after tax – that’s up 18.6% in a year. In the last four years corporate profits as a share of the US economy have risen by 300%.

Against these facts the people who’ve bet against America – telling you the dollar will collapse because of QE, society will disintegrate into food stamp hell, the unemployed will fill FEMA camps or the fiscal cliff is lethal – are wrong again. A recession ain’t in the cards. The American dollar will grow stronger, not weaker. And when rising inflation plus falling jobless numbers prove the Fed has printed enough money, then monetary stimulus will be withdrawn and interest rates will start their gradual ascent.

The contrast between our two countries will be fascinating. During four years of deleveraging Americans have paid off personal debt while we’ve wallowed in it. Home ownership rates there have tumbled while here they have soared. Mortgage borrowing Stateside has withered while here it’s hit one record after another. There houses dropped in value by a third. Here they rose as much. Meanwhile wage gains in both places have been similar, along with interest rates.

When it comes to risk, there’s no comparison.

In 2013 smart people will move money out of inflated Canadian real estate and into financial assets, with a growing exposure to the largest economy in the world. Next week could be a hell of a time to start.

262 comments ↓

#1 City that smells like it sounds on 12.28.12 at 6:49 pm

First!

#2 phinny on 12.28.12 at 6:57 pm

My old man has a business in Windsor, Ontario which, as anyone would know, is heavily influenced by what goes on south (or, in Windsor’s case, north) of the border.

He’s had his best year, he told me this Christmas, in as long as he could remember. Of course, he’s not hiring yet, but things certainly seem to be improving.

#3 totalinvestor.com on 12.28.12 at 7:01 pm

So Garth how about a gentlemen`s bet on gold?
I say that gold will be higher at the end of 2013, you in?

Metalheads gamble. I invest. — Garth

#4 Joe on 12.28.12 at 7:10 pm

“Yes … you are the first a$$hole … and there’s another one right after you.”

Ha ha ha… Merry Christmas and Happy New Year!!!

#5 Dr. Stan on 12.28.12 at 7:12 pm

second first!

#6 Bill Gable on 12.28.12 at 7:13 pm

I have tried to convince my Doomer friends that their tin foil hats are past the ‘due date’ – and they look at me, like I am from Mars.

Some people just won’t believe anything good is coming. Doom and Gloom sells, I guess.

One friend of mine has put every penny he has into Silver telling me that “banks are going to collapse” and the “barter system will be coming back”. $780,000 bucks!!!
This guy has a University education and the brains of a flea.

I tried valiantly to get him to read this Blog, or at least get one of your Books, Mr. Turner, or call you and Scott….nada.

He is convinced the world is ending.

MSM doesn’t get it – and I am so amazed that a ton of folks are viewing the world using their binoculars backwards.

Terrifying.

Not as terrifying as Harper’s Toupee, but close!

#7 fred hill on 12.28.12 at 7:14 pm

President Obama “modestly optimistic” fiscal cliff deal can be reached, but warns no one will get 100% of what they want

http://www.cbc.ca/news/world/story/2012/12/28/fiscal-cliff-friday.html

#8 HeartoftheWorld on 12.28.12 at 7:28 pm

If the rise in US house prices had anything to do with the operation of free markets, then this ‘go long the USA’ post would make perfect sense. Unfortunately it doesn’t.

Through ‘QE to infinity’ the US Fed is pushing mortgage interest rates down to deliberately re inflate the US housing bubble. Also, US incomes are down. Sound familiar? (quite similar to what Carney and F have been up to this side of the border, as reported by Garth). Here people have been taking on record debt loads and taking advantage of low interest rates to load up on condos; there, ditto on lower mortgage rates, and substitute lower incomes there for record debt loads here, equals the same thing in terms of current house buying.

Also, it appears that the US banks have been withholding ‘shadow inventory’ to artificially inflate the market. So: is what is happening to real estate markets down south just (another) ‘dead cat bounce’? According to this source, it definitely is:

http://www.doctorhousingbubble.com/echo-housing-bubble-echo-real-estate-bubble-united-states-home-prices-incomes/#more-6193.

And what was the best performing US stock sector this past year? Well, the TBTF banks, of course, all of which are insolvent. Which means to me, this: if you can successfully stay on the right side of the USA’s 100 per cent manipulated stock, bond, currency and real estate markets — all good… but watch out when the music stops and the rush for the exits begins!

ToM. — Garth

#9 Huggy Bear on 12.28.12 at 7:32 pm

‘Word on the street’ is that the fiscal cliff will be remedied shortly after the tax cuts expire.

That way both sides can claim victory for their petty political (is there any other kind?) posturing, by both being able to claim they didn’t back down or vote for tax increases. So a quiet deal can be hammered out in the first few weeks of next year.

‘You dig man?’

#10 Art Vandelai on 12.28.12 at 7:33 pm

The “fiscal cliff” is a mass of hyperbole. What it entails is taking military spending, entitlements spending, and increasing tax rates to pre-GWB levels. In other words, Americans had higher capital gains taxes, higher personal taxes under presidents Reagan, Bush and Clinton than they will have after the US goes over the so-called “cliff”. The economy still grew under this “oppressive burden”. The idea that somehow earnings received passively from the stock market (AKA casino) are more worthy of encouragement or incentive than earnings received from the hard work of its people, is a sham and is truly representative of a populace that values speculation over real work.

#11 Humpty Dumpty on 12.28.12 at 7:35 pm

This jackass would disagree with you oh prophetic one.

The toxic agent in global trade, global banking, and global bond market is the USDollar.

http://news.goldseek.com/GoldenJackass/1356642000.php

Besides who would want to live in an occupied police state… Enjoy those cross boarder shopping days.

http://www.guardian.co.uk/commentisfree/2012/dec/21/coming-drone-attack-america

#12 Andrewski on 12.28.12 at 7:40 pm

Chill fools!

#13 claudius emperor on 12.28.12 at 7:42 pm

And my opinion:

In 2013 smart people will move money out of inflated Canadian real estate and out of US and North American financial assets and bonds and build a growing exposure to:
- Asian Pacific
- Emerging Economies
- Europe

#14 Smoking Man on 12.28.12 at 7:48 pm

Garth when is it going to register I am that coconut of yours that our, home owners not same as yanks.

Our track 6ers will not sell at a loss, nore see the risk. Army of dumb defeats army of smart every time.

Re solid in Canada, we have the most per capita idiots on planet.

#15 Drill Baby Drill on 12.28.12 at 7:52 pm

Dear pathetic blog if you are looking for a huge potential drop in consumer confidence in Alberta look no further than the land locked heavy oil we are now experiencing. Downtown Calgary is only getting 60% of WTI price ($90 USD) and the volumes are not increasing because everyone was counting on the Keystone pipeline going thru but it was delayed 12 months ago. Now the Alberta Gov’t is not getting the oil royalties it was counting on and voila you have a $6 Billion dollar deficit. It is going to hurt in Alberta in 2013 !!!!

#16 not 1st on 12.28.12 at 7:54 pm

Wait until the tax code is changed to disallow deductible mortgages, then that will put a nail in the so called housing recovery.

Garth, you need to get out more. Maybe take a drive across the U.S. midwest. You equate the stock market to main street. Only 20% of people are invested in the stock market. Their daily lives don’t revolve around shares and dividends. I just came back from down south and there is no widespread recovery in the works at all, save for pockets like North Dakota. A round of analysts just went through CNBC pegging U.S 4th quarter GDP at 1% and the same going into 2013. Thats hovering in recession territory.

#17 Drill Baby Drill on 12.28.12 at 7:59 pm

The Alberta landlocked oil problem is going to intensify because the Gateway PL thru BC is not happening and the twinning of the Transmountain PL thru BC is up against environmental opposition (due to be completed 2017) and the shipping of oil to the New Brunswick terminal in St. John just got approval but not as yet thru Quebec. Quebec will delay their approval as well so this leaves oil tankers by rail (CN & CPR just ordered approx 1500 of them) Alberta is seriously screwed but the Govn’t is not talking about it officially. I am in the oil business (enginering) and our company is panicking looking for a plan ‘B’

#18 futureexpatriate on 12.28.12 at 8:03 pm

(photo). Ah, Canadian Content. Wonder when the conservatives will finally quit subsidizing wonders such as these and even worse, HGTV. Argument against: It hasn’t worked since the proliferation of cable antennae and never will again. Argument for:

There is no argument for. Oh wait. Property Brothers, the underwear model/magicians who have neither an realtor nor a contractor license. It wasn’t necessary to play either on HGTV. Until people found out. Then there was this thing called the internet, see, and…

Ooops. That’s an “against”, isn’t it?

P.S. Bidding wars have been in cash-only distressed purchases in Las Vegas for months now. The entire city will shortly be owned by Depression landlords. Better that then real estate consortiums who let them rot.

#19 futureexpatriate on 12.28.12 at 8:05 pm

#8 – ESPECIALLY the voters.

#20 Giuseppe on 12.28.12 at 8:05 pm

Primo!

#21 T-bone on 12.28.12 at 8:08 pm

Whachu smoking TRT? #4. You are talking some biased cow excrement. Did you post on the wrong blog? What’s the rape victim have in common with real estate? are our super banks in your train of thought?

#22 Drill Baby Drill on 12.28.12 at 8:09 pm

The biggest predictor of future home sales in Alberta is the price Alberta can get for it crude. I have lived and worked in the oil business here in Alta for 35 yrs and I smell a big dump comming.

#23 Steven Rowlandson on 12.28.12 at 8:13 pm

First of all real estate is still highly inflated relative to peoples incomes especially incomes of the homeless, unemployed , under paid and under employed people.
So any increase in sales or prices will be short lived and there will be further declines that will be devastating… Many decades of price inflation relative to incomes have not yet been expunged and this is prerequisite to a real recovery based on sound economics.

As for gold and silver prices these prices as we know today are still insignificant relative to the amount of financial assets, cash and credit in the world. For such things to be balanced by real metal many zeroes would have to be added to the price of gold and silver. For existing market prices to be legitamate most of the cash, credit and financial assets would have to disappear into a black hole and be expunged.
I expect higher metal prices as people seek something more real than a promise to pay.

Government debt is too big relative to the economy and politicians are wholely responsible for contracting the debt. They had the choice of to borrow or cut spending and pay down debt. They chose borrowing and as a result the debt grew and in some cases to the point where there is no honorable way out.
In the case of the USA the only choices are to monetise the debt and pay it off with funny money followed up by knocking 6 zeros off the money supply. Bad news for savers and there would be no advantage to selling metal for currency during the hyperinflation.

The other option is to repudiate the debt and money supply and condemn it all as being constitutionally illegitamate.
From there a new monetary regime based on coinage could be instituted. Anything else other than coinage would be a fraud and unconstitutional.

#24 Dr. WAYNE on 12.28.12 at 8:15 pm

#1 City that smells like it sounds on 12.28.12 at 6:49 pm

First!
=======================

Hey a$$hole … you look like you smell …

#25 The Prophet Elijah on 12.28.12 at 8:24 pm

US economy is fubar. I for one don’t root for a collapse only call like it is. First the .com bubble, then the housing bubble, next the mother of all bubbles – the bond. And the DEBT both domestic and sovereign continues to growth into colossal mind blowing proportions with no end in sight.
QE continues and doubles starting 2013 with no end in sight.
Interest rates to remain close to zero with no end in sight.
Obama lobbying to remove the debt ceiling altogether so DEBT goes to infinity with no end in sight….

And I can add more but won’t, how can this possibly end well?

#26 Stoopid Idiot on 12.28.12 at 8:27 pm

I would not describe rooting for the collapse of America a investing strategy as I would describe a drop in real estate prices a cause.. Both are symptoms. There a far more systemic problem deeply rooted in a failed monetary system….. Long Gold & Silver

The Truth About The Fiscal Cliff:

http://www.youtube.com/watch?v=FT7hXCOyU08

http://www.youtube.com/watch?v=R6GtsXv0VtY

The Budget Can’t Be Balanced:

http://www.youtube.com/watch?v=ea0ckvGazkI

#27 Goldie on 12.28.12 at 8:27 pm

I have a new code to add the the blog lexicon:
GHG: Garth Hates Gold

Not at all. I own some as part of a balanced portfolio. Just feel sorry for the cultists. — Garth

#28 Tim on 12.28.12 at 8:29 pm

You’ve been wrong on real estate, the prices haven’t dropped by any significant magnitude, and you’ll likely be wrong on the stock market–it likely won’t drop by any significant magnitude. Despite the drama of the clowns in Washington and the tea party whackjobs, the stock market has been fairly resilient. Most of the bad news has been priced into stocks. In fact, I wouldn’t be surprised if we see a rally in January when the clowns finally cobble together a deal

Of course there will be a rally with a deal. Duh. — Garth

#29 };-) aka Devil's Advocate on 12.28.12 at 8:44 pm

#115 Kelowna renter on 12.28.12 at 4:56 pm
I rent a carriage house in the Wilden neighbourhood in Kelowna. The owners have been trying to sell for 7 months I think.

These houses traded for high 700s to approx 1 million depending on size and view as recently as 2010.

Last sale was 535K in this neck of the woods.

Mr or Mrs DA, your statistics are like a bikini, reveal something interesting, completely hide something vital.

If you will stop spreading untruths about me I will stop telling the truth about you. Until then I must let the readers know you haven’t a clue what you are talking about. The carriage home properties in the Wilden neighbourhood of Kelowna were all constructed by Rykon Construction in and around 2006. They are located on Still Pond Lane in Wilden. That Lane has 13 homes on it. Two other such carriage home properties have Still Pond Place addresses:

412 Sold for $502,000 in 2009 and $405,000 in 2008

434 Sold for $530,773 in 2007

441 Sold for $592,000 in 2012

457 Sold for $462,900 in 2006

473 Sold for $567,500 in 2011 and $476,900 in 2006

487 Sold for $729,000 in 2008 and $492,900 in 2006

501 was built for the current owners who paid $119,100 for the lot in 2006

513 was built for the current owners who paid $112,005 for the lot in 2006

525 was built for the current owners who paid $121,100 for the lot in 2006

537 Sold for $679,000 in 2008 and $486,450 in 2006

549 was built for the current owners who paid $124,100 for the lot in 2006

561 was built for the current owners who paid $125,300 for the lot in 2006

573 was built for the current owners who paid $129,900 for the lot in 2006

585 was built for the current owners who paid $139,900 for the lot in 2006

597 was built for the current owners who paid $215 for the lot in 2007 which was previously sold in 2006 for $186,800

Figures obtained from MLS® and The British Columbia Assessment Authority

As you can clearly see no carriage home properties on Still Pond Lane or Place has ever been sold for anything in the high $700s and certainly none for approximately $1,000,000. And the last sale was NOT $535K in that neck of the woods. The last sale in that neck of the woods was that of 441 Still Pond Lane which sold for $592,000 in January of this year.

Not one of those property owners lost the $200,00 to $500,000 you insinuate – not even close. In fact as hard as I tried I found not one piece of evidence that any of those homeowners who had built and subsequently sold did so for less than they paid for the property.

You want to accuse me of manipulating the statistics you had best get your facts straight yourself Mr or Mrs Kelowna renter. As it stands I can justifiably call you an ignorant bald faced liar.

#30 Lord Egbert Nobacon on 12.28.12 at 8:48 pm

Hi Garth,

Robert Schiller, the renowned expert on the US housing market doesn’t appear to share your optimism:

http://www.zerohedge.com/news/2012-12-28/bob-shiller-housing-recovery-highly-uncertain-its-risky

#31 TurnerNation on 12.28.12 at 8:48 pm

VIX’s move the other day portended doom alright.

#32 calator_2000 on 12.28.12 at 8:49 pm

Do you want to make money in real estate? Buy houses in UK.. C will make you a good investor:)

#33 Gogo on 12.28.12 at 8:50 pm

Ray Dalio, manages about 150 billion dollars. He thinks that every investor should have at 10% of his portfolio in gold… is he a metal head or an investor. Or is he a talker? His investment record is public and audited. Garth show us your record. I am really curious. You may not publish this if you want. I am not writing this to make you look bad.

That’s good. It didn’t work. — Garth

#34 TurnerNation on 12.28.12 at 8:52 pm

Oh I just read the post. Pictures come first. Yeah, expecting a flop into Q1, into a buying op.
TFSA (Turner Free Stock Account) time.

#35 Hoof - Hearted on 12.28.12 at 8:53 pm

#18 Drill Baby Drill on 12.28.12 at 7:59 pm

I would suggest you develop technology that is capable of directional drilling to depths/distances at least the equivalent of the radii of the Earth ( minimum 12,000 miles).

Then, having done that, buy Ford F350 Pick Ups (with Bovine Balls/Truk Nutz attached) and smuggle the crude to BC Ports, or ship via FedEx.

PS Dr Wanker..catch- up 2-Ewe next post

#36 Blasé on 12.28.12 at 9:00 pm

are you including toronto in that capital reinvestment prediction Garth? I know you are including the gta. or do you think toronto houses can withstand until 2014? I say Toronto houses slide in ’13.

#37 DEG on 12.28.12 at 9:02 pm

Although putting all your eggs in one basket is foolish. The guy with $780k in silver is very likely on to a winner, You don’t have to be a doomer to own some silver. Anyone who takes a serious look at the fundamentals of the silver market will quickly realize the metal is under valued at the moment, as for gold I don’t own any nor do I think the financial world is coming to an end.

Cheers

#38 City that smells like it sounds on 12.28.12 at 9:04 pm

#25 Dr. WAYNE on 12.28.12 at 8:15 pm

Hey a$$hole … you look like you smell …

—————————————————

Sounds like someone needs his diaper changed.

#39 economictsunami on 12.28.12 at 9:10 pm

Optimist Alert:

Take away bond buying of $85 billion per month from the US Fed (plus emergency low rates) still high, unacceptable U6 and a fickle/ credit challenged consumer.

Nothing in the financial sector has been fixed and some banks are back to being dramatically over leveraged.(Don’t even get me started on the out of control growth of international derivatives.)

HFT is front running many markets, with their peek-a-boo, pre quote posting. Volume is low and volatility is high as many flash crashes continue to occur but many go unreported in the MSM. Many retail investors continue to extract money from equity markets at a dizzying pace. (http://hosted.ap.org/dynamic/stories/U/US_INVESTOR_REVOLT?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2012-12-27-17-17-47)

China’s GDP is based largely on stimulus gone wild, with enormous amounts of maladaptive ‘investment’. (http://www.mpettis.com/2012/12/28/the-imf-on-overinvestment/)

Westernized economies CBs continue with endless rounds of currency debasement.

Other then that… it’s all good…

The US will recover. Worry about yourself. — Garth

#40 };-) aka Devil's Advocate on 12.28.12 at 9:11 pm

#77DA aka Mis-information Man on 12.28.12 at 10:52 am
#56 };-) aka Devil’s Advocate,

I’m a renter in Kelowna, at Barona Beach during the summer… I winter at my home in Florida. I can afford any house I want in Canada, but the housing affordability index for Canada plainly says not to buy anything. Currently in Barona Beach there is over 42 units for sale, the landlords are running for the exit. In the summer I rent a $701,000, 2 bedroom / 2.5 bathroom condo on the beach all utilities included in that condo complex for $1050 a month. I’ve been doing that ever since I retired and came back to Canada from the States. In Kelowna landlords who bought since 2005 are eating their shirts, don’t tell me about cap rates being great. If you want great cap rates (22%), buy a decent 16 unit apartment building in Chicago for less than the price of a condo in Kelowna! I’ve been tracking housing for 3 years in Kelowna since the time I returned via a spreadsheet using the MLS, its dropping like a rock there. Foreclosures are up and increasing…if Ottawa doesn’t start playing with housing again you’ll see even greater price decreases. Its people like you DA that should be charged with fraud, your type of hyperboles caused a lot of people in the States to lose their homes. That is exactly what will happen here in Canada, its just a matter of time. In the States it took 7 years to bottom out, it has barely begun here. DA you’re are so full of mis-information, you’ve got to be wiping your mouth every few minutes, try to be honest and ethical. It’ll be refreshing for the readers of this blog.

I will not deny that Barona Beach is a real estate fiasco of biblical proportions. Anyone, but renters, in that development are the best examples of Greater Fools I know. Kudos to you for picking the single biggest real estate sham in Kelowna as it certainly is something for us to be embarrassed about but hardly representative of the city in whole (West Kelowna or Kelowna).

When I said that the cap rates are getting attractive once again I meant they are “getting” attractive once again. I have seen properties sold which are now rented to renters well covering the carrying cost to the Landlord. It is not an abundantly prevalent phenomena but it is gaining. It will never be abundantly prevalent because as soon as it nears investors will start investing and their demand will drive up the prices once again. I’ve seen it before and am confident I will see it again. In fact I consider it a leading indicator to be vigilant of in order to predict with some accuracy where the market is headed.

Also, as I said in a previous post, I do not advocate any of my clients buying revenue properties without using a 7 to 8 percent interest rate when doing the viability analysis of such a property.

A 22% cap rate in Chicago?!?! Come on, seriously. There are many such apparently outstanding deals in Chicago. Have you no wonder why? Can you imagine they tenancies? Can you just imagine? Would 22% be worth it? I don’t think so. There is a saying in real estate; ‘When you are far from your property you are near to your losses’. Have you invested in such a 16 unit apartment block offering that 22% cap rate? Have you, and if not why not?

I am happy for you though, that you are comfortable doing what you are doing. Fill your boots man. Whatever works for you.

Form Man I’d have thought you could do better than ride of that coat tails of that lame post.

Again I stand by my posts as factual and informative. Do what you’d like with them, or not. Choice is yours. Not everyone can succeed. The Pareto Principle is a fact of life – only 20% can win at the expense of the 80% who lose. We need losers that we can win. I’m not trying to make you lose – you’re doing a damn fine job of that on your own. Just like all those Barona Beach buyers who bought from the developer and now are begging REALTORS to sell them to more intelligent people albeit at a loss.

#41 Canadian Watchdog on 12.28.12 at 9:27 pm

A few more price drops in Toronto Link

#42 Form Man on 12.28.12 at 9:28 pm

#28 DA

gosh buddy, where is all this anger and defensiveness coming from ? Kelowna renter really seems to have set you off. If the Kelowna market is all sunshine and ponies as you suggest, then there is no need for you to be this way.

On the other hand, if, ( as it appears ) the Okanagan market is still in the toilet some 4 years after the correction, then you might have some ‘splainin to do’…………

#43 };-) aka Devil's Advocate on 12.28.12 at 9:36 pm

But Barona Beach is there. It was planned, built and sold. That is success. That so many of the buyers were duped by the development team into buying such at the very peak of the market as a good investment is… well… the buyers own fault. Nobody held a gun to their heads. They could have employed the services of a good free agent who would have shown them alternatives.

Barona Beach is there and actually a fine resort offering a host of enticing activities for summer retreat in the Okanagan just as #77DA aka Mis-information Man on 12.28.12 at 10:52 am is taking advantage of. So who is to complain – other than those Greater Fools who were duped by the development team into buying into Barona at the very peak of the market as a good investment? Certainly not Mis-information Man as he is clearly enjoying the benefit at another’s expense and boastful for being able to do so.

So we should thank those Greater Fools who were duped by the development team into buying into Barona Beach Resort at the very peak of the market as a good investment for they have given this valley an asset which will live on for many years to come by which many a visitor will come to Kelowna to play and enjoy all that we have to offer including Barona Beach Resort which is, really, quite a nice resort – just not worth what those first Greater Fools were duped into paying.

All’s well that ends well wouldn’t you agree?

#44 JSS on 12.28.12 at 9:45 pm

Hi Garth -

Is it better to buy individual US stocks or US-tracked ETF’s?

I want to buy next week. thx

#45 espressobob on 12.28.12 at 9:47 pm

Looks like Mr. market might be presenting US with a belated boxing day sale.

#46 Form Man on 12.28.12 at 9:48 pm

#40 DA

you have just admitted with that post that realtors are deceptive liars and should never be trusted……….

#47 couch potato on 12.28.12 at 9:56 pm

Hey Garth,

What do you think about Dan Bortolotti and his pimpin’ indexed mutual fund formula?

#48 };-) aka Devil's Advocate on 12.28.12 at 10:02 pm

#38Form Man on 12.28.12 at 9:28 pm
#28 DA

gosh buddy, where is all this anger and defensiveness coming from ? Kelowna renter really seems to have set you off. If the Kelowna market is all sunshine and ponies as you suggest, then there is no need for you to be this way.

On the other hand, if, ( as it appears ) the Okanagan market is still in the toilet some 4 years after the correction, then you might have some ‘splainin to do’…………

No anger Form Man. If you detect it I am sorry as really there is no anger what-so-ever.

Fact is there will be more than 2,200 single family transactions done in 2013 (not accounting for strata). That’s more than 4,400 ends. All I want is my 1.0. That’s a pretty easy task especially when you cull the dead wood from the mix. And I personally think that 2013 is going to be better than 2012 so I am quite eager to get started.

PLUS, there are some outstanding opportunities starting to show in other segments of the market. UBC wouldn’t give KGH any land because they don’t have enough for their own projected growth. We have the new cardiac center being built at KGH. The city estimates that we will add another 40,000 bodies to our population before 2020 (that’s a 33% increase!). The Airport is growing in leaps and bounds due to increased demand with new direct flights to many new places. These are just a few developments brought about by people with a ton more employed resources than you and I. That they are a go is pretty damned encouraging.

Of course you can throw this failed development and that failed development at us all you want Form Man. But, really, are they failed? Don’t count SOPA out quite yet my friend. And like my previous post on Barona Beach; while yes a great many Greater Fools got duped on that one it is now planned, built, sold and a permanent fixture adding benefit to the community. Yes at the expense of many a duped Greater Fool but that was their choice. Sometime along the way the owners who hung in there or the new more prudent buyers who bought out the first at pennies on the dollar will find their investment will pay off. Might be a while but that day will eventually come. And so too will it be with every other barely surviving development you say is failing. Are you sure they are Form Man or is it just wishful thinking on your part.

Nope, things are pretty darn good here in the Valley. No it’s not 2007/2008 nor do we want it to be. Those were foolish, heady, unsustainable times. Today we know better and we are moving forward at a reasonable pace with careful steps. There is still that core market of at least 2,200 single family sellers and 2,200 single family buyers, not to mention condo sellers and buyers, who will be buying and selling this year. Yes there are 800 REALTORS thus the average will be but 6 ends each but that is the ‘average’ and we all know how that works. Remember the Pareto Principle. It is an indelible fact of life; 20% do 80% of the business. 20% do 80% of the production. Oh and 20% do 80% of the bellyaching too Form Man – let’s not forget that.

2013 is going to be a fantastic year for some; others – not so much. And yet for others it will be an abysmal hellhole of a year. What it will be for you is what you make it. Fill your boots my friend it’s all there for the taking but you have to get up off your ass and see the opportunity. Attitude is everything. Call that foo-foo dust all you want but the fact is attitude IS everything. I don’t know about you but I can’t afford to have anything but a good attitude and I am sorry if I did not covey that to you in mine. I’ll have to work on that.

#49 };-) aka Devil's Advocate on 12.28.12 at 10:03 pm

sorry that should have read “That’s more than 4,400 ends. All I want is my 1.0%” not “my 1.0.”

#50 Hoof - Hearted on 12.28.12 at 10:05 pm

Dr Wayne.

OSCARS are coming in a few weeks..

You are the “back up/stand in” …if your patient(aka 1st choice) Seth McFarlane catches terminal hemmorhoids and botox – hangnails.

If you have to submit OSCAR awards…not allowed to call the OSCAR winners a$$holes (except maybe Alec Baldwin and Sean Penn)

#51 Scott in Gibsons on 12.28.12 at 10:08 pm

You are going to eat your words of optimism Garth. The financial world now runs entirely on fraud, corruption, and lack of accountibility. Good for you, you snuck through one more year looking like you’re smarter than those that see the risk. When the wheels fall off you will disappear or come up with excuses why you were wrong. Your advice is great, until it isn’t.

#52 bill on 12.28.12 at 10:09 pm

Garth thankyou for that hilarious picture.

https://www.google.ca/search?q=turds+of+misery&ie=utf-8&oe=utf-8&aq=t&rls=org.mozilla:en-US:official&client=firefox-a

#53 new canadian on 12.28.12 at 10:12 pm

Yes, US will hyperinflate and then crash. It takes time to crash a half-century-old ponzi scam.
USD denominated assets are very dangerous.
USD-CAD is at par, it was half some years ago. So anyone could argue that he got good ROI in US these years should check with xchange rates.

Meanwhile, let’s look at what an M.A degree in Economics at UBC would give you: A sense of stupidity.
http://www.theglobeandmail.com/report-on-business/economy/economy-lab/cmhc-must-stay-in-government-hands/article6790504/

Guy just does not understand what privatization means and gives 1st and 3rd reasons. 2nd reason: He is just a communist/socialist.
For me, he has a perfect future as Chief Economist at any Canadian bank.

#54 };-) aka Devil's Advocate on 12.28.12 at 10:12 pm

#43Form Man on 12.28.12 at 9:48 pm
#40 DA

you have just admitted with that post that realtors are deceptive liars and should never be trusted……….

HA HA. Try again Form Boy.

Barona Beach was sold by the developer’s own onsite sales force, not by REALTORS®. Had the buyers then employed the services of a free agent (REALTOR®) rather than trust the developers paid employees they might have been introduced to alternatives that made more sense and enlightened to the duping they were about to willingly submit themselves to.

#55 Deb on 12.28.12 at 10:16 pm

What then dist thou in thy mind have?

First of all, long before the current panic in Washington, we had a manager in our department who was commonly known as “Fiscal Cliff”.

Secondly, $5,500 is ready to launch on Jan. 1, or soon thereafter, one-half currency neutral, if you please.

Finally, your predictions for 2012 were more accurate than those of anyone else I know of, brave enough to confront uncharted waters. Thank you for letting us know, in advance, the date for your 2013 forecast.

#56 };-) aka Devil's Advocate on 12.28.12 at 10:20 pm

Oh and one more thing Form Boy;

If as you say in your post at #40 that “the Okanagan market is still in the toilet some 4 years after the correction” is true, can you explain how and why each of those properties for which I provided the resale information in at my post at #28 were able to be sold for more after the correction than they were at close to the peak on the upside of it?

I know you have trouble with numbers and might not be able to find that post so here are those numbers once again;
They are located on Still Pond Lane in Wilden. That Lane has 13 homes on it. Two other such carriage home properties have Still Pond Place addresses:

412 Sold for $502,000 in 2009 and $405,000 in 2008

434 Sold for $530,773 in 2007

441 Sold for $592,000 in 2012

457 Sold for $462,900 in 2006

473 Sold for $567,500 in 2011 and $476,900 in 2006

487 Sold for $729,000 in 2008 and $492,900 in 2006

501 was built for the current owners who paid $119,100 for the lot in 2006

513 was built for the current owners who paid $112,005 for the lot in 2006

525 was built for the current owners who paid $121,100 for the lot in 2006

537 Sold for $679,000 in 2008 and $486,450 in 2006

549 was built for the current owners who paid $124,100 for the lot in 2006

561 was built for the current owners who paid $125,300 for the lot in 2006

573 was built for the current owners who paid $129,900 for the lot in 2006

585 was built for the current owners who paid $139,900 for the lot in 2006

597 was built for the current owners who paid $215 for the lot in 2007 which was previously sold in 2006 for $186,800

#57 Smoking Man on 12.28.12 at 10:22 pm

Being shit faced at Fallsview poker room with wods of brown ones is insane, but then again, when the force is with you, don’t matter, quadruple up vs the pros feels amazing, I knew when to run, @club 360 drinking rum and cokes to wake up from the wine buzz.

Does that make sense?

#58 Form Man on 12.28.12 at 10:24 pm

#46 DA

The real estate cycle will eventually turn up as it always does. Roughly 6 years of downturn followed by 6 years of upturn. We are still a year or two from the bottom. Once the MOI drops to 6 we will begin looking at acquiring land and or buildings. A year or two after the bottom when the rebound is firmly underway, we will begin launching projects. When we are getting toward 6 years of upturn, we will increase the liquidation and start getting ready for the downturn.

It is obviously a bit more nuanced than that, but basic math rather than ‘wide eyed emotion ‘ will guide us. This method has worked like a charm for me for several cycles now.

#59 };-) aka Devil's Advocate on 12.28.12 at 10:25 pm

And Wilden (where those houses in my previous post are located) is a Kelowna neighbourhood which was hit comparatively hard by the drop in the market.

Yup, Kelowna real estate is in a shambles all right. Just terrible.

NOT

#60 Kegpeg on 12.28.12 at 10:27 pm

So any predictions on another US debt downgrade? If their so called fiscal cliff alternative falls short and they are still on track to run a Trillion+ deficit by mid to late 2013 will anything happen, or will the rating agencies just keep a negative outlook in fear of triggering another negative market shift on their retirement funds.

#61 T.O. Bubble Boy on 12.28.12 at 10:34 pm

HAHAHAHAHAHA:
http://www.huffingtonpost.ca/pierre-poilievre/canadians-and-fiscal-cliff_b_2377518.html

Harper propaganda at its best… gotta love quotes like:
“For example, Canada avoided the interventionist policies that led the U.S. to the sub-prime crisis.”

What kind of revisionist history are you trying to create to claim that Flaherty and Harper never intervened in the Canadian housing market?

Articles such as the G&M one listed here would prove otherwise:
http://whispersfromtheedgeoftherainforest.blogspot.ca/2012/12/mainstream-media-begins-examining-what.html

#62 Devore on 12.28.12 at 10:35 pm

Just waiting and bidding my time until the fiscal cliff drama reaches a crescendo before I rebalance again; more US equities, less Canadian bonds. Also, please for gold over $1700 so I can sell the rest of it to the doomers.

#63 The end is nigh on 12.28.12 at 10:40 pm

What I simpleton don’t understand is what will happen to the US debt of $16,000,000,000,000
which is growing by $3,000,000,000
every day?
My guess is they just wish, print or inflate it away.

No, growth resumes and they service it. — Garth

#64 Form Man on 12.28.12 at 10:49 pm

DA

you better get out there and start buying right now ! otherwise you might be ‘priced out forever’ !

#65 Pr on 12.28.12 at 10:51 pm

Doomer alert
Well, the doomer are just seing that when the market in general is rig, at this level, something bad is about to happen, sooner or later. So keep watching.

Dont forget HSBC+MEGA big drug dealer= Team
At one point the good guys will step in.

#66 Unlucky Tom on 12.28.12 at 10:51 pm

Those who were smart enough to buy growth assets in the autumn of 2011 have seen them swell in value by about a third.

Only if they are lucky. I bought a bunch of growth assets and lost quite a bit of money. I bought PSN, PGF, COS, CLC, RIM, MFC, SLF, BBD.B, and many others and most of them are down compared to 2011. I did my research and these all seemed to be quality companies with solid fundamentals, yet I lost money. It all comes down to luck.

If you had some you’d buy ETFs, not equities. — Garth

#67 No way out on 12.28.12 at 10:53 pm

Garth, thanks for your tireless articles and thoughtful narrative. Just one thing though:

“And when rising inflation plus falling jobless numbers prove the Fed has printed enough money, then monetary stimulus will be withdrawn and interest rates will start their gradual ascent.”

What say you to John Hussman, a US fund manager who raises loss aversion to a science with his long-short funds and who has written extensively about the fact that the Bernankian Ctrl-P monetary stimulus is so vast that raising 3-month interest rates to even 2% will now require like a halving of the monetary base with the kind of abrupt crunch to economic activity (and losses to the Fed’s vast Treasury portfolio) that would imply? For example, http://hussmanfunds.com/wmc/wmc120910.htm

Just sayin’ if Hussman is right, the Fed has no better chance of engineering a smooth withdrawal of stimulus than François Hollande does of luring high-income workers from Dubai with his income tax policy.

#68 Debt's Dark Embrace on 12.28.12 at 11:00 pm

I spoke to a few people here in Kelowna over the holidays….2 of them want to sell and move on but they are underwater and can’t afford to take the loss….another one wants a home equity loan to pay some bills but the bank won’t give a loan cuz she is underwater too……I have no numbers to spin, this is just what I hear from people I talk to here in Kelowna.

#69 Rob, good news 4 voltures on 12.28.12 at 11:02 pm

http://www.bnn.ca/Shows/Market-Call-Tonight.aspx

#70 Form Man on 12.28.12 at 11:07 pm

I agree with your predictions Garth. If things unfold as expected, Harper and Flaherty will find themselves in a bit of a pickle. In the aftermath of the GFC, Canada benefitted from a construction boom in the oil patch, and a housing boom in the big cities. The Conservatives paraded around openly claiming credit for this. Now, with Alberta cooling off rapidly and the housing market heading into a downturn, the Cons ( whose ideology convinces them that Obama will fail) have begun a narrative that suggests problems in the U.S. will be the reason if Canada stumbles in the next year or two. If indeed the U.S. continues to improve, while Canada struggles, they will look like fools.

#71 Grasshopper on 12.28.12 at 11:08 pm

Recently reported by statscan that Canadians are spending $1.64 for every dollar made. Could someone “east coast” that for me? ie. If I make a salary of $200,000 (which I don’t), and take home $100,000, I spend $164,000? Have a mortgage for 15 years with $164,000 left to go? Have a line of credit where I pay $164,000 in payments a year?

I don’t understand how a person can spend $1.64 for every dollar they earn.

As for being a doomer. I am not a metalhead, but I can not understand how the US economy can continue while their debt continues to grow.

http://www.usdebtclock.org/

Do I have this right? Each taxpayer is liable for about $1.061 million?

If the US sneezes, Canadians catch a cold.

#72 martin9999 on 12.28.12 at 11:10 pm

now you are making sense hairy fella

we should see 1250 at no time, that will triger a big time buying opportunity

#73 martin9999 on 12.28.12 at 11:11 pm

metals wont drop as much cuz people know lots of stimulus will take place to make sure USA wont hit recession

Lots of stimulus and gold is down. So much for that. — Garth

#74 claudius emperor on 12.28.12 at 11:14 pm

Would an open letter to F and the media to stop messing around guaranteeing subprime mortgages to people that can’t afford them in first place backed by us, the taxpayers work?

I am not sure if this guy (with a lawyer’s degree) knows what he is doing, frankly speaking, could they bankrupt the country so we lose most of the services while paying higher taxes?

Could any legal action be taken here? I would gladly donate now (hope it is not too late, though it seems based on the Globe and Mail’s article it might be too late already). Why are there no parliamentary discussions on this topic? Is everything rosy or it is just some people (including me) being paranoid?

Why is the media discovering this now?

#75 martin9999 on 12.28.12 at 11:14 pm

deal will take at least 2 weeks. if they dont get it together by february then expect sp to hit 1000-1100 hundred easy
by monday the market will be smashed with short sellers. i will bet big too

cheers

#76 Ralph Cramdown on 12.28.12 at 11:16 pm

Seth McFarlane? Oscars? I heard he was on the day-to-day DL after horrible but localized burns suffered in an accident while he was having his Dr. WAYNE bleached.

#77 Rob on 12.28.12 at 11:16 pm

# 59
Harper and F can blame Carney for the next few years since he wont be around. Lol

#78 HeartoftheWorld on 12.28.12 at 11:17 pm

ToM?

#79 espressobob on 12.28.12 at 11:25 pm

# 49 Scott in Gibson

Seams like you spend too much time reading “markets at a glance” or god forbid “Marc Faber”. Please say it ain’t so?

#80 Inflation Nation on 12.28.12 at 11:25 pm

WOW there were so many things wrong in Garth’s assessment of the US, I wonder where I should start…

Gold has been in a bull market for the last 11 years, right now to me it seems like it has been more or less consolidating this year. Last year the gold price Jan 1st was approx 1550 USD, and it will finish the year at approx 1650 USD, which about 7% gain if you bought at that time of the year. Over the long haul needless to say gold has outperformed the S&P 500. For those who can’t be bothered trading on the casino markets, phyiscal gold is an excellent hedge against currency devaluation. I wonder how much higher it will have to go before people like yourself will acknowledge it as good return.

Also I am not bullish on America at all, in fact I consider it a write off. New taxes in the new year, obamacare rules and regulations, more barriers to entry, more government deficet spending, no serious cuts on spending, more socialism, less freedom, etc.

Also I dont know if you know this or not, but the unemployment numbers in the US are fudged. They don’t include persons who have stopped looking for fulltime employment or those working part time. It might surprise you but the US government lies and fudges the numbers for inflation and unemployment. The reason why unemployment appears to be going down is because the US government stops counting people who have quit looking for jobs.

The reason why housing is going back up is because of the federal reserves QE3 program where they are buying up mortgage back securities that no one wants to own in the private sector at the tune of 40 billion dollars a month. They are trying to create another housing bubble… but they will be unsuccessful i think, because there are to many holes for it to be reinflated.

Also foodstamp usuage in the US has nearly doubled since Obama came into office in 2008 to nearly 48 million americans. I think that is a clear indication of dying middle class in the US…

Also those FEMA camps all over the US are now in operation and running! google it!

I think the US is in serious trouble in the long term. Canada is a lot safer and stronger economically.

Fudged employment numbers. Internment camps. Market manipulation. The wisdom of metalheads. — Garth

#81 DA aka Mis-information Man on 12.28.12 at 11:39 pm

You’re still spouting mis-information. Time to move on DA. By the way yes I do own those Chicago apartments; buying more this winter and they do make the cap rate I demand! Apartment management is all in the process management of those apartments… as long as you know what you’re doing you as an owner can be anywhere in the world. Process architecture and management is what successful companies build their business models on, look it up! What is becoming abundantly clear is that you’re very defensive concerning Kelowna and the truth behind its real estate practices, so I tend to think you should start to study ethics, cause you need them! You say Barona Beach is the outlier, but in practice its the norm for Kelowna.

#82 Jamie on 12.28.12 at 11:45 pm

Hi Garth, I enjoy your blog. I’d love to hear your thoughts on how/if declining real estate prices will affect REITs. Does it make sense that if a REIT’s assets decrease in value, that investors will perceive the REIT to be less attractive and its stock price will decrease? Will there be a difference between residential- and commercial-focused REITs?

#83 M on 12.28.12 at 11:51 pm

Garth… 2013 ..September… Gold 2000 +
I drink Finlandia.
Opposite, a bottle of Glenfidich 18yrs old. The age of consent :)
Mick

#84 earlybird on 12.28.12 at 11:52 pm

Dry powder is ready….I would never bet against US, as long as they can service the debt…smooth sailing. Its the UNCERTAINTY of new tax/regs/rules that is keeping money on the side….why invest or start a biz, when you dont know what the rules are. Canada is looking over a cliff, the US is at the bottom looking up! Exciting year ahead, gold is almost useless, except for a beautiful piece of jewelry….

#85 Ric in gta on 12.29.12 at 12:12 am

Hi garth
I agree with most of your comments except with regard to USA.
1. Obama care was more then just a heath care bill. Vast amount of wealth has been transferred from private to government. Doctors and all health care workers will now be employees of the government, on top of that they will be union workers paying dues. If you read the health care bill one thing jumps out, a flat $3800.00 realty charge will be on all homes purchases. This one bill has changed the USA.
2. Check out what the EPA has done to farming.

#86 Real_Professional on 12.29.12 at 12:17 am

@ TRT

I’m south asian, 1st generation Canadian. I have two older sisters which my parents have shown equal love to.. My wife is from a south asian family of four sisters, they are loved by their parents as much as anyone. My wife’s best friend comes from a south asian family of only two girls. My wife’s uncle who is as immigrant as immigrant can be has two daughters, no sons… he is in his 50s and has no plans for more.

Meanwhile the ten daughters from the families that i mentioned have about 15 post secondary degrees among them, no criminal records, have received no welfare cheques, and haven’t had arranged marriages. Yes, a true drain on society which should make us rethink immigration policy.

So your argument to question immigration due to some New delhi rapists is dumb and attempts to take advantage of the victim who tragically died.

It is as dumb as if someone from India said ban Canadian visitor visas because ‘Canadians are generally not vegetarians and Luca Magnotta killed an asian’…ergo Canadians are a threat to our way of life.

#87 Grim Reaper/Crypt Speculator on 12.29.12 at 12:18 am

Kelowna market will be just fine..

…as long as the minimum wage goes up to $99+/Hour

#88 claudius emperor on 12.29.12 at 12:26 am

As for the gold and the silver:

Could we finally get a comprehensive overview of why a gold standard would not work?

Historically (except the last 100 and something years) gold and silver have been used for preservation of wealth/value.

I read recently ‘I Claudius’, it seems even an accepted as idiot emperor (no wonder I use his name as a moniker, with deepest respect though …) could run successfully a country based on gold standard. Whenever there is more money in the coffers the guy starts public projects (hospitals, roads,…) and creates jobs, whenever there is less money he takes loans (reasonable, depositing public land as collateral) and cuts spending, how is cutting the spending a bad thing? Why would deflation (driving the prices down) be a bad thing?

Should that not be a driver for competition?

Is the real problem the system based on credit that we are running instead of a sound gold and silver based system?

I could accept public land or assets as a backup for the paper currency here as well.

How could an accepted as idiot emperor run so well a country 2000 years ago and we cannot now?

I have very minimum gold exposure but I would probably feel much safer if the money I have and earn are backed by something (gold, silver, land whatever it is) versus the paper notes that someone can print at will.

I agree that if printed with control paper money to some extent could be a good alternative but I fail to see that control, on the contrary, running deficits is the norm which means inflation (money printing) that far exceeds the interest paid by the banks.
On the top of that all the interest is taxed as income, really funny, the inflation of the gas and food has been north of 5 per cents on yearly bases in the last 4-5 years while the banks pay 0.15 per cents interest on non-term deposits and these money are taxed as income.. Ridiculous. It seems like people are being robbed and taxed while losing money at the same time.

Why should ordinary people be knowledgeable investors or forced to pay advisers (if they are lucky to get good advisors…) to prevent their savings from being lost?

Why can’t we learn to earn the money first and then spend them as has been historically the norm?

And if gold is useless why Germany, Italy, France, Russia, China, India, IMF,… every government is building and maintaining larger and larger reserves of gold? Why there are not selling it at these ‘record’ prices to take nice profit? By the way gold is officially marked as foreign currency reserves in their balance sheets?

Is someone searching for greater fools on world scale?

Are the things with the gold standard really that complicated? Or I am just being too naive?

Any comment by Garth would be greatly appreciated.

And I really want to hear some arguments different than: It is not practical, it is not going to happen (I really would like to know WHY).

Thanks in advance.

Gold is not, and never will be, currency in North America. Nor will any major country ever again have an asset-backed currency. Get used to it. — Garth

#89 n1tro on 12.29.12 at 12:28 am

Garth,

You say that the US will grow and be able to service its debts. I don’t disagree however I am curious what new industry the US will have to drive double digit GDP growth?

Auto is finished. Computers are yesterday’s news. China has the market on staples. Surely housing isn’t going to drive the growth!?

#90 claudius emperor on 12.29.12 at 12:39 am

The same with the capital ‘gains’ that do not take into account the inflation. Taking as a base for ‘gains’ the inflated price when selling.

While the real physical asset behind could be the same or smaller in real value.

I am not talking about laws here, I am talking about justice. Is this just?

#91 Riding the Pine on 12.29.12 at 12:51 am

I love the optimism, Garth, but a couple of massive holes in your outlook.

1) “The American dollar will grow stronger, not weaker.”
The US dollar gets devalued by QE – basic economics.
2) The US (gov’t debt = common man debt) cannot repay their debts and have no plan to. It is mathematically impossible. Eventually political spin will fail to hide this fact from the rest of the world.

The fear of a dollar collapse is not doomer-speak, it’s a reality to anyone brave enough to question a failed system. I have not yet heard a plausible argument for why the US dollar (and many other currencies) will NOT collapse at some point in time.

happy 2013 to all!

It won’t be in your lifetime. What a waste of worry. — Garth

#92 Nostradamus Le Mad Vlad on 12.29.12 at 1:00 am

-
Garth is saying that all is fine and reasonably well (UK rising), but one should also view the opposite side, such as here.

Austerity is not a pleasant word, and, as seen in Europe has had quite a negative impact. Not so much on countries, but on their citizens to keep them in order and be good slaves, doing what they’re told by crooked politicos while TPTB rape TROTW. Nevertheless, everything to its own season.
*
#8 fred hill and #9 HeartoftheWorld — See first two links. The fiscal cliff garbage could be a covering for other stuff, to keep sheeple distracted. See Pentagon vs. China link below — RepubloDems Is this why American companies are doing so well financially? Plus this article are joined at the hip. When a govt. has a subservient workforce, the govt. can do anything it wants, civilians be damned; Hemp or Gas? Hemp seems to be the better choice; Homeless Vets The economy is improving for some, not for others; Iceland First of many banxters jailed, and Oexpensive There is no fiscal cliff; War on Cash Sweden; Ten economic collapses through history; Nice way to bow out.

Cdn. Friday links; Your Money Or Your Life; Mathematics Not my strong point, so this leaves me totally baffled; Mercy! Patterns; Inflation Implosion; ObombaCare Premiums could double, which is why several companies are turning to 29-hr. workweeks; Silver Coming out of the closet in 2013? Milk at US$8 / gallon in a few weeks? IPOs slump; China’s rare earths — not so rare and prices are dropping.
*
1:14:41 doc. Smoking Man, this doc. proves what you’ve been saying all along (about education); Pentagon vs. China This would account for the US switching a lot of its military to the Pacific, but USS John Stennis “What the above article failed to report is that the Russian Navy is on maneuvers in the Gulf of Aden, and the Mediterranean.”; wrh.com; Facebook rewrites history to suit itself, and more on FB; Libya Still a madhouse since the west went in uninvited; Syria Subdivided into three sections; US Civil War Part II from a Cdn. perspective, and Feinstein’s gun ban Some won’t care for this; Suicide War iis TPTB’s version of depop.; Oregano Chickens Anything is better than Monsanto’s vomit; GW alarmists may like to question people in Siberia and / or Beijing how GW is working for them; The sun blows a raspberry at the Mayan apocalypse; Pole Dancing Pooch It’s not sexual; Year Of The Snake At least these aren’t poisonous; Nikola Tesla A comic’s view.

#93 The end is nigh on 12.29.12 at 1:01 am

Garth,
Service a $16,000,000,000,000 of debt?
My simpleton guess is that must be about the GDP of the whole world.
The City of Vancouver has a yearly operating budget of $1,000,000,000.
BCs yearly budget is about $50,000,000,000.
The US deficit is $3,000,000,000 a day.
To service this colossal debt, where will the growth come from? Real Estate?

P

#94 Grim Reaper/Crypt Speculator on 12.29.12 at 1:12 am

I posted the winning 4/69 and Loot-o Maximus numbers TWO hours ago….what’s going on here?

#95 claudius emperor on 12.29.12 at 1:18 am

The real question is what money will be seen as in the years to come – as past labour or as deferred consumption
(as keynesian as it gets).

#96 claudius emperor on 12.29.12 at 1:27 am

I am not trying to be provocative here, it is not nesessasy to read Das Kapital to see where the things are going.

Could the rich please be a little more reasonable?

#97 Aussie Roy on 12.29.12 at 1:33 am

Aussie Update

Baby boomers still caught in mortgage trap: research

Cash fears turn Baby Boomers into Baby Gloomers

BABY Boomers are turning into “Baby Gloomers” – a fifth of them face retirement with an unpaid mortgage.

NEARLY half of 2300 people surveyed by RaboDirect said their financial situation was worse than it was a year ago.

MORE than 60 per cent expect it to be even worse in the coming year.

NEARLY half feared running out of money.

ONE in four said they didn’t manage to save last year, or have no savings.

A THIRD did not have a will.

RaboDirect manager Greg McAweeney said there were close to four million Boomers with little time to waste before retirement.

Declining property prices are a concern for Boomers who may need to sell their homes to clear their mortgages and set themselves up for retirement.

http://www.news.com.au/money/cash-fears-turn-baby-boomers-into-baby-gloomers/story-e6frfmci-1226147471860

http://au.finance.yahoo.com/news/baby-boomers-still-caught-mortgage-222848164.html

#98 not 1st on 12.29.12 at 1:59 am

Garth, for one moment look up out at the sky from your office and really think about what is going on in the U.S. economy.

You have the fed in buying the countrys debt so as to reflate the morbid housing market. The fed has basically taken on several trillion in treasury debt over to their books to keep the illusion of a bond market going. At the same time and you have china buying the rest of the debt so as to subsidize the U.S. consumer so they can buy cheap imports from abroad while local industry and manufacturing recede.

No sane man on the street would think this is sustainable but somehow you do?

#99 Bazza the impaler on 12.29.12 at 2:20 am

Hi Garth – my view from down-under is that generally speaking you are are on the money but I reckon you miss the big one with your failure to note limitless printing of money (debt) as a way to finance economic expansion must lead to catastrophe.
This is one major lesson of history back even to Roman times when they clipped the coins giving a temporary increase of 20% to the emporers’ treasury.
Nations usually don’t end their reign at the top of the tree with a bang, but a slow whimper.
There is a place for gold (25%) in your portfolio.

#100 futureexpatriate on 12.29.12 at 2:25 am

The problem is far too many ignorant people think they know it all about economics and business when all they know is what they hear from peddlers selling stuff on radio and TV. Fear, greed, paranoia? The number one hit list. Barnum was right, only the frequency went up; there’s a sucker born every second.

#101 JuliaS on 12.29.12 at 3:04 am

Garth, thanks for setting the record straight on Gold. How much do you own percentage-wise? Do you care at all about paper GLD vs. physical arguments or is it all the same to you? I assume when you talk gold investment you imply paper (the low commission alternative).

#102 Richard and Zeus on 12.29.12 at 3:46 am

#44 Bottoms_Up on 12.28.12 at 12:28 am
#35 Richard and Zeus on 12.27.12 at 11:25 pm
—————————————————-
Don’t you know that the government outsources billions of dollars of work to the private sector — thus, outsourcing is paid for with ‘tax’ dollars, so it can’t be taxed either right? And therefore the wages of those in the private sector aren’t taxed. So just who is taxed?

Bottoms up – those so called private sector contracts by default makes them govt workers just unofficialy.

You CAN’T BE putting NEW tax money into new stuff if the money is coming from sources…..funded by taxes. That does not make arithmetic sense. The funding must come from GDP purely from the private sector with no govt funds involved. How can we grow if we keep growing TAX SUCKING programs and useless pencil pushers which require even more taxes from an already hurting private sector. You can’t. Govt MUST shrink in order for the economy to grow. And yes BIll Good of Commercial KNW……you can get rid of dead wood without killing healthcare and education. How’s that global warming in Coldcouver working for you? You know….the issue you won’t let die even though there is record cold around the world you news boys are told to ignore……

Cheers

#103 avenirv on 12.29.12 at 4:37 am

@TRT

Maybe what you say explains why Canada has no woman at the top but India, Thailand had.
Is this the explanation ?

#104 Westcdn on 12.29.12 at 7:28 am

I have been following this blog for a couple of weeks and there were a number of comments today that made me want to throw in my 2 cents worth. Personally, I consider real estate as just a place to live but I do want the highest standard of living I can afford. That said, when it came to investing with whatever I could save, I preferred the financial markets because it was cheaper and easier to reallocate my modest amounts. Being a mid-boomer myself, I have seen most of my older compatriots become wealthier through real estate than financial assets. I read somewhere that 80% of millionaires are made from real estate investing, 15% from entrepreneurship, 3% from employment and a lowly 2% from financial investing. That sounds plausible to me so I never advise people to follow my path. As for Canadian real estate, there is an older boomer I knew through work who may shed light on the future.
He was laid off in the great Alberta recession of 1983 and parlayed his severance into the purchase of foreclosed properties, usually low end housing. He renovated them and became a landlord. When the real estate prices began to recover, he sold them and purchased upscale single family homes which he again rented. Last year, he sold a couple of his rentals and purchased real estate in Phoenix. The plan was the same – renovate, rent and flip when the market recovers. He should be a millionaire a couple times over by now. I do wish him well even though I liked to tease him with the carpetbagger label.
There are a couple of points I want to make. I agree with Garth and my former co-worker that Canadian real estate is overvalued. I strongly believe this is a bad time to go into mortgage debt unless it is less than your annual income (good luck with that – eh) so you can weather a storm. I was a new Albertan homeowner in 1983 and I found it to be a lousy experience to be underwater and be worth more dead than alive. Second, consider investments in non-real estate assets. My co-worker could have blown up several times but he is cagey. He is indirectly advising us to move money out of Canadian real estate. Where to put the money, I don’t know but if you are going to stuff it in your mattress then I suggest you consider gold. I do know from experience that if real estate values fall, my investment portfolio will follow but hopefully I will continue to receive income while I wait for the sun to shine again.
My main concern these days regards the levels of debt. We seem to be complacent about debt defaults. A promise of future service or entitlements is worthless without the intent to pay. Socializing losses, credit expansion and money printing only buy time. May our leaders use this time wisely because I don’t want to be around when promises are broken.
Real estate will always be a valuable asset and money will be made on it. I just don’t want to see people hang themselves with mortgage debt, partly because the debt may be my asset but mainly because defaults involve broken promises up and down the line – fini.
(I just proof read and think I might have too much time on my hands) Anyway, I want to thank Garth for stating his opinions and maintaining this blog.

#105 Herb on 12.29.12 at 9:07 am

#58 Smoking Man,

makes perfect sense: it’s another episode in your continuing Gong Show.

#106 drydock on 12.29.12 at 10:11 am

Nations don’t default…….until they do.

No major western industrialized country will default in your lifetime, or that of your children. — Garth

#107 earlybird on 12.29.12 at 10:37 am

#92 My guess would be spending cuts (haha), Natural gas and weed….that should help them service the debt..

#108 shanks on 12.29.12 at 10:54 am

Garth, I never knew you played bass!
;)

#109 Herb on 12.29.12 at 11:03 am

Real_Professional,

I apologize for TRT’s comments. He is one of a few mongrels hanging around our blog dog kennel.

#110 TurnerNation on 12.29.12 at 11:07 am

Today’s photo could be one of a young H flanked by F and C. In their 70s band, “The Dr. Waynes”.

This weblog could post only photos, and we’ll debate these using the context of the current economic and political climate? :-)

#111 TurnerNation on 12.29.12 at 11:08 am

Doomers: I am pre-ordering my FEMA coffin. Available in any colour as long as it’s black.

#112 Herb on 12.29.12 at 11:13 am

#105 Richard and Zeus and Truth Hammerer,

maybe your diatribes would have some credibility if you specfied the “TAX SUCKING programs and useless pencil pushers” that should be axed. I’ve been begging you and your cohort to do just that for many months, but all you produce is more factless abuse.

It would be pointless to ask you to put up or shut up, so I wont.

#113 Mad Scientist on 12.29.12 at 11:16 am

G, I can’t share your views that the US is slowing regaining it’s foothold. Though I speak of only a small section of the US – I spent the Christmas holidays in Boston, and many say that the health of then entire nation can be guaged by a few cities, such as Boston. Anyways – what they tell me is not the “fiscal Cliff” storyline – but the true implications behind it – how is America gonna pay back it’s debt. Inflate itself out – still leaves the lender holding the bag. The family I was staying with – 3 homes on the very street have been for sale since August – their neighbour has openly admitted they haven’t paid their mortgage since April 2012 – living free while they await their eviction (most know that banks are probably instructed not to act just yet on foreclosing). The numbers just don’t up. The last stat I read was that the US needs 400,000 jobs per month just to meet the growing population of workers (immigrants and those who finish school) – Jobs are hard to come by – even the holiday season required fewer staff – the Boston Globe reported that job creation in 2013 would be little change from 2012 -

Why hasn’t a single word been uttered by the President on dealing with the debt the US is facing – even Garth makes little mention of this – is it meaningless ? Someone eventually has to pay – inflate your way out ? .. yeah, and China will be oh so happy to hold worthless debt –

Until North Americans have a debt load that reverts back to a medium that is managable – I say the entire economy is based on fantasy -

Of course not. The US economy has a GDP of $16 trillion. — Garth

#114 Junius on 12.29.12 at 11:38 am

#100 Aussie Roy,

You noted, “BABY Boomers are turning into “Baby Gloomers” – a fifth of them face retirement with an unpaid mortgage.”

I suspect that this is going to be more common going forward as the reverse mortgage appears to be one of the retirement options of choice among the Boomers.

Holiday anecdote. I was at a family dinner and overheard the discussion about the most recent family boomers to retire. Mid-60s and had good employment their entire lives but still didn’t have enough to retire in the “style they saw fit”. This is pretty expensive as it appears to include almost constant travel in style.

A few years back they inherited a significant amount of money and paid off their mortgage. They both worked a few more years and then decided to retire this year. However in order to afford their lifestyle they need to reverse mortgage the property.

This is typical boomer. They received a large inheritance from the “greatest” generation and spend it all in their lifetime. They say that you only take a reverse mortgage if you hate your children. Maybe it is also if your sense of entitlement exceeds your bank account.

Having watched the Boomer mentality my entire life it is easy to predict that this will become the norm amongst this group. Most will not leave anything to their heirs.

#115 Junius on 12.29.12 at 11:40 am

#90 Real_Professional,

Thanks for this post. He constant illogic and made up anecdotes are tiresome.

#116 Canadian Watchdog on 12.29.12 at 11:55 am

Here comes power of sales in Vaughan. Link

#117 ANON on 12.29.12 at 11:58 am

Growth resumes… when debt is cleared, and of course the government will offset the deflation in other debt like the last time, or we’ll get a MadMaxian full stop you won’t believe:

http://static.seekingalpha.com/uploads/2009/3/24/saupload_debt_trend_breakdown_2.jpg

Different other variations:
https://www.google.ca/search?q=total+credit+market+debt

Sovereign debt does not need to be repaid, and seldom is. — Garth

#118 Dr Wayne on 12.29.12 at 12:18 pm

Am I 120th? I’m sorry, John Wayne and Gretzky, for forever linking the Wayne name with assxx(you-know-what). I got beat up in school for being obnoxious, I still can’t help myself.

#119 Real_Professional on 12.29.12 at 12:59 pm

@TRT

That last post of yours sums up your intelligence.
Thanks for proving my point!

#120 EIT on 12.29.12 at 1:07 pm

Fiscal Cliff? Collapse of America? Pff.. You guys are behind the times. The new thing is WW3. Dedoy.

As for BUY SILVER CRASH JPM.
After the libor scandal don’t you think anything is possible?

#121 EIT on 12.29.12 at 1:18 pm

Does the Greek default count?

Since when is Greece a major western industrialized nation? No. — Garth

#122 Retired Boomer - WI on 12.29.12 at 1:23 pm

New Year, same old issues. Still saving a few bucks each month keeps one’s fanny out of problems later, when there is more month than money.

So, what are you thinking of for your New Years’ changes?

Still gonna do the same old stuff, the same way, and expecting different results? Sanity defined there, for sure.

Make it a time of change, to rein in your mistakes. It is really so simple, even I can do it.

Best in 2013.

#123 Tony on 12.29.12 at 1:25 pm

#9 HeartoftheWorld on 12.28.12 at 7:28 pm

Definitely a dead cat bounce. The people who know exactly what’s going on just shake their heads when they see the tripe coming out of America. The quote recovery in the U.S. housing market coinciding exactly with the November 2012 election. The bullshit coming out of that country could make the average citizen puke.

Sales are sales. Deal with it. — Garth

#124 Nemesis on 12.29.12 at 2:09 pm

“Sovereign debt does not need to be repaid, and seldom is.” — Garth

That’s an old GreekProverb, right?…

History is replete with examples of sovereign obligations gone awry… Indeed, there’s an entire genre of antiquarian art, Amazonomachy, devoted to ‘doing it’, GreekStyle.

#125 Dr. WAYNE on 12.29.12 at 2:12 pm

#123 Dr Wayne on 12.29.12 at 12:18 pm

Am I 120th?

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

Some repugnant dipstick stole my label … only Garth knows the truth, but astute and perspicacious readers will ferret out the mendacious miscreant.

#126 Spiltbongwater on 12.29.12 at 2:31 pm

Is there a way to get old people to stop writing cheques at the grocery store, and use a debit card? Pretty frustrating when the geezer in front of me takes 20 mins to get the cheque book out and write a cheque for $10 worth of vegetables.

#127 EIT on 12.29.12 at 2:31 pm

Isn’t default synonymous with debt restructuring. So your saying America will never restructure its debt? Nixon shock 1971 wasnt so long ago, what’s 4 decades?

Give it up. The US will never default on federal debt. — Garth

#128 Bob Copeland on 12.29.12 at 2:35 pm

#74martin9999
Garth, lets be fair. Gold is up .06% tax free compared to the last Saturday 2011.

And down 13% from a few Saturdays before. BTW, there’s nothing tax-free about it. — Garth

#129 Holy crap where's the Tylenol on 12.29.12 at 2:37 pm

Oh wow I do remember being in that band. I think I was one of the turds. Yes I was one of the turds it’s coming back to me now, little fuzzy it was in the late 60s. Oh well as Darwin would put it everything evolves so did I, no longer a turd but a turd Invester. I have in the past made some turd investments they have taught me lessons. Being an older person I have to say this fiscal cliff is nothing but a dog and pony show. It’s a big to do about nothing nothing will happen and nothing will change life will go on! As for the US economy and housing crisis I do see some improvements in the housing market in US after just returning from the Sunbelt. A relative of mine picked up a home in Nevada two years ago at a firesale price is now selling it for a decent profit. I never thought I would see that happen for another five years, Shazam!! As for gold blah don’t see much happening unless some despot sticks a hot poker up some other dictators rear in the Middle East!
Oh we’ll I been around for a long , long time hope you guessed my name.

#130 Doug in London on 12.29.12 at 2:42 pm

Looking at the calendar, I see it’s still Boxing Week, when the shopping malls are crammed with people out looking for bargains. Meanwhile, there’s the fear that a resolution to the fiscal cliff isn’t coming soon and that will shake up stock markets and cause them to drop. I say BRING IT ON! I’m eagerly looking forward to some good Boxing Week (or shortly thereafter) bargains in good quality dividend paying stocks!

#131 Toronto_CA on 12.29.12 at 2:42 pm

My company wants to start investing 10% of our portfolio in ABS and MBS, and I’m considering putting $5500 of silver bullion in my 2013 TFSA contribution to be made next week.

Diversification is good right?

#132 45north on 12.29.12 at 2:42 pm

TRT: talks about how a south asian family thinks and acts

Real_professional: I’m south asian, 1st generation Canadian

good reply real_professional

Bill Gable: happy new year Bill

#133 sue on 12.29.12 at 2:43 pm

#121 Canadian Watchdog

Love your posts! Eye opening info for sure.

#134 drydock on 12.29.12 at 2:50 pm

What about Argentina?
It used to be an advanced country.

#135 Basil Fawlty on 12.29.12 at 2:51 pm

“Sovereign debt does not need to be repaid, and seldom is. — Garth”
Is this not admitting default?

Of course not. People can live in the same house their entire lives and service the mortgage. No default there. — Garth

#136 tkid on 12.29.12 at 2:59 pm

Hello Garth,

I have been appreciating your columns on specifics of finance as of late. Given that most gold bugs/doomers/gloomers (and I am one) issues all involve the US and its national debt, could you do a column or two on its national debt? Something in depth with a word or two that would have us running for google and the dictionary?

If you’d include State and City debt, that’d be entirely fabulous. I know Provincial and City debt up here is getting into uncomfortable levels, but the US has been a guide on what will happen up here in Canada, and your viewpoint on the issue would be appreciated.

A Happy New Year to you and yours,

Tkid

#137 Holy crap where's the Tylenol on 12.29.12 at 3:10 pm

Just read a DOE report. The United States is expected to be a net exporter of gas in the next 10 years. Most of this gas is methyl hydrate, extracted from Fraking. With more gas coming on line I definitely see the price of natural gas to level out and perhaps even deflate. This phenomenon of methyl hydrate is stored everywhere across the North American continent including Canada and Mexico. A Vast amount of this gas is also in the Arctic where do to global warming lakes are forming as permafrost is melting releasing this methyl hydrate. This will help the US economy as they will go from an importer of natural gas to a net exporter. In the process it is creating some handsome paying jobs. Something to think about!

#138 Dan from Richmond Hill on 12.29.12 at 3:24 pm

Sovereign debt does not need to be repaid, and seldom is. — Garth

Mr. Turner, can you please explain what do you mean by that? Why sovereign debt does not need to be repaid?

#139 Dr. Wayne's Psychiatrist on 12.29.12 at 3:29 pm

Dr. Wayne:

Hey doc, who died and made you the self appointed policeman of all first posters? Make it your New Year’s resolution to look in the mirror and see who the biggest a$$hole on this blog really is.

#140 Daisy Mae on 12.29.12 at 3:31 pm

#71 Form Man: “Now, with Alberta cooling off rapidly and the housing market heading into a downturn, the Cons ( whose ideology convinces them that Obama will fail) have begun a narrative that suggests problems in the U.S. will be the reason if Canada stumbles in the next year or two…”

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

We’re talking about two separate countries, two separate governments. The ‘cons’ made all the same mistakes as the USA albeit a few years later — blindly following the Americans — so they have no one to blame but themselves.

#141 Daisy Mae on 12.29.12 at 3:40 pm

#72 Grasshopper: “I don’t understand how a person can spend $1.64 for every dollar they earn.”

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

Credit.

#142 hangfire on 12.29.12 at 3:45 pm

DELETED

#143 rosie on 12.29.12 at 3:50 pm

#119
“moving forward” I really hate this newish cliche’.
Does the fiscal cliff look like the coyote/ roadrunner type cliff, the Thelma / Louise type cliff, or the Butch Cassidy/ Sundance Kid type cliff? Each scenario had similar yet different outcomes.

#144 MultCult on 12.29.12 at 3:51 pm

I Ageee with the things TRT says about indian culture. I have some indian genetics, but if anyone calls me an ‘indo canadian’ in person, it will result in an incident.

#145 Form Man on 12.29.12 at 4:13 pm

#140 Daisy Mae

I agree. Interesting how H and F are quick to claim credit for anything that goes well, and even quicker at blaming others for anything that does not go well. Some would say that is an indication of immaturity……..

#146 Don on 12.29.12 at 4:13 pm

#121 Canadian Watchdog on 12.29.12 at 11:55 am
Here comes power of sales in Vaughan. Link
*****************
These are not P.O.S they are being flipped the ownership is In Trust

#147 Blacksheep on 12.29.12 at 4:43 pm

Dan from Richmond Hill #144,

”Sovereign debt does not need to be repaid, and seldom is. — Garth”

“Mr. Turner, can you please explain what do you mean by that? Why sovereign debt does not need to be repaid?”
——————————————-
The key word in your inquiry is, ‘Sovereign’.
Dan, research MMT. You will learn why you really ‘pay taxes’ and never feel the same about hoarding ‘cash’.
Here is a link to her video:

http://www.creditwritedowns.com/2012/12/stephanie-kelton-does-mmt.html

take care
Blacksheep

#148 Basil Fawlty on 12.29.12 at 4:57 pm

“Of course not. People can live in the same house their entire lives and service the mortgage. No default there. — Garth”

Fair enough, but what happens if interest rates rise and the mortgage payments can not be made?
We have seen defaults in Argentina, Mexico etc.. Interest rates are at their lowest level in history and have nowhere to go, but up.

In addition, how are these low interest rates maintained when debt and deficits have never been higher?

Not an issue when you control the world’s reserve currency. The US will never default on federal debt. — Garth

#149 WhiteKat on 12.29.12 at 4:58 pm

Buried in an ostensible jobs bill signed by President Obama in 2010 is a little-noticed job-destroying government regulation that threatens to trigger a massive outflow of capital from the American economy.

The Foreign Account Tax Compliance Act (FATCA) will have a devastating impact on the U.S. economy, U.S. financial markets, American businesses operating abroad and American citizens who work and reside overseas.

FATCA requires that all Foreign Financial Institutions (FFIs) reveal the accounts of ‘US persons’ to the IRS. The FFIs will then have to collect tax withholdings for the IRS from these clients. If by January 1, 2014 the FFI is unwilling to reveal their US clients’ accounts, the IRS will impose a punitive 30% withholding on all payments to the FFIs, on dividends, interest and gross sales of stocks, bonds, and financial derivatives.

FFIs have warned that the costs of FATCA compliance will be in the hundreds of millions and likely in excess of whatever taxes that the IRS could gather through its enforcement. It is likely many FFIs will simply choose to leave the United States, taking their clients’ money with them.

Many banks throughout the world have already indicated their intention to divest out of US securities and investments and have advised their institutional and private clients accordingly.

To read more on the devastating impact of the most dangerous US law nobody has ever heard of, check out these links:

http://isaacbrocksociety.ca/
http://americansabroad.org/

#150 Big Al New on 12.29.12 at 5:00 pm

What’s a sustainable growth value in a finite world, anybody, zERo.That’s right no growth is sustainable in a finite world.

#151 robert on 12.29.12 at 5:27 pm

Salmon Arm continues to show the stress! A 1700 sq ft penthouse with great views of lake and mountains has been reduced to $349,000 today after 300 days on the market. Assessed value is $439,000. Its getting worse not better. Oh yes and strata fees are $500 plus. These small interior cities will feel more pain than most think based on no buyers or employment. I feel for the young families that just wanted a home to raise their children in. Court ordered sales are spiking bigtime and this IMO is a sign of what is to come.

#152 TurnerNation on 12.29.12 at 6:05 pm

Parenting is hard enough work these days, without the worry of having “that” talk with your child, when he or she asks “Mama, Papa, what is a Dr. Wayne”?

Are there any bartenders here, who could whip up a new concoction (a “Doctor Wayne”) which will finally supplant that eponymous Harvey Wallbanger as a lounge-drink of choice?

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

#153 Gord In Vancouver on 12.29.12 at 6:05 pm

More Vancouver Real Estate Humor

Buyers waiting for housing bubble to burst could be in for a long wait

Read more: http://www.vancouversun.com/business/Buyers+waiting+housing+bubble+burst+could+long+wait/7756733/story.html#ixzz2GTtTUAJO

http://www.vancouversun.com/business/Buyers+waiting+housing+bubble+burst+could+long+wait/7756733/story.html

#154 AprilNewwest on 12.29.12 at 6:18 pm

#159 – Just what we can expect from the RE industry.

#155 Devore on 12.29.12 at 6:20 pm

#119 Mad Scientist

yeah, and China will be oh so happy to hold worthless debt –

Who cares how happy the Chinese are? Certainly no one in the US (except the doomers).

#156 Grantmi on 12.29.12 at 6:29 pm

#159 Gord In Vancouver on 12.29.12 at 6:05 pm

More Vancouver Real Estate Humor

Buyers waiting for housing bubble to burst could be in for a long wait

WHAT did you expect Cameron Muir(on) to say… as the BC RE soothsayer. He’s paid by the industry!!

“Uhhh! Douuu! Prices are going to go down.. yup yup yup.. that’s it. !”

#157 vic dude on 12.29.12 at 7:38 pm

The US can never go titters, deficit could be $100T.
They will just print it and make it work…why?
Because they can!
Wake up you sheep…to infinity and beyond!

#158 Bob Copeland on 12.29.12 at 7:51 pm

http://dollarcollapse.com/precious-metals/tom-cloud-how-to-sell-gold-without-reporting-it/

Little different in us. Be sure to read the comments from the IRS agent. Believe me, I sold all but 120ozs. I trust you but 5-6-7% taxable doesn’t excite me. I’m sitting on $400k cash and I’m scared. I’m really looking forward to your 2013 predictions.

#159 vic dude on 12.29.12 at 8:23 pm

∞ ∞ ∞ ∞ ∞ ∞

US…if you can’t beat em, join em~!

#160 Dr. WAYNE on 12.29.12 at 8:38 pm

#145 Dr. Wayne’s Psychiatrist on 12.29.12 at 3:29 pm

Dr. Wayne:

Hey doc, who died and made you the self appointed policeman of all first posters?

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

Lots of people have died, don’t you read the newspaper? I guess no one was bright enough to self-appoint themselves …

I would suggest ‘you’ look in the mirror and see a rather piss poor psychiatrist … one who insults his patients … improve your ‘blog-side’ manner if you wish to expand your influence.

#161 live within your means on 12.29.12 at 8:45 pm

#119 Junius on 12.29.12 at 11:38 am

Guess you didn’t live where I lived or where I live now. Your whole post is totally off the mark IMHO.

#162 Mel on 12.29.12 at 8:46 pm

TRT:

You are right. However, I don’t care much anymore. This is the way I see it. You can NEVER fool around with mother nature. Mother nature will in time take care of ‘Stupidity of mankind’.

Think about it, if all the rest of us were to do exactly what they do and happen to have more boys then girls, then, there will be shortage of girls in the future.

Supply(too many boys) demand(not enough girls) will eventually raise the price for girls. Watch out all of you men, if you are poor, do not apply for a future mate.

Crazy how people think they will be better off, when in fact they are doing exact opposite.

#163 Victoria Tea Party on 12.29.12 at 8:58 pm

#9 Heartoftheworld

You deserve more respect for your good effort there #9.

I’d sure like to go with St. Garth of Let the Goodtimes Roll sanguine view of the various markets.

But I STILL can’t! Damn!

DR. HOUSING BUBBLE

Dr. Housing Bubble has not changed his stance on US housing’s continuing overall problems for years now.

His research and analysis still shows an unhealthy level of shadow inventory and low central bank interest rates both being gross manipulations aimed at trying to boot the market into some sort of decent recovery in the worst-hit areas of the US following 2007-08. And thus increasing economic activity (GDP).

He lives in the US, and I don’t. So I have to believe someone who’s there on the ground. And I trust him.
Another bubble is obviously forming there.

ON A MATTER RELATED BECAUSE IT’S ALSO ECONOMIC

Similarly, I also believe that the Fiscal Cliff issue, facing the US Congress and administration, cannot be glossed over as straight politics and that a solution will be reached “in time.”

I think the whole ball of wax SHOULD be allowed its cliff dive. Why? Because with so much economic agony that would follow such an event, there could result at least some nascent recovery instead of just more can-kicking down the road.

Sure, those huge debts will never be repaid. But markets being what they are, even in this heavily manipulated context, some ATTEMPT at imposing fiscal rectitude would absolutely lead to increased economic activity and, thus, a better economy overall.

Meanwhile the US food stamps program grow in popularity; people keep dropping off the job-seeking rolls; homelessness and other indicators of civilizational decay get only worse.

CURRENCY WARS STILL THE MAIN EVENT

However, the biggest gorilla in this “room” of economic misery is not the debt, but the associated currency wars that continue unnoticed and unabated.

We hear nothing much about those “battles”. But watching daily currency moves does give indications of who’s on top for the next millisecond before some other fiat currency takes the helm. This is a true race to the bottom.

INSANITY

At the base of it all are those who brought about this catastrophe in the first instance. And they are still “in charge”; or, at least they believe themselves to be.

I think they’ve lost control and don’t have the foggiest idea of what to do next.

That’s why they just keep on printing money; over and over again, in efforts to find a different outcome to the one that they have only been able to conjure up so far, annual GDP of about 2 per cent a year since 2008 in the West.

Those failed numbskulls and their “brilliant” economists and yappie TV commentators have been trying to divine 5 to 6 per cent GDP growth. But that hasn’t happened.

I wonder why. Mr. Market still rules, that’s why.

#164 Ronaldo on 12.29.12 at 9:03 pm

#57 – AKA Devils Advocate

”can you explain how and why each of those properties for which I provided the resale information in at my post at #28 were able to be sold for more after the correction than they were at close to the peak on the upside of it?”

If he can’t then my guess would be that the banks lowering their prime rate from 5.75% at the beginning of 08 to 2.25% by April of 09 may have something to do with it.

#165 futureexpatriate on 12.29.12 at 9:12 pm

DELETED

#166 Daisy Mae on 12.29.12 at 9:27 pm

“Not an issue when you control the world’s reserve currency. The US will never default on federal debt. — Garth”

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

So, it’s all a game? What comes after a ‘trillion’ in debt –a ‘Zillion’? And then what? LOL

#167 dosouth on 12.29.12 at 9:38 pm

#19 Future ex- Check you facts about shows before parading your comments – “Oh wait. Property Brothers, the underwear model/magicians who have neither an realtor nor a contractor license……”

Don’t really watch the show but maybe you should?

http://shine.yahoo.com/decorating/property-brothers-behind-scenes-002600630.html

#168 Canadian Watchdog on 12.29.12 at 9:41 pm

The only thing that matters now. Chart

#169 dosouth on 12.29.12 at 9:45 pm

AKA DA – Can you supply stats on how many realtors the OKMREB had registerd 2009 and to the end of 2012?

That in itself is a telling stat – no one can really manipulate those stats (can they?).

#170 think again on 12.29.12 at 9:48 pm

So, it’s all a game? What comes after a ‘trillion’ in debt –a ‘Zillion’? And then what? LOL

$$$$$$$$$$$$$$$$$$$$$$$$

It is a Quadrillion then a Sextillion, then a Septillion, then an Octillion…on and on…

#171 Basil Fawlty on 12.29.12 at 10:16 pm

The fiscal cliff crisis is a bit like rearranging the deck chairs on the Titanic. The two parties are arguing about $1.2T in spending cuts over 10 years, which equates to about $100B/year, yet the annual deficit is currently $1.5T.

But, who gives a shit, we have more important things to do, like picking up some Molson’s, settling the hockey strike and learning more about Lady GaGa’s gender.

#172 Grim Reaper/Crypt Speculator on 12.29.12 at 10:17 pm

#131 Dr. WAYNE on 12.29.12 at 2:12 pm

#123 Dr Wayne on 12.29.12 at 12:18 pm

Am I 120th?

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

Some repugnant dipstick stole my label … only Garth knows the truth, but astute and perspicacious readers will ferret out the mendacious miscreant.

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

Now now…don’t talk about your wife like that…but she loves it when you talk dirty

#173 45north on 12.29.12 at 10:43 pm

Victoria Tea Party: At the base of it all are those who brought about this catastrophe in the first instance. And they are still “in charge” or
at least they believe themselves to be.

I think they’ve lost control and don’t have the foggiest idea of what to do next.

well I agree that the people in charge don’t know what to do next. The catastrophe has been a long time in the making, the ones that had a hand in the beginning have now died. I agree that we are better facing the problems now. But that’s what the fight is about, face the issues now or later.

#174 Gunboat denier on 12.29.12 at 11:42 pm

167 LWYM – agreed. Not one of J’s better efforts.

#175 Preparation H on 12.29.12 at 11:46 pm

It’s now obvious that Dr Wayne is used to being pissed on, actually he revels in it.

Lets see.

Frankly, we can’t get rid of this hemmaroid without Garth’s help.

Should we begin a ‘Preparation H’ appeal to Garth to rid the blog of this self-anointed blight? Let mine be the first vote in favor of banning the weiner known as wayner.

#176 Smoking Man on 12.29.12 at 11:48 pm

Vlad great links today,

Did you know Tesla is my great great uncle, dad’s side.

He had a great connection to the universe consciousness consolidator
CSIS going what it that.

Ok lets send them on a chase, Freeman :)

Damn now my phone will get tapped. My emails read.

#177 rembrandt on 12.30.12 at 12:15 am

Would you please tell me why you have not published three of my pieces over the past two months? I do not wish to appear inflammatory but is’nt this type of censoring what the mainstream media is perpetrating on the public? I expected more.

When you can make an argument that does not insult or belittle those who disagree with you, it will be published. — Garth

#178 Nostradamus Le Mad Vlad on 12.30.12 at 12:19 am

-
#169 Victoria Tea Party — “INSANITY — I think they’ve lost control and don’t have the foggiest idea of what to do next.” — Other than WW3, that would be an accurate assumption!

#172 Daisy Mae — “What comes after a ‘trillion’ in debt –a ‘Zillion’?”

My understanding is a quadrillion, quintillion, sextillion etc. But don’t worry — we’re only here for a short and great time. then we all break on through to the other side!
*
2:55 clip Chinese buying California homes; Corrupt Congress and private central banks; SArabia Nice budget surplus; Banking Fraud, money laundering and drug cartels, etc.; Iceland More banxters charged; Japan Production slump; Light Bulb Ban Use candles instead? UK families calling it quits in large numbers. The economics of life play a role here; How To Collapse a Bank and get knighted for doing it.

Former Republican advisor and Republicans NDE; Hitachi, Japan Like Detroit, losing its industrial base; The Moneyless Manifesto; Educated and Indebted Generation They were never taught about money; Secret Societies and vanishing money; Carbon / Pollution Tax Another tax which business and consumers don’t need.
*
Sandy Hook One answer would be to stop using public schools, by working with home schooling, etc., 1991 Book Predictor and SSRIs cause major role in shootings, but Big Pharma Grinding to a halt? and and MediCare costs; Whistleblowers “Welcome to Ameristan, where any citizen is believed guilty until proven innocent, and any citizen can either be assassinated or held indefinitely without due process.”; wrh.com; Iran – Latin America US interfering again; US Health System is not overly respected; Don’t Give Up Your Guns, Pravda suggests; CFR and Global Governance Arriving in the immediate future? Shootings “In the immortal words of the American comedian Ron White, ‘You can’t fix stupid’.Would-be thieves will not go to the homes of those marked on the map, but the homes of their defenseless neighbors.”; wrh.com; YouTube Hmmm. Scared of something? Science playing God Humanoid roboy arriving in nine months; Link between GW and advanced military stuff; 8:32 clip Riding the shuttle booster (sound enhanced); Hadrian’s Art Centre from AD123 found; Oh Woman Thy name is vanity; Shark Tank Jaws Part II.

#179 T5>myT4 on 12.30.12 at 12:39 am

For all the metal heads and doomsdayers. Having an income producing asset (blue chip stocks for example) transfers the cost of inflation or hyperinflation onto the end user. Coca Cola will just increase the cost of their beverages to consumers, and also increase their dividend payouts to their shareholders. Every morning I see lineup’s at Mcdonald’s, and anyone here can buy into that success story.

As long as people buy anything, dividends will finance continue to my life.

#180 Ronaldo on 12.30.12 at 12:59 am

Here is a good example of what can happen and has happened several times in the past with recreation properties in Kelowna.

BEFORE – 2006 $849,000 – $899,000

http://www.cottagesatsecretpoint.com/story_oksat.htm

2009 – less than $500,000

http://www.6717000.com/blog/2009/05/discount-pricing-in-the-okanagan/

Now – 2012 $457,000

http://v2.estatevue.com/platform/kelowna/watsonbrothers/search/detail/4-4215-westside-road-kelowna-bc-canada-v1z-3w8-id-507227.html

Pity those that bought in 2006.

#181 Jay on 12.30.12 at 1:23 am

Hi all,

I’ve been reading this blog for quite a few months now, because I’ve suspected for quite some time that housing is inflated far beyond where it should be in this country, and it’s interesting seeing the numbers as they happen from people who have more time to focus on this one piece of the puzzle.

It’s the fundamentals. People told me in 2005 that housing in the US couldn’t possibly go wrong. People are telling me today that housing in Canada couldn’t possibly go wrong. In both cases, typical households can’t afford to own the average household. To me, it seems like basic math.

Going back to the fundamentals, I think the US is in trouble, as well. Their attempt to spend their way out of recession again and again has only put them into a more difficult position.

I’d say, don’t look at debt vs. GDP, because GDP is being distorted by the deficit spending. The current deficit spending is adding around 1.5 trillion to the GDP the first time that money hits the economy, forgetting about multiplier effect.

I prefer looking at debt vs. revenue. It’s unlikely that the government can dramatically increase revenue vs. GDP quickly, so it’s a more accurate view of what’s going on.

In terms of debt vs. revenue, the US is looking worse than Greece (8:1 vs. 6:1). Contrast Canada’s federal debt to revenue ratio of a mere 2.5:1. In terms of deficit vs. revenue, the US is looking scary as well. (0.5:1 for a single year)

Much like the mortgages and HELOCs in Toronto and Vancouver (and before them in Los Angeles and Miami), the real damage won’t be seen until long after it’s too late, when the people paying the debt are in far too deep to recover.

I can’t help but think this “fiscal cliff” is both required to right the boat, and too little too late. Increases in revenue and decreases in spending will both be required to cut the deficit, but reforms should have started 10 years ago. Instead, George W. sent out paycheques paid for with federal debt.

As well, just like a horny house virgin, they’ve moved from mostly holding debt in 30 year bonds to holding debt in short term bonds to take advantage of short-term interest rates. That’s great right now — the US is borrowing 16 trillion dollars more cheaply than the Bush administration borrowed a mere 8 — but if rates return to historical levels, it means that debt maintenance will become a substantial portion of revenues, digging an already deep hole deeper.

I’m not saying to stock up on K rations and gold bullion (though paying investments are doing good with gold prices where they are right now, it’s because of factors quite different from global economic collapse). Obviously there are people in power who are going to act to counteract the negative effects of the debt. That said, I’d say if things don’t get substantially fixed by 2022 when I’d expect the next bust cycle to be taking place (The cycle has been about every decade since the ’70s), we might end up seeing something that makes the current European crisis look like a fairy tale.

Anyway, there’s my first comment on the site. Keep up the good work, I love seeing the hard data and facts backing up the hypothesis.

#182 The Man From Nantucket on 12.30.12 at 1:27 am

#156 Big Al New on 12.29.12 at 5:00 pm
What’s a sustainable growth value in a finite world, anybody, zERo.That’s right no growth is sustainable in a finite world.

Last time I checked, worldwide annual population growth is 1.5%, meaning 90M whatever odd new bodies who could potentially contribute to product.

Add to that a developing world that is rapidly moving from somewhere around post industrial revolution standards to modern standards.

We’ll run into bumps along the way (No way China can sustain their present rate of annual GDP growth, etc.), but My bet is sustained growth is certainly possible for the next several years.

#183 The Prophet Elijah on 12.30.12 at 2:17 am

Garth what happen to my other post, no rebuttal to the argument? I guess a prophet in the land is never popular, eh.

Disrespect = delete. — Garth

#184 Telecon on 12.30.12 at 3:41 am

Not an issue when you control the world’s reserve currency. The US will never default on federal debt. — Garth

Although the USD is the worlds reserve currency, there can be no denying its diminished popularity in recent years. It wasn’t long ago, you could go anywhere in Europe and shopkeepers would gladly accept USD. Now, you can hardly find a merchant in Mexico willing to take the risk lol. And as for the default claim, during the 2011 debt ceiling debacle, Obama repeatedly warned that if the debt ceiling was not raised then America would not be able to honor the interest payments on their national debt. However, no mention was made of cutting govt spending or entitlements. Therefore, it was made very clear where and what position creditors stand in the eyes of the U.S govt. Essentially, the world is being asked to lend to the U.S treasury in perpetuity so as to continue payments to existing lenders. May not be default but, in my opinion, is even worse. Rhymes with Fonzie

#185 juno on 12.30.12 at 4:07 am

#159 Gord In Vancouver on 12.29.12 at 6:05 pm

More Vancouver Real Estate Humor

Buyers waiting for housing bubble to burst could be in for a long wait
================
Yeah Cameron Muir also said, another 12% increase for 2012, Markets were great, CMHC in great position and yaddy ya ya.

He’s a used car sale man. Are you going to listen to a used car sale man or the mechanic who says the car is a lemon?

#186 neo on 12.30.12 at 9:24 am

#154Basil Fawlty on 12.29.12 at 4:57 pm
“Of course not. People can live in the same house their entire lives and service the mortgage. No default there. — Garth”

Fair enough, but what happens if interest rates rise and the mortgage payments can not be made?
We have seen defaults in Argentina, Mexico etc.. Interest rates are at their lowest level in history and have nowhere to go, but up.

In addition, how are these low interest rates maintained when debt and deficits have never been higher?

Not an issue when you control the world’s reserve currency. The US will never default on federal debt. — Garth

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

This is where Garth loses credibility. On the one hand he says the U.S. is recovering and as such interest rates/bond rates will begin to normalize. But in doing so, they will no longer be able to service their debt. You can’t have it both ways. Second, U.S. GDP is $15.5 billion not $16 billion on $16.3 trillion in debt. By 2016 it will only be $17.4 GDP on $22 trillion in debt. That will be a debt to GDP higher than the post WW2 record. Austerity will stifle whatever growth you think will allow then to “service” it.

US growth will make your arguments looks facile. — Garth

#187 John Constable on 12.30.12 at 9:34 am

>>Those who root for the collapse of America think this fiscal cliff means something.

I think you will find that most of them have a deeper understanding of the situation than that. Instead of this straw-man argument, perhaps you could present some data and intelligent analysis to explain why you believe they are mistaken.

Every day. — Garth

#188 Dr. WAYNE on 12.30.12 at 9:53 am

#181 Preparation H on 12.29.12 at 11:46 pm

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

No disrespect … but me thinks you’ve got a rather annoying ‘itch’ that you simply can’t scratch. I suggest you buy some of your ‘name tag’ and use copious amounts as directed.

#189 Daisy Mae on 12.30.12 at 10:22 am

#176think again
So, it’s all a game? What comes after a ‘trillion’ in debt –a ‘Zillion’? And then what? LOL

$$$$$$$$$$$$$$$$$$$$$$$$

It is a Quadrillion then a Sextillion, then a Septillion, then an Octillion…on and on…

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

So, why should we care? Why worry about it? Debt continues on to infinity.

#190 jwkimba on 12.30.12 at 10:46 am

@DA
“It will never be abundantly prevalent because as soon as it nears investors will start investing and their demand will drive up the prices once again.”

Not if they can’t get a loan. The chicago prices are yielding 22% because buyers cant’t get a loan.

You seem to be under the impression that everything will be OK because the money to buy real estate will be cheap and will flow endlessly forever. Don’t bet on it. Fannie and Freddie went down, so can the CMHC.

#191 live within your means on 12.30.12 at 11:12 am

So much for our 30-40 cms of snow in Halifax/Dartmouth. The winds woke me up at 2-2:30 am & have been up since then. We got about an inch of snow and then rain – the most we’ve had this winter. It’s rare that either Enviro Canada or the Weather Network get it right here.

#192 Picasso on 12.30.12 at 11:22 am

Can you buy half a townhouse for this price at home?

http://www.realtor.com/realestateandhomes-detail/812-Winged-Foot_Corsicana_TX_75110_M85215-67244

#193 drydock on 12.30.12 at 11:41 am

#189

My dead baby chicken crossed the road joke wasn’t disrespectful…….well maybe to turkeys on Saturday,but no-one else.

#194 Doug in London on 12.30.12 at 11:43 am

@T5>myT4, post #185;
Good points you make. I already own Coca Cola (KO-NY), but will have another look at Tim Horton’s and McDonald’s stock. I think dividend paying utilities are a good bet also. In tough times fewer people will go to Florida for a winter getaway, but they will continue to heat their homes, drive their cars and SUV’s, and use appliances.

#195 The Prophet Elijah on 12.30.12 at 11:50 am

Garth what happen to my other post, no rebuttal to the argument? I guess a prophet in the land is never popular, eh.

Disrespect = delete. — Garth
———————————————————-
And what part was disrespectful?? The part that you didn’t agree with. You calling people metalheads and doomers is disrespectful.

#196 Ralph Cramdown on 12.30.12 at 11:53 am

“Buyers waiting for housing bubble to burst could be in for a long wait.”

The real estate market is a no-called-strike game. You don’t have to swing at everything—you can wait for your pitch. The problem when you’re a householder is that the real estate industry and your family keep yelling, “Swing, you bum!”

With apologies to the Oracle.

#197 Form Man on 12.30.12 at 12:34 pm

#157 robert

Salmon Arm is another ‘retirement destination’ like Kelowna. these places were supposed to be over-run with retiring baby boomers by now. Might still happen, but I do wonder.

Kamloops is different than both the cities mentioned above, in that no one pretends it is a retirement haven. Kamloops is reliant on mining and lumbering which are doing relatively well these days providing Kamloops with an enviable unemployment rate of less than 5%. Fact is housing is in trouble in Kamloops as well. Check out the Mission Hill development; some 5 months after completion, and with significant price reductions, not a single unit sold…..not one. With an MOI of 15, Kamloops is in the same inventory category as Kelowna. This should be evidence that a good economy will not save an overbuilt market. Only time and underbuilding can solve this problem.

As for DA’s claim that prices in Kelowna are flatlining or moving up……..total b.s.

#198 Stoopid Idiot on 12.30.12 at 12:37 pm

Toronto_CA

I’m considering putting $5500 of silver bullion in my 2013 TFSA contribution to be made next week.

I would not buy Silver bullion per say as units in the Silver Bullion Trust Fund. This is a home grown Canadian Company and unlike a ETF’s they buy billion off the open market and is held in segregated treasuries facilities in Canada

http://www.silverbulliontrust.com/

For higher returns and leverage to Silver I would suggest a subscription to John Doody’s Silver Stock Analyst, this is not a cheap subscription but is performance based. John has been independently audited on his performance.

http://www.goldstockanalyst.com/silverhome.lasso

As you have mentioned the you are looking for diversity I would consider Silver for your TFSA as this may be a sector that may outperform most in the next two years with great rewards

Gambling, not investing. What a waste of TFSA room. — Garth

#199 Stoopid Idiot on 12.30.12 at 12:41 pm

Lesson # 1:

* U.S. Tax revenue: $2,170,000,000,000
* Fed budget: $3,820,000,000,000
* New debt: $ 1,650,000,000,000
* National debt: $14,271,000,000,000
* Recent budget cuts: $ 38,500,000,000

Let’s now remove 8 zeros and pretend it’s a household budget:

* Annual family income: $21,700
* Money the family spent: $38,200
* New debt on the credit card: $16,500
* Outstanding balance on the credit card: $142,710
* Total budget cuts so far: $38.50

Got It ?????
OK now,

Lesson # 2:

Here’s another way to look at the Debt Ceiling
Let’s say, You come home from work and find there has been a sewer
backup in your neighborhood….
and your home has sewage all the way up to your ceilings.

What do you think you should do ……

Raise the ceilings, or remove the sh@%?

Countries are not households, since they have the power to control revenues as well as expenditures, plus the level of interest rates and other aspects of monetary policy such as the money supply. Meanwhile the country with the biggest economy in the world sets the rules for others, controls the global reserve currency and attracts the lion’s share of investment. Otherwise you are a genius. — Garth

#200 The real Kip on 12.30.12 at 12:55 pm

“Look at the latest stats. Americans are buying houses again. More new deals than at any time since early 2010, when the government was paying people to make offers”

They are still paying people to make offers, it’s called QE3.

If you understood the velocity of money you’d know better. BTW, we have the same rate policy. — Garth

#201 Timing is Everything on 12.30.12 at 1:10 pm

#184 Nosty – Light Bulb Ban

We stocked up on the good ol’ incandescent bulbs at our bunker a couple years ago when the BC gov’t started the ban on 75 and 100 watt bulbs. Got a ‘healthy’ discount for the bulk buy of better quality 130v rated bulbs. Should have enough to last thru to 2030 or longer (all wattages). [note: simple, reliable and safe heat source in a real emergency too]

http://tinyurl.com/a2jhzv2

‘Resistance to the phase-out of incandescent light bulbs can be because of a preference for the QUALITY of light they produce.[8] Resistance can also arise because some say that the FREE MARKET is preferable to regulation, while others say that only government intervention will improve energy efficiency.’

http://tinyurl.com/qkrqbg

Resistance is futile! Not at our bunker, it ain’t.
Ha. ‘Efficiency’ at watt cost? [sorry about that]

#202 Ronaldo on 12.30.12 at 1:32 pm

“HOW RICH PEOPLE THINK” – Doomers take note.

http://www.businessinsider.com/how-rich-people-think-differently-from-the-poor-2012-8?op=1

#203 Canadian Watchdog on 12.30.12 at 1:41 pm

Gambling, not investing. What a waste of TFSA room. — Garth

Our top banks are making most of their profits on investment banking/prop trading now. That's gambling. So you're investing in gamblers. It's only a matter of time before some 'Toronto Whale' trader places a bad bet or something else happens. 

#204 CIA on 12.30.12 at 1:42 pm

#182 Smoking Man on 12.29.12 at 11:48 pm

Vlad great links today,

Did you know Tesla is my great great uncle, dad’s side.

He had a great connection to the universe consciousness consolidator
CSIS going what it that.

Ok lets send them on a chase, Freeman :)

Damn now my phone will get tapped. My emails read.
======================================

Don’t worry….. we can’t figure out WTF your saying either.

Our supercomputer almost blew up trying..but we conclude you pull letters out of a hat at random and attempt to put monosyllabic words together.

#205 Dan from Richmond Hill on 12.30.12 at 1:59 pm

When global investors stop clamoring for US debt, worry. But that will not happen in your lifetime. — Garth

Not in our lifetime, but it is only a matter of (longer) time?

I give up. — Garth

#206 neo on 12.30.12 at 2:08 pm

This is where Garth loses credibility. On the one hand he says the U.S. is recovering and as such interest rates/bond rates will begin to normalize. But in doing so, they will no longer be able to service their debt. You can’t have it both ways. Second, U.S. GDP is $15.5 billion not $16 billion on $16.3 trillion in debt. By 2016 it will only be $17.4 GDP on $22 trillion in debt. That will be a debt to GDP higher than the post WW2 record. Austerity will stifle whatever growth you think will allow then to “service” it.

US growth will make your arguments looks facile. — Garth

The irony is your insistence on US growth solving all their ills is facile. Spending is the problem Garth. Their spending is and will continue to outpace their GDP. It will only be exaserbated in the future and the higher interest rates necessary for the recovery you think is manifesting won’t be feasible as it eats into the very servicing of said debt. Your argument is specious.

Wait and see. In the meantime I hope all those pocket economists who come here are worried about their own families as much as American GDP. — Garth

#207 coastal on 12.30.12 at 2:27 pm

I think the metalheads will do very well this year as well as playing the range trade in the stock markets. The US economy is beat up and did a dead cat bounce. We should see a rally off a fiscal deal but will be hard to say how long it lasts, more problems to fix, like 20 million unemployed.

One thing for sure is BC real estate is gonna take a beating, especially when all the young bulls and agents who got sucked in the last 2 years are reciting excuses like kindergartners. How many times do you have to hear “low interest rates are normal and here to stay”. Lots of life lessons coming this year for the young and the dumb.

#208 Ayn Rand Army on 12.30.12 at 2:41 pm

When global investors stop clamoring for US debt, worry. But that will not happen in your lifetime. — Garth

Oh my goodness….. i hear the fed is projected to buy 90% of the new treasury debt this year after buying 70% last year.

So i don’t know what you’re talking about clamoring demand. China stopped buying two years ago and is a net seller now.

It’s over rover!

What an ill-informed comment. — Garth

#209 Richard on 12.30.12 at 3:08 pm

There sure seems to be allot of information available to point to stocks and RE still poised to go down in the future not up…..guess we will see.

#210 Hoof - Hearted on 12.30.12 at 3:15 pm

Well…what I read re: the U.S. is that the Republicans have imploded…not that there as much choice. The Democrats are a combination of taxation and wealth distribution through “entitlement”.

Obama will simply ramp up the Communist agenda…which is effectively to wipe out the middle class.

Likely scenario provide amnesty to illegals….and as Trudeau showed, acquire a massive ethnic voting block .

Do your homework, this has been the plan since the Federal Reserve was created.

Can you say Comrade ?

#211 Richard on 12.30.12 at 3:20 pm

#118

#105 Richard and Zeus and Truth Hammerer,

maybe your diatribes would have some credibility if you specfied the “TAX SUCKING programs and useless pencil pushers” that should be axed. I’ve been begging you and your cohort to do just that for many months, but all you produce is more factless abuse.

It would be pointless to ask you to put up or shut up, so I wont.

Herb…..spend an hour at http://www.taxpayer.com and see the billions wasted by useless govt pencil pushers.

#212 hangfire on 12.30.12 at 3:27 pm

I know the truth is not popular here…..but I continue to read comments regarding the Liberal ‘surplus’…guys…lets get this straight…..the Liberals shifted the transfer payments of the provinces onto the federal balance sheet and cut off repayment for education,medical and infrastructure to the provinces……this caused the taxation rates for provincial services to skyrocket…all on the backs of taxpayers…..never because there was any history of fiscal prudence….how many times does this have to be said…..it’s like plowing in a field of rocks…new ones just keep popping up.

Under Mr. Harper we will add at least $200 billion in debt by 2015. Explain that away. — Garth

#213 Incubus on 12.30.12 at 3:38 pm

Meanwhile in the United States

http://www.calculatedriskblog.com/2012/12/comment-on-house-prices-real-house.html

#214 █ ♣ █ ANONYMOUS on 12.30.12 at 3:48 pm

Anyone who wants to build a new oil pipeline in these environmentally sensitive times is going to have to build a twin-walled pipeline.

A twin-walled pipeline is similar to a twin-hulled oil tanker. If the main wall is breached (punctured), then the second wall holds in the oil.

The way it will work with a twin-walled pipeline is that there is a 2 to 3 inch space between the inner and outer pipes (maintained with spacer-blocks ever few feet) and every 5 to 10 miles the space between the inner and outer pipes is sealed and there is a drain-off to an outside storage tank that is accessible above ground. In addition to this, every 50 to 100 miles there is an emergency shutoff valve that stops the flow through the pipe in just a few seconds.

Any leak in the inner pipe then leads to oil flowing into the emergency storage tank. The moment oil starts to flow into this tank an automatic alarm starts which then instantly shuts off the oil flowing through this damaged section of pipe, closing the shutoff valves at both ends of the damaged section of pipe.

This type of pipeline will cost about 4 to 5 times the cost of a conventional pipeline, but with insane environmental protection laws, this is now the ONLY way any pipeline will be built as it removes any risk of oil leakage 100%.

#215 Fiscal Cliff on 12.30.12 at 3:52 pm

Inter-generational Theft – Boomers are living off our current productive wealth. To a much greater extent, we are living off the productive wealth of future generations.

Garth, your high prediction score/ratio indicates you have a profound understanding of the economic condition. You advise on this pathetic blog on how to profit, yet your ‘Not in your lifetime’ mantra foreshadows an eventual severe economic crash. Moving money around and increasing the value of a given asset is not productive growth. Exploiting tax policies and investing in dividend earning stocks only perpetuate the economic condition.

The greatest transfer of wealth in the history of mankind, the theft of hundreds of trillions dollars is the economic condition. We are stealing from our children and their children.

Like that’s new. — Garth

#216 Stoopid Idiot on 12.30.12 at 4:06 pm

It won’t happen here. Period. — Garth

Gold is nothing more than a alternative currency or store of value. Those calling for a lower Gold price need to ask themselves how many mines would be profitable at $1000.00 Gold and $90.00 Oil. It’s not Gold that is going up in value or Silver, Oil, Sugar, Cocoa, Wheat. It’s the units they are valued in (U.S. Dollar) going down. Since the inception (1932)of the Federal Reserve the U.S. Dollar has lost 96% of it’s purchasing power. Inflation is the hidden tax that few understand. Hyperinflation and Default our just around the corner. No Fiat currency has not defaulted… ever. If I where to capitalize on any commodity responding to Hyperinflation the first realization would be inside my TFSA for the most obvious reasons.

http://www.sharelynx.com/chartstemp/AUPPBasket.php

http://www.nolanchart.com/article6123-grand-illusion-the-federal-reserve.html

http://usawatchdog.com/dollar-sell-off-and-hyperinflation-by-2014-john-williams/

#217 Ayn Rand Army on 12.30.12 at 4:13 pm

Thanks Garth, and you prove my point for me. The link doesn’t seem to mention that the fed is the largest holder of us treasury debt at 2.8T which is soon to be 3.8 and then 4.8 over the next two years. Maybe higher!

See, China’s debt is down!

and Japan’s holdings are up because they are committing harry carry. The soon to be poor bastards.

China, Mainland 1149.6 1314.9 739.6 55.4 -12.57
Japan 1117.1 885.2 634.8 76.0 26.2

#218 Bill Gable on 12.30.12 at 4:16 pm

45 North – How kind of you – and right back at you.

Happy New Year to everyone.

Health, Happiness and Prosperity to you and your Family.

Thanks again, Mr. Turner = for everything you do.

(* Full disclosure – Mr. Turner has taken care of my Family with skill and class – along with his partner, and equally great fellow, Scott).

Cheers!

#219 Stoopid Idiot on 12.30.12 at 4:32 pm

We do not have, nor will ever have, hyper-inflation. That is a metalhead myth. — Garth

The United States is one of the few countries to have experienced two currency collapses during its history (1812-1814 and 1861-1865).

http://www.munknee.com/2011/03/21-countries-have-experienced-hyperinflation-in-last-25-years-is-the-u-s-next/

Stop embarrassing yourself. — Garth

#220 espressobob on 12.30.12 at 4:35 pm

#137 Toronto_CA

#206 Stoopid Idiot

You two might consider a “stop loss” to that “buy order”.

#221 Hoof - Hearted on 12.30.12 at 4:36 pm

Hey Vlad….if you need some topics….

25 Facts That The Mainstream Media Doesn’t Really Want To Talk About Right Now

http://www.thetruthseeker.co.uk/?p=62786

#222 Victoria Tea Party on 12.30.12 at 5:10 pm

OWING MONEY AND THE HONEY BOO BOO
“INDICATOR”

#207 Stoopid Idiot

Interesting take on the US debt issue.

Garth, you’re right about the lack of legitimate comparison when one lines up a household family budget, whose denizens cannot print endless amounts of eroding fiat currencies, with that of a sovereign entity which jolly well can. And does!

What #207 illustrates is the utter personalization of the US’s currency financial crisis, and it is a crisis, by reducing it to what a household budget crisis looks like.
That’s the only way that the rest of us can figure out what a disaster it all is.

The numbers our “betters” bandy about, formerly billions, now mere trillions, soon to be quadrillions are amazing in their hyperbole and amorality:

–hyperbole, because we are now getting used to hearing about money figures so huge that they utterly defy comparison. It is all just maddeningly loud noise; and,

–amorality because what kind of a group of human cretins has the absolute brass to lead the rest of us so-called innocents down this Hell-bound route to eventual financial non-existence?

I know that the American Empire, backed by more bristling armor and chutzpah than any other empire in human history, can and is doing what the heck it pleases to survive. I get that.

But will there NEVER be a downside to what I believe is terrible empirical behaviour? No empire survives “forever.”

So, then is there no future straightening of accounts, no regrets for all of this hideousness?

I believe there is and will be. Nothing stands still anymore than a millisecond or less these days. Things come and things go; sometimes every quickly.

I am going to be patient, as I continue to observe the many knock-on effects of bad US spending habits including fascination with the ongoing cultural rot, as personified by…

HONEY BOO BOO!!

These days this likeable little fat girl, nick-named Honey Boo Boo, and her Hindenburg-size mama travel about the US in a big fat Cadillac gathering fans and money for doing exactly what?

Nothing of substance I do believe.

For instance, last week she was on TV flossing her teeth with a long piece of spaghetti! Why? Beats me, but her adoring fans think the world of her! In fact there are 20 full Honey Boo Boo episodes you can watch!

So, does this particular form of cultural decay play back to the empire’s obvious financial problems or not?

Yes, given that most American workers have not received a meaningful pay raise in years, so they have to borrow to keep up with consumer price inflation.

Then there’s those boring food voucher stats (47 million folks and climbing), and the REAL jobless rate of what, 16 per cent?

One cannot separate the financial mess from the other messes. They’re interconnected.

And those good folks will one day have to tidy up their stable, by themselves.

By then no one else will have the money or the energy to assist because we’ll all have been royally you-know-what-ed by then!

#223 EIT on 12.30.12 at 5:11 pm

Your such a PaperBug Garth!

I live in dollars, and enjoy having lots of them. How about you? — Garth

#224 Ayn Rand Army on 12.30.12 at 5:20 pm

#219 Hoof – Hearted on 12.30.12 at 3:15 pm
Obama will simply ramp up the Communist agenda…which is effectively to wipe out the middle class.
—-
This is what every government is doing. Destroying the middle class that was built by capitalism and making everyone lower class and poor while everyone in governmnet becomes rich. It’s the ultimate in unfair wealth distribution.

Free markets and capitalism distribute wealth to those who produce and earn it.

Governments are simply thieves who claim to redistribute but simply take for themselves until there’s no incentive left to work or for business owners to take risks or even operate or try to grow.

And I know because I’m planning to move my business to Asia.

Aren’t you gone yet? Waiting for a government subsidy? — Garth

#225 EIT on 12.30.12 at 5:39 pm

I prefer atoms over human psychology. Dollars are a means to an end.

So is air. — Garth

#226 MultCult on 12.30.12 at 5:44 pm

I cant believe that still Garth thinks that Canadian real estate will crash after all these years of strength ! But I still respect him for at least trying to figure things out.

Actually I have not said it will crash, but correct and flatline. That is enough to wipe out legions of people. Please work on your reading. — Garth

#227 daystar on 12.30.12 at 5:54 pm

#207 Stoopid Idiot on 12.30.12 at 12:41 pm

I have no idea where you are coming up with a $1.65 trillion dollar deficit for 2012 (its an estimated 1.171 trillion):

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

…and should the U.S. go over the fiscal cliff without too much in the way of changes, their deficit is likely to be cut by half for 2012 and wither to a 1/3rd or less in 2014. Factor in the end of war in 2014 along with growth and 2015 will be a year where balance is in sight.

By the way, do metalheads have any idea what that will do to currencies through 2013 to 2015 and beyond? Do they actually realize that the price of gold has been on a tear precisely because of fiscal weakness since 2001? Why can’t they see what the consequences to PM’s will be with fiscal strength? GWB isn’t still in power here, we’ve got adults there now. Take that fiscal weakness away and what happens to gold and silver or the need for Q.E. and especially interest rates as the clock moves forward?

It shouldn’t be all that hard for us to grasp and yet, for some reason, it is so I’ll lay it out as best I can. here is what happens should the U.S. government steer the economy towards fiscal balance over… say… 4 years.

- The U.S. dollar strengthens relative to world currencies including the loonie, gaining momentum as deficits shrink.
- A stronger dollar means cheaper imports.
- A stronger dollar means cheaper commodities (priced in U.S. dollars)
- A stronger dollar means increased foreign investment in U.S. currency for a plethora of reasons (ascending currency, safe haven in a world where currencies are an increasing issue, stable U.S. bond markets. Bond’s aren’t my strong suit so someone feel free to enlighten and add to this point:

http://en.wikipedia.org/wiki/Bond_(finance)

- A stronger dollar leading to cheaper commodities and imports leads to greater profit margins in manufacturing and since the U.S. is still the worlds largest manufacture in nominal dollars, what do readers think this means in terms of job creation and growth? It shouldn’t be a hard causal effect to grasp here.
- Fiscal strength strengthening the dollar and reducing the need to borrow leads to the end of Q.E., further strengthening the U.S. dollar going forward through confidence well placed.
- A stronger dollar means the bond markets can self regulate since there is foreign buyers of the what little debt there is left to buy in terms of debt and as a consequence, interest rates stay low in the U.S. .

- A strengthening dollar over time means rates can stay low in the U.S. while rates rise elsewhere in the world trying to compete for the money that isn’t flocking to the U.S. economy so while the U.S. has the advantage of low interest rates, the rest of the world does not and as a consequence, the tables turn favorably for U.S. foreign investment abroad.

If readers have taken the time to digest this, the U.S. economy getting its fiscal house in order isn’t good for Canada or the rest of the world in general when it comes to interest rates as the cost of borrowing rises outside of the U.S. . For one, we’ll get less for our commodities as currencies diverge and interest rates will “normalize”. Considering our own fiscal mess here in Canada, I think, above normal within 5 years. Flirting with double digit rates would not be out of the question 5, 6 years from now, perhaps even sooner. If I’m right, what would high rates do to RE in Canada?

Hey, doomers, you’ve picked the wrong nation not to mention the wrong commodity. Think! Get some grasp of macroeconomics please! I can’t do it for you. If doomers can’t see why I see a .70 to .75 cent loonie in 5 years with interest rates around 8 to 10% and a housing/credit bubble gone bust along with the general economy itself, I can only suggest that when when doomers read abbreviations like ToM, research what it means and take a hint.

One final thought and then I’m gone for the day. There isn’t one point Garth has made on his piece and thread that I can disagree with. Japan and Canada stand out now as high risk for hyperinflation within the next decade but lets not confuse this with default. I don’t see western nation defaults but I do see hyperinflation coming. For Japan (I consider them them to be a western economy, the only one out Asia), if they don’t get their trade imbalances under control within the next 5 years, hyperinflation will come as external debt climbs. I do believe however, that if there a nation that can lead the world in automotive fuel efficiency, what I believe to be the next major tech bubble, its Japan which is why I can’t bet on default.

Secondly, Canada is at risk to hyperinflation within 10 years as well. If I’m right with interest rates and currency divergence, deleveraging from debt will prove extremely painful for Canada and our leader, it will be humiliating for those who support him and hard to accept for some but, our leader is a traitor and the sooner we get of Harper, the better it will be for Canada in terms of controlling the damage and healing. Its everywhere I look from currency related derivatives to housing bubbles and credit bubbles to trade, the environment, pick ‘em. Harper has to go before Canada can get well again. His supporters have simply overestimated his intelligence and mostly, his loyalty to Canada.

#228 Norm on 12.30.12 at 6:01 pm

http://www.thefiscaltimes.com/Media/Slideshow/2011/06/30/Most-Desperate-Real-Estate-Ads.aspx?index=11

Interesting read, there are also articles on “ghost” cities in the USA that never got finished or built. As far as the USA going into recession, I don’t recall the last one ever ending.

#229 daystar on 12.30.12 at 6:01 pm

#227 Bill Gable on 12.30.12 at 4:16 pm

Right back at you Bill. Happy New years and Cheers everyone!

#230 Stoopid Idiot on 12.30.12 at 6:12 pm

You two might consider a “stop loss” to that “buy order”.

That’s for people on Margin… I use no Margin, it will kill you as you sell that what is making you money to cover that what is losing you money, with a flash crash your fleeced and robbed of quality shares. I possess conviction as to why and what I buy and hold. I’m not controlled by emotion

Or grammar. — Garth

#231 Dr. WAYNE on 12.30.12 at 6:30 pm

#238 Stoopid Idiot on 12.30.12 at 6:12 pm

I’m not controlled by emotion

Or grammar. — Garth

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

Great come back … Now if I would have presented that quite justifiable response, can you imagine the sh++ that would be slung at me by those who have a nonexistent sense of humour …

#232 Stoopid Idiot on 12.30.12 at 6:43 pm

#235 daystar

The most erroneous of your assumptions is in the fact the Q.E. will go to infinity. Cost-push inflation will guarantee it. Rates will remain where are and the exponential function of the debt will take hold.

Then…. The End

http://en.wikipedia.org/wiki/Cost-push_inflation

http://www.youtube.com/watch?v=LqcHG7QUK9k

There are very few heroes in economics but for me one of the patron saints of that profession should be Nikolai Kondratiev who was shot by firing squad on the orders of Stalin in 1938. He died for what he believed was the truth. His execution was ordered because his academic work propounded that the capitalist system would not collapse as a result of the great depression of 1929. This truth Stalin did not want to hear, thus Nikolai was exterminated and his work suppressed for over two decades.

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

http://www.financialsense.com/contributors/christopher-quigley/kondratieff-waves-and-the-greater-depression-of-2013-2020

#233 EIT on 12.30.12 at 6:48 pm

Hold your dollars, enjoy your days, ignore the world. A paradigm shift is in order.

#234 Stoopid Idiot on 12.30.12 at 7:08 pm

There are very few indices I would consider insightful or for that matter untouched by Hedonics that would give a clear picture of world conditions economically

http://people.hofstra.edu/geotrans/eng/ch7en/conc7en/bdi.html

Or grammar. — Garth

Sorry… third language… it’s coming along

Dr. Wayne

http://en.wiktionary.org/wiki/bootlicker

#235 Mic D'angelo on 12.30.12 at 7:13 pm

This is Garth’s record. The prediction on the last 3 years or rising interest rates and government bond yields. It is an F. 2013 will be another year of low interest rates thanks to the world central bank financial repression efforts. In 2010 Ontario, Quebec and B.C. 27 year bonds were yielding 4.81% to 4.64%. Today, they range around 3.37% to 3.23%. This is a 30% drop in interest income per year. A $500,000 portfolio of these bonds would yield $7,200 less per year interest income.The poor investors would thought interest would go higher are $600 per month poorer. The 27 years total loss is$194,400 interest income. I have been long term government bonds since 1994 at 9.67% to 9.37% range. The so called experts said interest rates will go higher in the next few years. This is done so an investor can’t lock in a great yield and live off the interest like the good old days.Interest rates are going to the moon Garth and Santa Clause came to visit me on December-25-2012 with a big bag cash.

Sell the bonds, dude. — Garth

#236 TurnerNation on 12.30.12 at 7:28 pm

Anyone who uses the internet buzz word “fiat money”, I tune out.
We use MONEY, as your parents, grandparents, great grandparents, great-great grandparents, great-great-great grandparents, great-great-great-great grandparents did. Going back to biblical times.
Get over it.

#237 Intuitive Missus on 12.30.12 at 7:31 pm

Garth, when will Money Road be back in print. I have an order for two copies when it is ready :)

I am planning to retire at the end of next year so I am really looking forward to your predictions for 2013.

We feel very fortunate. When I was very young I started working for a very good company and I have been there ever since. I have never been afraid of hard work nor have I ever been afraid to learn new things. In the 39+ years I’ve been there, I’ve had many jobs with the same employer. I know, it is a rare event these days. As a result, I do have a DB pension plan that I’ve been paying into for 37+ years. My husband has a DC pension plan that he’s been paying into for 33+ years. We’ve also managed to put some money into RRSP’s. And we sold the big family home last year when we thought the market had gone into the price stratosphere. Of course the craziness continued. But at last it seems to have finally stopped. We are so relieved we trusted our instincts. We have been renting since June 2011 and are so relieved to be out of the market now. No stress whatsoever. We may buy again at some point but it will be something small and uber-functional with everything we need on one level – and no it won’t be a condo. From what we’ve seen, that is a bigger money pit than a house. We have two adult children still living at home and ready to move out on their own in 2013. They will be renting until it makes sense to do otherwise. We advised them to stay out of the market when their friends were buying over the past 2 years. Glad they listened. They are in good shape and not tied down if their careers take them elsewhere.

Keep up the great work you do. It is sincerely appreciated. I have learned so much from your writing and also from my fellow readers and posters.

Two worthy of mention are – Canadian Watchdog. Great work. I am a data junkie. And Linda Pearson – you write so eloquently what is on MY mind. Your last posting about separate bank accounts made me laugh.

Happy New Year to all.

#238 TurnerNation on 12.30.12 at 7:34 pm

#235 daystar whenever I encounter a new term on here, I hop over to urbandictionary.com where my prayers are usually answered. :-0

#239 TurnerNation on 12.30.12 at 7:43 pm

#239 Dr. WAYNE: that’s because of your Beta status.

If you were female – and for the planet’s sake I hope this is not so – you’d be the Amazon assigned the dreadful task of Armour-All-ing the Hummer’s tires.

#240 Bill Gable on 12.30.12 at 7:52 pm

This was sobering:

“From the time that George Washington was inaugurated (1789) to the time that George W. Bush was inaugurated (2001), the U.S. government accumulated about 5.7 trillion dollars of debt.

During the first four years of the Obama administration, the U.S. government accumulated about 5.7 trillion dollars of debt.

How can anyone support this kind of insanity?”

Link: http://tinyurl.com/b5c6a8f

#241 daystar on 12.30.12 at 7:55 pm

#240 Stoopid Idiot on 12.30.12 at 6:43 pm

Uh… I didn’t say Q.E. would go to infinity, did I. Thats you putting words in my mouth. What I did say is that Q.E. would no longer be necessary to keep interest rates low should the U.S. government get their fiscal house in order. Beyond what I see as your personal need to argue and write fiction, I suggest you take a look at why Q.E. won’t be driving up inflation any time soon, at least until Q.E. bonds reach maturity. Until these bonds actually do reach maturity, the effects of Q.E. is to keep rates low and that does have an deflationary effect as opposed to the consequence of not having Q.E. (higher interest rates are inflationary in themselves). Btw, if you put words in my mouth like that again, I likely won’t take you seriously enough to respond.

#242 skeptical on 12.30.12 at 6:53 pm

The world’s largest economy in nominal dollars is the U.S. dollar. One out of every 4 nominal dollars in equivalent world currencies is american. How you can even remotely compare Canadian and Japanese economy in terms of size with the U.S. economy is beyond me. So… lets compare for real shall we? Lets take a look (I’ve already done it ions ago but I’ll revisit the point to help you out), do a little research and then make a decision in order to avoid costly mistakes with investing based on blind assumptions.

http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)

U.S. (2011 PPP)
15 trillion
Japan
4.44 trillion
Canada
1.395 trillion

If my quick math is correct (and it is), Japan & Canada’s collective PPP/GDP based economies make up roughly 30% of what the U.S. economy is worth. If my earlier post is correct, that percentage will drop to a combined 25% of the U.S. economy or less and the consequence to gold should the U.S. head toward fiscal balance once again? Do I have to spell it out? Seriously? Still? Gold’s reign is done and not you or I or anyone else’s belief’s from the contrary will prevent this “should the U.S. government get its fiscal house in order” (there’s more to it like housing that has nowhere to go but up, energy headed towards self sufficiency, government regulation, U.S. manufacturing still the largest in nominal terms and entreprenurial spirit but they’ve got what it takes and the trends are positive). If you wish to lose money on gold through false assumptions and ego that can never leave room to be wrong, thats entirely your choice but in some circles (well, mine anyway) its defined as pure plain plumb dumb. (as they say, a fool and his money)

#242 Mr Buyer on 12.30.12 at 7:57 pm

#234 MultCult on 12.30.12 at 5:44 pm
I cant believe that still Garth thinks that Canadian real estate will crash after all these years of strength ! But I still respect him for at least trying to figure things out.

Actually I have not said it will crash, but correct and flatline. That is enough to wipe out legions of people. Please work on your reading. — Garth
……………………………………………………………
Returning to 3 times or even 4 times annual income is cataclysmic in anybody’s dictionary.

#243 claudius emperor on 12.30.12 at 8:04 pm

Garth, thanks for your feedback. I know there are certain things that can be said in public these days and certain things that can not be said… Unfortunately.

I think I can read between the lines…

As I result I decided to diversify and purchase physical silver (+ stocks based on holding of phisical silver) , up to 10 percents of my portfolio initially and then maybe more.

I am really not afraid of losing it (how could I ‘lose’ if I keep it in long run and pass it to my childern)?

What worries me more is the clear indication of manipulations on the silver market. Wondering how long this could go for. And maybe eventual confiscation.
(Hope not in Canada as I am not going to give away my silver)

By the way gold and silver confiscation did happen in the states in 1933.

I was never sorry when I follow my gut feelings.
And I was always sorry when I did not as they mostly always proved right (maybe due to the fact that I drink distilled water with no fluoride)

In a way thansk to the metal heads that are getting frequently smashed on this blog.

Some of the information posted and links provided are really valuable.

#244 not 1st on 12.30.12 at 8:08 pm

“Under Mr. Harper we will add at least $200 billion in debt by 2015. Explain that away. — Garth”

Sovereign debt doesn’t matter Garth, you said so yourself so lets rack it up like every other country does in the EU and in the U.S.A. If the U.S. has a $16 trillion debt on 16 trillion GDP, then we should have $1.4 trillion debt on a $1.4 trillion GDP. Lets add another 10 trillion in long term debt for good measure to entitlements too while we are at it. Why don’t we follow Japans lead too cause a quadrillion isn’t too much debt to service. We will just ask the taxpayers to cover it in the name of avoiding a recession.

Personally, I can service one hell of a whopper mortgage payment and I imagine many other can too, so let whistle past the graveyard of the canadian housing bubble too.

#245 claudius emperor on 12.30.12 at 8:12 pm

Just to add that I have much more trust in my own investment juddgements than in F, M.C or the Big Ben.

Alan Greenspan did not see the housing bubble in the states in 2006 while I clearly did see it much earlier.

One must look upon himself/herself in the mirorr every morning and never forget that the person he/she sees is the one that wishes him/her well most.

#246 Smoking Man on 12.30.12 at 8:14 pm

Calling all bubble heads, and day3 in the falls, and killing it. At leased 6 months worth of sort term rentals.. You do the math to shit faced at moment.

#247 claudius emperor on 12.30.12 at 8:38 pm

Garth said:
Actually I have not said it will crash, but correct and flatline. That is enough to wipe out legions of people. Please work on your reading. — Garth
——————-
Like no crash as in Japan, US, Spain?

I hubmly disagree. Our fundamentals and hidden liabilities don’t look good.

People and governments look overstreached, there is only the false sense of wealth triggered by the easy credit…

It is not matter of semanthics, one can only define what is coming our way in the housing market as a severe crash.

Unless the F fool keep throwing money risking system failure. As i said total value of the CPP is 170 billions while we are ‘guaranteeing’ mich more in really bad mortgages that should never be given in first place.
How is that not worse than in the states?

Enough political correctnes, just look at the numbers,
even the mainstream media is already doing it!
(look at the recent Globe and Mail article on CHMC)

Evrey sane person reading that would realize tha deep s..t that we are in.

The news is already out there, now is no time for political correctness and B.S.

I don’t care if you agree or not. I was correcting a poster who claimed I am predicting a crash. I am not. — Garth

#248 };-) aka D.A. on 12.30.12 at 8:42 pm

#234 MultCult on 12.30.12 at 5:44 pm

Actually I have not said it (real estate) will crash, but correct and flatline. That is enough to wipe out legions of people. Please work on your reading. — Garth

As so they should be. They were afforded opportunity to get in when they wanted and should have known the long term ramifications of having done as they did. If they cannot hold on there is inevitably another ready willing and able to assume their place. AND THERE IT IS… the continuation and maintenance of the market, why it will not crash nor flat line for long.

#249 Stoopid Idiot on 12.30.12 at 8:51 pm

#250 Daystar

Uh… I didn’t say Q.E. would go to infinity

Your Right … I did. Your assumption is it would stop… that’s what makes your assumptions erroneous. You have no concept of M3, or velocity

#250 not 1st on 12.30.12 at 8:57 pm

daystar, GDP is a meaningless measure of economic health because its highly sensitive to rates, bond buying and artificial stimulus. Take the 1 trillion extra a year the U.S. spends out of the equation and put some real funds toward reducing their crushing debt and their GDP will fall by 30-50% I bet. Same for the EU. In fact most of the top GDP countries have staggering debts which have goosed their GDP numbers. There is only one country with a respectable debt/deficit vs GDP and true AAA credit rating and that is Canada.

You are selling us short with your off the cuff comments.

#251 Nostradamus Le Mad Vlad on 12.30.12 at 9:00 pm

-
#219 Hoof – Hearted — “Obama will simply ramp up the Communist agenda…which is effectively to wipe out the middle class. Likely scenario provide amnesty to illegals….and as Trudeau showed, acquire a massive ethnic voting block .”

8:55 clip NDAA stuff, 6:26 clip (I think) See headline for further clarification, and 4:16 clip Illegals? Mercy! One who has seen the light! As Soros says, so goes Obomba, simply following his master’s orders. WW3 might be over very quickly if nukes are used, and Dimona is cast into oblivion. Good post.

#229 Hoof – Hearted — Thanks for the link. That NDAA sure sounds and looks like a dictatorship, along with the TSA and other (newly created after 9-11) levels of govt. Can anyone say inside job to further their agenda? I knew you could!

#230 Victoria Tea Party — “No empire survives ‘forever’. Things come and things go; sometimes every quickly.”

Nothing lasts forever is a more straightforward way of saying it.

#241 EIT — “A paradigm shift is in order.” — Couldn’t have said it better myself! Holy monopolies, tons of great posts today!
*
#249 Bill Gable — “During the first four years of the Obama administration, the U.S. government accumulated about 5.7 trillion dollars of debt.” — Plus more — ObombaCare’s Tax Hike US$1 tri. on Jan. 1.
*
Le BdB Group Yes indeed, our friendly local NWO empty clamshelled banana skinheads have reconvened in Rome, less than six months after they last met there. Didn’t Rome fall once? 17:37 clip The fiscal cliff is a red herring for something bigger, and 54:22 doc. Planet for sale. The NW Agricultural Order is chowing down on hectares of land. Monsanto etc. involved? End of 2012 This would go with the link from a few days ago, which said the end of the Mayan age would be continued by the start of the great tribulation; Planned Layoffs The economy may be getting better for big biz., not so for workers; Links in, one of the more interesting being a judge’s dismissal of a lawsuit against JPM’s silver manipulation; 0:31 clip Sen. Lindsay Graham threatens to turn the SS system upside down if his ego doesn’t get its way; 3,300% Payday loans UK soldiers;
*
1:40 clip Variations on winter driving; 56:21 doc. 1421 — the year China discovered America? Global Voter Fraud What do Chicago and Obomba have in common? Gun Control plus US unlawful wars Citizens should never disarm; Could Belgium bring Scientology to its knees? And more religion — ObombaCare’s Mandate; Riots in Argentina Growing all over the world, and Yemen, Pakistan plus Syria and Jordan Who is co-ordinating these attacks?

#252 claudius emperor on 12.30.12 at 9:03 pm

Excuse my passion but we must realize that when our social services and pensions are cut down the road and one or beloved one (god forbid) is identified with serious ilness and can’t get quick access to a specialist here (I know few people that were in such situations thru the years so they had to go the states (what irony!)) or one can’t retire at even 70 (just watch out for this coming) that would be a direct result of the curent economic policies.

How could one not be pasionate?

#253 Dan from Richmond Hill on 12.30.12 at 9:04 pm

Under Mr. Harper we will add at least $200 billion in debt by 2015. Explain that away. — Garth

Is this sovereign debt? Should it be repaid, or not?

Was it necessary? — Garth

#254 Grim Reaper/Crypt Speculator on 12.30.12 at 9:12 pm

Garth is getting cranky:

PS : Time to short on the “Soylent Green” options

#255 The American on 12.30.12 at 9:36 pm

At #192: Neo, the U.S. GDP is just as Garth stated at $16 TRILLION. It is NOT the trivial $15.5 billion you claimed. This ain’t Canada. I know it must be hard for you to wrap that tiny mind around, but you have ZERO idea what you’re talking about. Better luck next time.

#256 daystar on 12.30.12 at 9:47 pm

#240 Stoopid Idiot on 12.30.12 at 6:43 pm

After reading your comment again and actually understanding what you meant the second time ’round (I do that sometimes), sorry but I have to disagree. Q.E. will not go on to infinity, at least in the U.S. . I’ve explained why. The U.S. government has a very real legitimate shot towards fiscal balance over 4 years. They are half way there should they go over the fiscal cliff and I think people are catching on to the reality that this is the case because more than any other reason, its needed and that an earlier post of mine in early December explains why.

2013 will be an off year of sorts precisely because of reduced consumer spending as a result of tax increases but 2014 poses some very real opportunities in terms of spending cuts. There aren’t issues that I can see with old age pensions and EI from what I can tell. Unfunded state pensions are another story but that can be fixed as well through changes in entitlements/eligability. (they mean the same thing, just used differently depending on who uses it) The road to fiscal balance is one of raising taxes specifically to the rich (they have the nations money after all) and cutting spending (in defence and to some degree, healthcare). What they come up short with is made up with growth over time but the point I’m really stressing here is this.

The U.S. can do it. Anyone who thinks the U.S. can’t achieve fiscal balance over a realistic timeline (4 or 5 years) is really fooling themselves. Their combined gross public debt simply isn’t too high or unsustainable to overcome. Gross public debt is high (115%) not counting unfunded state liabilities but these liabilities can be managed through changes in eligability without jacking payroll taxes if needed.

I’ve laid out the reasons why but there are other reasons that need to be considered. The U.S. isn’t a one trick housing pony here. Besides manufacturing of which they are still the world’s #1 manufacturer in terms of nominal dollars, the U.S. as we speak has more drilling rigs on U.S. soil than all of the other drilling rigs in the world combined. (some nations aren’t included: Russia (caspian region), Cuba, Iran, N. Korea and China but even if they were it would be around or close to half)

http://investor.shareholder.com/bhi/rig_counts/rc_index.cfm?showpage=summary

http://www.wtrg.com/rotaryrigs.html

The reason why the U.S. is so active? Fracking for gas and horizontal drilling of old verticle wells not to mention new drill drilling overall on and offshore. Its new tech combined with government regulations and sheer will. Simply put, the U.S. is doing everything it can to become energy self sufficient and this Keystone pipeline is being delayed, I think, in response to energy production coming from elsewhere in the U.S. . I believe it will still be built but not as quickly as Canada hopes. Its not half so environmental or political as it is practical to delay the Keystone for such reasons. We are, after all, talking about a good deal of new energy resources coming onstream from Texas, Wyoming, North Dakota (Bakken play), Pennsylvania:

http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/in-us-energy-renaissance-flares-of-fear-for-albertas-oil-patch/article5398644/?page=all

http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/n-americas-energy-renaissance-more-like-a-revival/article5466109/

Seriously, how can one discount a U.S. recovery while ignoring what is going on with U.S. energy policy or what the effects of fiscal balance has on macroeconomics from there? It was mere years ago that I was on this very site talking about peak oil and how the world was facing crisis and here, the U.S. is “defying logic” as they say through the drill bit. I still believe in peak oil but technology (fracking, horizontal drilling) has changed the timeline and one can see it in a way through the policies Obama has laid out for america (think new emission laws). Same goes with gross public debt approaching 100% under GWB junior. Along came Q.E.

I guess the point I’m trying to make here is, be flexible. Just when you think you’ve got it all figured out or even just a slice of it, remind yourself that its still based somewhat on assumptions. Nevertheless, some of it is predictable. Self interested, misinformed and uneducated voters generally vote for bad leaders of the same flavor. We had GWB for 8 long years to pick on plus the people who voted them in, who do we have now? Obama. Different cat, different goals, different party, different policy, I think a much wiser leadership south of the line and a stronger, more experienced nation as a whole because of the adversity they’ve faced.

Canada is being led with the same kind of leadership as GWB with the same policies that created the same housing and credit bubbles, the same wealth and bloated ego effects and it will likewise lead to the same adversities the U.S. has gone through over time. Will we smarten up like the U.S. did and change our course the way the U.S. is right now as we speak?

I hope so. I truly do. But, it remains to be seen. Canada is still in denial, still too proud, still judgemental and defiant but that will all change as quickly as interest rates rise and the loonie falls and that, dear readers, is also relatively predictable, its just a question of when and I’m trying to answer it.

As for 50 year cycles, I don’t believe in them. There is quite simply too many variables changing for it to happen. Who can predict populations increasing 7 fold over 100 years or GWB juniors or likely what comes next with full certainty? (overpopulation, environmental degradation and depopulation that follows as resources deplete, followed by plausible war over the crumbs. Its preventable, but population controls aren’t on most government agenda’s.)

Are we reaching tipping points with popluations and environments and/or coming close never mind tipping points with debt? I can’t say for sure. No one can. Still… its far from foolish to try to predict. The whole excerise since the dawn of time is to notice the patterns behind intelligent design and causal effects behind not just what it is that we do, but the motives behind our actions. Its no waste of time. Lets just say that… if we aren’t being spoon fed the answers and search for them just the same, it can only make us smarter. The reason why Garth, myself at times and others put so much effort into it is to give us all a place to start, to give us the anwers to build on because it does take a collective effort to see the patterns and accurately predict what is to come from there. What disappoints me at times is the disrespect thats out there for the process and its true teachers. (Garth being the best example of a teacher I can think of) So keep it respectful blog dogs, thats all I ask and as a New years eve resolution I’ll do what I can to meet you half way. (throw it in my face if I don’t)

#257 };-) aka D.A. on 12.30.12 at 9:56 pm

#264Grim Reaper/Crypt Speculator on 12.30.12 at 9:12 pm

Garth is getting cranky:

LOL. I can well empathize.

#258 daystar on 12.30.12 at 10:07 pm

#258 Stoopid Idiot on 12.30.12 at 8:51 pm

Rubbing my face in it now. Understandable I guess. What I don’t understand is why money supply and velocity is something you believe I’m not aware of. Care to explain?

#259 not 1st on 12.30.12 at 8:57 pm

If GDP or PPP isn’t a good enough measuring stick for the size of an economy, feel free to weigh in with what is and the U.S. with its 115% gross public debt to GDP ratio is only slightly higher than our own. (we’re at 109%) We’ve got provinces losing bond ratings (like Ontario) and chartered banks, what makes you think our triple AAA rating in Canada will last, especially as rates begin their ascent? Off the cuff comments.. I’m not the only one capable.

#263 skeptical on 12.30.12 at 9:08 pm

K, fine, invest in gold, knock yourself out.

#259 45north on 12.30.12 at 10:37 pm

daystar: the consequence to gold should the U.S. head toward fiscal balance would be the end of its reign .

The people that hold power and influence in the US do so because of the value of the dollar. They are self-aware and will act to defend their interests.

#260 neo on 12.30.12 at 11:22 pm

#265The American on 12.30.12 at 9:36 pm
At #192: Neo, the U.S. GDP is just as Garth stated at $16 TRILLION. It is NOT the trivial $15.5 billion you claimed. This ain’t Canada. I know it must be hard for you to wrap that tiny mind around, but you have ZERO idea what you’re talking about. Better luck next time.

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

Check again American…

http://www.usdebtclock.org/

Next time educate yourself instead kissing up and looking foolish in the process.

#261 Mic D'angelo on 12.31.12 at 3:02 am

Garth, I would not sell my government bonds I bought over the last 17 years. I am earning about a little over $102,000 a year or 6.73% interest income from all my 75 individual government bonds. If I sell all my bonds I will make about a 34% capital gain. It looks good now but I will loose 3.40% per year in interest income and the 34% is only 10 years of interest income before capital gains taxes. The net capital gain would be only 25.5% and I would have to buy bonds at 5% to 15% premium over par yielding net 3.4% maximum yield. I have researched this in and out and it is better to stick with my hold to maturity strategy over the next 25 years collecting the interest every year. Reit’s, stocks, ETS, mutual funds and dividend paying stocks, Income trusts are for you Garth. I think that your answers are made by one of your assistants and not well researched.

Your interest is taxed at the top marginal rate. Capital gains are taxed at half that level. A 6.7% return on $102,000 is actually 3.8% after tax. Plus, you have utterly no diversification which makes you susceptible to risk, since 25 years is a long, long time. It is an unsound strategy. — Garth

#262 The American on 12.31.12 at 9:27 am

At #270: Neo, you are a freaking moron. You need to educate yourself and stop acting like a damn fool. A GPD of $15.5 Billion. Hell, GREECE has a GDP of $305 Billion. You are a freaking idiot.

Check YOUR stats. By the way, that clock you provided has zero to do with GDP. Can you even read?

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