The contrarian

One of life’s simpler rules is to closely watch what others do, and do the opposite.

Most people freaked in 2009, sold their mutual funds in a panic at firesale levels and ran screaming into the void. Most people buy things because they’re popular, which makes then rise in value. (They’re popular because they are, well, rising in value.) Most people want houses when markets are hot, then shun them when prices and sales fall. People lined up in the lobby of my bank tower to buy gold at $1,900 an ounce. Today bullion’s $1,200. No line. Most people have borrowed a lot and saved little. Most people are financial cripples, though knowledge is but a click away.

And most people are locking in their mortgages. Eighty per cent, in fact. Not smart.

Despite Friday’s middling job numbers in Canada, the economy’s a sloth. Exports are down, layoffs are up and we’re more a country that builds condos than manufactures stuff. Growth is subpar, and the Bank of Canada has stopped warning people about rising interest rates. As I told you a few days ago, it’s way more fussed over an inflation rate on its way to zero.

As a result, the central bank will keep its key rate sitting where it is – in the ditch – until 2015. That doesn’t mean long, fixed-rate mortgage rates won’t jump (they will, in late March) because those are set in the bond market. But it does mean VRMs – variable rate mortgages – will be dirt cheap for another two years.

So why would you borrow money at 3.79% at BeeMo or Scotia when the same bank will give you a floating rate of around 2.5%? Why wouldn’t smart homeowners invest the extra money, get a bit of growth, and chunk it against the principal when the loan comes up for renewal?

Because most people think with their duodenums. Bankers and mortgage brokers, with a vested interest in promoting fixed-rate loans (more revenue and commission), have scared the poop out of folks, convincing most they’ll be ‘safe’ if they lock in. As a consequence, given current conditions, these poor sods collectively will be shelling out millions more a year than they have to in interest.

Yes, the rate on a VRM can increase (and will, eventually). That means although your monthly payment remains fixed, more of it would go towards interest and less to paying off the debt with each move higher. But so what? Variable rate mortgages are almost always convertible. That means if you read a pathetic blog written by a bearded god, for example, and learn a rate increase is imminent, you can always convert to a fixed loan with one phone call.

In other words, why aren’t 80% of borrowers saving themselves thousands of dollars a year by riding with a variable rate that’s a full 1% less than the five-year toll, when they have built-in protection from spiking rates? Do they enjoy paying too much? Do they covet TNL@TB?

Nope. Just emotional. Fear’s the great motivator. So most people would rather avoid paying more for their mortgages if rates happen to rise in a few years than pay more now for a few years with a higher rate. (That sentence actually makes sense. Trust me.)

Lesson: go variable. Unless, of course, you are a deflowering virgin and can’t afford it.

Little-known but most real is the Bank of Canada ‘benchmark rate.’ This sucker is struck at 12:01 am ET each Monday, and becomes the official qualifying rate for that week for borrowers who don’t have a 20% down payment.

These are the people who must purchase CMHC mortgage insurance (insuring the lender, not them, against default) in order to secure a loan because they’re high-ratio borrowers. Regardless of the great rate the bank may be offering (like 2.5% for a VRM), if these people choose a mortgage term of less than five years, or any variable mortgage, they must qualify to make payments at the benchmark rate, not the bank’s offered rate.

And what’s the benchmark rate today? A big 5.34%. It last increased (by a fifth of a point) at the end of August, is more than double the current VRM. Yikes.

For example, a buyer qualified for a regular, discounted 5-year mortgage at 3.49% with a maximum purchase price of $300,000 would have to requalify at 5.34% if she wanted to switch to a variable-rate loan (even though the payments would be less). The result? The maximum purchase price would then fall to $250,000.

The intent of this change (made by that crafty little F, Rob Ford’s former best friend) was to throw a new obstacle in the way of first-time buyers, to ensure they could withstand inevitable rate increases. But it didn’t work. They all locked into five-year mortgages to avoid the benchmark rate, which means they pay more than they have to, can’t save, and become more financially vulnerable – which is why they only had 5% down in the first place.

This is called government. Watch it closely. Do the opposite.

167 comments ↓

#1 Derek R on 12.06.13 at 9:51 pm

It’s been a while since I last distributed the GarthFAQ. So here, once again, is a link to help anybody who isn’t sure who TNL@TB is, or whether they should worry because they don’t have any lawn ornaments.

The GarthFAQ

#2 dosouth on 12.06.13 at 9:55 pm

Thought for sure you would have commented on the F’s more threats regarding mortage fiddling in the National Post today Garth. Maybe nothing is really going to change….

#3 not 1st on 12.06.13 at 9:57 pm

People lined up in the lobby of my bank tower to buy gold at $1,900 an ounce.

—-

Your bank tower?

It’s a tall, pointy building where people work. I have an office there. — Garth

#4 crowdedelevatorfartz on 12.06.13 at 9:57 pm

So the falling Canuck buck won’t force “F” to raise interest rates anytime soon oh bearded one?

#5 [email protected] on 12.06.13 at 10:00 pm

Even though there is all this ying and yang going on Canada is still the best country in the world. Garth thank you for this blog.

#6 Smoking man on 12.06.13 at 10:00 pm

I have a fever of like 110.left the tax farm early. Wife the love of my life wants to chuck soom loot away.

How could I say no.

Combo of fever, 10 wines alone at club 101.

Have no idea of what gartho wrote, try again in morning

#7 Son of Ponzi on 12.06.13 at 10:02 pm

This blog is going to the dogs.

#8 Wrong garth on 12.06.13 at 10:07 pm

There is no difference in commission for a broker who offers a client fixed or variable.

More commish on bigger loan amount, and definitely more revs for the lender. — Garth

#9 Son of Ponzi on 12.06.13 at 10:08 pm

Pepal should never buy based on current payments, but always on “normal” payments.
Simpal!

#10 zee on 12.06.13 at 10:11 pm

Garth, to get the VRM rate and avoid the bofc qualifying rate, you need to have 20% down. Is that correct?

Correct. Or go fixed 5. — Garth

#11 Son of Ponzi on 12.06.13 at 10:12 pm

“Where pepal work”.
I worked in one of those ones. Not remember there was much work being done.
Busy yes, but mostly pepal putting in face time to please the bosses.

#12 Freedom First on 12.06.13 at 10:17 pm

Well worded and a valuable simple message Garth, so simple some financial idiots may be able to comprehend it. Unfortunately, many of them will ignore it. Financial idiots want what they want and they want it now, screw the cost.

Reminds me of a few of them over the years who have asked me to lend them money after their financial mismanagement nailed them with nowhere to turn, backs against the wall. Now, I give to charity, and I will give money in some cases to help people, not to enable them, but to really help them, and I use my own judgement in each case. Surprisingly, most people who are “helped” pay the money back, even though it was given, and not a loan.

To finish my point, the people who got themselves into financial difficulty with insane financial thinking and asked me for a loan, I tell them I will do better than that. I say, for free, I will go over your books, and help you to come up with the best solutions to your problems. The replies are never pleasant, but as one person told me, and it just about sums up the idiot way of thinking: “Freedom First, I don’t want your advice, I just want your money”. I just love that reply:) …….I learn from everyone.

#13 Mark on 12.06.13 at 10:19 pm

The mainstream media is starting to acknowledge a housing overvaluation. Does that mean housing is actually fairly priced?

#14 Magoo! on 12.06.13 at 10:19 pm

What about splitting the difference and getting a one-year fixed? Kind of the best of both worlds, no?
(Or is it the least of both worlds? :) )

Magoo!
Not First And Proud Of It

#15 Doctor Fierce on 12.06.13 at 10:23 pm

Bought 1 bedroom condo unit in Whistler, BC. Roughly 77% of assessed value. Roughly 65% of pre-2008 value Private sale. VRM at 2.55%. Share cost with partner.
Plan: sell to an american in 5 years when american economy has recovered and canadian dollar is weak, or worst case scenario have a place in whistler.

#16 Contrarian on 12.06.13 at 10:23 pm

I was going to buy a House in Vancouver in 2003. Everyone was going crazy about Real estate 10 years ago.

So glad I did the opposite. Wait a minute..

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#18 Nemesis on 12.06.13 at 10:29 pm

“This is called government. Watch it closely…” – HonGT

Indubitably. They’re watching you, SaltyDogz.

24/7/365…

Hint: Close your ‘ToiletLids’.

[NoteToGT: Nem's 'HallPass' will only last so long... It's all about TheJokes.]

#19 X on 12.06.13 at 10:29 pm

If CMHC was set up in 1946 to address a post-war housing shortage, and now we are experiencing home ownership levels never seen before….does it not beg the question why hasn’t F made any changes in CMHC insurance qualifications to date….

I mean if CMHC has doubled the debt level that it insures since 2006, and more of the population than ever owns a home, why no changes?

I guess I could ask the same question regarding enticing manufacturing, exporting or anything that is non RE based growth for the economy.

#20 Chopper on 12.06.13 at 10:36 pm

Good article Garth, FEAR is the reason people do what they shouldn’t do. And that will never change, they cartels know this they study their prey and the capitalize on it. Like you said knowledge is just a click away but some are too lazy to learn so they pay the price and become slaves to their lenders. It’s all about keeping people in the dark, pull a bag over their face and empty their pockets. Long live the fools without them we will not be rich.

#21 SilverMeridian on 12.06.13 at 10:39 pm

SilverMeridian Greater Ottawa surReal Estate Update

http://www2.ottawarealestate.org/home/NewsInformation/LatestNewsRelease.aspx

With all this huff and puff around sales and prices ballooning in Vancouver, Toronto and Calgary, latest stats reported from the front lines of the Ottawa RE market look a bit disappointing.  All OREB can brag about right now is that “November resale market on par with last year’s results”.  Of course, when it comes to making comparisons with last year, Tim Lee doesn’t want to mention the fact that active inventory grew up by more than 200 properties and is nearly doubled in comparison with November 2009. To put things a bit more in prospective, even though this November’s sales are only 5% less, last year was in turn already 9 % less than 2011 numbers, so no red hot market here. In fact, most of the houses in my heck of woods are slowly simmering on the back-burner without much interest and either quietly loose “For sale” sign or end up exchanging it for “For Rent” sign. Looks like some of the home owners in Ottawa finally woke up to the fact that they need to cash in while they can, but the moment is gone and now they are trying to chase after the two year old prices. I don’t see any significant price reductions so far, but this is mostly because everybody is waiting for the spring. I am also is waiting for the spring market, which is going to suck big time, and we might be seeing around 10,000 properties hitting the fan at the same time, but not much interest to buy because local market is already saturated. With most of the unsold properties being vacated already, next summer Ottawa is going to look like ghost town…

#22 Rural Rick on 12.06.13 at 10:40 pm

#6 Smoking man
Whiskey is by far the most popular of all remedies that won’t cure a cold.

#23 not 1st on 12.06.13 at 10:41 pm

Umm, isn’t everyone and their dog getting into the stock market now? Money piling into bogus tech startups? Doesn’t sound very contrarian.

#24 Nemesis on 12.06.13 at 10:47 pm

“Once they choose you… they control you.”

“We are EveryWhere.”

http://youtu.be/KfK8hjDxfLI

[NoteToSmokingMan: You can still drink what you like, how much you like & when you like, though. So... NotAllBad. And you can Blog, too.]

#25 SickOfBc on 12.06.13 at 10:47 pm

http://business.financialpost.com/2013/12/06/flaherty-cmhc-mortgages/

The value of home loans insured by Canada Mortgage & Housing Corp., which is backed by the federal government, has almost doubled since the end of 2006, saddling taxpayers with a growing liability as policy makers warn that gains in house prices may be unsustainable.
Flaherty regrets massive growth of CMHC ,
Average working family can’t afford shelter anymore , what a joke !

#26 my beard can beat up your beard on 12.06.13 at 10:52 pm

Quote:”In other words, why aren’t 80% of borrowers saving themselves thousands of dollars a year by riding with a variable rate that’s a full 1% less than the five-year toll, when they have built-in protection from spiking rates? Do they enjoy paying too much? Do they covet TNL@TB?”

lol!! cuz you’ve been telling everyone to lock into 5 or 10 year fixed mortgages for the past year

Ten-years were a deal in March, when I recommended grabbing one. Since that moment passed, VRM is the sane choice. — Garth

#27 NuisanceBear on 12.06.13 at 10:54 pm

First :)

#28 Country Girl on 12.06.13 at 10:57 pm

House sales dip in Waterloo Region in November:

http://tinyurl.com/lcg5jqh

#29 Godth on 12.06.13 at 10:58 pm

So now you’re telling us to buy gold and that you’re an anarchist? What’s next…http://www.youtube.com/watch?v=FosfvOdXrrw&list=HL1386384386

or maybe…http://www.youtube.com/watch?v=E4lfu5bu0r8&list=HL1386385003

#30 Carpicker on 12.06.13 at 11:05 pm

In case you haven’t noticed bitcoin and litecoin is crashing hard. $1200 down to $700. Time to go fiat or gold :)

#31 As Is Old Man on 12.06.13 at 11:05 pm

“Housing bubble 2.0 can only end badly”

http://tinyurl.com/l52ndrp

#32 T.O. Bubble Boy on 12.06.13 at 11:08 pm

@ #23 not 1st on 12.06.13 at 10:41 pm
Umm, isn’t everyone and their dog getting into the stock market now? Money piling into bogus tech startups? Doesn’t sound very contrarian.
————————————

As Garth noted yesterday: 15% own stocks, 70%+ own houses!

Also – which “bogus” tech startups are you referring to? Facebook? LinkedIn? Twitter? others?

Yes, there are several dotcom-style companies now with fast-growing revenues and zero profits, but only a fraction of what you saw in the 90′s.

#33 takla on 12.06.13 at 11:17 pm

Im sure those people will be lining up soon again garth for the au as its @production costs now.Its crashed and nobody wants it…….perfect time to get in on the ground floor for the resumption of the bull.Also in my 25 yrs of home ownership I rarely took more than a 1 yr closed,mind you my first mortgage was @ 16 % percent figured it had to go down sooner than later..

#34 T.O. Bubble Boy on 12.06.13 at 11:20 pm

Also, some above-average gainers (2.5%+) on the markets today included:

- BGG (Briggs and Stratton), who make gas engines
- HollyFrontier and Marathon Petroleum (refiners)
- China Petroleum and Petro China (two of the largest oil companies on earth)
- ICICI Bank (one of the largest banks in India)
- Dundee REIT (one of the larger REITs in Canada, mentioned on this blog many times)
- Legg Mason (asset management)
- Omega Protein (food/chemicals)

anyway – you get my point.

#35 Seeing it from both sides on 12.06.13 at 11:22 pm

Quote:”In other words, why aren’t 80% of borrowers saving themselves thousands of dollars a year by riding with a variable rate that’s a full 1% less than the five-year toll, when they have built-in protection from spiking rates? Do they enjoy paying too much? Do they covet TNL@TB?”

lol!! cuz you’ve been telling everyone to lock into 5 or 10 year fixed mortgages for the past year

Ten-years were a deal in March, when I recommended grabbing one. Since that moment passed, VRM is the sane choice. — Garth

From March 3, 2013 blog entry:

A harder decision is whether people with existing or new mortgages should opt for a radical borrowing – ten years at 3.69%. That means paying a premium of seven-tenths of a point for a long five years, gambling that for the next five you’ll score.

Worth doing? Yes.

Today’s blog entry:

And most people are locking in their mortgages. Eighty per cent, in fact. Not smart.

———————————–

So those that took your recommendation in March were ‘not smart’, in hindsight, now that that moment has passed, but they are still stuck in that 10 year ‘deal’…??

Exactly what I said. A decade at 3.69% was a deal. Not only will renewal rates in five years be significantly higher, but the mortgage becomes fully open. What don’t you understand about that? — Garth

#36 jan on 12.06.13 at 11:22 pm

One of life’s simpler rules is to closely watch what others do, and do the opposite.

Except for real estate….hahahaha

Especially RE. — Garth

#37 Shawn on 12.06.13 at 11:23 pm

Variable Rate versus Long Term

Excellent explanation of why people are almost forced to go to the five-year. I have not seen, for example, the Globe and Mail mention that the qualifying rate is on Bank of Canada web site and is so high compared to available 5 year mortgages.

Possibly not a bad thing for the CMHC insured gain.

It might REALLY help Canadians if there was a way to that Canadians could access really juicy 25 year locked in rate mortgages the way they can in the U.S.

That one brief shining moment where the 10-year rate in Canada was suddenly being offered at attractive rates was like an oasis in a desert. Or was it a mirage? Gone now.

#38 Yuus bin Haad on 12.06.13 at 11:31 pm

#22

Sure it does – when the bed flies by after consuming a fifth, hop in and let nature do the rest.

#39 SickOfBc on 12.06.13 at 11:37 pm

https://www.youtube.com/watch?v

The Real Canadian Youth . cmhc

#40 bah on 12.06.13 at 11:53 pm

… a deflowering virgin?

#41 Fredd on 12.06.13 at 11:53 pm

Most people sold their mutual funds in 2009? Doubtful.

#42 economictsunami on 12.07.13 at 12:07 am

Headline GDP in both Canada & America (Q3 GDP 2.7/ 3.6% respectively) and job rates (6.9/ 7%) appear promising at first glance but upon deeper examination tell the tale of what is quickly becoming a combination of both annual stock piling and rather large inventory builds.

Every country wishes to devalue their currency and become an exporter; while also hoping business investment will take the place of credit exhausted/ impaired consumers.

The realistic chances of this occurring is yet to be seen.

Canada’s job growth almost doubles expectations, but don’t get too excited:

http://business.financialpost.com/2013/12/06/canadas-job-growth-almost-doubles-expectations/

Has job market really improved? Yes, but not much:

http://blogs.marketwatch.com/capitolreport/2013/12/06/has-job-market-really-improved-yes-but-not-much/?mod=sfmw

With over capacity still present in many sectors and persistent labour slack, wage growth needed to generate sustainable inflation, remains slim to none…

#43 Jonny on 12.07.13 at 12:52 am

Is that correct ijust got preapproved on single income for 650k fixed rate and 550k variable. I threw the sig other out because i wanted to know what i could get if we split lost job etc. anyway the fixed was at 3.59 and variable at 2.6. Can you typically qualify more at a fixed rate?

#44 Rickson9 on 12.07.13 at 12:56 am

I just wanted to drop by to tell you that I am an idiot. I pretend that I am a pro when it comes to investments but guess what, I bought myself a $3M house and now I am waiting for it to be built. I have 0$ in my portfolio

http://tinyurl.com/kvkntm3

Now I am pumping up RE over here:

http://tinyurl.com/kdhxewk

I hope that one day Garth will write an article about me and my idiocy.

#45 Devore on 12.07.13 at 1:19 am

#15 Doctor Fierce

Plan: sell to an american in 5 years when american economy has recovered and canadian dollar is weak, or worst case scenario have a place in whistler.

And how much in interest, maintenance and insurance will this plan cost you?

#46 Devore on 12.07.13 at 1:22 am

#30 Carpicker

In case you haven’t noticed bitcoin and litecoin is crashing hard. $1200 down to $700. Time to go fiat or gold :)

Wonder how that lady in Calgary is feeling about selling her house for bitcoins. Sure sucks for anyone holding any of the stuff overnight.

#47 Yaroslav on 12.07.13 at 2:26 am

I just don’t get it Garth…

You say that you are a contrarian, and you preach liquidity, and going against what the herd is doing. Zigging when they zag, zagging when they zig, and having true freedom (not just things).

Having assets that pay you to own them, and the ability to sell those assets at the drop of a hat, when they are falling in value… Renting so that you have mobility and can take advantage of investment opportunities, as well as job prospects… Enjoying the freedom that comes with being young and unattached, and being able to travel, and see the world, while investing for a future that doesn’t involve living on Kraft dinner.

So, in all seriousness, why would a contrarian like you ever own a dog? A cat I can easily understand… A dog I just don’t get.

Cats can’t be herded. Ever heard of anyone herding cats? The saying tells you that it ain’t easy…

Dogs on the other hand can’t function without a pack (a herd). You become part of their pack when you own a dog. Part of that mentality.

Cats are independent (much like contrarians). They don’t need you to lead them around on a leash. They don’t require you to take them for walks. They are not herd animals, and don’t need a pack to belong to, or an alpha male or alpha female to put them in line…

You can leave a cat for a weekend with a supply of water and food, and it will be just fine when you get back. That means you can go out of the city on a ski trip, or a wild weekend at your favourite five star resort. You can go to the no-tell motel for 3 days of wild sex and the cat won’t miss you.

Try doing that with a dog. Leave your dog with just food and water. When you come back, there will be feces all over your home, vomit from the dog having tried to eat all its food at once, and likely a bunch of chewed up furniture and carpet from the dog losing its sh*t at you not being there.

Cats on the other hand will function perfectly fine without you. They may give you the cold shoulder when you come back, but otherwise, they’ll be just like before.

Why on earth would a free, young person (or old person for that matter) trade their freedom for the pleasure of following around a dog with a plastic baggie and picking up its warm feces on demand?

Why would a contrarian give up being able to go to friends’ homes for parties, get-togethers, etc. without having to worry about getting a dog sitter (and paying for someone else to take care of Fido?)

Why would a contrarian give up the freedom of not having to worry about taking the dog to friends’ homes (because it may make a mess on the rug, or it may bark incessantly when you try to leave it outside or in the basement).

Humans that own dogs are not masters. They are servants or slaves. The dog’s needs always come ahead of your needs. It can be minus 25 outside. Like it or not, you are still bound (like a puppy mill slave) to take the dog outside so that it can do its business. So that it can get its exercise. Your dislike of the cold doesn’t matter. The dog’s needs come first. Whether it is 5am or 11pm… Even if you wouldn’t be going outside otherwise, you will go outside when you own a dog. Cats just need a litter box, and they are good.

Then there’s the whole “having the mobility and freedom to live where you want to” thing. Dogs are not welcome in many rental properties, as well as in lots of condominiums. Landlords and condo boards don’t want to have anything to do with them. Dogs make noise. They bark for no reason at 3am. They whine and cry pathetically when you leave them alone. They ruin furniture in ways that cats just can’t. In short, they are a nuisance.

Cat don’t bark, and there are fewer issues with having a cat in a rental property. They don’t defecate all over the yard or lawn, they don’t dig holes under the neighbour’s fence, and they don’t cause injuries to humans that are anywhere near those caused by dogs. You can have a cat in a condo, and your neighbours will be none the wiser. Try doing that with a dog.

Dogs limit where you can rent, where you can own, and where you can live in general. They are the anti-thesis of freedom and liquidity.

Then there’s the whole “having the freedom to travel anywhere” thing. With a cat, you can just get a friend to come over every few days and feed it, and change its litter box every so often. Getting plane tickets, and going off for a vacation is no big deal. You can pay the neighbour’s child $35 to take care of the cat for a couple of weeks.

With a dog, you need someone who is willing to take the dog for walks, and pick up its feces. That usually means an adult who can handle the dog. You can’t just get the neighbour’s child to come and feed the dog without exercising it, and without taking it outdoors so that it can do its business. So now you are paying a dog walker real money (at least $35 a day) to take care of your needy bitch for you. Or you are not travelling…

How many people do you know that are world travelers and have a dog? A dog is a ball and chain. It’s a lot more work, and a lot more responsibility than a cat. And for what? What true contrarian would put up with that?

The dog owners will cry out, “Oh but a dog is much more loyal than a cat”. A true contrarian doesn’t want a creature that is loyal, or that requires you to be loyal to it. To a real contrarian, that’s a weakness. It’s a sign of a weak mind that requires a routine, or that needs to impose its routine on others.

A true contrarian isn’t all about routine, or obedience training. A true contrarian makes his or her own rules, and doesn’t have rules imposed on him or her. A dog requires a strict routine. Your life as a dog owner is based around that routine. When you come home from work, when you go out, when you come back… It’s all about the dog.

Being a contrarian on the other hand is all about having the freedom to not do what the pack is doing. Have you ever noticed Garth, that “dog people” tend to gravitate towards other “dog people”? That’s because no one else wants to put up with their “routines”. If you don’t have a dog, you don’t have sympathy for the dog owner that wants to leave your house party right when things are heating up because Fido needs to be walked. You don’t have sympathy for the “dog people” who can’t seem to have a conversation at work or anywhere else without talking about their mutts. You don’t have sympathy for the dog owners who treat their dogs as if they were their children and dress them up in doggy clothes. You don’t have sympathy for the friends that can’t come to Las Vegas because their dog doesn’t have a canine passport and would have to be put in quarantine…

A dog is owner is the obedient “tax farm slave” type that Smoking Man often refers to. The dog owner will do whatever it takes to care of the dog. Whether there is enough food for the owner to eat or not, the dog is always going to have kibble in its bowl…

The dog owners will protest, “Oh, but dogs are way smarter than cats”. That just isn’t true. If you put food up high on a counter, a dog will jump up and down in front of the counter, and will keep on jumping repeatedly, for a half hour or more, if the food is out of reach. It doesn’t have the sense to come up with a plan to get the food.

A cat knows how to get to the food. It has figured out ahead of time how to get to the food. It will wait until the opportunity arises (when you are not looking). Then in as few movements as possible, it will stealthily advance and steal the food. No pathetic jumping. No barking. No wasted opportunities. A cat embodies the essence of being a contrarian, who can seize opportunities as they arise. A cat is liquid in its own right baby.

Garth, just to wrap this up, the next time you post another dog photo, just think about whether your choice of pet has made you more or less free, more or less independent. Whether having a dog has cost you more or less than another pet would have… Whether having a dog has restricted any opportunities in terms of your travel, your lifestyle, and your choice of residence.

Just consider whether having a dog has made you into an obedient servant, rather than a free thinking contrarian… And whether you are encouraging others to follow in your footsteps.

Do those of us who have seen the light (and know that dogs are not part of the contrarian lifestyle) a huge favour. Start posting photos of cats! The blog dawgs got nothing on the contrarian cats.

Yaroslav = Ur a slave (if ya have a mutt).

#48 JimH on 12.07.13 at 3:10 am

#41 Fredd
A smidgen of research will educate you enormously, Fredd.

According to Morningstar, $121billion fled mutual funds in 2008… A record. This was almost 50% more that the exodus from stocks. 7 straight years of heavy outflows from mutual funds followed, even as markets goose-stepped higher.

There is still a tremendous amount of cash sitting on the sidelines, or that has been funneled away from the markets into other investments, like precious metals and real estate.

The smart money re-entered the equity markets in the spring of 2009, even as the “greater fools” were selling off. Nothing new about that!

#49 politicalblather on 12.07.13 at 3:18 am

OK…..lets not forget that 41% of the news jobs created were in the civil service….pure spin. The BOC is booting the dollar is in line with the election cycle….to keep the unions happy…..they think a low dollar spurs union jobs….even though that’s idiotic. In reality the gov can’t raise rates because they can’t afford to pay back what they’ve borrowed…no government can.

The consequences of this are scary…because people usually vote for the opposite of whats good for them. When the crap hits the fan we will see some wild political swings and likely end up living in teepees and eating squirrel.

Mr Harper and I will be on a nice warm island while the rest of youse sort it all out.

#50 Tony on 12.07.13 at 3:49 am

Re: #15 Doctor Fierce on 12.06.13 at 10:23 pm

The worst case scenario has already come true. The Toronto condo market is imploding. This will spread right across Canada and all condos in the major cities will tank in price. You may never see the price you paid for that condo in your lifetime again meaning a major loss.

#51 Tony on 12.07.13 at 4:09 am

Re: #30 Carpicker on 12.06.13 at 11:05 pm

Things generally do crash when they make the news as can be seen with the bitcoin. The idea is usually to buy when no one knows about it and sell when everyone knows about it. When it makes the news everyone knows about it.

#52 Onthesidelines on 12.07.13 at 6:22 am

I think the better rule for contrarians is the old saying “if you look around the room and you don’t know who the sucker is, you are the sucker.”

Basically, there are no rules. Going with the herd sometimes pays, sometimes going against the herd pays, too.

Those who were buying gold and realestate along with the rest of the herd on the way up and then sold at close to peak did well. Also, those who hung on after the crash, suvived to see valuations come back except, of course, that’s not always the case as the Nikkei has shown.

Bottom line right now and for some time is that governments want to inflate asset prices to raise GDP and create a wealth effect to get consumers spending again. To do that they are trying to force investors into either realestate or the stock market by making less risky investments such as government bonds and GICs unattractive by keeping rates low on such products. The really contrarian thing to do in this situation would be not to be seduced by the higher yields of dividend yielding securities nor the false promise of continued capital gains in realestate. Bite the bullet and wait it out until either the real economy worldwide does show real improvement or the whole thing crashes again. It’s a painful position but, in the final analysis, probably the safest one.

#53 Deb on 12.07.13 at 6:32 am

If most people think with their duodenums, what happens to the brain? Does this mean that the brain is fixed and the duodenum is variable?

#54 economictsunami on 12.07.13 at 6:55 am

F basically admits to over-reacting and possibly acting more then just a little kwazy.

Flaherty regrets massive growth of CMHC, vows mortgage action if needed:

http://business.financialpost.com/2013/12/06/flaherty-cmhc-mortgages/

Just because you can, doesn’t mean you should…

#55 jerry on 12.07.13 at 7:36 am

So when fixed rate mortgages go up in March do Bond prices go down? (Higher Yields/low prices?)

Why March??

#56 Ben Dover on 12.07.13 at 9:19 am

CMHC for the People by the People

Why does CMHC not insure the purchaser from the bank with the 20% deposit assurance ,which is from the people through taxation?

Why are the banks guaranteed the whole mortgage amount and not just the amount difference for the required 20% the banks demand to qualify for a mortgage?

Why aren’t the profit margins of banks, which borrow from our tax base, to lend us money, not set by our vertically challenged Master of Disaster?

Why aren’t all businesses given the same assurances from our government that the big banks only get for their businesses? Our government should not be picking and choosing winners and losers by tipping the table in favor of any corporation!

When originally started to help first time home buyers purchase a home, because banks were smart enough not to lend if you didn’t have 20% down, has gotten to one million dollar guarentees. CMHC is a dinosaur, and will be sold just like the Americans will relieve themselves of Fannie and Freddie, once our house prices return to earth.

The herd instinct among forecasters makes sheep look like independent thinkers………………

#57 Habbit on 12.07.13 at 9:31 am

Another great post Garth. We need to understand the best decision today may not be the best one tomorrow. C’est la vie. Merci encore.

#58 Random Vancouver Person on 12.07.13 at 9:42 am

According to Environment Canada, as I type this at 5:38am Pacific Standard Time, the temperature at the Vancouver International Airport is minus 9 degrees celsius!!! That’s without the windchill! With the windchill, it feels like minus 15 at the Vancouver airport! We don’t usually get those temperatures in Vancouver! And that’s at the airport–one of the mildest spots because it is right next to the water. If you go to the inland suburbs like Coquitlam, Surrey, Abbotsford, you can bet it’s even a few degrees colder!

I love weather like this! It makes me feel like a real Canadian! I can’t wait for the sun to come up so I can go for a walk!

#59 Tony on 12.07.13 at 10:25 am

Re: #55 jerry on 12.07.13 at 7:36 am

Why March?
More of America’s lies about the end of tapering. As America implodes Fed bond purchases will be increased next year. Look for a big rally in long term bonds after the bogus year end and the very start of January rally in stocks. America’s master plan is to keep on buying all the bonds while lying about everything from GDP to the unemployment rate. Then lower the boom on everyone by telling them the truth (finally) thereby selling the bonds at a big capital gain as it’s revealed America is in an endless depression.

#60 Daisy Mae on 12.07.13 at 10:39 am

“The intent of this change (made by that crafty little F, Rob Ford’s former best friend) was to throw a new obstacle in the way of first-time buyers, to ensure they could withstand inevitable rate increases. But it didn’t work.”

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

Is it at all possible for the Conservative government — specifically little F — to FORSEE what the outcome would have been? Isn’t this what we pay them for — to make the necessary decisions benefiting our country as a whole?

“This is government, watch it closely, do the opposite.”

Amazing….

#61 eddy on 12.07.13 at 10:56 am

@#47 Yaroslav

I’ve been in more that a few houses, even vacant ones, that STUNK bigtime of litterbox. odors are a killer to get rid of, anyone who lets animals shit in the house deserves the shitty offers they get when they sell.

most dogs don’t even need obedience training, they instinctively have good behavior- ‘let me out’
man they even clean up their own puke off your floor

#62 Penny Henny on 12.07.13 at 11:08 am

Car sales hit record numbers for November, record numbers for the last 6 months. It’s not just houses that are moving like hotcakes.

#63 Silver on 12.07.13 at 11:09 am

Bye the way… housing is sooo past…

Don’t you know … it smarter to mine Lightcoin( or what ever its called). or any of the 60 plus new secure digital money ponsi’s….

As I was told, Bit coin is to expensive and bought out.

University crowd electronic miner….

yes… flipping electronic paper gold in now called mining by the hip in crowd.

Equal to real work …. apparently.

Mining…… actual resource….

Thousands of Dollars spent on “secure” “apple” digital mining equipment…

Yep… a new resource industry is born…

End well… with these kids out there working in “mining”…. Never.

Silver

#64 Penny Henny on 12.07.13 at 11:17 am

Spring is around the corner and Garth says long term mortgage rates going up in March= The perfect storm for sellers!!!!! Yaaaaaa!!

#65 johnny d on 12.07.13 at 11:20 am

@#47 Yaroslav on 12.07.13 at 2:26 am

Garth doesn’t have a cat because apparently cat people go on 28 paragraph rants like you just did there.

#66 What about CMHC? on 12.07.13 at 11:20 am

What happened to CMHC limit of 600B ? Hasn’t been reached? Is it increased?

#67 Ralph Cramdown on 12.07.13 at 11:32 am

#52 Onthesidelines — “Bottom line right now and for some time is that governments want to inflate asset prices to raise GDP and create a wealth effect to get consumers spending again. To do that they are trying to force investors into either realestate or the stock market by making less risky investments such as government bonds and GICs unattractive by keeping rates low on such products. The really contrarian thing to do in this situation would be not to be seduced by the higher yields of dividend yielding securities nor the false promise of continued capital gains in realestate. Bite the bullet and wait it out until either the real economy worldwide does show real improvement or the whole thing crashes again. It’s a painful position but, in the final analysis, probably the safest one.”

Can’t agree with that analysis. Here in Canada, Flibbertigibbet has tightened the screws on the housing market and is shrinking government deficits, both of which are anti inflationary. In the US, sequestration and the expiration of some temporary middle-class tax cuts have been contractionary. State and local government have at long last stopped laying people off, for the most part. The UK government has recently introduced “Help to Buy” but other than that policy hasn’t been stimulative. Continental Europe muddles along, with policies ranging from not stimulative to contractionary. China tries to rein in a massive credit bubble.

Some central banks, on the other hand, are pursuing stimulative policies. But with fiscal and monetary policy in conflict in many places, we can’t say that overall policy is unabashedly stimulative.

Regardless, I see no reason not to invest now. There are usually deals to be had somewhere even if you feel the broad markets, or a country’s markets are overpriced. I see deals.

If you’ve enough for life already and are very risk averse, I suppose cash is a reasonable place to be. Everybody sells down to their own ‘sleeping point.’

#68 CrackHead Conservatives on 12.07.13 at 11:44 am

Garth is must killing you that these stupid rich kids that are running the country just because of who they are?

” The intent of this change (made by that crafty little F, Rob Ford’s former best friend) was to throw a new obstacle in the way of first-time buyers, to ensure they could withstand inevitable rate increases. But it didn’t work. They all locked into five-year mortgages to avoid the benchmark rate, which means they pay more than they have to, can’t save, and become more financially vulnerable – which is why they only had 5% down in the first place.”

Talk about a stupid kid now a stupid grown man clueless to reality. These CRACK head conservatives really have no idea what they are doing. They listen to SMARTER/manipulating people who are lobbyists that tell these idiot silver spoon crack heads what they should believe/think and the crack heads eat it up. Crackservatives are a DANGER to Canada and Canadians, These CRACK smoking idiots are well CRACKSERVATIVES and they need to go.

#69 CrackHead Conservatives on 12.07.13 at 11:53 am

You stupid silver spoon MORON. These rich kids wouldn’t qualify for a job managing tim hortons and yet these silver spoon CRACk head conservatives better known as Crackservatives are running Canada to the ground. It’s not like someone didn’t see this happening in 2006? The real deal conservative of the PEOPLE is Garth who saw all of this coming long time ago and wanted to help protect the PEOPLE. CRACK head or Crackservatives only conserve big business and special interest groups and could careless for THE PEOPLE of Canada . F you are a silver spoon moron.

http://business.financialpost.com/2013/12/06/flaherty-cmhc-mortgages/

#70 John on 12.07.13 at 12:06 pm

Cats suck too…

#71 Drill Baby Drill on 12.07.13 at 12:36 pm

#47 Yaroslav
Please note ! Nobody reads comments that long and drawn out. What a waste of time.

#72 Ret on 12.07.13 at 12:41 pm

“Benchmark Rates” are a nice story.

I look forward to Part II, “Liars, Damned Liars, Banksters and Benchmark Rates.”

No, you don’t qualify for that low variable rate, but we can get you into a fixed 5 year. Let’s go over your income statement again and see what we can do!

Oversight, compliance, audits of income statements? Not a chance.

#73 The American on 12.07.13 at 12:44 pm

At #59: Tony, you couldn’t be more crazy or dumb if you took stupid pills. You’re mere entertainment.

#74 Mister Obvious on 12.07.13 at 1:10 pm

#16 Contrarian

“I was going to buy a House in Vancouver in 2003. Everyone was going crazy about Real estate 10 years ago. So glad I did the opposite. Wait a minute..”
————————–

Surely you’re not trying to say that simply NOT buying a house is the opposite of buying one?

The opposite of buying a house is to find another opportunity for the same money. Since 2003 you could have done quite well renting while you invested in a diversified, balanced portfolio. That’s even with the financial crises of 2008 factored in.

Congratulations for not following the herd!

#75 World Traveller on 12.07.13 at 1:13 pm

#6 Smoking man on 12.06.13 at 10:00 pm
I have a fever of like 110.left the tax farm early. Wife the love of my life wants to chuck soom loot away.

How could I say no.

Combo of fever, 10 wines alone at club 101.

Have no idea of what gartho wrote, try again in morning

*****

I have no idea what YOU wrote!

#76 Rexx Rock on 12.07.13 at 1:22 pm

Last month while in Puerto Vallarta I met a young woman on the beach who left Victoria last year because of working two part time jobs with low wages.She left for Alberta where now she makes more money then her parents.What she told me totally shocked me,she told me that one of her jobs was at a coffe shop and her boss said she was hired because of her experience.Over 100 people applied for this 1 part time job.Percenatage wise it is 1% chance,20,000 for 400 jobs in Spain 1.7% or 23,000 for 600 jobs at 3 %in the states for walmart.I also heard that 1000,s apply for a few driving positions for driving a city bus.No wonder I never get hired when I apply 2 a year.Victoria’s job market is so bad even long time residents are leaving the city each year.

#77 CalgaryRocks on 12.07.13 at 1:25 pm

#61 eddy on 12.07.13 at 10:56 am
@#47 Yaroslav

I’ve been in more that a few houses, even vacant ones, that STUNK bigtime of litterbox. odors are a killer to get rid of, anyone who lets animals shit in the house deserves the shitty offers they get when they sell.

most dogs don’t even need obedience training, they instinctively have good behavior- ‘let me out’
man they even clean up their own puke off your floor

I don’t like my pets to take dumps in the house like Yaroslav so for my previous dog I put in a doggy door when she finally got too old to hold it in more than a few hours.

She would just go out in the yard, do her business and come back. It was great.

I know someone that has her mini shih-tzu trained in the litter box.

I could probably teach the same to my Shih-Tzu if I had to but having a dog gives me a great excuse when I have to leave Yaroslav’s boring parties. ;)

As it is she used to ring a bell when she had to go out, as a puppy, but now she just holds it in until I take her out. Unless she’s desperate in which case she sits next to the door and paws it.

You can meet lots of hot women just walking your dog. Mine’s a great wingdog. Always friendly and eager to meet new people, a perfect conversation starter.

#78 Andrew Woburn on 12.07.13 at 1:44 pm

“So why haven’t we had the inflation that some predicted in the wake of quantitative easing? The reason is that central banks are not the only, nor indeed the main, money creators. Money is usually created by the private banking system and that has been trying to shrink. If the money supply is a bath, then the central banks may have turned on the taps but the commercial banks have pulled out the plug.”

The Economist

http://www.economist.com/blogs/buttonwood/2013/11/economics-and-markets

Behind the scenes, the world’s big banks are coping with the changes forced on them by the Basel III rules introduced to head off another financial crisis. The major changes are an increase in their capital base and an increase in liquidity to meet emergency situations. This constrains their appetite for lending money and so reduces the money supply. The impact on banks is massive and is being phased in until 2019 to minimize economic disruption.

This is not to say that inflation or default will never happen. Nobody knows how the Fed is going to unwind QE and as the author of the article concludes:

“To go back to my oft-stated dilemma, if you can’t grow your way out of a debt crisis, you must inflate the debt away or default. Well, the euro zone is not growing very fast and it is not inflating; that leaves default as the most likely option.”

In applying that logic to the US, you would have to conclude that the US is hardly likely to default.

#79 Nemesis on 12.07.13 at 2:03 pm

Alas… I knew it was only a matter of time.

TooBad, KittyGalore. We were ready then… we’re even better prepared now.

http://www.youtube.com/watch?v=uvPjPzmUC7w&feature=share&list=PL7A0CDCBE9168C469&index=1

[SaltyDogz: I have been authorized to tell you that we're always looking for A Few Good Mutts. "It's not just a walk... it's an adventure."]

#80 Ripped on 12.07.13 at 2:24 pm

#62 Penny Henny on 12.07.13 at 11:08 am
Car sales hit record numbers for November, record numbers for the last 6 months. It’s not just houses that are moving like hotcakes.
……………………………………………………………………..

We have radio commercials every morning on how you can take equity wealth out of your house to buy cars, go on trips, etc…

#81 bill on 12.07.13 at 2:29 pm

#47 Yaroslav on 12.07.13 at 2:26 am
….and you never see a police cat ,eh?

#82 Shawn on 12.07.13 at 2:44 pm

WHAT U.S. HOUSE PRICE BUBBLE?

A thought pattern has recently entered my head…

From their peak in July 2006 U.S. house prices crashed an average of 35% according to the Case Shiller 20 City average. And despite a substantial recovery they are still down 20% on average from the peak.

Phoenix crashed 56% and is still down 36%. Las Vegas crashed 62% and is still down 46%.

Clearly there was a housing price CRASH.

Also starting in 2007, the S&P 500 crashed 57% in the 17 months from October 9, 2007 (at 1565) to March 9, 2009 (at 677).

So Stocks Crashed 57%. Stocks CRASHED a lot further than the 20 city house price average. Stocks (the S&P 500) are now 15% above the old 2007 peak.

Very few people ever blamed the stock crash on a stock bubble, it was instead blamed on the financial crisis. Stock PE’s were about 17 at the end of 2006, hardly bubble territory.

Interestingly almost everyone calls the U.S. house prices of 2006 / 2007 a bubble.

But was there really a house price bubble? Could it be that the U.S. house price crash was caused not by a bubble but by a financial crisis that it had its roots in poor lending practices and that was not caused by high house prices?

If so we can probably expect U. S. house prices to keep rising as long as interest rates remain low. Could we then regain the 2006 / 2007 prices before too many years?

If there was no U.S. house price bubble, or even if the crash was massively overdone, what are the implications, if any, for Canadian house prices?

#83 brainsail on 12.07.13 at 3:03 pm

“Boost for trade as global deal struck”

“The first major global trade deal in nearly 20 years was struck Saturday as 160 countries agreed on measures that could boost the world economy by as much as $1 trillion.”

http://money.cnn.com/2013/12/07/news/economy/trade-deal-bali/index.html?hpt=hp_t2

#84 Porsche on 12.07.13 at 3:14 pm

From Bitcoin to Sh*tcoin

#85 Godth on 12.07.13 at 3:15 pm

The future looks so bright…4eva more, and more, and more…http://www.zerohedge.com/news/2013-12-06/shanghais-record-pollution-creeping-inside-buildings

Ah, life without consequences…luvU. GDP is up, up, up.

#86 From Mississauga with Love on 12.07.13 at 3:19 pm

How much should the spread be between fixed and variable for it to be worth it to go fixed, Garth? Are you still now of the opinion, after the latest announcement on delays to increasing the variable, that if one gets the fixed at 3% vs. a variable at 2.5%, we should go fixed? Or has the new information about the delays changed your mind?

#87 Mike on 12.07.13 at 3:22 pm

Garth,
Don’t look at price of gold – look at the reserves and read:
http://en.wikipedia.org/wiki/Gresham's_law
and search
comex registered gold on GOOGLE
See interactive chart.

Regards,
Mike

PS Also search Google for: pathetic blog

#88 Nemesis on 12.07.13 at 3:56 pm

Well, it’s hardly authentic WeekEndZen…

But for SaltyDogz who’d prefer to stay close to the HomeFires with a FewGoodReads vs. Walkies… these may suffice:

FirstUp: A HighlyControversialProposal…

“Size matters.”

[WSJ] – Why Canada and the U.S. Should Merge, Eh?

http://online.wsj.com/news/articles/SB10001424052702303997604579238301861025662

NextUp: Conversely, the following InvestigativePiece nicely PutsPaid to the quaint notion that as a unit of analysis, “States” do actually matter anymore [other than as convenient proxies for other, larger, more powerful (if amorphous) entities]:

[CounterPunch] – Government by Big Business Goes Supranational: The Corporate Invasion

http://www.counterpunch.org/2013/12/06/the-corporate-invasion/

PenultimateFoodForThought: Tomorrow in history… 72YearsPrior [Hint: things are done a little differently these days, but it's still always about the RE]:

…”The Japanese attack began shortly after 08:00am on 8 December 1941 (Hong Kong local time), less than eight hours after the Attack on Pearl Harbor (because of the day shift that occurs on the international date line between Hawaii and Asia, the Pearl Harbor event is recorded to have occurred on 7 December). British, Canadian and Indian forces, commanded by Major-General Christopher Maltby supported by the Hong Kong Volunteer Defence Corps resisted the Japanese invasion by the Japanese 21st, 23rd and the 38th Regiment, commanded by Lieutenant General Takashi Sakai, but were outnumbered nearly four to one (Japanese, 52,000; Allied, 14,000).”…

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

And now for some RealZen, SaltyDogz – a newly published and utterly bizarre catalogue of FashionTips and CosmeticWizardry… from the same people who brought you TheStasi. FieldCraft never LookedSoGood!

[MotherJones] – Spy Camp: Photos From East Germany’s Secret Intelligence Files: A new book documents the absurd and terrifying history of the Stasi.

http://www.motherjones.com/media/2013/12/photos-east-germany-stasi-simon-menner-surveillance

[NoteToGT: I would have run the WSJ piece as, "The Love that dare not speak its name..."]

#89 Whistler bubble boy on 12.07.13 at 4:20 pm

#15 Doctor fierce

Up in Whistler the average taxes, strata, snow removal,Tourism whistler fees (yearly fee to promote Whistler ) and property rental management fees will make you go soft. My wife works in the industry up here and lets just say the melt is not over, Why try and catch a falling knife when you can wait for it to stick into the floor.
Good luck on your U.S dollar idea, I know for sure that is this neck of the woods strata, taxes and fees only go up.

#90 Julia on 12.07.13 at 4:27 pm

Cute puppy. Looks sad though. Sometimes it’s tough to not go along, especially when the ones at the other end of the leash seem so much more powerful.

#91 Industrial Guy on 12.07.13 at 5:05 pm

I was in San Francisco, LA and San Diego on business last week. The place is booming! House prices in Orange county are up 20 to 25% from last year.

A two hour commutes into Silicon Valley are becoming the norm. The traffic is insane. It makes the traffic on the QEW and the 401 into Toronto look trouble free.

The good news is they like Canadian suppliers. Rob Ford was on the San Francisco news two night in a row! If the Canadian dollar continues its downward trajectory, we’ll all be doing just fine thank you. I’m going to be visiting California a lot more next year.

Big Lots Canada based in Brantford announced they are closing the Canadian operation and getting out of Dodge. This doesn’t come as a surprise for anyone who has visited their stores lately. Buying Liquidation World was a mistake for them …. an expensive one.

My contacts in the retailing business are telling me that Target isn’t too happy with the performance of their Canadian operations either. If cars sitting in the parking lot are a good barometer of business ….. they must be hurting big time.

The closure of US Steel / Stelco will no doubt have a serious impact on the Hamilton economy. Is ArcelorMittal Dofasco the next shoe to fall for the city? Stay tuned ….. Economics and MOE pressure have forced the company to announce the closure of the oldest of its three coke plants in 2015. The the Ministry of the Environment hit AM Dofasco with thirteen air pollution charges in 2012 …. but everyone denies this had anything to do with the closing.

#92 Son of Ponzi on 12.07.13 at 5:12 pm

RC #67
“China tries to reign in a massive credit bubble”.
I’d call it a debt bubble.

#93 Son of Ponzi on 12.07.13 at 5:15 pm

RC #67
“Regardless, I see no reason not to invest now”.
Sir, I have some Bre-x shares to sell to you.

#94 Ralph Cramdown on 12.07.13 at 5:30 pm

#72 Ret — “No, you don’t qualify for that low variable rate, but we can get you into a fixed 5 year. Let’s go over your income statement again and see what we can do!”

Would it feel better if they told you the truth? “Your cosigner won’t guarantee a loan to you on those terms, won’t guarantee our depositors’ money if we make you a loan at those terms without a cosigner, and our depositors wouldn’t entrust us with the money to lend you without that guarantee. Have you considered buying a cheaper house?”

#95 happity on 12.07.13 at 5:35 pm

This is called government. Watch it closely. Do the opposite.

Interesting the endorsement that what governments do controls your investment decisions.

#96 recharts on 12.07.13 at 5:55 pm

Foreign buyers should pay a tax when buying Canadian properties

http://www.cbc.ca/news/canada/british-columbia/should-we-tax-foreign-buyers-of-vancouver-real-estate-1.2452769

It is worth mentioning that Switzerland for instance is very restrictive with foreigners buying real estate in that country. Just check their draconian rules in this respect.

There is nothing to be gained and much to be lost by placing barriers to foreign investment in Canada. — Garth

#97 Old Man on 12.07.13 at 5:59 pm

Well found a fool with my listing that is being held in my holding company to buy my ass out with an all cash offer on my corporate party home, as project K threw me under the bus with a break clause, and there will be tax ramifications to sort out, but thank god this will never show up on my personal tax return, or would be toasted by this all. The closing takes place in 2 weeks, so all is well, but lost $2,000 net monthly, so need to find myself a new place for the green. Now, guess who made this offer, as it was another corporation who wanted to buy a Happy House for employees to hang out in private, as all is secluded with a pool in the backyard. I say just blow it off and give me the cash to move forward, as do need this not anymore.

#98 MKULTRA on 12.07.13 at 6:06 pm

#47 Yaroslav on 12.07.13 at 2:26 am

MKULTRA says Yaroslav just to let you know Smoking Man is a dog owner and is a slave to his beloved pooch!

#99 D-Dawg on 12.07.13 at 6:24 pm

#1 @Derek R. Add to the FAQ: Track6er

#100 angela on 12.07.13 at 6:30 pm

Bernanke will be around to see the results of his mistakes and his misguided justification that quantitative easing is working because stock prices are higher, ignoring evidence that the “wealth effect” isn’t working.

#101 Ralph Cramdown on 12.07.13 at 6:33 pm

#87 Mike — “Don’t look at price of gold – look at the reserves [...] and search comex registered gold”

Why? Some goldbug blog got you convinced that you know something about the gold market that isn’t known by all the sophisticated and large scale operators? Got secret info that a rogue COMEX employee smuggled out in his anus?

Tell us when the Scotia Mocatta online store says “TEMPORARILY UNAVAILABLE — SOLD OUT” Perhaps not even then. Unlike oil, copper, corn, coffee, sugar or onions, the price of gold could go to $10,000 or $100 tomorrow and, apart from the world’s jewellers, very few people would be affected.

Here’s my prediction: Trade will continue, bills are going to be paid and I’m going to get my dividends and distributions next month right on schedule. Own something that shows its appreciation.

#102 Derek R on 12.07.13 at 7:02 pm

#99 D-Dawg on 12.07.13 at 6:24 pm wrote:
#1 @Derek R. Add to the FAQ: Track6er

Thanks, man. Don’t know how I missed that one!

#103 whyisitwrongtospeakthe truthwhen everyoneknows on 12.07.13 at 7:09 pm

DELETED

#104 Nemesis on 12.07.13 at 7:47 pm

…”apart from the world’s jewellers, very few people would be affected.” – Ralph

That’s, like, so cavalier… you do realize that it would mark the end of CosmeticDentistry as we know it?

http://tinyurl.com/n3oq2kz

#105 recharts on 12.07.13 at 7:50 pm

#96 recharts on 12.07.13 at 5:55 pm
Foreign buyers should pay a tax when buying Canadian properties

http://www.cbc.ca/news/canada/british-columbia/should-we-tax-foreign-buyers-of-vancouver-real-estate-1.2452769

It is worth mentioning that Switzerland for instance is very restrictive with foreigners buying real estate in that country. Just check their draconian rules in this respect.

There is nothing to be gained and much to be lost by placing barriers to foreign investment in Canada. — Garth

Yeah , I guess Switzerland is a clear example for that.

Seriously, if they want to invest in some Canadian business they are welcome. Buying houses may come right after that.
Flipping houses and not paying taxes (like the assignment scheme that went rampant a while ago) does not qualify for business. Not in my books.

you continue to surprise me with your views on what means “business” and “investment in the real sense” ..but what do I know. ☻

#106 Doctor Fierce on 12.07.13 at 8:29 pm

#89 Whistler bubble boy

I think this particular knife was in the floor. Time will tell if I’m right. Part of the reason I posted was an interest in whether anyone on here would support purchasing real estate in an ‘after the crash’ setting, which you could argue whistler is in. Some hotel-condo contraptions are down a solid 50% from peak. Buying undervalued real estate with historically cheap money can work. My argument is that whistler is where the country will be in 5 years, as the 2009 re-inflation never occurred here. Your comments on carrying costs are valid.

#107 maxx on 12.07.13 at 8:42 pm

#22 Rural Rick on 12.06.13 at 10:40 pm

“#6 Smoking man
Whiskey is by far the most popular of all remedies that won’t cure a cold.”

….and ZIRP is the most popular of all remedies that won’t cure an ailing economy.

#108 kilby on 12.07.13 at 8:44 pm

#80 Ripped on 12.07.13 at 2:24 pm
#62 Penny Henny on 12.07.13 at 11:08 am
Car sales hit record numbers for November, record numbers for the last 6 months. It’s not just houses that are moving like hotcakes.
……………………………………………………………………..

We have radio commercials every morning on how you can take equity wealth out of your house to buy cars, go on trips, etc…
_____________________________________________

GM dealers here in BC are offering zero down and 84 months financing. Apparently you are able to finance 25% over the value of your vehicle loan which translates to people walking out the door with a $60,000 pickup truck on which they owe $75,000 ….In two years it will be worth $35,000 on a trade and they will still owe over $50,000……As somebody repeatedly says “This can’t end well”

#109 youcantbeserious on 12.07.13 at 8:45 pm

So why aren’t people going with VRMs, because people like Garth have told them repeatedly to lock in cause rates were 100% for certain going up. Sorry Garth: but I bet I can find 20 blog entries in the past 12 months were you were telling folks that did not lock in on a 10 yr term that they were idiots. Sorry folks. I think Garth just pulled a Sherry Cooper on us – flip flop, flip flop. no accountability and admission… you really can’t be serious with this post.

The best option for people borrowing last winter was a ten-year. The best option now is VRM. Try to keep up. — Garth

#110 Daisy Mae on 12.07.13 at 8:59 pm

#91 Industrial Guy: “My contacts in the retailing business are telling me that Target isn’t too happy with the performance of their Canadian operations either. If cars sitting in the parking lot are a good barometer of business ….. they must be hurting big time.”

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

Canadians were expecting good American-type prices. We didn’t get them. Major disappointment for the consumer…

#111 Snowboid on 12.07.13 at 9:01 pm

#58 Random Vancouver Person on 12.07.13 at 9:42 am…

It’s cold down south too, it was only 19C as we walked through the Mercado this afternoon – had to switch to jeans from shorts!

I’m so happy to be a contrarian Canadian.

#112 Bottoms_Up on 12.07.13 at 9:09 pm

#91 Industrial Guy on 12.07.13 at 5:05 pm
———————————————
The closure of “US Steel” in Hamilton I read involves a loss of about 45 jobs. They will still be running coking operations, with a few thousand employees? Correct me if I’m wrong, but this doesn’t seem like it would be a major impact in Hamilton.

#113 jess on 12.07.13 at 9:13 pm

“suasion” minus the ‘moral’ part
=

..”United States of America v. Carollo, Goldberg and Grimm, . . . allowed federal prosecutors to make public for the first time the astonishing inner workings of the reigning American crime syndicate, which now operates not out of Little Italy and Las Vegas, but out of Wall Street.”..
http://www.rollingstone.com/politics/blogs/taibblog/another-batch-of-wall-street-villains-freed-on-technicality-20131204

Read more: http://www.rollingstone.com/politics/blogs/taibblog/another-batch-of-wall-street-villains-freed-on-technicality-20131204#ixzz2mqEtIzQk
Follow us: @rollingstone on Twitter | RollingStone on Facebook

.

#114 Macrath on 12.07.13 at 9:16 pm

#105 recharts

Switzerland,Just check their draconian rules in this respect.
———————————————————
I recently saw a Swiss TV report on the subject. There is so much foreign money hiding in Swiss Chalets, it has become a big problem. The IRS and others have installed new international tax reporting laws. The Americans will have to declare their RE holdings to the IRS and they are running scared ! Huge tax bills coming due.
Swiss RE is priced, out of this world, and there are few buyers for foreigners trying to dump their holdings .So they are, pardon the expression, SCREWED !

#115 TurnerNation on 12.07.13 at 9:23 pm

If it falls in the woods…

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$349,000.00

#116 Tiger on 12.07.13 at 10:02 pm

Nemesis, #24
Nice work!
Call bullshit on what is just smoking shit!

#117 Smoking man on 12.07.13 at 10:03 pm

Fever finally broke… Amazing hallucinations. I’m blaming it on the JD.

Badest bug I’ve had in years..

Still to weak to type, much to the delight of some on here.

#118 Dean on 12.07.13 at 10:12 pm

Vehicle purchase decisions now revolve around what the monthly payment is, not what the thing costs.

As someone who has always treated debt like toxic waste I find this concept mind boggling.

Welcome to the new world order.

#119 Tiger on 12.07.13 at 10:14 pm

109 youcantbeserrious!
Things change, get used to it! Garth just states !
Doesn’t really mean shit! This is lust a blog, up to you, to shift gears,don’t believe what you see,or read!
Be informed,

#120 wallflower on 12.07.13 at 10:38 pm

Yaroslav – get back on your medication.
Dog = love and adoration and affection – those which you are missing.
Cat = no playing frisbee.
You need exercise. Exercise and medication.
Now, was there anything important beyond paragraph 6 of your bizarre rant?
Your bizarre rant = Yaroslav, without medication.

Garth – yesterday, I shared your daily blog photo with a family member, while explaining that ‘Garth posts the best doogie shots’ and, specifically because the doogie shots are so precious. Just like the doogies. Keep them coming.

#121 Godth on 12.07.13 at 10:45 pm

#104 Nemesis

After Fukushima happened I used gold to paint the walls as a radiation shield.

#122 45north on 12.08.13 at 12:13 am

Kirby: GM dealers here in BC are offering zero down and 84 months financing. Apparently you are able to finance 25% over the value of your vehicle loan which translates to people walking out the door with a $60,000 pickup truck on which they owe $75,000 ….In two years it will be worth $35,000 on a trade and they will still owe over $50,000……As somebody repeatedly says “This can’t end well”

84 months! Obviously GM is making loans which will not be paid. Like half of them will not pay the loan off.

#123 recharts on 12.08.13 at 12:16 am

#114 Macrath on 12.07.13 at 9:16 pm
#105 recharts

Switzerland,Just check their draconian rules in this respect.
———————————————————
I recently saw a Swiss TV report on the subject. There is so much foreign money hiding in Swiss Chalets, it has become a big problem. The IRS and others have installed new international tax reporting laws. The Americans will have to declare their RE holdings to the IRS and they are running scared ! Huge tax bills coming due.
Swiss RE is priced, out of this world, and there are few buyers for foreigners trying to dump their holdings .So they are, pardon the expression, SCREWED !

That is beside the point of my comment
What I wanted to say is that the government of that country realized the danger that the Swiss will be invaded by wealthy people willing to park their money and to enjoy a very nice life in one of the most beautiful countries in this world.
For that reasons, as far as I remember, a very limited number of properties are available for sale to foreigners in each canton. As a foreigner there is no way you can get 10 flats there or more than one house if you are lucky to get that one. And the country is doing just fine.

The acquisition of real estate by non-residents is regulated by Swiss Federal Law under the Lex Koller regulations. The Lex Koller requires “persons abroad” to obtain a permit from the appropriate cantonal and federal authorities before buying real estate in Switzerland.

In certain areas of the Cantons of Vaud, Valais, Fribourg, Bern, Neuchâtel, Ticino and Graubünden it is possible to buy property through the Lex Koller legal process. The number of properties available to foreign (non-resident) buyers is limited by the Swiss Government. Currently the total annual number of properties that can be bought by foreigners in Switzerland is set at 1,440. This is divided for the Cantons as foreigner ‘permits’. These quotas are subject to change.

If the property you’re interested in has already been part of a foreigner quota (ie. has been owned by a non-resident person and granted a ‘permit’) this is transferred to the new owner and does not need to be waiting for fresh allocation of the quota.

The main tourist areas and ski resorts enjoy the majority of the permits allocated, making it fairly straightforward to buy in the Cantos of Vaud, Valais and the Bernese Oberland, as well as some areas of Ticino.

If the property is used as a main residence, no ‘foreigner’ permit is required provided that the purchaser actually lives there (renting out is not allowed). This is commonly known as the ‘Permit B’ and involves acquiring Swiss Residency at the time of the property purchase. A good Swiss notary or ‘fiduciaire’ can help with the application process.

Under the above conditions flipping houses in Switzerland is highly discouraged.
They did not need the spanish lesson to learn that it is not a good idea to let the foreign investors ruin your economy. From what I heard(and seen with my own eyes) the spaniards built a lot, more than they needed. I could see that on Costa del Sol (South of Spain) and I heard that lots of english retired there, applied for a mortgage but ended up not paying it ☺

This might hit us here as well.

The above examples are very good reasons for Canada to look at restricting the access to foreign nationals to houses that they do not intend to live in. That will not impact the immigration or good faith investors in any way.

#124 KommyKim on 12.08.13 at 12:51 am

RE: #47 Yaroslav on 12.07.13 at 2:26 am
So, in all seriousness, why would a contrarian like you ever own a dog? A cat I can easily understand… A dog I just don’t get.
Cats can’t be herded. Ever heard of anyone herding cats? The saying tells you that it ain’t easy…

LOL! I loved this rant. Read the whole thing. So true.

#125 Rabbit One on 12.08.13 at 12:56 am

Go with VIRM Mortgage or with fixed term mortage is not “which is better deal”, but my opinion, VIRM for the people who can tolerate fluctuation, fixed term is for those who don’t want to think about the short term rate changes for set fixed term.

Therefore, many first time buyers go for fixed term.
VIRM I would say for a bit more sophisticated mortgagees.

My suggestion for those who selected VIRM (good selection for last 20 years and for probably at leaset next 10 years), is to set equivalent of 5Y Fixed rate mortgage payment. (pay for 3.49% – 25Y amor), instead of 2.50% – 25Y amor. Or even go with 5Y posted rate pace, like 5.75%.

That’s what banks supposed to approve your mortgage,
and you should be capable to pay that amount.

This way, you will be way ahead of the game, and you have an option to go lower payment later if you want, or need to.

Talking about high ratio mortgage, CMHC mortgage is good for young professionals for example.
Who only have small downpayment now (because new to their career), and forsee increasing income in future.

CMHC will get those people into the market, that’s good.
You leverage from your own future income.

Not for the specs who leverage from (unknown) future market gains utilizing CMHC backed by government.

#126 live within your means on 12.08.13 at 1:02 am

#110 Daisy Mae on 12.07.13 at 8:59 pm
#91 Industrial Guy: “My contacts in the retailing business are telling me that Target isn’t too happy with the performance of their Canadian operations either. If cars sitting in the parking lot are a good barometer of business ….. they must be hurting big time.”

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

Canadians were expecting good American-type prices. We didn’t get them. Major disappointment for the consumer…
…………………
I visited the store once out of curiosity. Very few shoppers & I left empty handed. Must admit, as a woman, I hate shopping. Elder sis pumps up the economy, as her hubby says. In Jan. we’ll have to replace our dishwasher – now that’ll excites me. – LOL

#127 Whistler bubble boy on 12.08.13 at 1:25 am

106 Doctor fierce

I have lived in Whistler for 14 years, I think you are 100 % correct to say Whistler is ahead of the rest of the country as far as price decline goes. I have seen the americans buy and sell here with the dollar swing and do quite well. However they also enjoyed the price gains hype and speculation leading up to the Olympics. As far as you ever selling your place to a local I have to tell you this will prob not happen as I am sure you are familiar with the Whistler housing authority. Yes we have over 1900 bed units for local workers to buy at around half of free market value. Not to mention Squamish and Pemberton offer a much better value for a local. But you are not looking at marketing to them, you are thinking the Americans will return. Time will tell. The one upside that you failed to mention and I am sure you are aware of is the fact that this place is now a 4 season resort. Our summer business is growing and the artsy fartsy crew and all the hikers,bikers and family events are giving rental real estate another revenue vehicle.
I currently do not hold any real estate in whistler ( sold in 2010 after the biggest party this place will ever see with the most amount of cash flying around and jobs everywhere) But I do wish you good luck as you might need it.
P.S heads up for the not so special assessment that seems to be going on every where at the moment.

#128 Ronaldo on 12.08.13 at 1:36 am

#48 Jim H. -

”The smart money re-entered the equity markets in the spring of 2009, even as the “greater fools” were selling off. Nothing new about that!”

So Jim, if the smart money re-entered the market as you say they did in spring of 2009, can you tell us when they got out of it prior to that?

Possibly the smart money never actually got out but shorted the market back in 2008 after it peaked over 15000 and covered those shorts in March of 09 in addition to going long once market had gone down 50% from its high.

They could than have sat back and watched as their portfolios returned to pre-crash levels within a year.

It was a well known fact that the markets rose to pre-crash levels with very few participants in the market and huge levels of cash on the sidelines even at the commencement of 2010 when I met with an advisor to discuss strategies going forward.

I questioned the advisor on this unusual rise in the markets with such low volumes and he was unable to give me an answer except to agree that the markets did in fact rise with very little participation and with huge amounts of cash on the sidelines.

Anyone else have any ideas on this and what we may expect in the next few months with markets once again at all time highs?

#129 Peg City Coop on 12.08.13 at 2:01 am

I made the mistake of going long with my first mortgage. Took a variable capped product at prime+0.4% back in 2009. It probably was the right decision at the time when the overnight rate was rock bottom but did increase a few bps shortly after.

This time around the local credit unions had 6 month fixed a full 50bps lower than VRM. VRM was pegged at prime-0.5 but 6 month was sitting at 1.99%. So I locked it in for 6 months. Why pay more right!?

#130 cynically on 12.08.13 at 2:42 am

#47 – I thought I was reading War and Peace but without any substance but you probably hold the record for this year for lengthiness. I do agree with you about dogs, though.

#131 World According To Garth on 12.08.13 at 3:39 am

Makes me wonder why British Columbians are so stupid as to keep paying for this phony global warming carbon tax. Climate change? You bet – colder. Wake up morons.

#58 Random Vancouver Person on 12.07.13 at 9:42 am
According to Environment Canada, as I type this at 5:38am Pacific Standard Time, the temperature at the Vancouver International Airport is minus 9 degrees celsius!!! That’s without the windchill! With the windchill, it feels like minus 15 at the Vancouver airport! We don’t usually get those temperatures in Vancouver! And that’s at the airport–one of the mildest spots because it is right next to the water. If you go to the inland suburbs like Coquitlam, Surrey, Abbotsford, you can bet it’s even a few degrees colder!

I love weather like this! It makes me feel like a real Canadian! I can’t wait for the sun to come up so I can go for a walk!

#132 Andrew Woburn on 12.08.13 at 3:51 am

#122 45north on 12.08.13 at 12:13 am
==================================
Kirby: GM dealers here in BC are offering zero down and 84 months financing. Apparently you are able to finance 25% over the value of your vehicle loan which translates to people walking out the door with a $60,000 pickup truck on which they owe $75,000 ….In two years it will be worth $35,000 on a trade and they will still owe over $50,000……As somebody repeatedly says “This can’t end well”

84 months! Obviously GM is making loans which will not be paid. Like half of them will not pay the loan off.

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

I doubt that GM is actually at risk. “Securitized” subprime auto loans are now big business. The loans are bundled into investor packages just like the crap mortgages that blew up. The supply of greater fools is apparently inexhaustible.

http://www.businessweek.com/articles/2013-11-27/subprime-loans-are-boosting-car-sales

#133 Steve French on 12.08.13 at 7:39 am

Smoking Man:

Glad to hear you have broken the fever. Maybe a bout of the old dengue.

Get your typing fingers ready for the week ahead on Greater Fool.

We need you to keep this whole dang blog in good working order.

#134 Dwilly on 12.08.13 at 8:46 am

Hey Garth. I know you say gold is dead money, but what do you think about the ideas behind the Permanent Portfolio? Not saying 25%, but do you think a small position in gold is ever warranted? Say, maybe no more than 5-10%ish?

#135 maxx on 12.08.13 at 9:14 am

#62 Penny Henny on 12.07.13 at 11:08 am

“Car sales hit record numbers for November, record numbers for the last 6 months. It’s not just houses that are moving like hotcakes.”

Canada’s economy is anemic and getting weaker by the day with rampant consumer debt…..I wonder which countries will be first to regain traction and thrive going forward?

Got a truly shocked looked from TNMATB when he asked if there was any outstanding debt- I told him that, no, I had just paid the ‘phone bill.

Debt free=Stress free, with the ability to build a retirement devoid of deprivation.

Old, frail and cold at retirement? No thank you!

#136 Bottoms_Up on 12.08.13 at 10:00 am

#131 World According To Garth on 12.08.13 at 3:39 am
———————————————————
Observing a cold day, or having an uncle that sees more polar bears in the field, is called ‘anecdotal’ evidence. It is the weakest evidence out there. In the case of the polar bear, a changing climate may cause the polar bears to migrate to areas where they normally don’t go, thus becoming more visible to humans (simply observing more polar bears doesn’t mean they’re thriving). In the case of a cold day, it happens. And climate change means climate change. Some areas will get colder, some will get warmer, but the changes will be drastic and cause big issues….and can only really be observed using scientific analysis (long term trend data).

Same with the real estate market…houses on your street may sell in under a week…doesn’t mean the average market is ‘hot’.

Remember, anecdotal evidence is the weakest there is….but sometimes you may get lucky betting on it.

#137 Henry on 12.08.13 at 10:03 am

#123 – here’s how swiss real estate really works, from a guy actually living there…
Downpayment- min. 20%. Non negotiable, no way around it. Then you sign up for a mortgage, typical is 99 years ammo. So you pay 1% of balance every year plus interest. You can lock in about 2% for 10 years now. Interestingly, you are considered owning as much of a house as you have actually paid for – so for example a guy with 1,000,000 house where the balance is 700,000 is considered (for tax purposes) owining a 300,000 property. Thats why some swiss stop paying balance after reaching some 60% outstanding – cheaper pay mortgage interest than taxes on “more property”. If you sell within 5 years, capital gain taxes kick on – a huge issue in a country that otherwise has no capital gain tax.
If you opt for renting (as 75% wsiss do): have at least 3 months worth of rent ready to be frozen as a security in a special account and then your regular monthly rentals. So with leases on a family type housing probably somewhere at least CHF 4,000 a month, you need CHF16,000 to start renting (I wonder if this is not a downpayment on a “purchase” of a million dollar home in Canada:))
Houses however are real stuff, made of stone and wood, masonry work… not the stuff we use in Canada.
Need i say 1 in 10 in Geneva is a millionnaire?
Have a good week end

#138 rosie "moving forward" in the knowledge that, "this won't end well" on 12.08.13 at 11:01 am

For the SM fans.

http://takimag.com/article/notes_on_the_pussification_of_america_fred_reed#axzz2mtQ6Nso8

#139 T.O. Bubble Boy on 12.08.13 at 11:23 am

There is nothing to be gained and much to be lost by placing barriers to foreign investment in Canada. — Garth

Agreed… but shouldn’t the government (or, an independent body) at least TRACK what is going on?

All of the HAM speculation could easily be proven/disproved if someone other than CREA and the local RE boards had the responsibility of maintaining this info.

I mean, if you’re legitimately making a transaction, the banks know about it. Why should someone buying real estate be in the shadows like drug dealing or gun smuggling?

Have you not heard of FINTRAC? — Garth

#140 Ralph Cramdown on 12.08.13 at 11:40 am

#93 Son of Ponzi — “Sir, I have some Bre-x shares to sell to you.”

It’s amazing (but not really…) how many bad investments you can avoid merely by insisting that the companies you own be engaged in profitable enterprise, at least most of the time. The only place in my portfolios that you’ll find companies that have never turned a profit is as part of index funds.

#141 maxx on 12.08.13 at 12:58 pm

#110 Daisy Mae on 12.07.13 at 8:59 pm

#91 Industrial Guy: “My contacts in the retailing business are telling me that Target isn’t too happy with the performance of their Canadian operations either. If cars sitting in the parking lot are a good barometer of business ….. they must be hurting big time.”

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

Canadians were expecting good American-type prices. We didn’t get them. Major disappointment for the consumer…”

Bingo, Daisy Mae.

The first flyer I leafed through resulted in a “meh” reaction. I haven’t even been in to look around yet. Perhaps in the new year- however nothing beats the after Christmas sales in the US.
Pay Canadian retail? Ha!

I haven’t quite worked it out yet, but in our family paying full retail is viewed with horror and might come to 5% (max) of life budget, usually when confronted with absolutely no choice and even then, only about 1% at full price, and this, under duress.

Difficult to get ahead by padding someone else’s wallet. Never mind getting wealthy.

Isn’t it gross to think of some anonymous profiteer to whom you gave your hard earned, sitting in splendid digs and sipping perfectly chilled champagne on your nickel? I’d much rather buy great goods for which they paid full bore, and enjoy my own champagne!

#142 Macrath on 12.08.13 at 1:16 pm

#137 Henry

Thanks for the info. Switzerland is an amazing country Beautiful high speed trains that climb mountains. Advanced industry and labour relations, prosperous organic farmers with world renowned products.

We on the other hand have trouble getting a train from Union station to Oshawa without it breaking down. Can`t keep our ketchup and pickle factories operating and invest our net worth in particle board.

#143 Mister Obvious on 12.08.13 at 1:25 pm

Has the People’s Bank of China been reading greater fool? Here’s a quote from a Huffington Post article about the recent Bitcoin devaluation…

“The price can be easily controlled by speculators, creating severe turbulence and huge risks,” the PBOC reportedly said. “Ordinary investors who blindly follow the crowd can easily suffer major losses.”

That sounds vaguely familiar.

#144 Shawn on 12.08.13 at 1:29 pm

AUTO FINANCING

45 North at 122 said: 84 months! Obviously GM is making loans which will not be paid. Like half of them will not pay the loan off.

Andrew Woburn at 132 responded: doubt that GM is actually at risk. “Securitized” subprime auto loans are now big business. The loans are bundled into investor packages just like the crap mortgages that blew up.

*******************************************
Interesting stuff. As long as the loans are kept current with few defaults it all works out. Even if people borrow new money to pay old debt it all works out unless the defaults mount.

The housing credit crisis (as I allude at post 82) was really caused when loans were made to people that could not pay it back. Lending standards were poor. And the defaults were under estimated and therefore the securitized investments were wrongly rated far too high.

There is little or no sign that defaults are high or rising. If the job market does not get worse then there may not be a problem. In a deep recession, of course things get ugly.

People denigrate lenders for their high profits but it is indeed a very risky business at times.

#145 Nemesis on 12.08.13 at 1:47 pm

@BottomsUp/#136…

…”anecdotal evidence is the weakest there is….but sometimes you may get lucky betting on it.” – BU

Only in isolation… but when you add the SecretSauce™… Aggregation?

You have the most PowerfulPredictive medium yet devised… for example, two commercial* implementations in wide spread use:

https://www.recordedfuture.com/this-is-recorded-future/how-recorded-future-works/

http://www.wisewindow.com/about-us/wisewindow-videos

[* ... and those are but the merest Tip 'O TheIceberg, allegorically speaking. Hint: SuperComputers are the DreadNoughts of the 21stCentury.]

#146 World According To Garth on 12.08.13 at 1:50 pm

http://www.weather.com/news/science/environment/cold-records-beat-warm-records-first-time-1993-20131203

Oh really? This global warming conspiricy has been put to bed. Caron taxes are a scam. It’s only greenies with their lattes and Govt workers justifying their 91,000 dollar a year jobs promoting it now.

—————————————————————–

#136 Bottoms_Up on 12.08.13 at 10:00 am
#131 World According To Garth on 12.08.13 at 3:39 am
———————————————————
Observing a cold day, or having an uncle that sees more polar bears in the field, is called ‘anecdotal’ evidence. It is the weakest evidence out there. In the case of the polar bear, a changing climate may cause the polar bears to migrate to areas where they normally don’t go, thus becoming more visible to humans (simply observing more polar bears doesn’t mean they’re thriving). In the case of a cold day, it happens. And climate change means climate change. Some areas will get colder, some will get warmer, but the changes will be drastic and cause big issues….and can only really be observed using scientific analysis (long term trend data).

Same with the real estate market…houses on your street may sell in under a week…doesn’t mean the average market is ‘hot’.

Remember, anecdotal evidence is the weakest there is….but sometimes you may get lucky betting on it.

#147 recharts on 12.08.13 at 1:52 pm

#139 T.O. Bubble Boy on 12.08.13 at 11:23 am
There is nothing to be gained and much to be lost by placing barriers to foreign investment in Canada. — Garth

Agreed…

Any particular reason for that?

#148 Smoking man on 12.08.13 at 2:23 pm

#138 rosie “moving forward” in the knowledge that, “this won’t end well” on 12.08.13 at 11:01 am

For the SM fans.

http://takimag.com/article/notes_on_the_pussification_of_america_fred_reed#axzz2mtQ6Nso8

……….

Brilliant. Last week was shooting the shit with a PhD math dude at the tax farm.

Giving him a few secretes of code smithing, after all I have logged about 20k hours in my craft. I’m pretty good.

I was shocked to discover while he was teaching at a prestigious USA university a big present of fresh men can’t do times table. They need a calculator to do 4×5 or square root of 9.

Forget converting fractions to decimals in one’s head. Almost all can’t do it.

The above link explains why.

#149 Nemesis on 12.08.13 at 2:32 pm

ChortleChortle… Sunday BoomerZen for SaltyDogz… Hmmm… or should that be, “BummerZen”?…

[UK Independent] – Number of pensioners visiting A&E for cannabis and cocaine poisoning reaches record high

…”Record numbers of pensioners over the age of 65 are requiring hospital treatment following recreational drug use, according to the latest NHS figures…

…More than half of those admissions were for people over the age of 75 – of the generation who would have been in their 20s during the 1960s when experimental drug-taking was at its peak.

Experts have blamed the “free love” generation for the rates tripling in 10 years, and warned that the problem is only going to become more of a burden on public services.”…

http://www.independent.co.uk/life-style/health-and-families/health-news/number-of-pensioners-visiting-ae-for-cannabis-and-cocaine-poisoning-reaches-record-high-8991396.html

#150 Shawn on 12.08.13 at 2:47 pm

REMEMBER THE DOOMERS?

Remember 2009 and 2010 and 2011 when so many people posting on this site were predicting a stock market crash. And that U.S. house prices would continue to fall. And that the U.S. would soon default on its debt. Or that inflation would go hyper due to money printing. And that Gold was headed for $5000, at least.

At that time Garth was suggesting people invest in equities in a balanced fashion. He also suggested that investing in the U.S was a good idea.

This turned out to be good advice. Stocks have done even better than almost anyone figured they would.

Most of the doomers have been silenced.

Today may be a better time to predict a stock market crash or at least large correction but most of the doomers have been humbled and gone silent.

As always the future will remain unpredictable, especially in the short term, it has ever been so.

Making short-term predictions in the financial markets is almost always a humbling experience.

#151 Ripped on 12.08.13 at 2:50 pm

Canada and it’s vast resources

http://www.stockhouse.com/opinion/ticker-trax/insights/2013/12/06/79-of-tsx-v-stocks-now-10-cents-or-below

#152 Daisy Mae on 12.08.13 at 3:14 pm

#91 Industrial Guy: “My contacts in the retailing business are telling me that Target isn’t too happy with the performance of their Canadian operations either. If cars sitting in the parking lot are a good barometer of business ….. they must be hurting big time.”

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

Target zigged when it should have zagged.

#153 Shawn on 12.08.13 at 4:14 pm

TARGET’s Mistakes

When Target bought the Zellers leases for $1.8 billion I calculated that it had paid around $15 million per store – just for the right to keep paying rent at each store – albeit a cheap rent.

I did not see anyone else even question the price paid.

Target then spent an average of about $10 million per store in renovations.

This means they are into each store for an average of about $25 million and they don’t own the stores.

Meanwhile I had calculated that Walmart trades in the neighborhood of $25 million per store and they own their stores in many cases.

It was easy to see, as I said at the time, that Target would not be a low cost operation.

So, no low costs, no low prices, therefore no stampede of customers.

Some things are predictable. (Even before the fact which is the most useful type of prediction).

#154 Nemesis on 12.08.13 at 4:54 pm

@SM… #148

ChortleCubed… hehehehehe

…“These maps show us a stark difference – and complementarity – in the architecture of the human brain that helps to provide a potential neural basis as to why men excel at certain tasks, and women at others,” said Ragini Verma, professor of radiology at the University of Pennsylvania in Philadelphia.”…

[UK Indepedent] – The hardwired difference between male and female brains could explain why men are ‘better at map reading’

http://www.independent.co.uk/life-style/the-hardwired-difference-between-male-and-female-brains-could-explain-why-men-are-better-at-map-reading-8978248.html

[NoteToGT: Resisting the temptation to transpose the initial consonants of the lead researcher's first and last names was almost more than I could bear.]

#155 Kaganovich on 12.08.13 at 4:56 pm

144 Shawn

You write” People denigrate lenders for their high profits but it is indeed a very risky business at times.”

Indeed, some do criticize banks for the high profits they make, and for good reason. Lightly regulated proprietary trading/control fraud etc. are some of the legitimate reasons why they are criticized. Not for plain-vanilla lending. In fact, they are criticized for not engaging in that activity as much. Remember when Obama got up and tried to pass off the expected multiplier effect vis a vis fractional reserve banking as a better substitute than fiscal measures? Banks would much rather bundle up some “crap” (subprime auto loans derivatives, bets on the newly created rental stock lorded by a few private equity magnates), as Carl Levin put it last time around, and sell it to some institutional investors. Why don’t you explain the concept of risk in the context of too big to fail, TARP, five years worth of successive central bank interventions (QE/ZIRP)?

#156 espressobob on 12.08.13 at 5:16 pm

Doomers silenced? Hardly! Their just sitting back waiting in the shadows. They can’t wait to overwhelm this blog with ‘we told ya so’ mentality. Bears are so predictable. Usually happens during a pullback.

Over the long term these creatures get ground into burger. Pass the salt, thanks.

#157 T.O. Bubble Boy on 12.08.13 at 5:29 pm

@ #147 recharts on 12.08.13 at 1:52 pm
#139 T.O. Bubble Boy on 12.08.13 at 11:23 am
There is nothing to be gained and much to be lost by placing barriers to foreign investment in Canada. — Garth

Agreed…

Any particular reason for that?
————————————

In general, if your economy is seen as protectionist/government-controlled, less of the world will want to do business with you.

In my opinion, the natural resources “crutch” has limited Canada’s ability to create sustained, meaningful companies on a global scale. Yes, we’ve created Blackberry and Nortel and Lulu Lemon and the Big 5 banks and Thomson-Reuters, but where does Canada LEAD the world? Yoga Pants? Mortgage Lending?

At the very least, the Canadian Government should be *CLEAR* on our protectionist policies. Maybe we want to protect water and oil — that’s fine, but stop pretending that we’re open for business in those areas.

I can see how the Norway model would be a great idea for Canada (nationalizing oil, and investing the proceeds), but you have to be “all in” on that type of movement… the one-off decision making that allows Nexen to be sold to China but vetos every other investment is just silly.

#158 T.O. Bubble Boy on 12.08.13 at 5:32 pm

Have you not heard of FINTRAC? — Garth

Does this track RE transactions? How do we get “surprised” by offshore flipping of condo assignments then? How can we not produce a report that shows the % of Vancouver or Toronto houses being sold to offshore investors?

Yes, it tracks all real estate transactions and requires identification of purchasers. — Garth

#159 johny on 12.08.13 at 5:39 pm

the Wise Man from the East – the Chinese, the Indies, The Russians and the Arabs buy your gold and silver on sale, paying you with worthless dollar bills you have been printing unrestrained. Have you Americans completely lost your mind? Have you become a country of retards? The whole world is laughing of you! We can all see that the former mighty America is bankrupt, and we do not understand that the people let your leaders continue this obvious scam.

Before you had Gangsters, now America is governed by Banksters supported by Washington that scams all its citizens.

#160 Ralph Cramdown on 12.08.13 at 6:17 pm

Oh, Garth. FINTRAC merely requires real estate agents to make “reasonable efforts” to ascertain the identity of clients, and lawyers to report “suspicious” transactions unless conducted with a literal bagful of cash.

Not exactly. Verifiable IDs are required for all transactions. There are significant penalties and professional repercussions for non-reporting. — Garth

#161 Andrew Woburn on 12.08.13 at 6:35 pm

#149 Nemesis on 12.08.13 at 2:32 pm

…”Record numbers of pensioners over the age of 65 are requiring hospital treatment following recreational drug use, according to the latest NHS figures…

…More than half of those admissions were for people over the age of 75 – of the generation who would have been in their 20s during the 1960s when experimental drug-taking was at its peak.

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

I’m not sure if this article proves that newspaper reporters are bad at math or that “boomer” now simply means any retired person of any age. Boomers were born between 1946-1964. The oldest hit 65 in 2011 but most of then are a lot younger. The kiddies that got into weed in the “summer of love” were born about 1950. Anyone 75 or older today was born in 1938 or before.

One of the tedious things about being a boomer is having children who have barely learned to shave think they know all about you because of some stupid MSM tag. If you loathe being described as a “millenial” you should understand. Most early boomers did not try drugs and are not likely to start now. Many later boomers did and are still doing so but they are unlikely to overdose at this point. Furthermore 900 cases in a population of 60 million is hardly an epidemic and some of them might well have been suicide attempts.

#162 recharts on 12.08.13 at 7:31 pm

#157 T.O. Bubble Boy on 12.08.13 at 5:29 pm
@ #147 recharts on 12.08.13 at 1:52 pm
#139 T.O. Bubble Boy on 12.08.13 at 11:23 am
There is nothing to be gained and much to be lost by placing barriers to foreign investment in Canada. — Garth

Agreed…

Any particular reason for that?
————————————

In general, if your economy is seen as protectionist/government-controlled, less of the world will want to do business with you.

In my opinion, the natural resources “crutch” has limited Canada’s ability to create sustained, meaningful companies on a global scale. Yes, we’ve created Blackberry and Nortel and Lulu Lemon and the Big 5 banks and Thomson-Reuters, but where does Canada LEAD the world? Yoga Pants? Mortgage Lending?

At the very least, the Canadian Government should be *CLEAR* on our protectionist policies. Maybe we want to protect water and oil — that’s fine, but stop pretending that we’re open for business in those areas.

I can see how the Norway model would be a great idea for Canada (nationalizing oil, and investing the proceeds), but you have to be “all in” on that type of movement… the one-off decision making that allows Nexen to be sold to China but vetos every other investment is just silly.

Hold on hold on ! I think you lost it.
What do the above have to do with restricting foreign investors from speculating on the RE market ????
If I am not wrong that is exactly what I was saying above. Fence them in regards to RE, them buy ‘a house’ (not houses) after they invested in other sectors…

#163 Nemesis on 12.08.13 at 7:37 pm

@AndrewWoburn/#161…

All VeryGoodPoints… albeit, suicide by CocaineHydrochloride would be an altogether unusual CheckOut methodology.

Personally – I blame advertising:

http://tinyurl.com/mp2gno4

NextUp:

For our MagnanimousHost [ChortlingConspirators will be excused on this occasion]:

“In 2012–13, FINTRAC received 19,744,923 financial transaction reports. The large number of reports added to our holdings each year underscores the importance of modernizing our information technology analytical systems, which are vital to ensuring the effective analysis of the voluminous financial data. The following charts illustrate the trends for various reports over the past three years.”

How many HumanAnalysts do you think they have?

http://www.fintrac.gc.ca/publications/ar/2013/1-eng.asp

#164 Roman on 12.09.13 at 12:25 am

Is it possible to use disqus engine for comments?
The current one really sucks…

#165 sandman on 12.09.13 at 6:52 am

Whistler bubble boy…

Yes and yes…as a foemen property manager there , i can agree with the special assessments.

Whistler was built mostly in 70′s 80′s…poor construction methods and at the same time as the leaky condo syndrome…

I managed numerous properties there…..what I saw on the inside of most of these properties …was horrifying.

The re-piping, re-roofing and re-wiring bills that are about to come due will be catastrophic.

I know of one proper that needed complete facelift but now the insides need a re-do…none of the owners have the stomach for the bill…I ‘ve seen numerous walk aways… It is a rat’s nest….I wouldn’t touch Whistler
for the next 10 years!

#166 randman on 12.09.13 at 6:55 am

the Wise Man from the East – the Chinese, the Indies, The Russians and the Arabs buy your gold and silver on sale, paying you with worthless dollar bills you have been printing unrestrained. Have you Americans completely lost your mind? Have you become a country of retards? The whole world is laughing of you! We can all see that the former mighty America is bankrupt, and we do not understand that the people let your leaders continue this obvious scam.

Before you had Gangsters, now America is governed by Banksters supported by Washington that scams all its citizens”

Haha Johny

Well said…but the sheep will carry on as usual!

#167 randman on 12.09.13 at 6:59 am

Hey Garth. I know you say gold is dead money, but what do you think about the ideas behind the Permanent Portfolio? Not saying 25%, but do you think a small position in gold is ever warranted? Say, maybe no more than 5-10%ish?”

Don’t waste your time..

Neither Garth nor Ralph Cramdown make commissions recommending gold or PM’s

Even though gold now falls into Garths philosophy of buy low and sell high… you’ll notice he still denigrates it.

When gold shines again..I predict this pathetic blog will wither from the shame!

If we had a permanent economy you could have a permanent portfolio. Guess what? — Garth