Hysteria

stomachs

People, being people, like to believe the worst. They want Tiger Woods to implode again. They like Kate topless. They loved prisoner Conrad Black.

No difference with public policy. We’re just as confused. In the free trade debate two decades ago people thought it meant Americans would take all our water. Quebeckers think they can have both independence and OAS cheques. And now people think their bank accounts and GICs will be stolen.

Can’t blame some of them. They’re sure being lied to in a big way.

For example, some hucksters flogging pieces of silver to the naive, scared and vulnerable have been relentlessly beating this drum.

BREAKING SD ALERT
It appears that the Cypriot bail-in is anything but a one-off event, and is in fact the new collapse template for the entire Western banking system, and not just the ECB/ Eurozone!
SD has been alerted to an alarming provision that has been buried deep inside the official 2013 Canadian Budget that will result in depositor haircut bail-ins jumping to this side of the pond during the next bank crisis!
Titled ECONOMIC ACTION PLAN 2013 and tabled in the House of Commons by Minster of Finance James Flaherty on March 21st, the official 2013 Canadian budget contains an explicit provision that Canada will pursue the bail-in model for systemically important banks for future bank failures!
Depositor haircuts have just jumped to this side of the pond, effective the next bank crisis/ failure.
Not to be outdone are the gold bullion humpers, who always use the lowest common denominator – fear – to promote their business.

Writes gold fanatic Jim Sinclair (who I almost respected years ago):

There are two things to do immediately:
1. Get your money out of the “Too Big To Fails.”
2. Increase your gold position.

Even some people who certainly should know better, like blogger and US financial advisor Mike Shedlock, have been sucked into the vortex of rumour, misinterpretation and doomsterism

Canada Discusses Forced Depositor Bail-In Procedures for “Too Big To Fail” Banks in 2013 Budget
Inquiring minds in Canada managed to slog through a massive 433 page budget proposal and discovered Depositor Haircut Bail-In Provisions For Systemically Important Banks.

Sure enough. Right on page 145 of the Canada Economic Action Plan for 2013 We see …

“The Government proposes to implement a bail-in regime for systemically important banks. This regime will be designed to ensure that, in the unlikely event that a systemically important bank depletes its capital, the bank can be recapitalized and returned to viability through the very rapid conversion of certain bank liabilities into regulatory capital. This will reduce risks for taxpayers. The Government will consult stakeholders on how best to implement a bail- in regime in Canada. Implementation timelines will allow for a smooth transition for affected institutions, investors and other market participants.”

In case you are unfamiliar with bank parlance, deposits are not “assets” they are “liabilities”. A plan that would turn “certain bank liabilities” into regulatory capital is a plan to confiscate deposits.

The hysteria is unfounded because the premise is wrong. The government is not proposing legislation of allow the confiscation of bank accounts to ‘bail-in’ a failing bank so taxpayers need not do the job. That’s absurd in a country where we have a crown corporation insuring deposits. It’s hard to believe so many people have fallen for this fable being spun by the gold-and-silver merchants acting in their own self-interest, and the bank-bashing economic nihilists who long for 2008.

Yes, Canada’s Big Six banks have been designated as ‘systemically important.’ Thank goodness. That means these guys will need to increase their capital reserves substantially (by about 14%), keeping a massive new amount of cash on hand at all times in case of a liquidity crisis. This helps ensure a Bear Stearns or Lehman meltdown never happens in Canada, where our few banks dominate the economy.

These words should comfort everybody with a savings account or a bank mutual fund:

“The Government also recognizes the need to manage the risks associated with systemically important banks—those banks whose distress or failure could cause a disruption to the financial system and, in turn, negative impacts on the economy. This requires strong prudential oversight and a robust set of options for resolving these institutions without the use of taxpayer funds, in the unlikely event that one becomes non-viable.”

It’s also correct the feds’ discussion paper (not the budget, but the ‘economic action plan’) proposes that before public money is used to rescue a bank (not that it’ll ever happen) its shareholders and bondholders step in first. Not depositors. That’s a fabrication.

Instead, the bail-in provisions (when announced) will require the big banks to hold debt that can readily be converted into capital if the institution falters. The logic is simple. Without some mechanism put in place in advance of any troubles, bankers might assume that being “too big to fail”, they’d always and automatically be bailed out (as happened in the US). So the feds are making it clear they need to save themselves. And how can you argue with that?

Nowhere does any document talk about ‘deposits’ or ‘depositors’ or funds held by the banks in trust for customers. The only reference is to the conversion of ‘certain liabilities’ into capital if the SHTF. And you can bet those liabilities will be new bond issues floated by the banks – which will be snapped up in a heartbeat by investors who know how deluded the doomers are.

As the authoritative publication ‘Credit Outlook’ pointed out, the whole idea is to impose losses on bank debtholders (ie, bondholders), not taxpayers, in the event of a disaster. “Canada’s plan to establish bail-in powers is consistent with other international reforms, including the Financial Stability Board’s Key Attributes of Effective Resolution Regimes for Financial Institutions, which recommends that resolution authorities have the power to write down or convert all senior unsecured and uninsured liabilities, as well as subordinated debt and preferred stock to regulatory capital.”

Let’s recap.

This is a good development. It slaps the bankers around, makes them raise a bunch of money and clearly says if they screw up, they have to fix it. This shifts liability from us to them. And nowhere – absolutely nowhere – does this suggest your bank TFSA is going to be sucked dry if CIBC chokes.

There will no more be confiscation of bank deposits in Canada than there will be a bank failure.

But it does prove we have a bottomless well of stupid.

233 comments ↓

#1 Abraxas on 03.28.13 at 9:00 pm

I would rather if it had been plainly spelled out that depositor moneys are sacrosanct and the last to be chewed. Alas it is not and people are understandably nervous.

Also how does this affect brokerage houses? Say, Scotia bank goes down in flames… is the money in iTrade accounts affected in any way or are those totally different entities?

Brokerage investors have at least $1 million each in coverage under the Canadian Investor Protection Fund (CIPF). — Garth

#2 Rob on 03.28.13 at 9:02 pm

Would investors run out of bank stocks when RE deflation becomes common knowledge? Even if the banks can handle the bubble bursting its shareholders who may panick and cause a huge sell off.

#3 Toronto bidding wars heat map and stats on 03.28.13 at 9:04 pm

They say we still have bidding wars in To.
Here are the numbers. You judge

Sold over 100% 29.98%
Sold over 102% 23.34%
Sold for 100% 12.22%
Sold under 100% 57.80%
Sold under 98% 31.19%

Sold for 100%±2% 45.47%

And the map can be seen below.

http://recharts.blogspot.ca/

enjoy!

#4 City that smells like it sounds on 03.28.13 at 9:04 pm

FURRRRRRRRRRRRRRRRRRRST!!!!

#5 espressobob on 03.28.13 at 9:04 pm

A great post as usual, thanks Garth. The very thought of a Cyprus event here in north america just seems laughable considering the conseqences.

#6 Bottoms_Up on 03.28.13 at 9:07 pm

Canada will never be a Greece or Italy or Spain or Portugal or Ireland or Ice Land or Cyprus. No worries.

#7 nocte_volens on 03.28.13 at 9:07 pm

Writes gold fanatic Jim Sinclair (who I almost respected years ago):

In terms of knowledge and understanding of how markets work, you don’t have the qualifications to carry Sinclair’s briefcase.

I don’t lie. Does that count? — Garth

#8 Nietzsche on 03.28.13 at 9:09 pm

Good post. Except knowing about the “bottom well of stupid”. There is too much stupid in BC

#9 mark on 03.28.13 at 9:14 pm

Yeah, maybe I’d buy gold and silver if everyone pushing it wasn’t making a buck off it.

Little different to real estate agents and stock brokers pushing their wares.

#10 Alyce in Wonderland on 03.28.13 at 9:20 pm

It is not the bank failures I am afraid of, thanks to F’s stupidity the government (you and me) are on the hook for the mortgage insurance.

Some gold bugs including Jim Sinclair are nut jobs. To such a degree that makes it all very fishy. These people were normal until few years ago. Now if you read their delusional writings (in stupid colour-ish fonts) the last thing you would do is to buy precious metals or commodities in general . Which in small moderations in long run is probably not such a bad idea.

Strangely enough there were times (before the age of credit) when the only possessions passed between generations were real estate and jewellery along with some coins. These days it seems dividend paying stocks and farm land are probably the best long term investment. Until it changes.

#11 stop lying on 03.28.13 at 9:22 pm

#3 – meaningless… if a house is listed at 1mil and doesn’t sell, then relisted for 900k and sells for 950k, they would say it sold for 106% and not 95%

#12 Alyce in Wonderland on 03.28.13 at 9:24 pm

If I would like to advertise something I will hire Jim Sinclair to criticize it.

#13 An Importation To Prop The Ponzi Scheme on 03.28.13 at 9:26 pm

Toupee Harpo and Garden Gnome have to explain which exactly “certain” liabilities they have in mind. Mind you, in EU, deposits under 100k are also protected yet they went after. They failed to get them but the point is, the “guarantee”, “protection” or whatever you call it is wortless now.

News flash: this ain’t Cyprus. — Garth

#14 Adam on 03.28.13 at 9:28 pm

Canadian economy is not in great shape right now. Isn’t asking the “systemically important” banks to increase their capital reserves kind of stupid? Isn’t this the exact time they should be putting more of their cash “out there”? – specifically to businesses.

#15 My thoughts on 03.28.13 at 9:30 pm

More relists coming on the market daily in the GTA. Why do people think they can get more for it his year then they asked last year… Amazing really. You know what’s nice…. Not having debt. You can have way more fun in life that way.

#16 Hellforabasement on 03.28.13 at 9:34 pm

So far 63 houses in Calgary have sold for over $1,000,000 in March…a new record.

#17 Kingbubbles on 03.28.13 at 9:35 pm

Stupid is as stupid does

#18 An Importation To Prop The Ponzi Scheme on 03.28.13 at 9:36 pm

No,Canada is not Cyprus. It is a juridical paradise for mining companies wreaking havoc in other countries. A money launderer for “business” immigrants who made their illegal dough elsewhere. Or an US trampoline for mafias and secret services. Different business than Cyprus. Or is it a diferent scale?

Full moon? — Garth

#19 morpheus on 03.28.13 at 9:37 pm

[Matrix Scene: The Oracle's apartment building]
Neo: And she knows what, everything?
Morpheus: She would say she knows enough.
Neo: And she’s never wrong.
Morpheus: Try not to think of it in terms of right and wrong. She is a guide, Neo. She can help you to find the path.

#20 Smoking Man on 03.28.13 at 9:37 pm

Our Banks Can Print Labour Credits at will. Cypris could not.

Wealth is Labour and when you own other peoples labour (employees) you get rich…….

Very Simple yet Herd line up at job fairs to sell there soul, when its so much easier to have a booth at the Job Fair.

Thanks you so much teacher, I now have a JOB

#21 Tim on 03.28.13 at 9:40 pm

Garth, for one I have to admit you are the only person in Canada right now going into April the second quarter with his finger on the pulse. First off I just want to mention how dumb everyone in Vancouver is. And that is in fact the largest correction for markets across Canada. Vancouver is expected to slide a whopping 40 percent from the peak/ froth/ whatever you want to call it. I cannot believe how my neighbors in North Surrey keep trumpeting property values as soaring. My retort has been that they will in fact fall. As homes are overpriced to market. You cannot sell bulldoze jobs to investor class peoples ad nauseum until the stars burn out without a pull back. Vancouver is screwed! So is Toronto!

#22 Vandamncouver on 03.28.13 at 9:42 pm

“Brokerage investors have at least $1 million each in coverage under the Canadian Investor Protection Fund (CIPF).” — Garth

Question, are there any reasons to suspect that canadian income portfolios (invested primarily in bank dividend bonds) may see some downward movement? I ask because you mentioned that the first sign of trouble would result in more debt obligations (bonds) being issued to raise capital, so wouldn’t this dilute the cost per share of existing bonds and possibly it’s dividend?

Could we see this if real estate and mortgage lending continues in the direction you’ve forecasted?

#23 Vandamncouver on 03.28.13 at 9:43 pm

i think I made a mistake. There’s no such thing as a bank dividend bond, is there? Only a bank divident stock?

#24 Tim on 03.28.13 at 9:43 pm

anyone remotely invested in vancouver real estate is expected to see a momentous shock to “real” values. It’s all fake numbers! Vancouver is headed for third world real estate numbers. No real transactions will occur. The biggest scam/fraud real estate is Scamvouver.

#25 Steven Rowlandson on 03.28.13 at 9:45 pm

Garth, money as you like to call it is like a force of nature. It goes where it is secure and well treated. It is folly to get in the way and try to stop the unstoppable.
People like gold and silver and they either have bought some or will buy some. It is not doomsterism or the end of the world. It is just business and in the near future after the world of finance and politics has burned in the fires of its own greed and evil those metal heads as you call them will kick start a new economy and may be a new political regime based on their values instead of those you have known. Keep your money hard and shiny, your sword sharp and the world will turn.

I’m always hard and shiny. — Garth

#26 AK on 03.28.13 at 9:45 pm

“Writes gold fanatic Jim Sinclair (who I almost respected years ago):

There are two things to do immediately:
1. Get your money out of the “Too Big To Fails.”
2. Increase your gold position.”
——————————————————————–

It must be something with the name “Jim”.

Jim Rogers: ‘Run for the Hills,’ I’m Doing It

http://finance.yahoo.com/news/jim-rogers-run-hills-im-155520607.html

#27 Rob on 03.28.13 at 9:46 pm

Hurry before THEY (who’s they) get your money.. Make sure that underground bunker is finished, stock ammo, gold, incase the dollar crashes or the zombies attack. People relax, only disaster awaiting is RE deflation, unemployment, higher taxes and running out of money. Thats all…

#28 Alyce in Wonderland on 03.28.13 at 9:47 pm

The should be no doubt in the soundness of our banks.

The complex system however which is the world economy today could become very unstable due to systemic dis-balances, the derivatives for example could be the ticking bomb.

“Merely quantitative differences, beyond a certain point, pass into qualitative changes.” –Karl Marx, Capital, Vol. 1

#29 Brian Ripley on 03.28.13 at 9:48 pm

#13, Garth commented “News flash: this ain’t Cyprus.”

Very correct. Canada is an autonomous issuer of its own non convertible currency which exists within a freely floating exchange rate system (so is the U.S and Japan).

Cyprus is bound to the Euro and cannot issue it’s own currency. As U.K. Foreign Secretary William Hague said “The euro area is a burning building with no exits”.

Unless they can achieve political union (The United States of Europe), The Eurozone is doomed to fail. The Eurozone needs to be modeled after Canada or the U.S so that national wealth redistribution can occur from rich provinces to poor provinces.

High Net Worth Individuals are discovering various cities in Canada as safe havens. I have updated the Knight Frank tables showing favoured cities for the HNWI here:
http://www.chpc.biz/whale_watching.html

#30 Jounce on 03.28.13 at 9:49 pm

Damn, too late. Already moved all my Canuk shekels to Zimbabwe. They offer a better interest rate.

#31 T.O. Bubble Boy on 03.28.13 at 9:55 pm

Smoking Man — tax time is coming, and I have a write-off for you:

http://www.walletpop.ca/gallery/8-odd-tax-write-offs/4980843/

#32 Dr. Hoof-Hearted on 03.28.13 at 9:56 pm

Insurance is only as good as the insurer of iast resort

…hey

…………that’s US.

#33 john m on 03.28.13 at 9:56 pm

“People, being people, like to believe the worst. They want Tiger Woods to implode again. They like Kate topless. They loved prisoner Conrad Black…………….i disagree in part….first off – i could care less what happens with Tiger Woods—i can’t stand Conrad Black…..BUT i do like Kate topless :-)

#34 GrandPa on 03.28.13 at 9:58 pm

Hell, I’m not worried about the banks;

it’s politicians whether Federal or Provincial spending like crazy while claiming oops “slight down-turn caused us to miss financial target by a billion or 2 this quarter.”

Here in Alberta we’re having a slight miss-calculation so need to borrow some 6 Billion clams. Oh, not a one-time-event… going in-the-hole last 5 years!

#35 Victoria Real Estate Update on 03.28.13 at 10:01 pm

Welcome Victorians!

As Garth has said, real estate sales have declined dramatically across Canada and the story is certainly no different here in Victoria. A total of 197 SFHs sold in all of Greater Victoria last month. That total is weak compared to total sales in Feb. 2012 (248), Feb. 2011 (248) and Feb. 2010 (274). Obviously people in Victoria are catching on that now is not a good time to buy.

As Garth has said many times, lower prices always follow sales declines. This also happened in the U.S. and in every other country that experienced a dramatic real estate price correction.

How much have prices fallen in the past year? Click on this link and go to comment # 26. As that comment shows, SFH prices in Saanich West and Victoria have fallen about 15% since last May, for example. This is only the start.

In March 2007, this Los Angeles house was valued at $516 K. By July 2011, its value was $232 K. Victoria experienced a bubble price run-up comparable to that of Los Angeles. Victoria will experience its own major correction.

Your decision to wait it out for lower prices will pay off more than you can imagine. If you save $80 K on the purchase price of a house with a minimum down payment, for example, you will actually save between $180 – $250 K (approx.) by the time you pay off your mortgage.

We are very happy renting. We are taking advantage of this incredible opportunity to (not) buy right now. Not only is our down payment growing, but house prices are declining. Some people made money as house prices went higher, but we are saving (making) money as house prices go lower.

Girls and guys don’t let anyone convince you that now is a good time to buy. Renting for now is a no-brainer. Keep following what Garth has to say about the future of Canadian real estate as he has never been wrong about that.

Next week I should have some more numbers for you to look at.

Until next time – Cheers!

#36 Timbo on 03.28.13 at 10:06 pm

nothing to see here….move along….

http://economix.blogs.nytimes.com/2013/03/28/median-household-income-down-7-3-since-start-of-recession/

“For the first time in over a year, median annual income fell by a statistically significant amount from the previous month”

Print Ben print!!!!

#37 habbit on 03.28.13 at 10:10 pm

Yes the investment trusts were safe too. The position you articulate makes good sense but this goverment is not to be trusted. See 40 year mortgages. Nough said

#38 souvereigninternational on 03.28.13 at 10:13 pm

-As the authoritative publication ‘Credit Outlook’ pointed out, the whole idea is to impose losses on bank debtholders (ie, bondholders), not taxpayers, in the event of a disaster. “Canada’s plan to establish bail-in powers is consistent with other international reforms, including the Financial Stability Board’s Key Attributes of Effective Resolution Regimes for Financial Institutions, which recommends that resolution authorities have the power to write down or convert all senior unsecured and uninsured liabilities, as well as subordinated debt and preferred stock to regulatory capital.”

-Garth, If they are so authoritative, yet they plainly state they will mess with preferred stocks may be it is time to stop being so bullish on prefferreds? Anyway since when do you trust authorities?

and I’m not a gold bull but at the end of the day it is a real tangible wealth and isn’t it possible that PM bull is not over. I think at the end of the day we will see a massive move from public to private but expect a lot of volatility on the way, including a crash in currently overvalued stock market. See article below about gold stalling in mid seventies:

http://www.activistpost.com/2013/03/ignore-banks-bearish-statements-on-gold.html

#39 rosie "moving backwards" on 03.28.13 at 10:14 pm

Now I get it. http://www.americanbanker.com/bankthink/canadas-bail-in-plan-for-systematically-important-banks-is-credit-negative-1057837-1.html?pg=1

#40 Timing is Everything on 03.28.13 at 10:15 pm

I believe guarantees on deposits are inherently fraudulent. But at least the Reserve bank of New Zealand is upfrnot about the situation. Canada is not. – Mish

Mish is no longer credible. — Garth

#41 Cici on 03.28.13 at 10:15 pm

Very well written and convincing Garth.

…But, I’m still not convinced.

How can I trust any institution that sucks 7$ of my money per month in transactions fees (when I only do one to two transactions per month), even with a $2,500 balance? No wonder the orange guy’s shorts are stuffed.

Obviously, my bank does not care at all about me.

IMHO, looks to me like real estate’s going to hell, and if bank profits go down with it, my bet is that the actual banks themselves won’t be taking any hits. And, if the majority of tax payers/voters are underwater on their mortgages…well, the liabilities are going to have to come from somewhere now, aren’t they?

Trust this, I will be closing that useless, fee-sucking bank account very soon.

If you want to protect your capital in this era, here’s the formula:

1. Prostitution (tax-free labour!)
2. Money laundering
3. Deposit all assets and liabilities in the Cayman Islands

#42 Riding the Pine on 03.28.13 at 10:24 pm

Garth – I hate fear mongering more than most, but it should be pointed out that the protection fund set aside for “insured” deposits in the US only covers a very small fraction of those deposits.

This is eerily similar to the bank fraud that’s existed since their inception – NOT covering their deposits, and making money from bad economic theory.

Banks don’t insure deposits. Governments do that. — Garth

#43 Devore on 03.28.13 at 10:32 pm

The only reference is to the conversion of ‘certain liabilities’ into capital if the SHTF. And you can bet those liabilities will be new bond issues floated by the banks – which will be snapped up in a heartbeat by investors who know how deluded the doomers are.

Precisely as someone on the VCI blog pointed out. Deposits are hardly the only liabilities banks have. And they are usually senior to other types of liabilities. Converting liabilities into capital? That’s just restructuring.

Why this legislation? Perhaps the peckerettes felt they did not have sufficient leeway to manage unruly banks, or the existing language was imprecise or too vague. To link it to Cyprus is paranoia.

#44 Gladiator on 03.28.13 at 10:33 pm

@BrianRipley

Sir, have your head checked. If Canada was its own currency issuer, it wouldn’t have had any debts. Have you checked Canada’s latest debt numbers? Pull yor head out of your other end and realize you’re being had as a taxpayer. Your kids, if any, are on the hook too. Then, post stuff online.

#45 Riding the Pine on 03.28.13 at 10:36 pm

#38 souvereigninternational

Great link. Another reminder of how humans have such a short memory.

I love the more recent comments from Bernanke months before the US housing crash, assuring congress there’s nothing to indicate housing should decline….incredibly, people (and entire markets) believe every word he spews.

#46 futureexpatriate on 03.28.13 at 10:37 pm

I dunno, I would worry FAR more about US sanctions on NK being used as sanctions were used on Japan to force the attack on Pearl Harbor. And for the same reason.

NK is far more paranoid and cult-suicidal than Japan was in 1941.

And as a pretext for another US Mideast war against Iran… perfect.

NK sanctions and sending bombers to SK…. most out of character for Obama. NOT reassuring.

#47 Will on 03.28.13 at 10:38 pm

Inflation taxes your money 2%+a year that’s sitting in a bank account. If you left your money in a bank account since 2008 you’re getting close to a Cyprus style haircut. The only difference being the number in your account is the same (quite literally with such low rates).

#48 Sydneysider on 03.28.13 at 10:38 pm

In the 1980s, I had a lunch date with a manager at a small Edmonton bank. She suggested that I put my RRSP in that bank. A couple of months later, it went bust, and the depositors lost much money, as I recall. Fortunately, I did not take her advice.

Cyprus is a fault line. Who knows at this point how far the crack will run?

Cyprus is Cyprus. Worry about yourself. — Garth

#49 Mick on 03.28.13 at 10:39 pm

Saying “it could never happen here” is in itself the height of stupidity.

Anything can happen anywhere, believing any different makes you as delusional as those you mock.

No big bank here will fail. Period. — Garth

#50 Riding the Pine on 03.28.13 at 10:40 pm

Garth – I hate fear mongering more than most, but it should be pointed out that the protection fund set aside for “insured” deposits in the US only covers a very small fraction of those deposits.

This is eerily similar to the bank fraud that’s existed since their inception – NOT covering their deposits, and making money from bad economic theory.

Banks don’t insure deposits. Governments do that. — Garth
____________________________________

I know…same result – depositors still not covered.

#51 Randman on 03.28.13 at 10:40 pm

I would rather if it had been plainly spelled out that depositor moneys are sacrosanct and the last to be chewed. Alas it is not and people are understandably nervous.

Exactly…instead we get political double speak

Why not just issue a blanket statement?

Why not stop listening to the gold nuts? — Garth

#52 greyhound on 03.28.13 at 10:41 pm

Agreed there’s lots of hyperbole about Cyprus.
Have they changed the law since 2005 that says CDIC insures bank accounts only up to $100K, and anything above that in a single bank account is uninsured?

Him 100, her 100, joint another 100. But why would you have it in a bank account? — Garth

#53 Bo Xilai on 03.28.13 at 10:50 pm

These words should comfort everybody with a savings account or a bank mutual fund:
——————
It’s not like bank mutual funds have extra protection because they are sponsored by a bank. All assets held by a mutual fund in Canada are segregated and separate from the firm managing the assets or sponsoring the fund.

#54 Timing is Everything on 03.28.13 at 10:53 pm

Mish is no longer credible. — Garth

He’s not a politician. Does that count?

#55 Marnic on 03.28.13 at 10:57 pm

Well I guess someone has to love the banks…

#56 Abraxas on 03.28.13 at 11:03 pm

Garth, you are not being honest. It is not yet known which types of liabilities will be convertible to regulatory capital. Those details have not been disclosed yet. Have a read here:

http://www.americanbanker.com/bankthink/canadas-bail-in-plan-for-systematically-important-banks-is-credit-negative-1057837-1.html?pg=1

I said it was yet to be announced. And it won’t be deposits. — Garth

#57 Dr. Hoof-Hearted on 03.28.13 at 11:19 pm

Banks don’t insure deposits. Governments do that. — Garth

No big bank here will fail. Period. — Garth

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

So what’s the conclusion?

The BANKSTERS and their FIAT currency have run out wriggle room.

Anymore quantitative easing and other such colonic economics BS dilutes the value of what they stole.

Their last grasp will be more ” natural person ” abuse of the legal definitions and claim bank depositors are shareholders and must share in the grief…..

The Final Solution is a balance of (i)confiscation of real assets and (ii) war….read REAL History.

Even Churchill admitted WW2 was an economic war

#58 Smoking Man on 03.28.13 at 11:20 pm

See I get fan and hate mail on my shirt blog

The fan
your post “Trading Stradagy 101″:

you are a legend!

I ve made more $$$ following you over 3 years in the Greaterfool comment section then my “educated” friends have following orders.. If you are ever are in the kitchener/waterloo area drinks on me!
……………
I’d take Em up on it but no return contact onfo

#59 Keith in Calgary on 03.28.13 at 11:26 pm

There’s a number of reason why my money has been out of the country for years.

MF Global in the US comes to mind………..Canadian banks and trust companies that went bust in the 80′s………extensive and uncontrolled money printing on the part of our governments…….manipulation in the free markets for political gain………fraud, theft, lying, cheating and stealing realtors, developers, banksters and politicians……..no penalties for the white collar crime these conmen commit……..Cyprus…….and now this development.

Nothing will ever be confiscated, this it quite correct………until it happens.

With columns like this your credibility is slowly eroding Garth.

A real indictment coming from a tax evader. — Garth

#60 Smoking Man on 03.28.13 at 11:26 pm

Now for the bad post

AnonymousMarch 19, 2013 at 12:33 AM
This picture and blog are both absolute pieces of shit.

O we’ll can’t make everyone happy…. I thought it was an amazing pic considering the state I was in when I drew it….

Like to see garth put up some of his worst and emails,

#61 Canadian Watchdog on 03.28.13 at 11:36 pm

This shifts liability from us to them.

Ya right. OSFI's 1% surcharge will be paid by higher banking fees from depositors. Read the screen next time you deposit or withdraw.

#62 Investx on 03.28.13 at 11:47 pm

Awesome. I love it when it’s different here.

#63 Smoking Man on 03.28.13 at 11:48 pm

Just rediscovered super tramp…..

Now they’re planning the crime of the century of what will it be.

Who are these men of last greed and glory…… Rip of the mask and let’s see.

Hum, I know but will never tell…….

#64 Tunacan on 03.28.13 at 11:50 pm

I quite like Jim Sinclair. He called 1650 gold ten years before it happened, when everyone said it wouldn’t happen. He is now calling for 3500 gold minimum.

I like garth too but think he dismisses the gold story far too quickly… Maybe he just does it because it gets a rise out of so many.

I think the short story is this…
All governments and banks will tell you everything is ok and guaranteed until it is not. The system we’re in is completely broken and dependent on quantitative easing into perpetuity. There is no “market” anymore for anything, because interest rates are not at a natural rate and they will not be allowed to return to a natural interest rate. Its all one big series of serious capital misallocation. Savers get punished and pulled into equity markets that are rising on vapour volume, or bonds that pay nothing. Behind the scenes are quadrillions in derivatives that are marked to some fairy tale valuation, but are really like drunks leaning on each other in a bar.
There is no amount of deposit guarantee that would protect a derivatives crisis. Bail out vs bail in who cares you will get skinned one way or another. Tax, levy, inflation whichever is politically expedient. There is not enough capital anywhere to plug the derivatives holes that already exists post Lehman. And really the reason why there is a save cyprus at all costs mission.

Thats the big secret, and gold trades unlike any other asset. I read one analysis that showed 96% of trading days on Comex was down…think about that. Why are people so shocked that gold is manipulated when we have libor, enron, madoff, man financial, and others? God gold is set by a process on the LBMA known as “fixing”What more do you need?

#65 Gunboat Denier on 03.29.13 at 12:01 am

Good post Garth. Happy Easter.

#66 JtP on 03.29.13 at 12:05 am

Garth, we know your position on precious metals. What about computer generated metals? ;-)

Bitcoin almost hit 100 CAD today (then took a 23% haircut before settling back in at 90 CAD).

#67 Crash Calaway on 03.29.13 at 12:05 am

DELETED

#68 Tom Vu on 03.29.13 at 12:17 am

Smoking Old Man:

I have complaint.

I invested in your Pet Rock breeding program IPO.

It not work. Numbers not increasing !
They just sit there …do nothing..like they work for Gov’t.

I tink some rock are …well …you know…”light in the loafers”.

#69 Sluggo8 on 03.29.13 at 12:23 am

All you resident expert blognosticators have lost varying degrees of cred over your existance with blown thesis, poor timing, missed forecasts, etc. All of you underestimated the actions of the central planners, yourself included or did you see the IMPP and Montreal Accord coming when you told everyone to bail in 2008. You were right but providing liquidity for the banks trumped your contrarian cred down a whole bunch.

#70 Shawn on 03.29.13 at 12:25 am

BANKING 101

In case of trouble at banks first to lose are common share owners. If that does not cover the loss, next comes preferred shares. Then bond investors.

If losses exceed all that then next deposits are at risk except that insured deposits are covered.

After all that governments can decide to protect uninsured depositors. But why should they? Uninsured is uninsured.

Obviously if the deposit insurer / government is broke than insured deposits are also at risk.

Nothing in the above has changed in 100 years.

Cyprus ultimately went by the book. Insured depositors were or will be fully covered. (Well pending some restrictions for now) The first idea to tax insured deposits was pretty silly (although if the insurer was broke…)

Rumors that bank shareholders or bond investors got off scott free are almost certainly false.

P.S.

Capital reserves means lots of equity and bonds to protect depositors.

Cash reserves are assets and are vastly different and just provide liquidity but not really any extra protection for bondholders.

#71 kreditanstalt on 03.29.13 at 12:27 am

You certainly do have an overriding faith in those governments and their guarantees.

I can understand this, because your entire premise – that we’re in a “recovery”, that everyone should just behave as before, 2008 will never happen again and the governments can protect us – depends on those governments and their bankers continuing to be able to rig prices, halt price discovery mechanisms, manipulate markets and hide true market values.

And they won’t always be able to keep all those balls in the air.

No, it’s just a recovery. — Garth

#72 Nebbio on 03.29.13 at 12:30 am

Conrad Black should still be a prisoner.

#73 Gary M on 03.29.13 at 12:35 am

This aggressive and confrontational online persona bears absolutely no resemblance to the soft-spoken real-life Garth Turner.

#74 Smoking Man on 03.29.13 at 12:44 am

In life we need a plan, a dyslexic does not have a list to be checked off.

Why does a zillionair work for the tax farm…… He has an abstract visual of what needs to be done..

After goal is achieved I will share, 2 more years….

I really am a genius….

Just watch

#75 Scott in Gibsons on 03.29.13 at 12:45 am

Yeah, Sinclair the nutbar! Wasn’t he the lunatic that predicted $1650 gold a few years ago?! What ever happened to him?

I’m sure you’re right that the new bank bonds “will be snapped up in a heartbeat by investors”. Especially when they find out that they will lose their investment in a crisis to stabilize the bank. Sounds very attractive! Do you think the yield will be very high?

I think people who know more than you will buy them and do quite well. — Garth

#76 Trader on 03.29.13 at 12:46 am

Bro… CIBC is going down! For real? Well, you called it first…
How about if F makes it a one time tax on all CIBC deposit holders? That way the deposit insurance doesn’t need to kick in…
Poor CIBC.

#77 Crash Calaway on 03.29.13 at 12:54 am

Watched news footage today on the reopening of Cyprus banks.
Sad watching depositors lining up like sheep in a chute to be let in to the bank one at a time for their daily castration.
In addition to being robbed, they have to stand in line and butter the sandwich that is about to be stolen by the bully.
And the biggest insult is the govt supplies armed guards to protect the interests of the thieves.

There seems to be a lot of wishy washy details released regarding what exactly the Capital controls encompass.
Limits on banking withdrawel amounts, transfers, no checks cashed etc… are pretty clear, but,

What if a person decides not to march to their silly game. Could a depositor simply close their account?
I’m sure there would be a waiting period as even in Canada banks need notice to amass sizeable $$$ to payout closed accounts.
Somewhere in the documents when people open accounts there must be time frames that a bank must adhere to in returning money on closed accounts.

I can see depositors wishing to keep active accounts having no choice but to bend over to the banks & Govt.

But those that want completely out should be able to terminate an account with a failing enterprise.
Are Cypriots chained to the sinking ship in this area too?

#78 Mark on 03.29.13 at 12:54 am

Depositors won’t lose a dime. But if there is any significant threat to bank shareholder equity, the interest rates, particularly on adjustable rate “Prime”-linked debt, are going to increase dramatically.

After all, “Prime” is a rate that the banks can change at their discretion. Distress will be taken out on the people who take adjustable rate mortgages, not on the depositors, nor the shareholders.

#79 Smoking Man on 03.29.13 at 1:00 am

DELETED

#80 Smoking Man on 03.29.13 at 1:03 am

My last post not made to be exploited, trained to be explored. Teachers rock……

Way to much to drink tonight………..

#81 Tom from Mississauga on 03.29.13 at 1:06 am

Friend convinced to buy physical silver, warehouse it and use a CDO to buy. Couldn’t believe it the first week. The guy that got’m into it should be arrested. Thanks for coming out swinging at this guys.

#82 Small Town Steve on 03.29.13 at 1:10 am

There is talk that some mutual funds and ETF’s will no longer be able to convert interest payments to other forms of tax friendlier distributions for 2013.
YAY more bullshit to wade through!

#83 jp on 03.29.13 at 1:25 am

With the pending decrease in RE, is it time to short the banks, or buy puts. What do you think Garth?

Thanks,

Go ahead. Lose money. — Garth/em>

#84 Hysteria — Greater Fool – Authored by Garth Turner – The Troubled Future of Real Estate | The Affluent Boomer™ on 03.29.13 at 1:36 am

[...] No difference with public policy. We’re just as confused. In the free trade debate two decades ago people thought it meant Americans would take all our water. Quebeckers think they can have both independence and OAS cheques. And now people think their bank accounts and GICs will be stolen. Continue reading → [...]

#85 not 1st on 03.29.13 at 1:40 am

Garth, while you were going on about Cyprus and gold, you missed the latest market turn in the country. Yup Regina.

http://www.leaderpost.com/business/Regina+buyer+market+resale+homes/8166113/story.html

#86 Garth is not god on 03.29.13 at 2:06 am

Garth I know you will not post my comment but I do know that you will readit. It is a letter from me to you, Canada has same problem like Cyprus. Canadian banks have direct and indirect exposure to PIIGSC bonds if any one go down like Greece then Canadian banks will fail. ECB asked Cyprus banks to raise the tire ones capital and they where not able to, Canadian governments asking Canadian bank to raise capital, can they ? . If they fail now we have a temp,ate to solve a know problem.

#87 1drs on 03.29.13 at 2:06 am

You know that Mr. Buffet owns 3 banks , or at least parts of the big 3 in the U.S.. If he sells his bank holdings in the U.S. I will sell my Canadian Bank Preferred Shares. The doomers here need to watch the people who have proven , with their own money, what the right financial moves are. Oh, and if you keep your money in a bank, you need to loosen up the tinfoil hat.

#88 a prairie dawg on 03.29.13 at 2:23 am

A Gary Clement cartoon.

http://fullcomment.nationalpost.com/2013/03/28/gary-clement-on-the-conservative-backbenchers-revolt/

#89 Canadian Watchdog on 03.29.13 at 2:36 am

Globe and Mail: Here's what it takes to sell a Toronto home fast – and over asking

And here's why it's a lie.

#90 dosouth on 03.29.13 at 2:49 am

Ever heard of newsvertising – Another great story on scam articles purporting to be news. The Financial Post this time…. SCAM written all over it! Wonder if this crap will be uncovered by the “real news”?

http://tinyurl.com/8w488pk

#91 Tony on 03.29.13 at 3:45 am

They don’t want a repeat of Northland Bank back in 1985. But will falling real estate values being the norm in Alberta that could of course only happen in Alberta.

#92 Tony on 03.29.13 at 3:53 am

Re: #48 Sydneysider on 03.28.13 at 10:38 pm

No wonder last year resale one bedroom condominiums in Edmonton were still changing hands at 1980 valuations back in 2012. I guess that and Albertans being able to walk away from real estate was the reason Northland Bank went under back in 1985.

#93 Anon on 03.29.13 at 3:54 am

No big bank here will fail. Period. — Garth

Maybe not. Or maybe they all will. YOU DON’T KNOW THE FUTURE. Stop pretending that you do.

None will fail. — Garth

#94 drydock on 03.29.13 at 4:00 am

# 53

What about the segregated accounts of MFGlobal?

#95 Waterloo Resident on 03.29.13 at 4:11 am

Gold?
Precious Metals?

Well, I don’t know too much about them, and I don’t know if Garth is right or not, but take a look at this 3 year chart and lately (since about Oct 2011) gold has been flat, the trend is flat, not upwards like it was pre-Oct 2011.

http://stockcharts.com/h-sc/ui?s=gld&p=D&yr=3&mn=0&dy=0&id=p01748877310

So my hunch would be that Gold is sort of a dead end right now as far as investments are concerned.

#96 just sayin.... on 03.29.13 at 4:38 am

peddling fear….” pot callin the kettle black”… ” … sell your house, put it into well balanced portfolios etc etc”. ive never seen a single financial advisers contract that didnt say they SHOULD get you xx% per year but if you lose it all …. tough luck.

no bank’s have failed in cyprus either. .. After they stole all the deposits to keep the politicians euro gravy train moving.

Canada is run by the same circus, just different clowns.

Just saying, read everything and make your own mind up…

The No.2 Cyprus bank is kaput. No insured deposits are being taxed. The Rey of your moment s equally factual. — Garth

#97 Freedom First on 03.29.13 at 5:36 am

Relax….nobody panic…… re: Cypress, Gold and Silver pushers, RE pushers, Stock Pushers, GIC pusher, any asset pusher. Re-Reminds me of the focus of Garth’s generously free informative blog: Diversification, Liquidity, Balance, Re-balancing, and my own addition to these, being debt free. Remember the principles that Garth rightly extols have stood the test of time through the ages, and will continue to do so. For centuries, why these principles continue to be considered the only successful way to grow and maintain wealth is very simple, and yet ignored by the majority throughout time: “Nobody knows what will happen in the future”. This is why to be “All in” any 1 asset is extremely foolhardy and should always be avoided. No exception.

#98 Buy? Curious? on 03.29.13 at 5:48 am

Garth, the second greatest Canadian is Conrad Black! Sure, the guy was “convicted” of one charge that ‘Merica trumped up, got screwed over by the first Canadian Dictator and had to constantly go up against dimwitted, small-minded Canadians who have been blackmailed by French Canada and didn’t know it, but gawd-damit! he’s a fantastic guy. Try not to put him the same boat as Tiger Woods. There’s no comparison there.

http://www.youtube.com/watch?v=5NTRvlrP2NU

#99 RickOShea on 03.29.13 at 6:42 am

MF Global, Jon Corzine absconds with investor’s segregated account balances…

Couldn’t happen ‘here’! – except it already kinda has.

MF Global investors in Canada were made whole while US investors lost. — Garth

#100 House on 03.29.13 at 7:30 am

And I guess you rely on the word of a Prime Minister who we can’t turn our back on in case he puts a knife in it.

#101 Stickler on 03.29.13 at 7:36 am

“… authorities have the power to write down or convert all senior unsecured and uninsured liabilities… to regulatory capital.”

>> Hey now! That means deposits over 100K (the CDIC limit), and 100% of deposits of other currencies.

Example:
- Account holder Mary has 200K CAD in savings
- 100K USD in savings (she snow birds)

Bank needs capital ->
ALL Mary’s 200K CAD & 100K USD is taken…

she is repaid only 100K CAD from CDIC insurance (taxpayer money).

Not saying it will happen, but that is the implication here.

Why do I even bother? — Garth

#102 Morgan on 03.29.13 at 7:42 am

As clumsy as it was, the idea in Cyprus isn’t a bad one – why fiddle with taxing income when you can tax wealth directly? As inequality grows, it’s one method to redistribute wealth that doesn’t hurt the middle-class the worst (since they rely more on heavily-taxed income). For anyone who panics about this idea, there are only about 400 Americans who own 40% of the country’s wealth to lose that should really worry. No government will try to implement the idea as badly as Cyprus did, or with less effectiveness. Which also means that any place that does will target wealth, not just bank deposits, and that means that gold and silver or whatever would all be fair game.

#103 Stupesing in Cabbagetown on 03.29.13 at 7:49 am

#43 – Devore – Why this legislation?

I think it has something to do with compliance with international banking standards (Basel III).

#104 TurnerNation on 03.29.13 at 7:50 am

F better call TD Bank. They’re going all out, promoting their Mortgage Vacation scheme.
There’s a long underground walkway between the subway stn and Roy Thompson hall. One side, every 25 feet, TD’s taken over billboards – all. The other side TD’s wrapped its length – entirely – with an ad.
Was standing in a branch, tee-vees on the wall are blaring the same.
Their message clear – stop payments!

#105 Susan from London area on 03.29.13 at 7:57 am

Wow looks like the people in Cypress were ponzied by their own banks, and government.

#106 Herb on 03.29.13 at 8:26 am

#79 SM,

don’t worry about having been too drunk in your #79 at 1:03 AM. You had already sobered up considerably by then from your #74 at 12:44 AM.

#107 Pr on 03.29.13 at 8:27 am

If you still believed F and Carney when they say: theirs is no housing bubble in Canada. So I guess you believe any one say their is no problem in Canadian banking, no inter-relation around the globe.

Read this:

Cyprus state broadcaster CyBC reported on Saturday that German Finance Minister actually entered the Eurogroup meeting on Friday proposing a 40 percent haircut on Cypriot bank accounts. Sarris stated on Saturday that this had also been the proposal of the International Monetary Fund.

I think you can at any time can replace Cyprus by Canada or USA.

#108 mark on 03.29.13 at 8:33 am

The responses to this post just prove it’s true.

It’s always the same – the people who have all their money in an asset class can’t see that the people whose opinion they covet on that asset are just sell side goons.

If the meltdown comes, I’ll guarantee you there’s only one commodity that will maintain purchasing power and that will be bullets.

#109 Canuck Abroad on 03.29.13 at 8:39 am

88 Canadian Watchdog – great post. This kind of crap should be outlawed (but won’t be).

Just curious, if you are in the market for a home, is it possible to find out the listing history for your shortlisted candidates so you know which ones have been sitting unsold for ages and have had multiple price drops/changes?

And is there a regulatory body that you can report the scam advertising the Canadian real estate industry regularly engages in?

#110 Canadian Watchdog on 03.29.13 at 8:44 am

More Toronto Price Drops

#111 Coho on 03.29.13 at 8:46 am

The Cyprus bank ‘holiday’ or more like extended vacation and theft of peoples’ money is just another symptom of age old factions vying for world dominance. There’s a lot going on behind the scenes. We see only apparent reasons for these events. We ask each other, “Is that why this happened? Yes, apparently so. That’s what we’ve been told. Anderson Cooper said so on CNN. No propaganda there –must be true.”

It’s an issue of trust more than anything else. Anyone who cheats or has been cheated on in a relationship knows that things are never the same afterwards. People are tired of being lied to. People are tired of banks and big business having it all their way to their (the peoples’) detriment. People are tired of governments playing both sides — encouraging people to spend and then criticizing them for being over indebted. In my opinion, intent trumps any law or system in place, especially in today’s world.

Could you imagine sitting at the kitchen table 20 years ago having your first coffee of the day and opening up a paper with today’s news? The word ‘shock’ would not adequately describe one’s reaction. Things are deteriorating—diplomatically, economically, environmentally. The world is increasingly on a war footing. The West is being challenged economically and militarily and it is not a stretch that westerners may pay a financial price at the least, as North Korea, China, Iran, and Russia begin to flex their muscles against the NATO West. They’ll want their share of the wealth. It may well come directly out of our pockets one way or another. It always does.

Don’t bet against the USA? I don’t know. America is downplaying the threats from North Korea – probably because NK has the means to do some major damage. In fact on a ‘news’ show today they were criticizing or rather ridiculing the 5 million dollars it cost for two stealth bombers to fly over the Korean Peninsula and back as a symbol of force. Excuse me?! The North Koreans are threatening to nuke the USA and its interests in the region and the talking heads are complaining about a mere $5 mil bomber fly by. No talk of regime change in NK. No talk of delivering bombs and democracy. No talk of WMD. No beating the war drums. That is a pointer that NK isn’t a pushover or the bully NATO would be on it like white on rice. Perhaps NK is playing the role of China’s unruly attack dog. The bully is being threatened! Wow, isn’t this is switch? “I’ll steer clear for now”, says the bully.

Bullies only fight when overwhelming odds are in their favour, so they engage not so much in battles, but slaughter. We’ve heard many times that this isn’t a fair world and we need to ‘deal with it’. So, it’s not surprising why nations are arming themselves to the teeth. That is the deterrent to would be invaders because money and power rule the day on this foul orb—not diplomacy and fairness. Anything can happen and one cannot blame people for being worried, distrusting or yes, even hysterical.

#112 afraidit allmightend on 03.29.13 at 8:58 am

The differance between Canada and Cypress is that the large depositors in Cyprus were primarily foriegners…hence the natural element of zenophobia among the close community of the tribe….but in Canada the big cash pigs are the civic servants with more cash than they know what to do with…..don’t expect a grab for the civil servants bankroll…..they are the elite.

And BTW…why do the civic servants think they should take home double the average salary…on top of the out of line perks?

http://www.vancouversun.com/business/bc2035/Salary+database+Growth+figure+salaries+slows+public/8167301/story.html#

#113 TurnerNation on 03.29.13 at 9:24 am

Today, we remember the guy who stood up for greater good, stood up to the unjust king, and got nailed for it.

#114 Spiltbongwater on 03.29.13 at 9:26 am

Garth, do you think Bitcoins have a place in a balenced portfolio?

http://finance.yahoo.com/news/bitcoin-cyprus-sparks-scramble-digital-164900785.html

Just like yaks. — Garth

#115 personal question on 03.29.13 at 9:33 am

Thank Garth for your contribution with this blog.
I always wonder if the inventory of gold in the world is in relation with the amount of gold sold in the market. If I become to be right then the banks transformed something that people believe “an asset” in just pure paper or credited values in a database, both of them worthless for me. Please forgive me this pesimism but today are the bank who are screwing up the trust in the financial system.

#116 Shawn on 03.29.13 at 9:36 am

Banking 101

Banks take in deposits and lend them out.

If borrower leaves loan on deposit then bank uses no cash to do this. No conspiracy there. If you leave it with me I will gladly loan you a million.

But borrowers tend to spend the loan and it comes back to a different bank as someone else’s deposit.

First bank then needs to have its own deposits to fund that loan. So the ability to make a loan without cash on hand is temporary until the loan is spent.

Bank owes the deposit and borrower owes the loan. No wealth was created.

Money is defined as cash plus deposits (but not minus loans). In that sense money is created when loans are given.

Too much debt? Maybe. But loans are more than matched by deposits. Check any bank’s balance sheet.

One man’s debt is another man’s savings. Or since most have debt, three men’s debt is one man’s savings.

Or 100 men’s debt is one corporation’s savings.

Don’t like any of this? Learn more and buy bank shares.

Buffett invests in banks. Who you gonna listen to?

#117 rosie "moving backwards" on 03.29.13 at 10:12 am

Because we are worth it. All of it. In fact we think we should have more. Come on Brampton, pay up. Talent like this does not come cheap. http://www.thestar.com/news/city_hall/2013/03/28/brampton_councillors_question_mayor_susan_fennells_steep_pay_hike.html

#118 Brico9 on 03.29.13 at 10:12 am

Garth,

Why do you have keep having gold related topics in your posts? Yet, you keep saying this is not a gold blog.

Jim Sinclair is a person of interest for hard core gold bugs. Most of the GF blog readers never heard of the guy. He promotes his gold company.

Jim Rogers is another story.

Gold bugs can goto the many gold sites for comments. Try 321gold.com. It’s your blog – Do what you want. I come here for real estate not gold.

My post was about bank capitalization and deposit security. Not gold. — Garth

#119 Julia on 03.29.13 at 10:26 am

My oldest friend from childhood has lived in Cyprus for 25+ years with her Cypriot husband. The children came here for university but have plans to go back to Cyprus to live eventually. Lately I’ve been wondering if they are rethinking that plan. At least all their money is safe and sound invested here in Canada, except for what us in their real-estate there. Was wondering if Cyprus realestate is taking a big hit too.

#120 Eaglebay - Parksville - Victoria on 03.29.13 at 10:32 am

I read a lot of useless comparisons between Canada and Cyprus.
I think that Cyprus is irrelevant. Their economy is the size of Hamilton, Ontario. Whoopee.
And, which Cyprus are we talking about? The Greek South or the Turkish North?
I don’t even care about Europe. They only represent about 7% of the world’s population and their economies are becoming insignificant.
The future lies within North and South America and Asia.
As for the major Canadian banks, they are solid and fairly well managed.
That’s why a large percentage of the banks shares and bonds are held by investors from outside Canada.
We should believe in our country as much as the foreigners do.
Canada is what we make it. Damn the ignorant doomers.

#121 Cow Man on 03.29.13 at 10:35 am

# 102 Morgan

You are “right on”. Taxing wealth, and devaluing money through inflation, are the only way out for nearly all of the world’s governments to stay solvent. When you look at 1% getting 126% of the US income growth, meaning 99% are losing wealth by 26%, wealth tax is what we have to have.

#122 Laurie on 03.29.13 at 10:50 am

Saturday Star’s article “First Time Buyers Find Toronto Real Estate Market Hot as Ever” describes a couple’s 1-1/2 year search for a home, and includes this quote that was so precious it made me stop reading the article to jump over here and share:
“They’ve felt heartache, disappointment and fear that their children Jack, 5, and Lilly, 2½, would be renters for life.”
Never mind the starving children in Africa or suffering orphans in war torn countries. Jack and Lilly might face their fate as RENTERS??! LMAO!! Pathetic, mellow dramatic media manipulation at its finest.

#123 The American on 03.29.13 at 10:51 am

At#113: Coho, the U.S. is obviously taking the threats very seriously. Otherwise, the B2 bombers wouldn’t have been flown over 6,500 miles each way in a matter of minutes to the Korean Peninsula to show the flex of our military muscle. It should be taken as a warning that the U.S. can and will respond to any unwanted and unwarranted moves on North Korea’s part, indicating we can strike back in minutes, keep life loss at a minimum, and act with laser precision. Basically, it’s like telling NK to think hard and think twice before they do something *really* stupid. That’s just 2 B2 bombers! Are you aware how many bombers are within the U.S. fleet? Additionally, it is believed that NK, although having the capability to design and have the nuclear capability they continue to threaten with, does not actually have the capability to detonate the arms on impact. Honestly, do you really think NK of all nations would be allowed/permitted (yes, those words were chosen carefully) to obtain nuclear detonation technology? Of course not. The biggest threat from NK right now is the fact they do have other capabilities, such as gun fire, bomb dropping, large warheads, etc., all of which they would possibly use on their bordering neighbor, South Korea. NK’s threats to detonate a nuclear warhead on Washington D.C. is pure absurdity. The technology required to send the missile long range AND hit with precision AND detonate is only held within a few highly-technologically advanced militaries. NK is anything but. They love their pretty costumes, dramatic music, ridiculously stupid/funny propaganda films, and venom-like rhetoric against the U.S. It makes them feel good to threaten attack, which they could well do. The U.S. will not put up with it. I agree with you, though, the $5MM is total chump change for a military operation that sends a very clear message to a considerably hostile nation. NK is easily 40 years behind the rest of the developed nation when it comes to military technologies.

Fun Fact of the day. Did you know that the U.S. has 7.4 per capita for every 1,000 , including Active, Reserve, and Paramilitary? North Korea has 387 Total (Active, Reserve, Paramilitary) per capita for every 1,000, and 45 per 1000 are active.

The point is nobody is taking the NK lightly. However, there must be an appropriate level of force used against a threat. Just because someone makes a claim (NK), it does not make it true. The opposing side (U.S.) recognizes that, and would prefer not to use excess force if not needed. We lived through that under the Bush years, remember?

U.S. military at a glance….
http://en.wikipedia.org/wiki/United_States_Armed_Forces

B2 Spirit Bomber…
http://en.wikipedia.org/wiki/B2_Bomber

http://www.youtube.com/watch?v=qTLyUnyXtq0 (video)

http://www.youtube.com/watch?v=YKvPBxDxHnA (video)

North Korean propaganda videos…
http://www.youtube.com/watch?v=Qd1qR66gcLQ

http://www.youtube.com/watch?v=EiA1bmWnRQM

http://www.youtube.com/watch?v=qqe3izSNunw (explanation)

http://www.youtube.com/watch?v=P7e0Q1EUiZk

http://www.youtube.com/watch?v=JkRT3C1mGRM

http://www.youtube.com/watch?v=S7Kq78G2nxA

#124 charles on 03.29.13 at 10:56 am

For this not being a “Gold Blog” you sure devote a lot of ink to it. Many peole today reject the banking business model as it exists today. You can’t seem to let it go. What exactly are you afraid of?

It’s not fear. More like bemused revulsion. — Garth

#125 Paul W on 03.29.13 at 11:05 am

Keep up the good work, I appreciate the time and energy it takes…

#126 Dr. Hoof - Hearted on 03.29.13 at 11:06 am

War may be imminent

http://www.jimstonefreelance.com/

This article is being live typed and will continue to change until this line is removed.

I have ignored certain current events recently, like the banking “crisis” in Cyprus, and the heating up in North Korea up until now, because I want this site to be one that covers topics that not everyone knows about. However, due to a stunning convergence of events I feel it is time to draw a conclusion from them

First of all, this so-called obviously manufactured “banking crisis” in Cyprus, which went from being a ten percent shave to a 40 percent whack. Pure B.S., there is NO REASON FOR IT. All fractional reserve banking systems can just pull cash out of thin air, and all of the major banks are interconnected and have the same top ownership. This means that if there are problems in one region, except for paperwork tricks and other charades to the contrary, NONE of them need to ever go down. The situation in Cyprus was staged, and I sensed it from the beginning. So that begs the question then, WHY DID THEY DO IT.

There are two big reasons, and BOTH are related to a hot bullets flying war. The first of these is to normalize the concept of having your money stolen on a global scale. If they succeed with this in Cyprus, it will set the stage for a domino effect, where it is ok to declare a banker crisis anywhere, and then rob the bank deposits. The stolen wealth can then be used to fund the war machine.

The second big reason is even more ominous. Most people who are paying attention know that they want to separate the domestic dollar from the internationally traded dollars, and issue them as separate currencies, with the domestically traded dollar getting – you know it, just like Cyprus, a 40 PERCENT WHACK in value, while the internationally traded U.S. dollars keep their full value. So they can tank the crap out of America while maintaining the currency status around the world – PERFECT if the DHS is going to go around killing millions of people with their star of david hollow point bullets, an act sure to destabilize America.

The end game? Destroy the Euro, and steal all the wealth the people invested in it, destroy the American economy while robbing a majority of the wealth invested in it, and then emerge supreme with a single international currency – the international US dollar, to be traded ONLY BETWEEN GOVERNMENTS and to be backed by the work of their little slave pool populations, still reeling from being robbed of their Euros and other forms of exchange.

Unify all of them under ONE central economy and currency, and then use this unified front to wage war with Russia, Persia, and China in a final grab at total world domination. Far fetched? Possibly, but then there are other things I have noticed, which indicate we are going to war.

etc etc.

Please tell me you don’t read that crap, let along believe it. Like the battery-powered mosquito with the built-in syringe? — Garth

#127 Old Man on 03.29.13 at 11:07 am

#121 Julia – Cyprus is no longer a banking center, so the equation will change with Real Estate evaluations, as this small country has lost an important economic sector as part of its GDP.

#128 Brunette on 03.29.13 at 11:12 am

if I have a baby, should I name him Harper? the news last night said that Steven Harper may be the Canadian of all time.

#129 charles on 03.29.13 at 11:15 am

My new set of Wolf series $20 for $20 arrived from the Canada Mint. Expensive silver but with the limited mintage and the very high premiums the one ounce Wolf wildlife series is fetching give a poor man hope.
Yes I know. No divident, no tax advantage, just a shiny rock. But…when you hold in one your hand you realize why this is real money. It can not be printed to infinity to suit the rich, will be here long after we are gone and is in finite supply. Please understand dividents, bond coupons, yeilds and such are for the wealthy. The filthy masses worry about tomorrows meals and preserving what little wealth the have. Live with it.

And you can’t buy anything with it. Sucker. — Garth

#130 TheBigLebowski on 03.29.13 at 11:17 am

It looks like a bail-in ,it smells like a bail-in ,and oh its even called a bail-in. But don’t believe your lying eyes, nothing to see here, its not a bail-in ? People are so dumb.

#131 Ralph Cramdown Ⓤ on 03.29.13 at 11:19 am

#64 Tunacan — “There is no “market” anymore for anything, because interest rates are not at a natural rate and they will not be allowed to return to a natural interest rate. Its all one big series of serious capital misallocation. Savers get punished and pulled into equity markets that are rising on vapour volume, or bonds that pay nothing.”

OK, Tunacan or anyone else who cares to answer. What is this ‘natural’ rate of interest that you say we aren’t at?

It’s my understanding that the natural rate is when the desire for savers to save/lend balances the desires for borrowers to borrow. But that can’t be what you mean, because currently we see corporations sitting on billions in cash because they’d rather save than invest, and seemingly hundreds of people on this blog sitting in cash or bonds because they’d rather save than invest — let’s face it; anyone who’s complaining about low rates or worried about losing their money to a bank failure is obviously saving, not investing. Now that would indicate that rates are too HIGH — lower rates would mean less saving and more investing. I get the feeling that that isn’t what you mean.

So, given that unemployment is higher than optimal, that our economy is grinding along in second gear, and that most people with money seem to be saving/lending it rather than investing and borrowing more to do so, what is your theory of natural interest rates, and what would happen to our economy if interest rates went up?

#132 malcolm x man on 03.29.13 at 11:26 am

Garth luv your blog, but u are starting to sound like a real estate agent.
“Dont worry everything is always OK”

In terms of Canadian bank stability, it is. Do you have proof to the contrary? — Garth

#133 World Traveller on 03.29.13 at 11:37 am

#121 Julia

They should, one thing I have realized, no matter what issues we have with Canada and we do have problems, it is still the best country in the world, especially when you compare it to Europe who is completely hopeless.

#134 SRV on 03.29.13 at 11:44 am

“rapid conversion of certain bank liabilities into regulatory capital”

Now Garth, please be honest with your flock…

Deposits are indeed balance sheet “bank liabilities,” and you know that (interesting how they do not define which liabilities they will use to make the bank whole… ‘F’ picks from a hat perhaps).

And… the terminology comes directly from the IMF “confiscation template” document that was used in Cyprus (and published over a year ago).

And… guess who tipped off the Metals Community on the latest major blunder from ‘F’? I mean, who knew those Euro idiots would break out the plan right after he included this innocuous (sans the Cyrus context) reference in his budget!

You are welcome!

Hey, you got to post your undying faith (yes My Flock, investing in safe bank preferred shares put you at the head of the confiscation line when the black hole that is the derivative trade implodes on our ultra safe banking system… Canadian banks make up much of the top ten in the category) in our corrupt and failing financial system for all to see!

Greater Fool indeed!

BTW, Mr. Sinclair sends his regards… lol!

#135 Piccaso on 03.29.13 at 11:47 am

#113
Don’t bet against the USA? I don’t know. America is downplaying the threats from North Korea – probably because NK has the means to do some major damage.

——————————————————-

Hey fat boy,

I’ll huff and puff and blow your house down if I want to.

Regards,
USA

#136 Burnt Norton on 03.29.13 at 11:50 am

More advertising charade shenanigans, this time from a mortgage brokerage.

http://whispersfromtheedgeoftherainforest.blogspot.ca/?m=1

Good job Whisperer!

#137 raider on 03.29.13 at 12:01 pm

Among the joyful entertainment on Easter today was besides Garth’s posts, some talks from the Mises crowd. Looking at the RE bubble in Canada it actually appears to be caused by both of these issues: Moronic consumers and ill-chosen monetary policy.

http://www.youtube.com/watch?v=INDZe4KAZS4
http://www.youtube.com/watch?v=nDif454Wp9g

Garth, just a quick question, probably the obvious one, after all this scare about who holds the stick when the (Canadian) Banks get in trouble. You are somewhat a proponent of investing preferred (Bank) shares.

Since depositors are senior to stock- and bondholders, would a scare in Canadian financial institutions constitute to a buying opportunity; or should that be more of a run for the hills for investors in preferred stock?

Under which circumstances would you put on your shopping pants, when this RE mess entangles?

I’m one from the house-poor, investment-horny crowd, looking for frivolous long-term investments in with my monthly pay-cheque :D

The banks will not be impacted by the real estate correction I envision. — Garth

#138 Randman on 03.29.13 at 12:02 pm

Garth

Now Karl Denninger weighing in on Canada….

With all due respect ,you are losing the argument that
This move by the government is trivial

“In a just world when someone swindles you they go to prison. If the swindle is extreme and the loss similarly extreme, they should get the death penalty — after a proper and fair trial, of course.

But we do not live in a just world. We live in a world where plunder is the order of the day. The recent Cyprus bank confiscation is both right and wrong.

It’s right in that it’s the correct way to resolve a bank, provided the capital structure is honored and both shareholders and bondholders are wiped out — entirely — before depositors are hit.

But it’s wrong in that the government, including Brussels and the ECB, provided assurances that these institutions were financially sound and it turns out they lied.

Now the fruit of this poison tree is upon us. Small businesses, which simply cannot operate without being over insured deposit limits in most cases at least some of the time, have been destroyed. There are now reports from real companies coming in that 85% of these firms working capital has been effective seized.

This has and will force an immediate shutdown of these businesses and the loss of every single job associated with them.

I have no quarrel with someone losing an imprudently-made investment. That happens all the time, and I lose money all the time when I make bad investments. But this is not a matter of a bad investment. It is a function of outright fraud committed by government agencies and false claims that they have repeatedly made, upon which these firms relied, and now they have been destroyed as a consequence.

You cannot at the same time have the government telling you that the banks are safe and sound and at the same time preparing to, or actually, seizing your funds. That is felony grand theft and fraud — period.

That is not confined to Cyprus. Now Canada intends to put the same system in place. Buried on page 144 and 145 of their latest budget document is the following ditty:”

http://market-ticker.org/

Another American who is dead wrong about the bail-in. Why is this news? — Garth

#139 rosie "moving backwards" on 03.29.13 at 12:09 pm

This person, this Pigg person. http://www.thestar.com/business/real_estate/2013/03/29/firsttime_buyers_find_toronto_real_estate_market_hot_as_ever.html

#140 rosie "moving backwards" on 03.29.13 at 12:18 pm

This rings a bell. Check the date. http://www.economist.com/node/4010456

#141 Contrarian on 03.29.13 at 12:22 pm

My post was about bank capitalization and deposit security. Not gold. — Garth
—————————————————————
Can’t seperate the topics of money, gold and international commerce. Central banks are buying record amounts of gold, let’s not dismiss this fact and the role gold plays in the system.
As for Mr. Sinclair his track record and success speak for themselves, and you don’t have to be a “gold bug” to learn and benefit from the man. He’s 72 and has 50 years very successful trading experience, what do you who dis him bring to the table??

A blog you can’t stop reading. — Garth

#142 Contrarian on 03.29.13 at 12:27 pm

The banks will not be impacted by the real estate correction I envision. — Garth
—————————————————————-
Fannie Mae and Freddie Mac were also suppose to handle the brunt of the RE fall out, and we know how that went. We’ll see how CMHC does, I hear there is a tsumani coming better grab the umbrella.

Naive. Ill-informed. — Garth

#143 Contrarian on 03.29.13 at 12:34 pm

If share and bond holders would be the first to take a cut, then how much value would these be holding at a time a bank might be in distress? I mean if we have arrived at that point then likely there won’t be much to salvage, meaning depositors are up next and fast.
How much a share is a Cyprus bank going for now that it’s insolvent?
I remember in 2006 Dexia bank was $20/share, today it’s under .10!

Nobody has suggested depositors will participate in any rescue. You and your metalhead pals are making this up. But if it bothers you, keep your money in a jar. — Garth

#144 peter on 03.29.13 at 12:37 pm

I made the most money in my investment career trading gold. I haven’t owned any since last summer of 2011 but expect there is a good chance I will again. Investment Advisors have hated gold throughout the 12 year bull run. There is no management to interview, no M&A opportunity, bottom line, there is no money in gold for the financial services industry. Hence, they missed 12 years of spectacular gains and now stand back with pride and say, “I told you so” “gold is a lousy investment”. Fact is, central banks are accumulated gold aggressively and repatriating gold. The precious metal may still go down. Who knows? However, money printing to the degree we today is uprecidented. There will be consequences. Exactly what they will be remains to be seen. Gold should be a benefactor in the long run.

I do not recommend gold because you will lose money, and it pays nothing to owners. Purely, mindlessly speculative. — Garth

#145 rosie "moving backwards" on 03.29.13 at 12:47 pm

#126 American

Read Animal Farm. Orwell understood the nature of dictatorships. N.Korea is starving. It’s ruling class is nervous. It’s people are reaching the point where they don’t care about anything but getting food. This propaganda is meant for domestic consumption only. That’s all they have left to consume.

#146 blok existentialist on 03.29.13 at 1:04 pm

This is such a useful site, even for someone who tends to follow sock-drawer logic.
SM is right … you really can make money off the fears of the herd.
I’d like to thank all the gold bugs out there for continuing to frantically buy up all the Victorian jewelry available on EBay.
Even the rolled gold and gold-plated stuff is now disappearing rapidly. Anyone who hangs onto their stash is bound to make a decent profit down the road … due to rarity engendered by panic, not because it’s metal.

#147 SRV on 03.29.13 at 1:09 pm

Well, you are a bigger man than I thought Mr. Turner (maybe you are a hockey player after all)… never expected you to post my last comment.

You’re losing this one though… why not go after F&H with all the resources you have? This is the time to get them to come out with a public defense (denial), making it much more difficult to ever “pull a Cyprus” on us (my one and only goal).

You could make that happen Garth (although your post may just do the trick)… so far I’ve had no luck north of the border.

Breaking News… discussion of depositor confiscation (“if you deposit in a bank you are making them a loan at virtually zero interest”) on BNN as we speak… Genie meet Bottle!

So, where to go with those savings… Bitcoin for now… Next up, barbarous relics!

#148 blok existentialist on 03.29.13 at 1:10 pm

Oh, I forgot to mention. The gold bugs are melting everything down.

#149 Old Man on 03.29.13 at 1:12 pm

#147 peter – I am a firm believer in buying gold with a twist, and 18K only to buy presents for the wife or girlfriend as sometimes roses and chocolates will never be enough to keep them happy. :)

#150 evilgenius on 03.29.13 at 1:14 pm

“No big bank here will fail. Period. — Garth”

…And real estate prices never fall. Period.

#151 Gunboat Denier on 03.29.13 at 1:15 pm

132 Charles – expensive? You bet! $7.41 melt value

http://www.coinnews.net/2013/03/18/canadian-2013-20-wolf-silver-coin-for-20/

Wouldnt a silver bar work better?

#152 Freedom 85 on 03.29.13 at 1:15 pm

#120 Brico,

Gold is a currency. It is money. It pays no interest. It only goes up (appreciates) or goes down (depreciates) because of what is going on with other currencies. It is valuable because it has been a reflection of these things for over 5000 years. It make up reserves of the same central banks that flap daily about housing, economy, consumerism, etc. Banks deal in fiat and earn interest. You go to buy a house, you need money or currency. This currency or paper fiat is just the latest plaything of the governments of the day.

What is important is that gold has risen from 250 in 2000 to 1600 today. Why has it risen is the question to ask? Because the governments have been bad boys and girls. They have printed too much fiat money that you deposit in the bank everyday and use to buy groceries. The have used this fiat paper unwisely and have developed derivatives and other things most people don’t understand and traded those derivatives and other toxic products in an unregulated market that blew up in 2007 and 2008.
Now the governments have been scrambling to plug the leaks. They tried going deeper into the rabbit hole by printing more money (QE to infinity) and that program is about to ramp up again, but this time all countries will be doing it simultaneously. Wow! I can’t wait…..
The countries falling off the cliff so far are the worst abusers so far. Those leaks are being plugged. At first, taxpayers (QE and bailouts), now the model is changing to depositors, investors and bail-ins- i.e. Cyprus).
In the meantime, Garth is correct, the banks will make a killing so he encourages you to invest there as it the banks who will be the first users of the money issued all the while knowing that the vast majority of average folks will be the ones getting killed financially as they have too much debt…
But I digress. Getting back to gold and housing. It is all intertwined really. Gold is bashed because it doesn’t pay interest. It is a barometer. It is a beacon that indicates your purchasing power is going up or going down. When gold falls in price, it means fiat currencies such as the Canadian dollar are strong in general and when it rises, it means the governments are being undisciplied and printing too much money, thus destroying our standard of living.
They do not wish for you to know or understand this too well so they deride gold and do all they can to keep it misunderstood. Because if you knew this and started asking too many questions, their unfettered ability to print money may be put to question and that is not allowed.
Gold is pure money. When you own physical gold and store it away from your bank, it is pure savings and it is out of the banking system. Advantage for you. Wealth for you. Not for the folks that encourage you to deposit with them so they can have access and control over it.
It is freedom financially for you. No matter what Garth or anyone else says, all folks should have 5% or so in physical form as insurance and when looking at a rising gold price, they should be looking more closely at the reasons why instead of wasting time bashing it.

#153 Canadian Watchdog on 03.29.13 at 1:16 pm

Teachers’ snags stake in telecoms Down Under

While the muppets keep pumping all their money in stocks driven by HFTs on low volume , the smart money is moving out.

#154 evilgenius on 03.29.13 at 1:17 pm

By the way Garth, Deposits are liabilities, so in fact it’s not excluded that if they can’t convert enough bonds, they will take a bite into deposits.

Talk to a lawyer about interpretation, you’ll see.

Unbelievable. — Garth

#155 Tony on 03.29.13 at 1:25 pm

Re: #147 peter on 03.29.13 at 12:37 pm

Traditionally gold has been an inflation hedge. Gold was pushed to absurd levels as almost everyone believed hyperinflation was the wave of the future many years ago. They were wrong and the next move will likely be hard and fast to the downside. You could see a five or six hundred dollar loss in one business week or less. That’s the biggest risk to owning gold right now.

#156 Macrath on 03.29.13 at 1:26 pm

Why is this news? — Garth

Even nervous nellie nihilist Alex Jones is in on the action.
Creating hysteria to sell doomsday supplies.

#157 SRV on 03.29.13 at 1:28 pm

“Gentlemen! I too have been a close observer of the doings of the Bank of the United States. I have had men watching you for a long time, and am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country.

When you won, you divided the profits amongst you, and when you lost, you charged it to the bank…You are a den of vipers and thieves. I have determined to rout you out, and by the Eternal, (bringing his fist down on the table) I will rout you out.”

Andrew Jackson

#158 blok existentialist on 03.29.13 at 1:34 pm

Like destroying an Old Masters’ painting to salvage the ‘valuable’ lapis lazuli used for the blues.

#159 Dr. Hoof - Hearted on 03.29.13 at 1:35 pm

I would say that one of the biggest indicators is how sovereign ones country and its REAL ASSETS really are.

Didn’t Harper et al sign away much of our natural resource base to foreign entities China, with clauses that benefit China if this is disrupted ?

That’s what this is all about…global carpetbagging

#160 Contrarian on 03.29.13 at 1:41 pm

75Scott in Gibsons on 03.29.13 at 12:45 am
Yeah, Sinclair the nutbar! Wasn’t he the lunatic that predicted $1650 gold a few years ago?! What ever happened to him?

I’m sure you’re right that the new bank bonds “will be snapped up in a heartbeat by investors”. Especially when they find out that they will lose their investment in a crisis to stabilize the bank. Sounds very attractive! Do you think the yield will be very high?

I think people who know more than you will buy them and do quite well. — Garth
————————————————————–
The only one buying US bonds since 2008 is the Federal Reserve via QE to suppress interest rates. Sounds like the investment of a life time, better get in – sarcasm.

Of course you are wrong. Consistently so. — Garth

#161 Old Man on 03.29.13 at 1:43 pm

Just a story for all you buyers of fine gold jewellery for yourself or a gift for the lady in your life. Never buy 10K, and 14K is ok, but 18K will hold retail value, as bought a bracelet years ago, and had to go for an adjustment with a top goldsmith to add in two small links as was too tight.

He said this is a fine piece of 18K Italian gold, and what did you pay, so told him. Then he weighed it again, and said you just bought 18K for a 14K price, so where did you hoop this bargain. I bought it in Toronto on the Shopping Channel via TV, and he was shocked by it all.

#162 luke8929 on 03.29.13 at 1:44 pm

Your money has already been stolen, inflation and debasing the currency by increasing the money supply,

Confiscation is not something they have not or will not consider, how close is it? well who knows, these things seem to happen quickly without any warning.

The banks and government are tied at the hip, banks go under no one buys the bonds and the .gov can`t fund itself. No chance the .gov allows the banks to go under without taking every step, including confiscation, to prevent that. What else will they do? raise taxes, have the CB make more debt available to the banks? Perhaps the latter but it still dilutes the value of your money.

Remember who Garth Turner is, a financial adviser who makes money on the CONfidence game continuing, people lose faith in paper money or think that its not safe and the system is finished, that’s why they are out telling you this will never happen, they will ensure their survival at any cost.

What are you going to do if they close the banks one holiday weekend and take your money? Well being a good brainwashed Canadian sheep absolutely nothing. Once its happened its too late, plan accordingly.

‘Remember who Garth Turner is’? The guy giving you this free blog, and the one who has cautioned people about making irrational, dumbass decisions for decades before I ever helped a client, when you were in Huggies. — Garth

#163 rick jeffrey on 03.29.13 at 1:50 pm

Garth:
1. bail-in has a specific meaning so I am not buying that depositor haircuts will not occur or forced equity participation.
2. bail-in would already be called something else had the budget been written after the Cyprus blow up, the word smiths will need a new phrase.
3. why do banks get to issue unregulated, unfunded, non-transparent, derivatives? How can we know the value of these supposed assets?
4. All Canadian banks own brokerage houses, so so much for our banks not having the perils of merchant bank trading a la Goldman Sachs.
Glass Steagal Act required, separate insurance and brokerage from the banks, force the banks to lend only. (Why should they be chartered to gamble?)
5. Am very interested to know what you think a bank should be empowered to do and not do, considering they have a license to print money.

Banks don’t print money. There is a regulatory wall between deposit-taking and brokerage operations. Banks do not issue derivatives. No insured depositors here will ever be taxed. No bank will fail. — Garth

#164 Marnic on 03.29.13 at 1:51 pm

#64 Tunacan: Awesome post! Nice to see someone nail it so dead-on here.

#165 Jazmine on 03.29.13 at 1:55 pm

#100 RickOShea on 03.29.13 at 6:42 am
MF Global, Jon Corzine absconds with investor’s segregated account balances…

Couldn’t happen ‘here’! – except it already kinda has.

MF Global investors in Canada were made whole while US investors lost. — Garth
——————————————————–
FALSE

We were locked out of 100 000 dollars worth of active trades which expired worthless. This was not covered by CIPF nor talked about by slime stream media….and Corzine still walks around a free criminal.

No insurance against stupid. Just losses caused by corporate failure. Exactly what it was designed for. — Garth

#166 Ronaldo on 03.29.13 at 2:00 pm

”Him 100, her 100, joint another 100. But why would you have it in a bank account? — Garth”

E X A C T L Y !

#167 Timbo on 03.29.13 at 2:03 pm

roflmao! Banking is Fun!!

http://hat4uk.wordpress.com/2013/03/29/smoke-signals-special-eurogroup-will-stop-capital-flight-now/

“If I can just put into English what this means, ‘We hereby abrogate all responsibility for the business funds you keep with us, because we can no longer be trusted. In fact not only can we not be trusted, if those nasty Government people spot we’re up the swannee and order us to restructure, all bets are off, and the chances are you’ll lose the lot because they’ll steal it for the bailout.”

http://1.bp.blogspot.com/-2nGiu4J9ETs/TawxD9XXIpI/AAAAAAAAAIM/4TNNuzhOxl4/s1600/roflmao128629864358935877.jpg

#168 Ronaldo on 03.29.13 at 2:07 pm

#66 JtP – ”Bitcoin almost hit 100 CAD today (then took a 23% haircut before settling back in at 90 CAD).”

The next big disappointment for many people.

Reminds me of some of these pyramid schemes that have made their rounds of the country over the years. When you get gullible people rushing into these schemes with the illusion of making big profits by buying and selling the idea rather than the actual sale or use of the product it is time to bail out. This thing will not end well.

#169 souvereigninternational on 03.29.13 at 2:10 pm

@#121 Julia
I’ve heard this one before somewhere… …God bless America, the greatest country in the world.
You should travel the world some more. You will learn that there is no such thing as “The Best Country” (not even Chile ).This is such a delusional Canadian thinking that translates to “it’s different here” when talking about our real estate. The laws of economics work the same here as everywhere else. So “It’s the same here, but may be different (i.e. worse) because of our delusional state”

@ #144 Contrarian

My post was about bank capitalization and deposit security. Not gold. — Garth
—————————————————————
Can’t seperate the topics of money, gold and international commerce. Central banks are buying record amounts of gold, let’s not dismiss this fact and the role gold plays in the system.

–could not agree more, took the words out of my mouth.

watch Dept Collapse presentation by Mike Maloney for more info
http://www.youtube.com/watch?feature=player_embedded&v=tj2s6vzErqY#!

#170 Humpty Dumpty on 03.29.13 at 2:11 pm

MARC FABER: Not Even Gold Will Save You From What Is Coming

Read more: http://www.businessinsider.com/faber-gold-wont-be-a-place-to-hide-2013-3#ixzz2Ox6m1RMu

Gospel of Matthew

24Then said Jesus unto his disciples, If any man will come after me, let him deny himself, and take up his cross, and follow me.

25For whosoever will save his life shall lose it: and whosoever will lose his life for my sake shall find it.

26For what is a man profited, if he shall gain the whole world, and lose his own soul? or what shall a man give in exchange for his soul?

27For the Son of man shall come in the glory of his Father with his angels; and then he shall reward every man according to his works.

28Verily I say unto you, There be some standing here, which shall not taste of death, till they see the Son of man coming in his kingdom.

With a world full of hysteria, hopefully you will spend this weekend reflecting what is really important.

Your faith is more precious than gold G….

Blessings to all….

#171 Confidence on 03.29.13 at 2:17 pm

“Nowhere does any document talk about ‘deposits’ or ‘depositors’ or funds held by the banks in trust for customers. The only reference is to the conversion of ‘certain liabilities’ into capital if the SHTF. And you can bet those liabilities will be new bond issues floated by the banks…” – Garth

“You can bet”? “You can bet”? That doesn’t sound very certain or reassuring or all-knowing.

Debate about what is intended by the proposed legislation is largely irrelevant. Whether we’re talking about existing regulations that promise to secure deposits or reassurances by means of interpretation of proposed legislation, whatever, it all comes down to the perception of security, to confidence.

Bank runs happen when depositors lose confidence in the security of their deposits. Confidence is put in jeopardy when conditions of that security aren’t clearly articulated and when questions remain open. Confidence is jeopardized further, and often irrevocably, when depositors discover they have been lied to.

Consider this:

http://www.zerohedge.com/news/2013-03-29/oooops

Yes, Canada’s banking system remains one of the most secure in the world. Everything is fine right now. But no one is in any position to assert that no Canadian bank will fail. No one is that omniscient, including you Garth.

No major bank here will fail. Write it down. Stick it on the fridge. — Garth

#172 Janet on 03.29.13 at 2:21 pm

A couple of years ago Garth (bless him) wrote a book called ‘After the Crash’; in it we heard about squirrel recipes, buying a securing a wall safe, buying and cementing power generators and gold too. In his engaging style with multiple anecdotes, he laid it on the line. This current bail-in/out thing was included in a 2010 federal document and now it’s reared it’s head in the 2013 budget. We witness Cyprus. So we have concerns. Meanwhile we’re dusting out the safes and looking into generators, while reviewing his previous Crash advice. He may have been labelled a doomer back then. So why the blow back now? What Mr. T might consider demanding is that the mainstream media and elfin ‘F’ get up before some Mikes and answer questions about pgs. 144-45/55 for the Canadian people. We don’t need to hear that we’re idiots for checking out his squirrel recipes and cement for home safes. Regards, Janet

#173 Contrarian on 03.29.13 at 2:21 pm

#171pinstripe on 03.29.13 at 2:05 pm
Since the Cyprus situation, I did spend some time chatting with people who have been through the depression years and their advice is that there are a lot of parallels to the Great Depression. I asked them, “what are you doing with your money in this situation?”. Their response was, ” Don’t believe a word the politicians say, and do not trust the bankers. Take the money out of bank and keep it in the jam can hidden somewhere where noboby will touch it, because it will not be pretty when this is over”.

There are virtually no parallels with the 1930s. — Garth
———————————————————
The parallel is don’t trust what politicians and bankers tell you in times of crisis.

That’s your problem. And, what crisis? — Garth

#174 Ronaldo on 03.29.13 at 2:33 pm

#132 – Charles – this is the most expensive way to buy silver that I know of. Would it not make more sense to purchase silver rounds since you can buy them for a couple dollars over spot. You are paying a huge premium when buying from the mint. Check out http://www.kitco.com

#175 Ronaldo on 03.29.13 at 2:43 pm

#158-Tony – ”They were wrong and the next move will likely be hard and fast to the downside.”

If that were to happen, there would not be one single oz. available to purchase anywhere because of the demand. Note: The only amount I own amounts to less than 1 oz. AG, now that is another thing.

#176 Mike T. on 03.29.13 at 2:52 pm

ha ha

‘doomsterism’

nice touch

#177 rosie "moving backwards" on 03.29.13 at 2:53 pm

Wall safes are old school. I wonder how this one does in the crucial bowling ball test. To me that’s a deal breaker. http://www.guardian.co.uk/business/shortcuts/2013/mar/29/mattress-safe-bank-with-confidence

#178 AK on 03.29.13 at 2:55 pm

#174 Humpty Dumpty on 03.29.13 at 2:11 pm
“MARC FABER: Not Even Gold Will Save You From What Is Coming.
——————————————————————–

Yes, and MARC FABER, another loud tout knows what is coming?

#179 Canadian Watchdog on 03.29.13 at 2:58 pm

There is a regulatory wall between deposit-taking and brokerage operations

Remarks by OSFI's Mark Zelmer: PDF

First, Canadian banks have been actively engaged in offering investment banking services for many years, especially after acquiring the major investment dealers back in the late 1980s and early 1990s. These acquisitions have provided significant  diversification benefits to the banks, which have helped them weather several financial storms since then. For example, profits from investment banking activities helped cushion bank profits a few years ago when commercial banking activities were experiencing rising loan loss provisions. By the same token, commercial bank profits over the years have helped some banks weather the occasional stumble in capital markets.

(Zelmer goes on touting proprietary London 'whale' sized trading as good–safe practice for Canadian banks)

What profits is he talking about?

HYPER-HYPOTHECATION  

With weak collateral rules and a level of leverage that would make Archimedes tremble, firms have been piling into re-hypothecation activity with startling abandon. A review of filings reveals a staggering level of activity in what may be the world’s largest ever credit bubble.  

Fuelling hyper-hypothecation and joining together daisy chains of liability through the pledging and re-pledging of collateral have been banks around the world. Once in the system collateral is being pledged and re-pledged over and over again either through sale and repurchase agreements or re-hypothecation as demonstrated by a review of SEC filings. For instance, Goldman Sachsdisclosed recently that it had re-pledged $18.03 billion of collateral received as at September 2011, Oppenheimer Holdings re-pledged approximately $255.4 million of its own customers’ securities in the same period, Canadian Imperial Bank of Commercere-pledged $72 billion in client assets, Credit Suissesold or re-pledged CHF 332 billion of assets (received under resale agreements, securities lending and margined broker loans), Royal Bank of Canada re-pledged $53.8 billion of $126.7 billion available for re-pledging, Knight Capital Groupdelivered or re-pledged $1.17 billion of financial instruments received, Interactive Brokers re-pledged or re-sold $7.9 billion of $16.7 billion available to re-sell or re-pledge, Wells Fargo re-pledged $19.6 billion as at September 2011 of collateral received under resale agreements and securities borrowings, JP Morgansold or re-pledged $410 billion of collateral received under customer margin loans, derivative transactions, securities borrowed and reverse repurchase agreements and Morgan Stanley re-pledged $410 billion of securities received.

—-

CDIC has $3.3B in total assets while total deposits held in Canadian banks is $155B, of which most is already hypothecated or re-hypothecated in other creditors' names.

You want to keep all your money in this hyper-casino? Go ahead.

#180 Ralph Cramdown Ⓤ on 03.29.13 at 3:04 pm

#144 Contrarian — “As for Mr. Sinclair his track record and success speak for themselves, and you don’t have to be a “gold bug” to learn and benefit from the man. He’s 72 and has 50 years very successful trading experience”

I’m not trying to be argumentative, but what, exactly, is Jim Sinclair’s track record? I did a little digging and can find almost nothing about the guy, except on his own websites. He says he started a stock brokerage in ’77 and sold it in ’83, and you don’t have to be Sherlock Holmes to know that the value of a stock brokerage in ’83 — right at the end of a long bear market — was a roll of nickels and assumed debt, so he sold at the bottom on that one. Then he held the coat of the Hunt brothers while they extricated their mashed nether regions from the silver market. And now he’s involved in a small cap mining play in Tanzania? That’s it?

He’s not even the most famous Jim Sinclair out there, he only gets talked about on gold and silver bullboards… If he’d made and lost a few fortunes, isn’t it possible there would be more about him? Wait, here’s where he got the bum’s rush out of the boardroom of a junior miner on the old VSE:
http://www.infomine.com/press_releases/stt/pr012396stt.html
And here’s a book he wrote, “How you can profit from gold” published in 1980. I hope that book told its readers to short it, but I’m guessing it didn’t.

Is there more? Because unless there’s a lot that my limited digging didn’t uncover, it sounds like this guy is just a prolific blogger who’s a legend in his own mind, and maybe in yours.

#181 T.O. Bubble Boy on 03.29.13 at 3:07 pm

@ #177 Contrarian // #171 pinstripe

Maybe we should all get Stock Certificates and Bond Issues and shove them under in the mattress or in a cigar box in the backyard?

#182 Tony on 03.29.13 at 3:18 pm

Re: #138 Piccaso on 03.29.13 at 11:47 am

No country has ever lied their way back to prosperity and America certainly won’t be the first. The stench of the bullshit coming out of that country has to stop.

#183 souvereigninternational on 03.29.13 at 3:19 pm

@ #178 Ronaldo
in US i dealt with APMEX, never a problem, excellent customer service, fair prices, reasonable shipping cost and good selection.
In T.O. the best option is personal pick-up at CANADIANPMX on Younge in Richmond Hill, shipping’s too expensive in Canada. They have decent premiums and growing selection.

#184 Alta Lad on 03.29.13 at 3:25 pm

#115 Turner Nation Amen

#185 rick jeffrey on 03.29.13 at 3:26 pm

Garth;
I just checked Royal Bank Financial Statements and they do own $90billion worth of derivatives including currency swaps, interest rate swaps, etc. They claim to value them at FMV but I do not know how we could ever check that since they do not trade. In USA the banks value them at whatever they wish to. Likewise, the Federal Reserve can value them at what they wish.
As to firewalls between the investment bank side and loans side, I just do not know if I trust that, basically the issue is that the bank should remain a bank and be concerned with stability or lose its charter. If the banks were compelled to sell non bank services such as brokerage and insurance and use the proceeds to conform to new stringent deposit reserves I suspect we would have less to worry about in terms of a need for bail in/out, a concept I am opposed to no matter what.
Derivatives should be strictly limited; in fact they should be compelled to eliminate their use over time. With derivatives you can have whatever profit or loss you wish. Hopefully that is tightened up in the budget.

You said banks issue derivatives. Not the case. As for the separation of deposit-taking banks and bank-owned brokerages, it is the law. Doesn’t matter if you trust it or not. — Garth

#186 T.O. Bubble Boy on 03.29.13 at 3:26 pm

Can anyone confirm if this is accurate:
http://www.businessinsider.com/wall-streets-most-worrying-charts-2013-3#drew-matus-ubs-9

Has the U.S. Fed purchased ~90% of all U.S. Treasuries auctioned in the last 3 years?

#187 raginnn on 03.29.13 at 3:32 pm

More fake real estate stories using employees as plants. What ever happened to journalistic integrity?
You’d figure the reporter would at least Google the names of the plants she interviews for the story…

http://business.financialpost.com/2013/03/27/canada-housing-retirement/?__lsa=de0b-6c00

http://www.teamrrp.com/team/

#188 daystar on 03.29.13 at 3:50 pm

#80 Smoking Man on 03.29.13 at 1:03 am

Well… if you really want to draw attention to yourself with self aggrandizing, self worship fashion:

http://dyslexicsmokingman.blogspot.ca/

#30 Smoking Man on 03.27.13 at 9:44 pm

And now here you are, teaching us all how to raise kids:

“Teach your kids to be a smoking man.

1) Lying 101
2) 9 to 5 Its business take no prisoners
3) Home School kids
4) There is no right or wrong, just Risk vs Reward
5) Study the Herd, not the charts
6) Build explosive self confidence
7) Morality whats that
8) Hounesty is weakness
9) Learn to manipulate slaves
10) Givers lose, Takers Win”

Act or no act, my unsolicited advice to you SM is, sober up you drunken rummy, your caca doesn’t fly.

#189 afraidit allmightend on 03.29.13 at 4:14 pm

The only people who have anything to worry about from N Korea is the Koreans…..north and south. I’m surprised there are any Koreans left they way they are leaving the country by the millions……Dallas for ex has a huge K population.

They are smart and enterprising people….I say invite them all over and carpet bomb the northern half.

#190 TurnerNation on 03.29.13 at 4:14 pm

#125 Laurie . I think Ancestry.com should have a special mark denoting renters in the family tree. You don’t want those types breeding. :-)

#191 polecat on 03.29.13 at 4:17 pm

Gee, enough panicking already? Same as last December, world is still here. Sorry Garth, I’ll tune in for another post later, some of these wingnuts are too annoying. More of a chance of another SARS than our banks failing you nimrods, go take all your money out now if you think it’s that bad, and hide it in your mattress. Or buy a house, whatever…

#192 Blacksheep on 03.29.13 at 4:22 pm

I agree with Garth, banking risks are extremely low, Canada being a currency issuer.

However, Mish’s opinion is held in very high regard.

If you have become uncomfortable with your banking arrangement, regardless what Garth or anyone else says, CHANGE it.

Many legal options to put funds out of reach.

We do not need to convince others to see things our way, follow you own path.

#193 Contrarian on 03.29.13 at 4:24 pm

Garth how come you’re not posting some of my previous comments, is there a limit on your site?

If you have anything new to say, maybe not. — Garth

#194 Buy? Curious? on 03.29.13 at 4:35 pm

Garth, looks like you’re getting your hands dirty dealing with the common folk considering all the rebuttals. Why buy gold if there’s an immanent financial crash? Are you going to take out your ounce of gold and a cheese grater to pay for toilet paper after the collapse of the entire financial system? Why are people so crazy? If they really wanted to collapse the system, they should just stop paying their bills. I mean like, everything! Take out a line of credit, buy as much gold as possible and move to Newfoundland. Why do people come here and not put their money where their mouthes are?

By the way, Is Newfoundland a tax haven? I met a girl from the the Bahamas on a whale sighting tour. She was so hot! Was it a sign?

#195 TonyMontoya on 03.29.13 at 4:38 pm

This whole house of cards is ready to fall. This make believe economy is being held up with fake fudamentals, false statistics, and the ability for the man on the street to live of his credit cards and lines of credit! Silver, Gold, and Real Estate are all in free fall, and were headlined as a great investments by the same PTB that have artificially over inflated the NA stock markets – which will coincidently be the next to crash.

Garth with his quick mind and wit, will say all is well, in a funny and eloquent way. But dont believe a word. Just pe preapred for the shit show to end in disaster.

PS after the crap hits the fan,maybe then we can rebuild this world into a place that is liveable and without greaseball bankers, that bet bailout money into derivatives markets!

This blog is a freak show. — Garth

#196 vacation in montreal on 03.29.13 at 4:49 pm

#184 Ralph Cramdown Ⓤ on 03.29.13 at 3:04 pm
_____________________________________________

not very well researched…

why don’t you try Sutton Resources sale of Bulyanhulu Gold Mine.

how about the 2001 Forbes article? “Golden oldie
Bernard Condon, 12.10.01 “

#197 DreaminginTechnicolour on 03.29.13 at 4:49 pm

Depositors in banks get pitiful % interest on their money while home buyers get record low interest rates on their mortgages and bank stocks and profits soar – who is being fleeced by the banks ?

#198 Tom Vu on 03.29.13 at 4:54 pm

There is much acrimony, hostility and mud slinging today (ie much more than normal)

Keep up good work !

#199 coastal on 03.29.13 at 5:10 pm

And you can’t buy anything with it. Sucker. — Garth

Actually that’s not true, I know of a gun shop in the BC interior that takes gold as payment. Ya I can just hear ya now Garth, lol.

If gold breaks $2000 will you change your tune ? It’s not like all the Canadian banks haven’t been calling for $2000.

#200 Julia on 03.29.13 at 5:12 pm

According to this dude, everyone over 62 should get a reverse mortgage right now. http://traumaandsubstanceabuse.wordpress.com/about/?utm_source=DTFP+Quarterly+Newsletter+-+Dec+2011&utm_campaign=a81d248eca-DTFP_Quarterly_Newsletter_Spring+2013&utm_medium=email

#201 Tunacan on 03.29.13 at 5:29 pm

#134 – natural interest rate
Would be achieved if supply and demand were allowed to exist without management by central banks. Western central banks announce to the public that they pursue a zirp policy meaning zero interest rate. That means there is a very visible hand intervening in the treasury bill and long term bond auctions. When no one else shows up to buy this debt entities like the federal reserve simply step in and soak it up thereby not allowing the interest rate to rise. If central banks were not there to soak up supply the interest rate would need to rise in order to properly compensate investors for the risk they’re taking.

So central banks explicitly state they interfere interest rates. In doing so they cause distortions in allocation of capital. To allow interest rates to return to a state of equilibrium sans central bank involvement would set off cascading defaults. There is just so much debt that can never be serviced if rates even rose one percent. So in as much as CBs talk about withdrawing QE it will never happen because thats when the music would stop.

Rates will rise with sustainable increases in economic activity. No mystery in that. — Garth

#202 Julia on 03.29.13 at 5:30 pm

Oops sorry wrong link. http://www.businessinsider.com/great-time-to-get-a-reverse-mortgage-2013-3

You had me worried. — Garth

#203 T.O. Bubble Boy on 03.29.13 at 5:40 pm

HAM TAKES MANHATTAN:
http://www.theglobeandmail.com/life/the-hot-button/woman-buys-65-million-manhattan-apartment-for-two-year-old/article10553197/

I guess this could help to explain all of the empty condos in Toronto/Vancouver… HAM buying condos just in case their 2-yr-old decides to attend UofT or UBC in 2029.

#204 rosie "moving backwards" on 03.29.13 at 5:44 pm

You think it’s bad now doomers. I remember ’76. It was bad. I was mad. As mad as hell. I learned how to take it though. (notice “the mans” quick reaction, profit motive trumps everything) http://www.youtube.com/watch?v=WINDtlPXmmE

#205 Timing is Everything on 03.29.13 at 5:49 pm

F’s got an idea…A wonderful, awful idea. But, of course, it will ‘never’ happen in Canada.

A ‘template’…

‘By increasing the likelihood of bank shareholders and creditors shouldering the losses of a failing bank, the OBR can help to mitigate the risk of New Zealand being placed in such a position in the future.’

http://tinyurl.com/d9744gz

Check ‘em out!

http://tinyurl.com/c779l4r
————————————————–
Garth, for your bemusement and revulsion…

http://tinyurl.com/bmzg4am
http://tinyurl.com/cyklgju

#206 Godth on 03.29.13 at 6:02 pm

Rates will rise with sustainable increases in economic activity. No mystery in that. — Garth

We need you to manifest another planet, pronto. This one is about clapped out resource wise. Make it so you omniscient being you.

#207 Dr. WAYNE on 03.29.13 at 6:30 pm

“In view of the fact that God limited the intelligence of man, it seems unfair that He did not also limit his stupidity.”
Konrad Adenauer

#208 Hide the virgins on 03.29.13 at 6:33 pm

After reading a bunch of doomed comments I can clearly visualize human behaviour during other crisis such as an eclipse or a meteor in ancient times. If I were a virgin I would totally be scared of a scaficial event incoming.

#209 Hide the virgins on 03.29.13 at 6:34 pm

Sacrificial – hate iPad auto correct

#210 Ralph Cramdown Ⓤ on 03.29.13 at 6:53 pm

#205 Tunacan — “natural interest rate would be achieved if supply and demand were allowed to exist without management by central banks. Western central banks [are] a very visible hand intervening in the treasury bill and long term bond auctions. When no one else shows up to buy this debt entities like the federal reserve simply step in and soak it up thereby not allowing the interest rate to rise. If central banks were not there to soak up supply the interest rate would need to rise in order to properly compensate investors for the risk they’re taking.

So central banks explicitly state they interfere interest rates. In doing so they cause distortions in allocation of capital.”

But in a world of free exchange rates, investors who don’t feel they’re being properly compensated could just invest somewhere else. Or turn turtle, take their money off the table and invest in hard assets. And yet, they aren’t. The trade weighted US dollar index is right about where it was before the GFC:
http://research.stlouisfed.org/fred2/series/TWEXB
And the Commodity Research Bureau spot index is as well:
http://www.crbtrader.com/data.asp?page=chart&sym=BZY00&name=BLS%20Spot&domain=crb&display_ice=1&studies=Volume;&cancelstudy=&a=M
So if investors haven’t fled the US dollar for either other currencies OR commodities, can we really say they aren’t being properly compensated for their risk? Sure, they might want more return and less risk — who doesn’t, ever? — but surely everybody who has money parked anywhere has it exactly where they feel most comfortable? Your argument seems to be that people have a favourite asset and that they invest in that asset regardless of the return, but when the return is too low they complain about it on blogs… “in order to properly compensate investors for the risk they’re taking” suggests that investors are taking risks without being properly compensated for them?? But doesn’t every investor make the risk/reward decision for himself?

From what I can see of flows into stock funds versus bond funds, it appears that savers are are still quite risk averse. Ditto with all the talk on this blog about bank deposit insurance… I mean really? Bank deposit insurance? If most savers are risk averse and would rather lend than borrow, the natural interest rate is going to be low.

#211 Herb on 03.29.13 at 7:25 pm

#208 Rosie “moving backwards”,

this one is more appropriate although Paddy Chayefsky did not include banks in the script:

http://www.youtube.com/watch?v=5jmuhZY2mgs&feature=related

#212 Ralph Cramdown Ⓤ on 03.29.13 at 7:37 pm

#200 vacation in montreal — “why don’t you try Sutton Resources sale of Bulyanhulu Gold Mine.”

That was the board he was kicked off of which I referenced.

“how about the 2001 Forbes article?”

Thanks for that. I tried looking into the results of his claims adjacent to the Sutton properties, but can’t find their disposition, unless the properties TSE:TNX are developing are one and the same (something suggested they were a bit further away).

None of this suggests ‘legendary.’ To my mind, ‘dilettante’ might be more appropriate. Nice tough though, bailing out of gold just as his “How to profit from gold” book was hitting the shelves in 1980. Does he recommend gold continually, or only when he’s bailing out at a top?

Jim Sinclair’s domain is held by Duval Minecom of Vancouver, which “provides specialized media-related consulting services to large and small mining companies in Canada and abroad” and was founded by David Duval, who is associated with Kitco. Maybe that’s common knowledge among the ‘bug set, but it strikes me as unlikely that you’re going to get unbiased asset class advice from such a source.

#213 An Importation in Quebec on 03.29.13 at 7:41 pm

Marc Faber and Ellen Brown must be hysterical:

http://www.advisoranalyst.com/glablog/2013/03/28/marc-faber-i-am-sure-governments-will-one-day-take-away-20-30-of-my-wealth.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+advisoranalyst+%28AdvisorAnalyst+Views%29

and

http://www.globalresearch.ca/it-can-happen-here-the-bank-confiscation-scheme-for-us-and-uk-depositors/5328954

And there’s the proof. — Garth

#214 rosie "moving backwards" on 03.29.13 at 7:43 pm

#212
Virgins? scaficial? Garth, I must protest the tone this blog has taken.

#215 T.C. on 03.29.13 at 7:45 pm

Ha Ha!

This entry’s comments are especially funny. Long weekend perhaps?

Any suggestions on instruments that short gold / silver?

#216 Canadian Watchdog on 03.29.13 at 7:50 pm

#214 Ralph Cramdown

From what I can see of flows into stock funds versus bond funds, it appears that savers are are still quite risk averse.

Does declining volume mean anything to you? Or are you just looking at headline stock quotes like home buyers?

#217 M I K E on 03.29.13 at 8:01 pm

Garth with all due respect. Jim Sinclair predicted Gold to $1650 by 2011 long before anyone was beating that drum.

He was bang on, so little bit of respect is well deserved.

He’s now a nutbar. Way past his best-before date. — Garth

#218 Richard in Kelowna on 03.29.13 at 9:08 pm

My goodness Garth you sure kicked a barrel of dynamite off the cliff today with this topic.

By the way, were you in government when Canada sold off most of it’s gold reserves or was that before your time? Also, do you remember what the average selling price was?

#219 Tunacan on 03.29.13 at 9:16 pm

#214 – Correct. Investors can park money where they want. The bond market must be managed at ALL cost. As long as CBs can print unlimited money to buy unlimited bonds there will always be a buyer and consequently interest rates can be parked at zero indefinitely. The cost is depreciating currency. All major currencies are competing to devalue and taking turns. So for instance the US dollar looks strong but it just happens to be the best looking horse in the glue factory right now. So you’re right investors should flee to real assets. And that’s where the management of gold price comes in. Answer this. How is it that physical metal demand is at all time highs (eg. US mint coin sales are double digits % ahead of previous records) yet the gold price does nothing? How is it that countries like UK and Japan announce major policies to print money and gold goes down? Gold is not allowed to rise at a time when other currencies are being trashed – because that would shake confidence and then the jig is up.

Tin foil alert. — Garth

#220 Tunacan on 03.29.13 at 10:10 pm

Tin foil? Garth attacks the messenger instead of the message?

I thought that was the message. — Garth

#221 syfon on 03.30.13 at 12:53 am

Another 200+ posts day.
Just by mentioning gold.
Works like a swiss watch.

This is not a gold blog.
Mention Sinclair again and you can add another 100

#222 Stew on 03.30.13 at 2:00 pm

Garth doesn’t quite get it, there is NOT enough cash to cover the depositors. Do you even know who owns the PRIVATE BANK OF CANADA? Why don’t you tell your readers? You’ll probably say CANADA..BWAAAAAA

The BoC is a crown corporation. You own it. — Garth

#223 Stuart on 03.30.13 at 2:20 pm

So, my mother-in-law has sold her townhouse and put the proceeds into a bank bond and a GIC. Both are bank liabilities, wouldn’t you say? How much of her money can she bank on keeping?

Except for the market losses on the bond, all of it. — Garth

#224 ike on 03.30.13 at 2:42 pm

The No.2 Cyprus bank is kaput. No insured deposits are being taxed.
——-
They should be taxed, but insurance company has to cover loses. If I understand how insurance works.

On the other hand, If I am wrong: how I can insure myself of being taxed?

#225 The Honest Banker on 03.30.13 at 3:25 pm

The new Canadian budget that was tabled on 21 March 2013 includes a section that explains how Canada is planning its own Cyprus style bail-in plan for its “systemically important” or too-big-to-fail banks. This bail-in plan would include the use of bank deposits to keep the banks viable in a crisis. Good planning eh? http://tinyurl.com/cvcf9v9 or see pages 144 and 145 of the budget as it was released in parliament. The Finance Ministry chose to put this in there – so they must be more than a bit nervous about the possibility of a derivatives unwind or some other action.

If your web site believes such crap I lament for your readers (it appears there are two of them). See my previous post. — Garth

#226 Peter MacDougall on 03.30.13 at 3:45 pm

Great article, cogent, rational, logical, commonsensical, amazing. All very good and Canadian. We are lucky. However my thoughts are with the depositors in Cyprus who didn’t see this coming who are going to pay for others poor choices. Banks and Governments, the best is brother to the worst.
When is the best time to be smug in a global financial village?

When you live in a solvent country. Duh. — Garth

#227 John on 03.30.13 at 8:28 pm

I have read about 50% of the comments. I am not financially literate. I have degrees in science and research. But I believe Garth is wrong. He may be a intelligent guy, but intelligent guys begin to believe their own story line and forget examine what other bright guys are doing.

1: Central banks are buying gold. Why?
2:There is a great degree of distrust every where. No one is telling the truth, what ever the truth means.
3: The derivatives have yet to come to roost. They will. What happens then? This is a tsunami.
4: Watch ZeroHedge and you get the sense that nothing is safe. Institutions that can borrow at zero percent to speculate – will. These folks will create problems.
5: I listen to Faber and Rogers – diversify.
6: Garth did not speak to MF Global’s decision to close out the positions of the Canadians made whole. They were not technically made whole.

Garth, rather than making quick remarks, you have knowledge and insight that you could add to these comments. Please consider doing so.

John Smith

1. Banks hold far more US$ than bullion. It means nothing. 2. That’s your problem. 3. Positions can and will be unwound. 4. ZeroHedge is a professional nihilist who has published factually incorrect material re Cdn banks. 5. Big surprise. 6. No insurance scheme in the world will make someone whole for an unexecuted trade. You’re a scientist and a researcher? Wow. — Garth

#228 John smith on 03.31.13 at 12:02 am

Garth

You are being rude. There is no upside to this attitude, as it simply shows an unpleasant aspect of your character.

MF Global
You have glossed over the MF Global issue… again. If MF Global had not grabbed the customer accounts then no positions would been terminated. I have friends that have lost a great deal in this regard.

Central banks continue to buy gold. It would be my novice view that if the central banks do, then it would be prudent for citizens in Canada, just as citizens in China are advised. I am not so interested in their US $ positions. These same central banks say in Japan, or China are transacting business outside the US $. This is a new trend. This will destabilize the US. These same central banks are inflating their currencies like crazy… US example is $85 B per month. This must be the new normal. Japan is worse. I work in Japan.

ZeroHedge
My point about ZeroHedge is not the accuracy of the Canadian reference, but rather about the malfeance in the financial sector, in general. As Prof. Michael Hudson would say, what can not be paid, will not be paid. University of Missouri. Similarly, Prof. Steve Keen, University of Western Sydney. Google them.


If you would care to venture in the scientific realms of artificial intelligence or satellite communications, I would not be so rude with your novice entry point questions. [An English major would not do so well in science. :-)]

You have a tendency to avoid the details.

Sucks being young and wrong, no? — Garth

#229 hagbard on 03.31.13 at 6:26 am

At this point, I wish I bought a house back in 2009 here in Essex county rather putting my money in the bank. Houses here are selling like crazy and prices climbing. I don’t trust the govt to keep its hands off my savings (or anything else for that matter).

#230 hagbard on 03.31.13 at 9:58 am

Just wanted to ad that the govt isn’t helping the situation by not coming out and saying that our savings accounts won’t be touched. Short of that, they’re creating the fear and uncertainty which validates Zero Hedge.

They’re apparently not putting typhus in the water supply, either. But in the absence of a clear denial, let’s be terrified. — Garth

#231 Chris no longer in England on 03.31.13 at 10:04 am

Fact remains that anyone who puts money into their bank account ought to be confident it will only be touched by them (or the bank in legitimate charges). Not that a portion of it will be confiscated and the bank closed before that date to prevent people from removing their money and doing what they want with it. Who cares if billions of it belongs to the Russians? Don’t they deserve to hang on to their ill gotten gains the same way the rest of us want to? It doesn’t belong to the banks and it doesn’t belong to the governments. They have already taken their slice before we got our own mitts on it, in most cases. It is theft and confiscation, and anyone who thinks it could never happen here has just not yet imagined the circumstances in which it might happen. Think about what those might be. Before the EU juggernaut began rolling over us (sitting in our sovereign nations and minding our own business) we never thought it could happen to us either. And as an aside – no-one sitting pretty in the US and Canada who has never lived through BE and AE (Before Europe, After Europe) can have the slightest idea of what it is like to be harried and bullied by your OWN government, on behalf of the Monolith; by the Monolith itself, and by fellow deluded citizens at least 20 years younger than yourself with no memory or knowledge of the “before time”, who sneer and ridicule those who can compare, and prefer how things were before we all got raped, buggered and robbed by the EU.

So there!

#232 Stew on 03.31.13 at 12:34 pm

More disinformation Garth..tell your readers the TRUTH:

“Ultimately, the Bank is owned by the Minister of Finance on behalf of Her Majesty in right of Canada.”[4]

In other words we own S$iT..THE QUEEN OWNS OUR BANK

That’s why it’s called a ‘crown corporation.’ This blog is staring to disgust me. — Garth

#233 Fort Mac Flatlander on 03.31.13 at 3:25 pm

An interesting article to counter certain economic optimism, however, corporate profits are up benefitting those that can afford them.

http://www.zerohedge.com/news/2013-03-26/guest-post-available

Not to be a tin foil hatter, but that is all.