Race to the bottom

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Damn. And I was going to write about happy thoughts today. Bummer.

The question now is whether or not the Big Owe, the reincarnation of the elfin, but testy, deity F (RIP) will phone Peter Veselinovich. I’m betting not. So far the new federal finance minister, Joe Oliver, gives every indication he’s the political equivalent of those little plastic thingies that golfers put down to mark where their balls used to be.

Remember when BeeMo and Manulife tried to sneak mortgage fixed rates down to the 2.89% level? Little F was on them like bad underwear, squeezing until they yelped, gave up and stopped encouraging more debt and higher house prices.

This week Veselinovich’s company, Investors Group, better known for mutual funds with fat fees and back-end surprises rolled out a limited-time, short-term, teaser, variable-rate mortgage mortgage at the surprising price of prime minus 1.01%, which these days means it costs just 1.99%. The number’s intended to catch attention, and make people drool. Kinda like that North Toronto million-dollar house that went on the market at $699,000 and received 72 offers.

But there are implications. First, spreading the meme of cheap money available at slightly more than the inflation rate only encourages more debt (which is what IG wants, obviously). Second, there’s a direct line connecting low rates with high house prices. Now that SFHs in two of our major cities are at the $1 million mark, how is this in anyone’s interests? Given the fact household incomes are static, and yet household debt swells ever-higher, price escalation means the trip back down will be steeper.

Third, it’s a race to the bottom. More deflation. In the absence of organic economic growth, it’s all about stimulus. Mortgages at 1.99% are intended to encourage people without money to buy properties they wouldn’t otherwise be able to afford, or to purchase more expensive real estate than would be possible at the crazy, insane rate of, say, 2.99%.

Time for a chart. Here’s how the debt load of Canadian families compares with other countries. Hmm. Notice the direction everyone else is headed in? That sure makes sense in a world turning deflationary, where debtors are usually crushed. As you can see, we’re special.

COMPARABLES modified

Source: Moody’s Investor Service

Maybe the Big Owe’s also aware of a report just done by Moody’s Investor Service on why giant US retailer Target is flaming out in Canada. As you may know, Target made a big splash here by opening 124 stores nation-wide in a bid to take on Wal-Mart and sell more cut-rate crap from China. But business has been so disappointing rumours have circulated the chain may be slipping back across the border.

Why did Target bomb?

Because, says Moody’s, Canadians are tapped out. We are more “economically stressed” than Americans, and it’s being tied expressly to our piggy-like devotion to debt. “The challenged macro economy has created even more competition for the scarce consumer dollar. This makes Target’s entry even more challenging as it tries to carve out a profitable niche.”

You bet. The housing bust of 2005-7 forced American families to deleverage – pay off debt – so today indebtedness there averages ‘only’ 100% of disposable income. In contrast, we’re at 164%. And rising. If Mr. Veselinovich gets his way, debt levels will now puff up faster than a diseased whale carcass cooking in the Newfoundland sun.

By the way, speaking of the US real estate experience, evidence shows the lower a middle class person’s income, the greater amount of personal net worth they put into a house. Just like us with our 1.99% mortgages and 5% down payments. There’s no question the current Canadian market is being carried on the backs of those who need both mortgage insurance (because they are high-ratio borrowers) and cheap loan rates. But these are also the folks least able to withstand a decline. Meanwhile rich people are more diversified, and do not have all their eggs in one basket.

So this is interesting. See who got slammed the most when American real estate values cratered…

miansufi-housing-feature-21 modified

Source: ThirtyFiveEight.com

Well, there ya go. Even-cheaper money, along with big debt and higher real estate values, while the economy languishes and employers hack. Hard to imagine a scenario in which more people could learn about economics all at the same time.

Make the call, Joe.

194 comments ↓

#1 hohoho on 05.13.14 at 7:10 pm

> … bankers help facilitate the wealth creation process. But they don’t actually create any wealth themselves …

facilitating wealth creation is a value added process/service, why is it that your value added work creates wealth but banks’ don’t?

#2 ryobime on 05.13.14 at 7:13 pm

And I just wanted to email to you.
Why are you always so up to date????

#3 Daisy Mae on 05.13.14 at 7:16 pm

“This week Veselinovich’s company, Investors Group, better known for mutual funds with fat fees and back-end surprises….”

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

Pulease don’t rub it in. Will I ever get over my disgust? ;-(

#4 Aggregator on 05.13.14 at 7:18 pm

1.99% mortgage? You ain’t seen nothing yet. 0.99% mortgage coming soon to Japanada.

#5 Derek R on 05.13.14 at 7:20 pm

You can write about happy thoughts tomorrow.

#6 Great on 05.13.14 at 7:23 pm

Why wouldn’t “F’s” replacement not see the danger and smack the bank jockeys down?

#7 Daisy Mae on 05.13.14 at 7:24 pm

Three neighbours — all seniors — have bought brand new vehicles which, sadly, depreciated the minute they drove off the lot. Obviously, they’re not reading these extremely informative blogs…which should be compulsory reading for every North American. I guess they figure they “can’t take it with them”.

#8 Mishuko on 05.13.14 at 7:28 pm

Isn’t IG’s lending insured by the chmc? If it is then they literally have nothing to lose…

Hmm….

#9 Westsider on 05.13.14 at 7:28 pm

It only keeps getting better here in the BPOE

http://www.cbc.ca/news/canada/british-columbia/vancouver-s-most-expensive-teardown-1.2640603

#10 yann on 05.13.14 at 7:29 pm

Big Oliver is not even as useful as a golf tee…

Just a filler for a post, directly commanded from the PMO; which is happy to see people falling in the debt slavery trap.

Unfortunate, and a lot of people will get hurt.

#11 ILoveCharts on 05.13.14 at 7:29 pm

Surprised that this article didn’t make the cut today. It’s a bad sign when there is so much to cover!
http://www.cbc.ca/news/business/jobs-recovery-overstated-bank-of-canada-study-finds-1.2641227

#12 Happy Renting on 05.13.14 at 7:30 pm

Oh Garth, there will be no learning, only cries for government bailouts.

Thanks for trying to write something positive, though. I’ll hold out hope for tomorrow. :)

#13 Happy Renting on 05.13.14 at 7:35 pm

Speaking of back-end surprises, you could do an update on the neighbourhood that has the sex house. Might still be depressing, but the double entendres you could use would be hilarious. :)

#14 johnny d on 05.13.14 at 7:41 pm

Joe Oliver also made it very clear that he wants to reduce the government’s exposure to mortgages. By doing that and allowing the free market to steer itself, he actually might be exactly what we need. Banks will actually have to consider risk when lending money.

Many people will get crushed as things play out.

#15 Dean Mason on 05.13.14 at 7:41 pm

Those clueless to have mutual funds and other high annual fee and high MER’s taken from their Investors Group investments and associated with IG, watch out.

I would not be surprised if they put higher RRSP, RESP, TFSA, RRIF, LIRA, LIF and other transfer fees, higher MER’s and other higher annual fees and who knows what else they can get from the financially illiterate and inexperienced.

Many variable rate mortgages do not have to follow the Bank of Canada or the official prime rate.

They can have their own prime rate at what they ever decide. Hint, they can increase their prime rate and not have to tinker their current discount of 1.01% from Investors Group prime.

#16 Cow Man on 05.13.14 at 7:41 pm

Sir Garth:

How IG has changed. I used to work for them. It was always about encouraging savings, paying down debt. Doing Personal Financial Reviews to establish where savings could be attained to set aside for investing for the future. Seems now it is all about besting the “Jones”. IG used to teach the same subjects Garth speaks about. No more I guess.

#17 jess on 05.13.14 at 7:42 pm

rogue incorporators

http://www.nakedcapitalism.com/2014/05/new-zealand-shell-company-incorporation-franchises.html

#18 Julie on 05.13.14 at 7:49 pm

I have no debt and no matter how enticing the rate, I won’t be running out to get myself a “bigger and better” house. People need to use a little common sense but that seems in short supply with a segment of the population! As for Target, it’s not doing well because its stores in Canada suck – merchandise is nothing like what US stores carry.

#19 the Jaguar on 05.13.14 at 7:49 pm

http://www.bbc.co.uk/programmes/p01yjjbp

Larry Summers was on the BBC talking about Secular Stagnation….worth a listen. Echos many of the things Garth has written about.
Garth, isn’t it time for a Bandit update?

#20 David Lee on 05.13.14 at 7:50 pm

I think Barb will be out of a job soon, given she works for the RE industry, via the Vancouver Sun:

http://www.vancouversun.com/opinion/columnists/Barbara+Yaffe+Vancouver+house+prices+pushed+apathetic/9835246/story.html

Or maybe, she knows she’s on her way out and is just not holding back.

#21 Robert Schiller on 05.13.14 at 7:52 pm

Garth is correct – the way down will be painful for those fully loaded with debt!

#22 DaleFromCalgary on 05.13.14 at 7:52 pm

#1 – It is a false premise that banks facilitate wealth creation. They not only don’t, they parasitize wealth creators by skimming off interest, commissions, and service fees. Banks, stockbrokers, insurance agents, governments, and realtors all take a piece of the action but do not create wealth.

Wealth is created by farmers, fishermen, miners, foresters, and manufacturers. They create useful things for our lives. The tradesmen who build houses or unplug basement drains perform useful services. The bankers and realtors do nothing of lasting value for society.

#23 BG on 05.13.14 at 7:57 pm

The main reason why Target failed is because they plain suck.

They were supposed to bring good deals and variety, instead they bring almost empty shelves and a very very poor selection.

I and others I know waited for months for them to open their brand new stores. I was ready to spend my dollars (and I’m a saver).

But they are a freaking joke. And this is the main reason why they will retreat south.

#24 Retired Boomer - WI on 05.13.14 at 8:06 pm

IG – might as well mean “Infected Group” as they are infecting the economy of that which it needs none of – more cheap DEBT.

Not surprisingly there will be takers of the new tease, only to be “infected” later with something penicillin can’t cure.

OH well, not my problem. Today, decided to sell some of those insanely run-up dividend paying stocks, time to take cash off the table, and wait. “Sell in May, and go away”…
“A time to sell, a time to buy, and a time”…. look up the original.

Yeah, you ARE special. Garth, would have preferred to read some “Good News’ for a change, got any?

Tomorrow, maybe yes

#25 Old Man on 05.13.14 at 8:06 pm

The Olive Man always has a stunned look on his face as if he don’t know which door to open. Caesar picked his puppet wisely as he must be the oldest Minister of Financial Reform on record. He will surely take his orders without a complaint being uttered, and at any world meeting will impress nobody. He will read a prepared script and insist on no questions because has no clue what it mean’t. Welcome to Mr. No Nothing!

#26 Mister Obvious on 05.13.14 at 8:09 pm

As I recall, looking back over nearly four years of reading Greater Fool, there was no prediction of just how incredibly stupid things were going to get before they improved. Are there new depths of financial irresponsibility yet to plumb?

It’s getting kinda scary now.

#27 Darryl on 05.13.14 at 8:09 pm

Target is just another Zellers. Same high prices for same crappy China stuff. Only difference is that they have more cashiers.

#28 Smartalox on 05.13.14 at 8:10 pm

Speaking about unhappy thoughts, some recent news about domestic violence cases on the rise in Vancouver. I know that financial stress is not the only cause, but it can be a significant stressor on top of an already miserable situation, particularly if one partner supports the household, and the other spends, uses credit unwisely, or badgers the breadwinner into poor financial decisions.

If you’re in any relationship where you’re being abused, or have been threatened with abuse, get out of the situation and get help, no matter the financial cost.

Make your safety your first priority.

#29 Shawn on 05.13.14 at 8:14 pm

2% Mortgage rates

What a wonderful time to take out a mortgage.

Can people with no mortgage on their house do this?

I dare say a guy could mortgage his paid for house and invest in some InvestorsGroup mutual funds and come out a ahead maybe.

We can beat the bank here. Borrow at 2% and invest in Bank preferred shares at closer to 5%?

There are rate reset prefs that pay 4.4% (Enbridge for example) . These will almost certainly trade back close to par in five years. So you can lock in 3 years borrowed at 2%, deduct the interest and make 4.4% on a tax advantaged pref share. It’s not huge but it probably works about to $3k per year per $100k borrowed of relatively free money.

I am not sure it is worth doing because you would have to take out a large mortgage to make it worth while, but it’s a low risk way to make money.

You have to love Investors Group here, no? I mean how can anyone complain about a bank giving out ultra low rate mortgages?

We complained when interest rates were high so let us rejoice when they are low.

#30 Spiltbongwater on 05.13.14 at 8:16 pm

I thought long term mortgage rates are priced from the bond market? Is the bond market dictating 1.99%? How can IG circumvent the bond market pricing?

FTR I don’t use plastic thingies to mark my golf ball. I use 1 Turkish Lira, or the equivalent of 53 cents, rounded up being worth 55 cents.

Fixed-rate mortgages are financed in the bond market. VRMs are not. — Garth

#31 Vangrrl on 05.13.14 at 8:19 pm

On Friday a friend posted on Facebook about this mortgage rate. He used to work for Investors Group, and still has friends who work for them. Of 18 comments mine was the only one that wasn’t along the lines of ‘Ra Ra!’ And ‘So awesome!’ When I commented that it encourages more debt and further drives up prices, I was pretty much ignored, other than by the friend who said something like ‘Maybe for new buyers, but it’s money in the pockets of existing owners’. Then I commented that rates will be going up and I got an ‘LOL’. Hopeless.

#32 takla on 05.13.14 at 8:19 pm

soon Canada’s last wensday of each month will become a growth story
Our lovely nabours to the south now have 50 million on gov. assistance and food stamps and can actually measure the uptick in consumer purchases related to there”welfare day” on the 3rd of every month consumer good sales pick up and by the 20th of every month the peons are broke and comsumtion drops.
Unemployement rate has gone up almost 1 % point in my area of the lower mainland since last fall,jobs are being jettisoned,the point could come that the banks will pay you to take a mortgage if this keeps up,at least theyd be able to keep THIER jobs in that senerio.
Listening to the scanner before bed these days is getting extremely depressing,people are being financially stressed ,at least 5 suicides since x-mas @ least the fuzz can ping their cell phones to find their resting places,now that’s progress.

#33 Dig Deep on 05.13.14 at 8:20 pm

Banks create nothing more than illusion. It all started when a bank decided to lend the same dollar multiple times.

Look around you and ask the question, “Is it paid for?”.

Someone wrote a book once about the Canadian banking system, Tower of Gold, Feet of Clay. Too true.

#34 sheane wallace on 05.13.14 at 8:28 pm

strange, I actually like Target.

Joe has no balls, just the plastic thingies.
Just cut fuc..ng CMHC insurance

http://www.counterpunch.org/2014/05/13/the-federal-reserve-and-an-unsustainable-empire/

#35 dance...dancetotheradio on 05.13.14 at 8:32 pm

I like Target.
They are a huge improvement over Zeller’s.

#36 sheane wallace on 05.13.14 at 8:33 pm

#4 Aggregator on 05.13.14 at 7:18 pm
1.99% mortgage? You ain’t seen nothing yet. 0.99% mortgage coming soon to Japanada.
—————————————–

It could be -0.11 % + free hooker biweekly.

#37 Calgary Owner (2nd. Round) on 05.13.14 at 8:37 pm

What is IG’s driver for doing this? Is it a wild gamble against the odds that the BoC will rise the key rate imminently? 3 years is a long time, and according to what you said two days ago (and have said for a long time), prime rates will be substantially higher than 3% at that time, but now IG will keep them at 1.99% until then. Is it possible that they have solid information to back up this move? Do you think other banks will jump as well, or at least reduce their rates to try to draw some competition for IG? Are they just nuts?

It’s a variable-rate loan. IG takes little risk. — Garth

#38 Weedeater on 05.13.14 at 8:41 pm

If only the government would just covering the lenders’ collective asses with CMHC. none of this would be happening if the lenders had the risk on their balance sheet. Grandfather existing mortgages and get taxpayers off the hook.

#39 Shawn on 05.13.14 at 8:46 pm

InvestorsGroup

Is tieing up their money for three years at prime minus 1.01%, currently at 1.99%.

Would any of you tie up money that way when you could invest it elsewhere?

#40 Hotta Sheeple on 05.13.14 at 8:50 pm

“…….Mortgages at 1.99% are intended to encourage people without money to buy properties they wouldn’t otherwise be able to afford……”
=========================

Didn’t we see this (disaster) movie before?

Why are Canadian politicians so eager to allow a sequel to a known box office bomb, circa 2008?

Unless, of course, you’re the ‘Conservative’ Party of Temporary Foreign Workers and Taxpayer Backstopped Record Bank Profits.

#41 Smoking Man on 05.13.14 at 8:51 pm

So what do I do, put salt on people’s wounds, rub crap in people’s faces regarding rates..

Told you all go long on bonds at peek yield when Batman said hello.

I better than that… I want to respond to Ying Yang..

Yes I do believe in ET…

You got to believe in something, trillions of stars.. Probability very favorable.

Just because there’s a church on every corner, don’t mean there is a God..

But because so many believe you look like an idiot if you show up at Sunday school and scream out.. Are you idiots for real.?

Truth by popular consensus…

My Alien DNA only operates on logic, probability with a bit of JD.

#42 Nemesis on 05.13.14 at 8:51 pm

#Econ403:MMT&DSGE/AConfectioner’sApproachToEconometricModelling #TheCandyFactory’sSordidSecrets #RaceToTheKettle?

http://youtu.be/yLWtAk0ScyE

#43 sheane wallace on 05.13.14 at 8:56 pm

#39 Weedeater

This is how slave labour is milked. Stupid 2 bit lawyer (F) playing financial minister sold us en gros, at least our liability as guarantee for somebody else’s stupidity.

I am sure his sons will have good careers on Bay Street.

#44 Aggregator on 05.13.14 at 8:59 pm

#21 David Lee

"The truth is, housing is a cash cow for governments. Politicians don’t seem to much care how neighbourhoods are disrupted as long the market remains hot and the cash keeps coming."

Precisely. And banks too. This is why nothing will change as long as government, banks and politicians are in bed together keeping their profits rolling at taxpayer's expense.

You don't read much about it on Canadian MSM or filtered Google.ca that you're redirected to purposely. Go to Baidu's search and you'll find those seminars sponsored by Canadian banks or United Nation organizations , helping promote the mainland-to-Canada homebuyer manifesto. They're all in on it. You just don't hear about it.

Chinese developers favored Vancouver real estate market (Translated)

By the Real Estate International Conference organized by the Institute of Urban Land held in Vancouver on the 9th, more than 3,000 real estate industry representatives from around the world discussed the current situation and prospects of the international real estate market, and agreed that Chinese investors favor the Vancouver real estate market.

China has been helping real estate investors to invest in Canada's legal adviser Lujia Ji told Xinhua News Agency reporters interview that is a clear trend over the past few years, Chinese investors have started to buy only detached from the past to buy real estate projects, such as Apartment Property , residential and commercial buildings and hotels. According to his observation, Chinese investors on Vancouver land prices and do not care, they can get more attention for the development of the building or site.

Vancouver Mayor Robertson spoke at the meeting, Vancouver is now in Asia outside of Asia's most distinctive cities, urban development is very diverse, and he hoped that more Asian investors to invest in Vancouver.

Vancouver architect Bonifeisi believes the Vancouver Chinese investors are increasingly seen as a creative urban development land. Bonifeisi said: "Chinese investors favor of Vancouver, both buy a condo, but also the development of Chinese real estate developers have our customers, they have developed a multi-purpose high-rise real estate in Vancouver."

What did you think? Gregor was promoting high tech jobs in China? Pffft. This UN funded muppet is out there helping corrupt state-owned developers trying to get their money out of China by selling off Van's land.

#45 coastal on 05.13.14 at 9:05 pm

Victoria CTV news had a bit on it, the fine print says you must qualify for 4.99% but I can imagine how many get the funny money calculations of income to squeeze by. Sleazy is all you can say. My retirement home will be even cheaper after this puppy tanks like 1981 thanks to the Owe Man.

#46 Old Man on 05.13.14 at 9:06 pm

#33 takla – you must be a snoop which reminds me that have a good one in my office closet which retailed for $400.00 at the old radio shack. Oh its been years listening to all the dirt as it has a digital scanner. I forgot all about it, so thanks for the reminder, as am bringing it back into service tonight.

#47 Mr. Frugal on 05.13.14 at 9:07 pm

Not only did the poor lose the most during the global financial crisis they also gained the least during the recovery. The top 1% have made off like bandits. But, there is no point crying over spilled milk. The only way to get ahead is to learn to dance to Wall Street’s tune. Spend less, save more and invest it in the right assets.

#48 will on 05.13.14 at 9:09 pm

Very interesting observation on Target. Never thought of that. Always thought it was bad management. It’s very simple – Canadians are tapped out. Thanx for that Garth.

#49 Inglorious Investor on 05.13.14 at 9:13 pm

“Joe Oliver, gives every indication he’s the political equivalent of those little plastic thingies that golfers put down to mark where their balls used to be”

Nicely done.

#50 Habs76-79 on 05.13.14 at 9:15 pm

Regardless of all this manipulative, crony capitalistic bull flop, life is still quite straight forward, if one lives beyond their actual means for too long, one finds out the hard way about the consequences. Too bad all too many of us in the modern world, feel that we are entitled to live life the way we dream about even without funds to support such. We live too much entitled, thinking the costs of such will not be a burden, when in reality those that lend you such lifestyles with easy credit will take what they want or believe they should get from you.

#51 omg on 05.13.14 at 9:15 pm

Shrewd Move by Investors Group

Been hearing about this all day on the radio and on the TV.

Investor Groups got several million dollars worth of free advertising out of this and will at least break even on the mortgages.

Pretty smart.

#52 Inglorious Investor on 05.13.14 at 9:20 pm

1.99… They’ve scraped the bottom of the barrel so thoroughly the wood looks brand new. When do they start using a chisel? Oh, I forgot; they always have.

#53 omg on 05.13.14 at 9:21 pm

Victoria Target stores are depressing to go to, they are almost always empty. The Walmarts on the other hand is always busy.

Canadians do not want upscale discount stores, the people who shop at discount stores in Canada are too tapped out – they just want the lowest prices, not lowish prices.

If Target pulls out there will be a lot of huge empty stores available for some other US retailer to take over.

#54 X on 05.13.14 at 9:28 pm

The Big Owe….How fitting.

It really is sad, every day goes by, we get closer to the inevitable rise in the US lending rate as well as bond yields…higher rates are coming. It is too bad more was not done to protect the sheep from slaughter, shame on those with the power to do anything about it.

#55 Victoria Tea Party on 05.13.14 at 9:29 pm

SUM OF THE PARTS…OR PARSING THE SUMS!

St. Garth of The Clappers Of Doom Society, in his three latest posts, has summed up what’s facing the Rest Of Us in the so-called civilized, industrialized, world.

It is called a depression, pure and freakin’ simple. There is no way to sugar-coat this baby. Not this time. Prepare for the long, lean times ahead.

Want proof? As we anxiously await a revived jobs market which won’t be happening, look up the joyless economic stats from Canada, the US, the EU, China and Japan. All the important economic indicators, especially consumer spending metrics, are stomach-churningingly down. Nobody in the US, for example, seems to be buying according to April stats released hours ago, including those annoying i-pads or whatever.

Check them out for yourselves on CNBC, and the rest of the economic cheerleaders of failing empirical models and you must ask yourself: who, or what, is next?

Well, the stock market, and the bond market, depending on sovereign debt levels and corporate greed which will drive interest rates and prices every which way, but your way.

Then there’s the coomodities including oil and gold. Oil persists in the 100 dollar US a barrel zone even though we’re told that the USA has become the new Saudi Arabia of oil thanks to mega-fracking activities. OK. But oil’s still in C-note territory. Why? Because of economic uncertainty. Gold awaits a revival, but when?

Fact is, we’re in worse condition than in pre-2008. Much worse.

And the poor slobs entering Canada’s soon-to-be-throttled real estate industry have no clue what lies ahead.

Broken, busted and all clapped out is what.

BTW when the stock markets begin tanking watch for the US Fed to crank up new QE. Will it help?
Hope so. Gotta keep this old carney show going.

#56 Pope Nosty Snugglebumd the 666ce on 05.13.14 at 9:49 pm

#204 Old Man on 05.13.14 at 7:14 pm — “The NATO countries are lining up with military troops to fly into Nigeria to find those kidnapped girls.”

The main reason for the US heading into Nigeria is not the girls, but this and this.

But do not be concerned, as this is a first class example of “one reaps what he sows.”

Just as the shills like to cause trouble in other countries to further their own ends, so the same is being done to them at the same time. It really has become an enormously silly world.

#57 TurnerNation on 05.13.14 at 9:51 pm

Nemesis, anything over five posts per day is gaucheness.

#58 Smoking Man on 05.13.14 at 9:55 pm

#56 X on 05.13.14 at 9:28 pmIt really is sad, every day goes by, we get closer to the inevitable rise in the US lending rate as well as bond yields…higher rates are coming. It is too bad more was not done to protect the sheep from slaughter, shame on those with the power to do anything about it.
……….

Rates are never going up again….

However, jobs that’s a different story…

Technology making humans redundant, boomers will be spending less. Growth flat…

Rares like lead on Jupiter….

#59 rosie "moving forward" in the knowledge that, "this won't end well" on 05.13.14 at 10:06 pm

A couple of references to cheap Chinese crap require clarification. The wild west capitalism that produces the world’s consumer goods comes at a price. Air, land and water pollution is epic. Finding consumer products made in 1st world, regulated economies is possible. You just have to start looking.

http://www.theguardian.com/environment/2014/apr/23/china-half-groundwater-polluted

#60 Junior Juice on 05.13.14 at 10:12 pm

I guess now the only question is where a lowly retail investor can buy some 10 year credit default swaps?

#61 MarcFromOttawa on 05.13.14 at 10:15 pm

Canadians owe the most per capita of any G8 country and yet we also have the richest middle class according to CBC; with good services and great quality of life.

#62 MarcFromOttawa on 05.13.14 at 10:20 pm

Any stats on how much of the deleveraring that happened in the U.S. was due to debt defaults?

#63 Detalumis on 05.13.14 at 10:25 pm

#55 OMG is right, I don’t want another junk store, Wal-Mart has the “I don’t care about quality market” sewn up. I buy almost everything online now or at a handful of independent bricks and mortar specialty stores that provide quality and service. I don’t wear poor quality, fall apart clothes and plastic shoes. I don’t fill my house with tchotchkes. I don’t eat big piles of packaged foods, Target is full of that sort of garbage.

#64 Kris on 05.13.14 at 10:28 pm

#10 yann on 05.13.14 at 7:29 pm
Big Oliver is not even as useful as a golf tee…

Just a filler for a post, directly commanded from the PMO; which is happy to see people falling in the debt slavery trap.

Unfortunate, and a lot of people will get hurt.

Sure, you will get hurt for living in yer basement.

#65 Geoff on 05.13.14 at 10:29 pm

#10 yann on 05.13.14 at 7:29 pm
Big Oliver is not even as useful as a golf tee…

Just a filler for a post, directly commanded from the PMO; which is happy to see people falling in the debt slavery trap.

Unfortunate, and a lot of people will get hurt.

Sure, its you who will get hurt for living in yer rented basement.

#66 not 1st on 05.13.14 at 10:30 pm

How come the U.S. housing crash was over and done with in 18 months and here its going on 8 years and still nothing.

#67 45north on 05.13.14 at 10:30 pm

Joe Oliver, gives every indication he’s the political equivalent of those little plastic thingies that golfers put down to mark where their balls used to be.

best post ever

I’m going to spell it out: in the US the wealthiest were hit but the poorest were wiped out. Wiped out! Joe represents the riding of Eglinton-Lawrence. If you own a house in Eglinton-Lawrence you are wealthy. I mean if you own it outright.

Still Garth does point out how to fight the next election and win, lose or draw keep your head up.

#68 TurnerNation on 05.13.14 at 10:36 pm

Chatter about Rona, Leon’s. Check out subprime chart, Easyhome – EH.TO

#69 John in Mtl on 05.13.14 at 10:37 pm

Like I said before… sure, people with high debt might be having more fun with more things than the prudent and wise people who don’t get indebted up to their eyeballs. But in the end, if they get squeezed too hard, they’ll just declare bankruptcy and walk away. Bad credit rating after that? who cares really, since most know that you are “pardoned” after 7 years and the banks will bend over backwards to have you back as a debt slave by letting you borrow once again. Even bankruptcy is sold as a “monthly payment”, like a mortgage, a car or furniture at The Brick!

Bankruptcy (law) is a joke, you still get to keep your house if you can make payments, keep your car if you need it for a living and no, they won’t force you to abandon your BM for a Kia. You might have to sell granny’s silverware and your 55 inch tv… all just stuff you can get by without.

When the SHTF, who will be left to pay the mess? prudent, wise and balanced people (like me) who acted responsibly. We truly now live in a world where anything goes, nothing matters and nobody cares (or is responsible, accountable).

J

#70 Cici on 05.13.14 at 10:37 pm

Good Lord, this is just getting more and more idiotic.

I don’t fully buy the whole Target story though. If you ask me, they freaked when things tanked in the US, thought it would be good to get some Canadian exposure to make up for the losses, took too long and paid to much to aquire Zellers, and then realized retail in Canada was on path to a certain destruction, which is why they never bothered to deploy a successful Canadian launch. Even months after the official Canadian openings, shelves were half-stocked if not nearly completely bare…the flagship store in my community was even out of TOOTHBRUSHES when I was in the market for one.

Or, perhaps they paid peanuts for Zellers and got all the real estate for pretty penny, and are now hoping to hawk it as RE goes a little higher, and are using poor sales as an excuse to cash in on the commercial building transactions??

Well, this is just speculation, but it certainly does smell awfully fishy ;-(

#71 Phil Indablanque on 05.13.14 at 10:41 pm

“debt levels will now puff up faster than a diseased whale carcass cooking in the Newfoundland sun.”

Sounds like you’ve been hanging out with Ron James!

#72 Sydneysider on 05.13.14 at 10:58 pm

It would be interesting to redraw that graph using not the debt, but the cost of servicing that debt. My impression is that nobody in Australia or Canada pays much attention to the house price, just the size of the monthly repayments.

#73 JonB on 05.13.14 at 11:01 pm

Do people on this blog actually understand Mortgages?

You have to use the BoC rate to qualify for a variable rate thus raising the bar significantly for people to qualify

#74 Jon B on 05.13.14 at 11:06 pm

A society full of debt slaves is probably easier to govern than one where the majority are free and without debt. The latter have real power. The former are chained down and must come to accept they answer to a master. Joe is probably fine knowing the debt slave farm will only get bigger as greedy bankers fight to shackle more “clients” with these low rates.

#75 D.D. Corkum on 05.13.14 at 11:11 pm

23 DaleFromCalgary on 05.13.14 at 7:52 pm

—-

If a farmer loans money to buy equipment that helps him create wealth faster, then its unfair to call the lender a “parasite” on wealth creation just because they collect fees or interest.

#76 takla on 05.13.14 at 11:13 pm

re#48 old man..”takla you must be a snoop”
Yup,knowledge is power as the NSA says so I mount my own counterintell.Since we sold and moved into the city there is lots of crime,break-ins,assualts ect ect. all local and after dark it can get dangerously interesting.
Wife and I used to pop popcorn on a slow sat night and listen to the scanner for hrs for cheap entertainment.
Unfortunately in these times the crime,domestic assaults,suicides,ect ect have become somewhat sad.Still listen nightly but more for property protection then for entertainment purposes…had 2 property crimes in the last month on the culdisac

As the economy weakens just more pissed/desperate people

#77 Bill Gable on 05.13.14 at 11:19 pm

#33 Talk

(*as in Landing?)

The grammar and spelling might be skewed, but sadly, you have nailed it.

I am seeing closed store fronts on the west side here in BrokeLandia, and a ton of friends are starting to hurt.

It is everywhere.

Today’s post by Mr. Turner is one to be read carefully. Deflation is something we don’t need at this point in this chess match.

There are many dangers extant and D E B T is your enemy. That being said. It’s an exquisite trap.

People struggle to pay down debt, don’t spend, and so it kills business and then employment suffers and it becomes a nasty feedback loop.

I will say it again, my blog dog friend. “These be perilous times”, and time to be ready to put a reef in the Main, Jim…..”

I never thought I would see history repeat itself. It was just stuff we studied in Economics at UVic.

Incroyable.

#78 Andrew Woburn on 05.13.14 at 11:47 pm

#187 Condo Minion on 05.13.14 at 4:47 pm
This might be a harbinger:

Profits down 85% year over year for this furniture retailer.
=========================

A long established Vancouver Island furniture chain, Stokes, just crashed last week and two mainland major furniture stores, Sandy’s and Ashley’s, folded their cards in Victoria last winter although they both continue to operate in Vancouver. Coincidence?

#79 Freedom First on 05.13.14 at 11:51 pm

….where their balls used to be…..well said Garth……nothing but the truth:)

The only reason we have not had the RE over leveraged house horny burned by the debt volcano eruption yet is the unforeseen massive #’s of price inflation techniques used to lead the unaware lambs to slaughter. IG bringing out 1.99% ? . Say it ain’t so Joe!

#80 Andrew Woburn on 05.13.14 at 11:56 pm

Why did Target bomb? Because, says Moody’s, Canadians are tapped out.
=============================

Or because the Target management is paying to plant a story to cover their retreat. My wife never met a retail store she didn’t like until I took her to Target in Nanaimo. She lasted five minutes, a world record. Normally it takes her at least fifteen minutes to buy a simple package of Kleenex even when she’s in a hurry. Her two comments were, “Why did they bother?” and “I’m never going back”.

#81 trackpants on 05.14.14 at 12:01 am

You rent. It is simple. You see them come on here and blast Garth for being one of those Boomers that “how would he start from Zero today?”

Get a grip. Beardo next door to me started from zero and he’ll still be there. Hipster Beard works “seasonal” when work comes.
At 30 he ain’t earning. Sits at home collects EI till it runs out and lets his woman work temp jobs.
“so hard..this economy”
hahahaha

BCD probably stands for Beardo “something” Beard face Hipster Douche

Climb the ranks and work hard.
Save.
Invest in business. Get an accountant. He found me investment avenues.

Consult. Be good at one thing and do it well.

Growing a beard and carrying your kid around like a &ji(Stain) isn’t impressing anyone

Trackpants all the time except when you hit the office or like me that can do it from home

“how would you do it again from zero”
hahahahaha

Hard Work. Get stupid good at something.

Ill take a dose of deflation with my rent payment.

Mercedes down the street is still working overseas for months at a time while his wife flirtsExOrs the guy with the one gear bike

His beard gets a work out. Besides pouring drinks he has found something he is really really good at

*&*ing rich doOOds wife while he flies to China

#82 Bcd on 05.14.14 at 12:08 am

#37 sheane wallace on 05.13.14 at 8:33 pm
#4 Aggregator on 05.13.14 at 7:18 pm
1.99% mortgage? You ain’t seen nothing yet. 0.99% mortgage coming soon to Japanada.
—————————————–

It could be -0.11 % + free hooker biweekly.

————————

I’d be in for a pound if they offered the bi-weekly hooker teaser rate.

#83 Larry on 05.14.14 at 12:29 am

Well, rate is not going higher anytime soon …

http://www.cbc.ca/news/business/investors-group-unveils-3-year-mortgage-at-1-99-1.2641367

#84 Marco Polo on 05.14.14 at 12:35 am

I clearly see the business model here. It’s almost a very smart one.

let me register as a bank, go to the bond market, and borrow money at 1 percent. I’ll loan this back to the mortgage holder, at 1 percent as well, and actually have an operational loss.

now the fine print. My product would be variable rate, five year, with no exit clause. It would be available only to Alberta residents, who have a moderately hot housing market, and massive oil reserves to eventually repay it.

it would be available only to mortgage holders over 200K, with houses of 2000sq ft or greater.

if the rates go down, below 1 percent, I immediately break even, as I’m no longer operating at a loss. If the rates increase, I make money, and have my mortagees tied up for several years.

this is a case of modern slavery. A slave to a home you don’t even own.

#85 Christopher Lackey on 05.14.14 at 12:47 am

Investors is world famous for their nosebleed MERs. I wonder how many
people know that they. Mackenzie and great west, some of the biggest
non bank financial sector players in canada, are controlled by power corp conglomerate and the desmarais family of montreal. Incidentally IGM has had a nice run on the tsx. But call investors for a mortgage at your own peril…theyll try to recruit you!

#86 Andrew Woburn on 05.14.14 at 12:56 am

#121 Detalumis on 05.13.14 at 7:39 am
all made possible by money extracted from people who are paying something called taxes. You and your squeeze my dear are actually a net drain to the economy and a huge burden. In places like the Philippines you would be living a hard scrabble life, glorious sunsets, sandy beaches but certainly living hand to mouth.
====================================

As far as we know The Cat Food Lady and her “squeeze” have worked and paid taxes all their lives and she is still cleaning houses to support herself. Are you effectively telling them they should just lie down on the ice floe and rest a while as the tribe moves on? If they are charity cases and a “huge burden” on society, what are you going to say to the inevitable future legions of permanently jobless Canadians stranded by outsourcing and automation. Shall we tell them the economic boat has all the oarsmen it needs so why don’t they all just walk the plank?

The middle class is steadily eroding at the margins. Today it’s mainly an erosion of job quality; tomorrow its the jobs themselves. This has been happening to the working classes for a while now. There are unnerving accounts of blue collar, middle-aged men marooned in places like rural West Virginia, unemployable, untrainable and living on welfare, food stamps and oxycontin aka “hillbilly heroin”. You probably don’t have to look far to find the same thing in Canada.

Economists often claim that technology creates more jobs than it destroys by creating entirely new occupations and industries. This has been true for society as a whole but past technological disruption only replaced manual or mechanical clerical activities. It freed up time and valuable brainpower for other pursuits. But it’s different when human perception and intelligence is on the line and the machine is better, faster, cheaper and adaptable. We lose.

So are we citizens with an inalienable economic share in our native country or are we itinerant fruit pickers who can be sent home when there’s nothing to harvest? Who owns Canada? Are we talking a guaranteed annual income or hobo camps? I guess we are going to find out over the next 15-20 years how, or if, democracy actually works in Canada. Remember business income does not necessarily collapse as the ranks of unemployed Canadians swell because the global middle class market will continue growing for a long time.

How will these new leisure classes use their time and minimal income – charitable volunteering and adult education or sex, drugs and whatever loud music is in fashion? Will they react to watching “Lifestyles of the Rich and Flagrant”, with passivity or violence? They won’t be buying condos on Yonge Street or SFH in Kitsilano so where will they live. On reservations?

The issues are political: how will income be distributed if we no longer value labour, and sociological: how will we value ourselves if we can’t work. Compared to this, global warming is a side show.

#87 Shot Ski on 05.14.14 at 12:57 am

Off topic, but may I pour some gasoline onto the fire?
http://energeticcity.ca/article/news/2014/05/13/bc-suspends-licence-of-real-estate-agency

#88 Som of Ponzi on 05.14.14 at 12:59 am

According to the chart, Deutschland leads the pack.
When will Canukistan ever learn?

#89 John on 05.14.14 at 1:05 am

I’ll say it once and I’ll say it again, we have a leadership vaccuum nationally and internationally. It will not end well
Read Lee Iacocca’s book: Where have all the Leaders Gone

#90 Waterloo Resident on 05.14.14 at 1:16 am

This is why houses ‘EVENTUALLY’ will stop rising, and interest rates will fall to zero %, perhaps even go negative for a few decades. ( houses might stop rising, but I cannot say if they will fall or not.) :

TECHNOLOGY, that’s why.

You see, technology is destroying jobs, and as the jobs disappear then the economy slows down and governments drop rates to try to stimulate the economy back to a higher level.
(Add in the effect of ‘PEAK OIL’ resulting in world growth going negative and you’ve got a recipe for employment disaster.)

Lets take ‘MOVIES’ as an example:

– In the 90’s I used to use a VCR to record movies from cable TV. The movies were fairly fuzzy and low resolution, so buying commercial VCR recorded movies made sense, and that industry kept a lot of people employed.

– Starting in 2000 I bought a DVD recorder and started copying cable TV movies onto DVD+R discs. They were so much smaller than those bulky VCR cassettes.

– in 2007 I bought a SONY RDR-HX730 DVD Recorder for $499. It had a hard-drive so I could copy movies to the hard drive and then edit them before copying them to DVD discs. I thought that was the pinnacle of technology.

– in 2012 I got high-speed Internet, got a new computer, and found out from some kids how to Google the term: ( Watch online free putlocker “Star Wars” ) (substitute megashare, sockshare, tubeplus, and firedrive, to get different results). As a result I have downloaded over 1000 movies in extremely high quality digital format, all from the Internet, all for free. They are not the 4 GB sized quality that you get from commercial DVDs, no, that is ILLEGAL. No, these are only 350 KB to 650 KB in size each, not as good as a DVD, but 10-times better than what I used to record from Cable TV using my VCR recorder, so that’s good enough for me. All of these movies are on an external hard drive the size of a pack of cigarettes, replacing 4 bookshelves full of VCR cassettes that used to cover an entire wall in the basement.

As you can see, the revolution in technology is just amazing. Now just imagine how companies are using this same revolution in technology to replace your job with workers from foreign countries where the labour costs are a small fraction of ours?

THAT IS WHY JOBS ARE DISAPPARING faster than you can imagine.

So as jobs disappear, the economy takes a huge hit, and interest rates tank. But the 80% of the people who still have jobs use those lower rates to speculate on real estate and before you know it the cost of houses has doubled. So that $1 Million Toronto crack shack is now selling for $2.1 Million in 2017. I am almost positive that as jobs disappear, interest rates will head towards zero, and as they do houses will head towards $10 Million each.

#91 Buy? Curious? on 05.14.14 at 1:40 am

Based on my observations and my understanding of it, Jealousy must be a horrible affiction to have. “Wah, wah, wah! How does a dumbass like Buy? Curious? manage to be doing better than me? Wah, wah, wah.” I see all the time. Though to my face, they describe me as one lucky bastatrd. Here’s my secret. All I did was look at all the successful people around me and try to copy what they were doing. Sure I made mistakes, but the common theme they all had was that they got into the housing market early. So this teaser rate may not be a bad thing. If a young family can get in, then maybe sell in 2-3 years and use the profit they make to get a bigger deposit and smaller mortgage, wouldn’t that be smarter than renting a place for the same time, struggling to save? Of course it is, silly goose!

If you want to rent because of “work mobility”, freedom or whatever, go ahead my worker bees. But, if you want to get ahead, start plans for retiring in Europe or Thailand, take advantage of the rate.

https://www.youtube.com/watch?v=Xv2VIEY9-A8

#92 Mack on 05.14.14 at 1:58 am

Shhhhhh. Don’t tell Garth
http://www.vancouversun.com/opinion/columnists/Barbara+Yaffe+Vancouver+house+prices+pushed+apathetic/9835246/story.html
Remember when we were told interest rates were going up and we wouldn’t see rates rise again? Too funny

#93 Mike T. on 05.14.14 at 2:00 am

#38 Calgary Owner (2nd. Round)

What is IG’s driver for doing this?

According to the article on CBC the plan is not to make money on the 1.99 but to use that as a platform to sell mutual funds, insurance and whatever else

also – renew in 3 years and hope to do better?

maybe this is the new norm for creating ‘growth’

http://www.cbc.ca/news/business/investors-group-unveils-3-year-mortgage-at-1-99-1.2641367

#94 Gandalf on 05.14.14 at 2:02 am

Japan, After the Bubble

Back to the future with this article. Just think Canada 10 years down the road while reading this. The truth is out there…

“Looking back, it’s odd that so few people saw the bust coming. I certainly didn’t.” – Jin Matsushita

73 year old former Japanese stockbroker now working the graveyard shift at a 24hr convenience store!

http://content.time.com/time/specials/packages/article/0,28804,1902809_1902810_1905192-1,00.html

#95 Andrew Woburn on 05.14.14 at 2:09 am

A little ray of sunshine to brighten your day.

“In their quest to cripple solar power and protect the profits of their fossil fuels-based businesses, the Koch brothers have run into an unexpected and potent adversary: tea party conservatives.”

http://www.latimes.com/opinion/topoftheticket/la-na-tt-koch-brothers-new-foe-20140502-story.html

#96 juno on 05.14.14 at 2:26 am

Its not the banks fault, its the toothless government which allows the top 1% to manupulate the masses.

The banks are in control and make the rules as they please, The Real-estate agents does what they have to make a living, lie steal and cheat.

But the government allows this fiasco to occur. #1 problem CMHC. Get rid of CMHC and the problem goes away. If someone wants to insure these people let the free market dictate the real market value with government interference. Then you will see interest rates go back to normal, and down payment being more sane. And better procedures and credit check.

Cmon they say they don’t have stats on sales and etc. For over 12 years the real estate market has been booming, They have stats, just doesn’t want the average joe to see them when they can stir up some frankennumbers to keep the young-ones in heat!

#97 saltpony on 05.14.14 at 2:55 am

Garth,
How is the ankle? Are you generally ambulating yet?
xo
Saltpony

#98 SofaKing on 05.14.14 at 3:18 am

Investors Group… what a joke that outfit is.

Remember, ohh what’s his name… that worked for IG and then started Berkshire Investment Group and stole $Millions from investors. Anyway, he got sentenced for 9 years in 2010, paroled in Oct 2012!

Anyway, back to my point on IG. They, as many other financial institutions are simply out of control! Nothing the public or government says can stop these crack addicts of debt re-hypothecation. The Canadian central bank, better not, ever use tax payer money when the day comes that these addicts crash our financial system and come crying for socialized bail-outs/bail-ins.

#99 Londoner on 05.14.14 at 4:50 am

“Mortgages at 1.99% are intended to encourage people without money to buy properties they wouldn’t otherwise be able to afford, or to purchase more expensive real estate than would be possible at the crazy, insane rate of, say, 2.99%.”

Here in the UK we’ve had sub 2% variable rate mortgages available to retail clients for +5 years. The introduction of these rates had no measurable impact on the price of houses or mortgage originations across the UK. Home prices are driven by a number of variables of which interest rates are but one.

Again, you will not see the BOE start raising rates unless it’s accompanied by economic growth. Let’s see what Carney has to say today.

#100 Londoner on 05.14.14 at 5:17 am

Point of clarification on my earlier post. When I say “retail” clients I mean ordinary retail clients vs high net worth retail clients, not vs institutional clients. Point is that 1.99% (and lower) VRMs have been available in Canada for quite a while.

#101 Londoner on 05.14.14 at 5:46 am

So we have the results. Despite the UK unemployment rate dropping to 6.8%, well below the rate a which the BOE said it would consider raising interest rates, and despite the fact that the GDP growth forecast has been raised, the BOE has pledged to keeps rates low. What a disappiontment to all the people who were expecting the BOE to signal an early rise in rates.

As I’ve said before, the central bank of any fiat monetary system would rather risk overshooting the inflation target then risk losing growth. Rates will only rise when real income and productivity growth is sustainable.

Do you really think Canada is any different?

#102 Realtor # 1 GTA on 05.14.14 at 6:49 am

Like I said before, Banks will offer prime minus one like they did before
Interest rates are not going up thanks to QE by BoC
BoC knows consumers are extremely interest rate sensitive
With no job growth and soon a “housing correction” why would they raise rates???

Months into tapering a nothing rates are going lower!
Time to throw out 70% ownership rate stat.

Jobs losses is your only hope
its all about – Debt service ratio

#103 bigrider on 05.14.14 at 6:55 am

#42 Smoking man- ” trillions of stars…believe in ET”

Trillions of stars, actually 100’s of trillions yes, ET mathematically from a probability standpoint, therefore probable existence BUT

Trillions multiplied by trillions of kilometres separating these stars not to mention millions upon millions of years of civilizations coming into existence and extinction(also probable) and since the speed of light is fastest speed (governed by physics proved by Einstein) Stephen Hawking would agree with ET existence but not in their visits to earth.

#104 Sebee on 05.14.14 at 7:02 am

Look at Germany on that chart. Disciplined aren’t they?

#105 TheCatFoodLady on 05.14.14 at 7:32 am

From the ‘bete noire’ post comments; specifically Detalumis at #121. Two issues… first about ‘preparing kids for fast paced change’ – I didn’t mean being able to inoculate them against the hard grind life can be. I don’t think you can prepare anyone for that; it’s got to be lived. What I was trying to say – obviously poorly – was that they need to be told that “things ain’t what they used to be”; you need to try & pick education & training that gives you the best chance of staying ahead of the wolf pack at the door. Minimal debt, maximum mobility – the factors that have been discussed here ad nauseum.

And as much as I’d like to, I simply cannot argue the fact that fiscally, the Main Squeeze & I are a net drain on Canadian society. In most other countries in the world…we’d be LUCKY to be eating cat food. I work – I don’t turn down cleaning jobs, gardening jobs, babysitting, dog walking, car shovelling; whatever I can get that’s legal. Honest work is honest work & I can arrange almost any job around medical needs at home.

‘Poverty as a Virtue Syndrome’. There is nothing inherently virtuous about poverty, wealth or anything in between. It’s more a case of me trying extract a few ounces of dignity out of our situation. You are treated differently when it’s known you’re poor – condescension, assumptions of lack of intelligence, addictions, lack of morals, complete fecklessness – the daily bread of poverty.

Damned right I seek out ‘Queen of the World’ moments. They don’t happen often & I cherish them when they do as they’re a nice change from choosing between buying a needed shirt or needed jacket when you can’t swing both. They’re a nice change from the clients who think by offering me a bit more money, they can buy more than cleaning services – if you get my drift. And there’s a whole lot more of that sort of unpleasantness than I could ever have imagined. It sucks but it’s part of my reality.

I’m in my mid fifties, competing with everybody & his/her dog for work. I still find plenty; it just happens its work no one wants because it’s physically laborious, repetitive & at times flat out boring. Dodging the horny old goats who can’t understand that waving cash under my nose isn’t going to result in a little interlude is… degrading, insulting & rage inducing.

So yeah, when I can steal away fishing for a few hours, sitting in PEACE & not being harassed, I’ll take it. And I mean it when I say it could be far worse. At least there’s no debt to worry about.

#106 Deb on 05.14.14 at 7:39 am

An additional reason as to why Target bombed here is their strange view of Canada as merely a 51st state. They foolishly planned the new Canadian stores based on a model that works in Trenton, New Jersey.
Proof? I went to one of their stores in mid-January looking for long underwear and thermal socks. They had neither. I asked when they expected to get them in? They didn’t know.
As I left the store, back into the -44 Saskatchewan breeze, I remember thinking that if they can’t get socks and underwear right, they are truly doomed in Canada.

#107 Fortune500 on 05.14.14 at 7:46 am

We should start a similar initiative here:

http://www.saveoursavers.co.uk/

#108 Not an economist on 05.14.14 at 7:50 am

“Make the call, Joe.”

Not a chance, Garth. Come on, you’ve been a part of this dog and pony show called the conservative caucus. You know there’s only one man that gives the final yay or nay on every single word that comes out of any minister’s mouth.

It’s not Joe’s call to make. And if you still have sources inside the ruling cult, you know the plan is “steady as she goes”. Steady indeed. Highly unlikely there’s enough air left to pump up this bubble till after the 2015 election. But they’re sure not going to stand in any corporation’s way if they figure they can milk the cow one more time, and in the process delay the inevitable a bit longer.

2% loans, subprime, teaser rates, the works. Right at the inflation target for CPI, basically free money (at least in the very short term until the teaser rates reset). Wow. This is quite literally the last round of fools. There’s nowhere else to go, and I have no idea what anyone can do when the housing market shits the bed. Are they going to lend at negative interest rates? Or what?

#109 annand on 05.14.14 at 8:11 am

You are starting to sound like dr doom or a zero hedge guy.

#110 TurnerNation on 05.14.14 at 8:27 am

1.99% rates? Hockey stick time in GTA, SM called it.

Anyone recall the short-lived Hooters Air?
Started by Smoking men I bet.
http://en.wikipedia.org/wiki/Hooters_Air

– Metals bottomed here as I expected since last week.

#111 Bargains everywhere on 05.14.14 at 8:34 am

#108 TheCatFoodLady on 05.14.14 at 7:32 am

So many people here, including me, really enjoy your writing. Do you have a separate blog? If not, it might be something to consider. I don’t know the first thing about blogging but you always hear about people making money at it. I think you’d have a pretty good shot.

#112 maxx on 05.14.14 at 8:41 am

#15 johnny d on 05.13.14 at 7:41 pm

“Joe Oliver also made it very clear that he wants to reduce the government’s exposure to mortgages.”

Want, can and/or will………….we’ll see if and when the second and third options come to pass. My money’s on an external black swan event as catalyst.

I am completely gobsmacked that our leaders, possessing more formal education than any other generation and having access to so much intellectual and digital resources are still holding out for a major fiscal miracle by continuing to print, print, print and backstopping banks to excess.

#113 I sing the praises of the Cat Food Lady on 05.14.14 at 8:43 am

One salient point that may have escaped your single detractor is that you probably have a higher net worth than more than a few of the greater fools that Garth writes about. And, you are in a very good position to get through a downturn. Simply put, no one is going to get the bailiff to come around and evict you from a house that has been foreclosed upon.

Lastly, what sort of country would this be if we did not provide assistance to those who needed it? There are no guarantees in life. Anyone can fall on hard times.

Your views are refreshingly honest and your comments are interesting to read, as well as being well written. Your insights and commentary are valuable and I am certain that they are food for thought for many others. Good work!

#114 alan parsons on 05.14.14 at 9:00 am

Interest rates are cost of capital and are not related directly to the rate of growth. In the 80-es the rates were in the range of 18-21 % with no growth in economy. Well then there was growth in the monetary base, we have that now as well.

The world is growing at 4-5 % yearly rate (China is growing at 7.5%) while certain western countries suffocated by the banks actually contract. Well, they lie about it by massaging statistics (mostly inflation) to show real growth and steal from savers who are duped to believe that there is no inflation. The other reason for the severe economic decline is the aggressive outsourcing.

The problem is that we have an open world economy and in lack of strict capital controls (for now) everyone is free to and smart people are investing in the other, growing world.

No one is forcing savers to keep their savings at 0.25 GIC rate, they can freely invest their money abroad.

It is a confidence game for certain currencies. Maintained by massaging statistics and open lies (e.g. Belgium buying 50 billion of treasuries per month), blatant manipulation of markets.

The last pillar is currency swaps – we, North America at this point truly depend on Europe to subsidize our depreciating currencies as there is none else left (Japan and China left that train).

The problem is that with the housing gasbag blown out of proportion and the banks and taxpayers on the hook there is no way to deflate house prices (yes high houses prices are here to stay but in depreciating currencies) so that built inflation pressure will be release any time soon.

And once the currency swaps limits are reached we would have sudden implosion in the value of certain currencies. I doubt Germans would be able to support us for an extended period of time. And if somebody starts to actually sell treasuries… Belgium would have to step in and buy them. There goes the currency swaps quota.

Many people would be very surprised as they would be left holding the bag with worthless savings.

Never trust mainstream media or government propaganda, do it at your own peril.

Corporations and banks would be fine but the sheeple….

MSM and banks are but a tool for disinformation and market rigging.
The fact that this is happening simultaneously in all the countries of the British-American empire where the bank owners are actually an international cartel shows that this is most likely by intend.

The world is not exactly what you see on CNN, there is global repositioning taking place where the shepple in the west is milked to death while the farm (and corporations and bank) owners are diversifying with BRICS, the only difference that they won’t have full control there and would have to cut a deal.

#115 alan parsons on 05.14.14 at 9:18 am

Bonds? Let me tell you where to shove those. We are facing some very interesting 5 years. There would be blaming (international speculators, gold bugs), Russians, Chinese,… you name it.

The capital controls is the scary part, at this point I believe they are inevitable. Somebody could show up on TV and proclaim that we (actually you stupid savers and investors) must sacrifice for our economy and country. So to shield you from market volatility we will take over all you investment capital and savings (houses excluded), will take care of it as we are better managers and will give you instead these 20 years safe government bonds at 1 % interest and a promise of a meager pension at the age of 75 (to be 80 by the time you retire). And all further gains on gold would be taxed at windfall rates.

#116 Nemesis on 05.14.14 at 9:20 am

@Aggregator/#46…

No worries, mate – ‘OlCrusty’s ‘on top of it’, as it were.

Oh, snap!

“She also banged the gong at the Hong Kong Stock Exchange.”

[Tyee] – Christy Clark’s Never Ending Campaign: A year after out-politicking the NDP, BC’s premier is still in election mode. And one fast-growing job sector is spin agencies.

…”A month earlier, Jobs Minister Shirley Bond was spouting the government’s line about a million job openings by 2020. The Skills for Jobs Blueprint, however, quietly announced the goal posts had been moved to 2022.

Clark and deputy premier Rich Coleman, who is also the LNG minister, jetted off to Malaysia, Singapore and Hong Kong for a week.

Clark’s fifth trade mission in three years, May 2-9, allowed her to partake in familiar campaign behaviour: posing for photos in ethnic clothing and posing for photos while wearing a hardhat.”…

http://www.thetyee.ca/News/2014/05/14/Christy-Clarks-Never-Ending-Campaign/

[NoteToGT: Gauche though it may be, what editorial wag wouldn’t have been tempted to run that piece under the banner, “GongBanged in HongKong: ResourceTourism & Premier Clark’s AsianVacation”]

#117 Ralph Cramdown on 05.14.14 at 9:26 am

#95 Buy? Curious? — “Here’s my secret. All I did was look at all the successful people around me and try to copy what they were doing. Sure I made mistakes, but the common theme they all had was that they got into the housing market early.”

Most of the successful guys in my neighbourhood wear rings on the third finger of their left hands, so I got one too. How do I tell whether I’m doing better than if I wasn’t wearing this silly magic charm?

#118 X on 05.14.14 at 9:49 am

In most balanced markets RE agents don’t lobby the gov’t to tell them so….

http://www.theglobeandmail.com/report-on-business/economy/housing/realtors-tell-harper-housing-market-still-quite-balanced/article18655503/

Two cities with average home price of a million, mortgages under 2%, borrow from your RRSP for downpayment, which is ridiculous, as you only need 2.5% of your own money to put down, you can borrow the other 2.5% down….sounds like normal RE market conditions to me, an agent told me so.

#119 Just the facts Ma'am on 05.14.14 at 9:53 am

#115 Bargains everywhere on 05.14.14 at 8:34 am
#108 TheCatFoodLady on 05.14.14 at 7:32 am

So many people here, including me, really enjoy your writing. Do you have a separate blog? If not, it might be something to consider. I don’t know the first thing about blogging but you always hear about people making money at it. I think you’d have a pretty good shot.
————————————————
I was thinking the same thing yesterday.

#120 Buy? Curious? on 05.14.14 at 9:55 am

#121 Ralph Cramdown on 05.14.14 at 9:26 am

“Most of the successful guys in my neighbourhood wear rings on the third finger of their left hands, so I got one too. How do I tell whether I’m doing better than if I wasn’t wearing this silly magic charm?”

What an excellent point! Dudes wearing jewelery as sign of success or as some of my MILF’s like to call “peacocking”. Your neighbourhood sounds lovely. Which part of Newfoundland are from? Are mullets still a sign of virility too?

Bwahahaha!

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

#121 Daisy Mae on 05.14.14 at 9:59 am

#6 Great: “Why wouldn’t “F’s” replacement not see the danger and smack the bank jockeys down?”

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

Because it’s a political ‘game’ the feds are playing and Harper calls the shots?

#122 Daisy Mae on 05.14.14 at 10:07 am

#17 Cow Man: “IG used to teach the same subjects Garth speaks about. No more I guess.”

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

Just when was that, I wonder? All I ever got from my former ‘adviser’ was very bad advice…which, fortunately, I ignored. ‘Cause he was wrong.

#123 Bottoms_Up on 05.14.14 at 10:08 am

Garth, another moment of brilliant humour:

“…gives every indication he’s the political equivalent of those little plastic thingies that golfers put down to mark where their balls used to be.”

Canadians really need to get doing something about their debt loads. Reduce expectations? Stop spending on wants and focus on needs?

Still browsing the new car ads, the advertised biweekly payments keep dropping (a few weeks ago, they were touted around $85, now down into the high $70’s).

#124 Daisy Mae on 05.14.14 at 10:13 am

#19 Julie: “As for Target, it’s not doing well because its stores in Canada suck – merchandise is nothing like what US stores carry.”

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

So…it boils down to poor management and greed. Of course, it does. It amazes me that these so-called VIPs running the show are so stupid.

#125 Bottoms_Up on 05.14.14 at 10:14 am

#110 Deb on 05.14.14 at 7:39 am
———————————–
Target in Ottawa: clean, great customer service. Some deals on a few items, rest of the stuff overpriced, therefore no point shopping there, unless you are OK trading higher prices for customer service.

#126 brainsail on 05.14.14 at 10:23 am

The comments are entertaining.

“3 ways America should be more like Canada”

http://finance.yahoo.com/blogs/daily-ticker/why-canada-is-prospering-and-america-isn-t-150359533.html

#127 Sheane Wallace on 05.14.14 at 10:24 am

There goes the middle class.

https://ca.finance.yahoo.com/news/sears-holdings-considering-selling-51-per-cent-stake-103554026.html

#128 Daisy Mae on 05.14.14 at 10:48 am

#65 Detalumis: “#55 OMG is right, I don’t want another junk store, Wal-Mart has the “I don’t care about quality market” sewn up.”

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

LOL Reminds me of our present clubhouse furniture!

Council sold our beautiful designer furniture because it “was getting old” — their opinion, and they broke a bylaw when they did that. Replaced it will Walmart junk. That junk is now falling apart. If a chair crashes under the weight of a homeowner we’re facing a lawsuit….

Can’t fix stupid.

#129 TheCatFoodLady on 05.14.14 at 10:54 am

KREA’s April data just came out – “we’re in trouble, Skippy.” A bad month was described as ‘a quiet month’ by the KREA president – gee, I would have expected all that pent up demand from ‘bad weather’ to be springing forth like the spring bulbs & pot holes.

Year over year, sales down 18%. Prices DROPPED 3.9%. It was quickly noted that wasn’t the start of a trend but a reflection of a drop from a honking big hike last April. I guess the visitorless open houses weren’t the start of a trend either – people must have been busy scouring the snow moulded lawns for any sign of green rather than scraping up green for down payments. New listings were down 14% year over year but the inventory is still higher – yeah, that happens when places aren’t selling.

Denials be damned – I think we ARE seeing a trend. The city is tapped out & the only establishments I see doing well are discount grocers & Dollarama.

http://creastats.crea.ca/king/index.htm

The downtown business council has been called on the carpet for a high downtown storefront vacancy rate – over 10%. The city council members doing the most kvetching about that need reminding it is not the business council’s job to recruit new tenants. Downtown shopping is facing serious & multiple issues & as much as they’d like to, busted buyers can’t afford to support local stores for the sake of loyalty.

http://www.thewhig.com/2014/05/12/report-points-to-down-in-downtown

#130 karlhungus on 05.14.14 at 11:12 am

So in Edmonton the average household earns over $100,000 and has debts of $164,000 (including mortgage). Wheres the problem???

#131 Nemesis on 05.14.14 at 11:15 am

#WickedWednesdayPotPourri #ChinaDaily’sTipsforTouringPremiers #RampagingChickens #EvenAWormWillTurn

[ChinaDaily] – Forum trends: How to make friends with foreigners

http://www.chinadaily.com.cn/opinion/2014-05/14/content_17503543.htm#Contentp

[UK Telegraph] – Thousands of chickens escape on motorway and hop into cars

http://www.telegraph.co.uk/news/picturegalleries/howaboutthat/10830118/Thousands-of-chickens-escape-on-motorway-and-hop-into-cars.html

[LAT] – Prop. 13 Loophole to Close

“The staunchest defender of California’s politically untouchable property-tax initiative, Proposition 13, has tacitly approved a bid to change the landmark law for the first time since voters passed it 36 years ago.

The Howard Jarvis Taxpayers Assn., the anti-tax group named for the champion of the 1978 measure, dropped its opposition to a bill that would clamp down on companies avoiding higher property taxes when they buy commercial real estate by using a corporate ownership maneuver.”…

http://www.latimes.com/local/politics/la-me-prop13-20140514-story.html

[NoteToGT: That chicken piece should have run as: MotorWayMayhem: Belligerent Broilers CarjackCommuters]

#132 G-Dawg on 05.14.14 at 11:15 am

Negative..Target bombed because they did a shitty job on the roll out and have refused to fix the basic issue.

“Because, says Moody’s, Canadians are tapped out. We are more “economically stressed” than Americans, and it’s being tied expressly to our piggy-like devotion to debt. “The challenged macro economy has created even more competition for the scarce consumer dollar. This makes Target’s entry even more challenging as it tries to carve out a profitable niche.”

Target opened to empty shelves…little of the selection promised….none of the great prices that buyers had been looking forward to from their US Target store shopping experience….instead the stores were drudgery and sameness without any change from the Zellers and Sears soviet style retail.

We see Canadians flocking across the border to spend money…so CDNs are definatley not ‘tapped out’…..they are just sick of getting ripped off and offered crappy product like the CDN retail scene seems to think is all thats deserved this side of the border. Every store in Canada with the same attitude should go broke…..to hell with them.

#133 Old Man on 05.14.14 at 11:16 am

#132 Daisy Mae – the best piece of furniture I own is a Victorian king chair. Someone threw it at the curb for a junk pick-up and took two of us to get it in a truck as its destination was in my basement. I stripped it down and refitted the web seating, as can refinish furniture, but was too good a find, so had it finely done in red velvet and a nice finish for a modest fee. Today its a show piece worth $2,000 or more, and weighs 100 lbs.

#134 gladiator on 05.14.14 at 11:22 am

@TheCatFoodLady:
Agree with posters above saying that you should consider your own blog. Not saying you should go away from here – love your posts and read them thoroughly – it is just that you possess the art of the word and have great views of life. These are enough to create a successful blog. It may even become an additional source of income, and this all – doing what you are naturally inclined and gifted to do.

#135 Avg. Guy on 05.14.14 at 11:31 am

Garth,

Not to nitpick, but your reference for the last chart should read http://fivethirtyeight.com/.

And for those interested, here is the entire article:

http://fivethirtyeight.com/features/why-the-housing-bubble-tanked-the-economy-and-the-tech-bubble-didnt/

It’s an interesting article and even more interesting website. It’s one that I check out daily, along with Garth’s blog!

#136 Derek R on 05.14.14 at 11:31 am

You can mark me off as another Cat Food Lady fan. Her comments are always worth reading.

As for the unkind comments about her being a net drain on the economy, the evidence says “No”.

We all start out as a daily drain on the economy and we all end up that way. It’s only between the ages of 16 and 60 that most of us make a daily contribution. But it’s possible to see roughly how people are doing by looking at their financial situation. If they have negative net worth, they have probably been a net drain so far. If they have positive net worth, they haven’t.

Going by the fact that TCFL has no debt and is living within her means it sounds to me like she is on the plus side and getting “plussier” every day.

And that’s just looking at things from a monetary point of view. If we add the unpaid work that most women do for family and friends, I think that we would discover she has a big positive balance which is not reflected in her straitened circumstances.

So stop knocking her. She’s doing her bit.

#137 chapter 9 on 05.14.14 at 11:51 am

I used to work in a property which is owned by IG and they are hemorrhaging red ink. The retail side alone has spaces that have been empty for almost 10 years now and in the last 3 years they have lost another 50%. Like watching a re run of the Titantic. Office space vacancies match retail as well a lot of square footage sitting empty.
And this is in Alberta!!

#138 Smoking Man on 05.14.14 at 12:03 pm

#107 bigrider on 05.14.14 at 6:55 am

#42 Smoking man- ” trillions of stars…believe in ET”

Trillions of stars, actually 100′s of trillions yes, ET mathematically from a probability standpoint, therefore probable existence BUT

Trillions multiplied by trillions of kilometres separating these stars not to mention millions upon millions of years of civilizations coming into existence and extinction(also probable) and since the speed of light is fastest speed (governed by physics proved by Einstein) Stephen Hawking would agree with ET existence but not in their visits to earth.
……………….

Einstein and Hawk are Wrong….. Period.

CERN shot a neutrino from Switzerland to Italy..
Faster than light.. Proves Tesla (ether) theory.
Ether is the by product energy of my theory of shrinking matter.

Not only can we go faster than light, but much faster.

Einstein was an idiot.. He got most of his stuff from the patient office and his Serbian wife physicist.

Tesla a Serbian…

Smoking Man 1/2 Serbian 1/2 Alien…

#139 armpit on 05.14.14 at 12:05 pm

Unemployment rate lowers to five year low to 6.8 % in England. Carney signals boe moving closer to interest rate hike.

#140 rosie "moving forward" in the knowledge that, "this won't end well" on 05.14.14 at 12:10 pm

Screw Walmart, Target, Canadian Tire, Home Depot etc. China is doing virtually nothing to tackle it’s air pollution problem. Industrial production trumps common sense. Purchasing their products is contributing to a world wide environmental crisis. Buy products from first world regulated economies. There out there if you look.

http://www.theguardian.com/environment/2014/may/14/beijings-smog-police-chinas-war-pollution

#141 Shawn on 05.14.14 at 12:10 pm

CONFUSION REIGNS

From KarlHungus at 134

So in Edmonton the average household earns over $100,000 and has debts of $164,000 (including mortgage). Wheres the problem???

Net of mortgage. — Garth

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

Okay so we have a chart from Moody’s investor services and it is not even clear whether household debt does or does not include mortgage debt. I suspect it does. But no way to know, unless we get word from Moody’s or a link thereto.

No wonder people are confused

But the main point of course is that whatever was on the chart, Canada has a higher household debt to income ratio on average than the others, so that at least is clear and that ws the main point. Hopefully it was measured consistently in each country.

Another main point is that no matter the precise definition the thing is rising in Canada.

#142 High Plains Drifter on 05.14.14 at 12:14 pm

Gulf War 1 got to me, right in the gut and turned me to some hard thinking. I did not have a title for my conclusions but now, I know my Epiphany was, I would not survive 50 if I didn’t start using game theory. That means you have to know who is on the battlefield, what their values and motives are, how big they are, and to let a loose arrow fly, how good are they at scapegoating. By 1995 my salt of the earth father in law suggested I get a job sweeping streets.By the time of his death he would kid me about not having the corner suite. I did get it in 08 and it promptly fell $100,000 by New Year 09. It did not bother me much as my hedges worked and I am not greedy. or nice to people who game me.

#143 Cow Man on 05.14.14 at 12:32 pm

#126 Daisy
1991-1994 Former clients had my wife and myself over for dinner last Saturday. They said if it was not for the intervention I made 20 years ago, they would have saved nothing. It is not the return on investment, it is the discipline to live within your means that makes financial success.

#144 bdy sktrn on 05.14.14 at 12:59 pm

#94 Waterloo Resident on 05.14.14 at 1:16 am

– in 2012 I got high-speed Internet…
————————————————-

you got real internet 2 YEARS AGO!!!!!!!?????????

did you trade in the fred flintstone stone wheeled, foot-propelled car in 2007?

seems like watching all those movies kept you real busy:)

i think we were one of the first few adsl lines in vancouver in 95 or 96 if i recall

i couldn’t even keep a dozen audio cassetes organized , never owned a movie. all streamed now anyway, tech is VERY powerful.

more and more machines will replace humans.

rates stay in toilet.

#145 erebus on 05.14.14 at 1:09 pm

Dayum! house prices accelerating and cheap mortgages galore. It’s not hard to understand why people laugh at the idea of a declining real estate market.

http://www.theglobeandmail.com/report-on-business/economy/housing/home-prices-showing-early-signs-of-accelerating/article18655781/

This is the new normal, and it’s here to stay. I wouldn’t be surprised if some bank comes out with a 0.99% rate very soon. Only a traumatic crash like the one the US can changes people’s minds about houses and debt. Nothing like that will happen in Canada.

#146 EB on 05.14.14 at 1:10 pm

@TheCatFoodLady:

Never mind the blogs, you should look into ebook sales online – there are some impressive opportunities out there right now with Amazon, Barnes&Noble, etc. An excellent way of improving your bottom line each month. Really worth looking into Romance & more.

#147 HogtownIndebted on 05.14.14 at 1:11 pm

Interesting article about the lying Harperites exposed:

http://www.thestar.com/opinion/commentary/2014/05/13/how_the_myth_of_a_canadian_skill_shortage_was_shattered_goar.html

So much of the TFW program appears to have been based upon deliberately fudged stats. The firm collecting data for the Cons used kijiji and counted the same jobs multiple times, when they were posted in different categories, to argue for a lack of Canadians to fill skilled jobs, therefore inventing a justification for foreign workers.

(Hmmm…that strategy sounds very familiar. Did these guys go to the same online correspondence school for statistical training as TREB/CREA staff?)

The Canadian neocon enterprise seems to be so fraudulent, so based upon willful obfuscation and outright lying.

-fake stats supporting TFWs

-‘tough on crime’ bs measures…when the crime rate is dropping substantially (mostly thanks to all those boomers finally getting wrinkly, leaving causing real trouble to the younger and smaller cohorts of the rest of us – I am trying to do my part, really I am, Steve!)

-cancelling the long form census (which recent events prove we really do need) when only 27 people (not “thousands”) complained

-pressuring climate change researchers and scientists to keep quiet

-bullying the Supreme Court, a pure bs move denounced by almost the entire legal community

-abdication of responsibility to address the RE and interest rate bubble, because it’s too close to an election

How stupid do you really have to be to support this kind of crap?

Trudeau is a total lightweight imho, but infinitely better than all this nonsense.

Hudak wants to cut 100,000 jobs and ‘promises 1,000,000’. (Bet his staff took the same statistical training as the people above)

Today, even Hazel McCallion endorsed Wynne over Hudak.

Pretty soon a very large majority of Canadians will reject entirely being any part of such a club that requires you to have an IQ under 85, or at least act like you do.

#148 HogtownIndebted on 05.14.14 at 1:17 pm

An afterthought:

Trudeau is definitely a lightweight, as I said.

What cons don’t realize is, so is Harper, in every way. He is simply not a very bright guy. That he stands out in his caucus as the opposite is revealing, to say the least.

Probably why you left, eh Garth.

#149 Old Man on 05.14.14 at 1:28 pm

I hit upon an operating company with massive holdings which amounts to a spider web of intrigue. They are in big trouble heading for a bankruptcy and must sort this out with further study, as are now doing a shell game with assets. They have an outstanding debt consolidated of a mere $21.1 billion which they cannot pay with present cash flow. Stay tuned as must investigate this further. It is not who you might think, as was not obvious at all; they are hidden under the radar.

#150 bigtown on 05.14.14 at 1:40 pm

It is hard to see deflation in my house. I buy yogourt and have noticed the downsizing on the containers. On most readily edible food products there has been a downsizing of the size of the container and the prices have stayed the same. Going to the cleaners in my house like detergents etc. the same downsizing in smaller container with the same price. My hair colour has doubled in price in less than three years. My Estee Lauder moisturizers are half the size they were three years ago but the same price. Our Bell Fibe bundle started out at $75 three years ago but now is more than double that and gone are more than 75% of the channels. So I have yet to see any deflation in the regular household bills or consumer products we buy. The GREATERFOOL value is priceless as it has been and seeing what other Canadians think is always priceless.

#151 Sheane Wallace on 05.14.14 at 1:46 pm

Justifying the need for foreign workes by looking at Kijiji?

I am wondering how they calculate the CMHC risk, probably by studying the air humidity patterns in Toronto.

#152 Ralph Cramdown on 05.14.14 at 1:47 pm

#151 HogtownIndebted — “What cons don’t realize is, so is Harper, in every way. He is simply not a very bright guy.”

There’s only a few time-tested ways of getting to the top of the greasy pole. Harper did not get there with charm, connections or his own fortune. By elimination, we must conclude that he was a political genius. Has he grown out of touch and surrounded himself with lickspittle sycophants? I think so. But he got there in the first place.

#153 bigrider on 05.14.14 at 1:52 pm

#142 smoking man on CERN and neutrinos

Check your info on neutrinos. They arrive first not faster. This fact due to how they are dispersed in cosmic events.

Hawking and Einstein wrong ?…you being silly now man…you would have been better off arguing for worm holes , quantum shifts or something to that effect.

Why would ET wanna come here anyway ?. I say, pack your bags and start walking( I do mean walking literally) to a non descript ant mound in the middle of the Nevada desert to visit the ants. What no interest ?? Not worth the effort ??? Thought so.

You still haven’t addressed time…what ? intelligent life on this planet has existed for what, maybe 2 million years at best? ? A universe that has for 15 billion. Species come and go and what we are to believe that co-existence and contact with another intelligent species in such a micro dissection of time has occurred on earth?

Tell you what, take a granule of sand, paint it red and flick it onto a beach in Hawaii where the waves are crashing . Fly back to Toronto and then go back and visit that same beach in 30 years and find me that same granule of sand.

The probability of success of that venture is of a magnitude far greater than ET visiting us and making contact. It illustrates the mathematical improbability of such an event ever occurring.

#154 Whitey on 05.14.14 at 1:55 pm

What Newfoundland sun?!?

#155 DreamingIntechnicolour on 05.14.14 at 1:56 pm

Unbelievable…

http://www.dailymail.co.uk/news/article-2628071/The-residential-street-governments-goldmine-How-new-homeowners-small-road-paid-1m-stamp-duty-just-two-years.html#comments

#156 happity on 05.14.14 at 2:01 pm

The EU is gonna have big debt problems emerging this summer or fall, maybe a bail-in will take place.

USA and Canada are not far behind, due to their debt and incestuously integrated global banking and derivatives.

Real estate will be the least of the world’s problems.

#157 A Yank in BC on 05.14.14 at 2:08 pm

I actually like the Target that was built nearby in an old Zellers space. But the prices are noticeably higher for a given product than at a Target in the USA. Perhaps a further indication of how over-valued the CDN dollar is.

#158 Retail Stores on 05.14.14 at 2:08 pm

Take a walk down Robson street in Vancouver. Its like a ghost town of empty stores. Nordstrom’s coming online. YVR retail coming online. Wow did these guys ever miss the boat. Office leasing vacancies are at a decade high. with 2M more sq ft coming online soon.
How are so many smart people not putting all of this together? Ahhh right cause they are all profiting from driving the heard to the nearest cliff.
Its gonna be ugly.

#159 shawn on 05.14.14 at 2:09 pm

Secret to Financial Sucess

Cow Man at 147 said:

It is not the return on investment, it is the discipline to live within your means that makes financial success.

*******************************************
Absolutely correct. People WHINE endlessly about high MERs but mutual fund guys are often the reaon people invest at all.

Sure these people may lose 2.5% to MERs or whatever. And that adds up huge over time.

But I can guarantee you that 7% less 2.5% = 5% on SOMETHING saved monthly and compounded for years is infinitely larger than the full 7% (or 20% for that matter) earned on NOTHING.

The KEY to building wealth always starts with saving. Without some money saved there is nothing for the return to operate on. Next comes time. The percentage return earned becomes important only if the first two are in place.

I don’t think mutual funds are the best solution for all of us or even most.

But for some people the only reason they save is that some mutual fund guy busted his butt to get them started and then held their hand.

Peole who complain that the advisor steered them wrong in 2008 or whatever are often immature and just looking for someone to blame.

Me, I have never sold mutual funds or any type of investment. I just hate to a knee-jerk reaction against advisors – they have their place.

#160 shawn on 05.14.14 at 2:11 pm

Debt Repayment by Companies?

Old Man says

They have an outstanding debt consolidated of a mere $21.1 billion which they cannot pay with present cash flow.

******************************************
That could be a problem byt lots of companies borrow new money to pay old debts and even enterest and can do so for years as long as the lenders trust the cash flow is evntually coming.

Lending is ALL about trust.

#161 Retired Boomer - WI on 05.14.14 at 2:17 pm

#99 ANDREW WOBURN
#109 THE CAT FOOD LADY

Andrew, good job.

The Cat Food Lady – always enjoy your insights, keep it up.
I read most posts here, but unfortunately not always in a timely manner. Few are really great like your usually have been.

As for everyone’s story I know none except what they wish to reveal, and even then who can say they have any fact. I would hope most do, but then so few people in real life are ‘worth keeping.’ At least, that has been my experience. Keep writing! Keep your wits and you will be fine, and you will always have more than enough.

#162 Aggregator on 05.14.14 at 2:23 pm

Here comes U.S. subprime housing 2.0 on top of $1.1 trillion in student loan debt. Video

Forget the stats. The entire U.S. and Canadian economy is now being commanded by Big Gov & Cronies Co.

#163 happity on 05.14.14 at 2:43 pm

Yup, now Russia is having a meeting with China, Iran and others about completely dropping use from trade.

Why?

Because they need to make room for the good folks like garth who want the usd so badly…

#164 jess on 05.14.14 at 2:48 pm

Tax Analysts Video Examines Audit Proof Businesses
@amytselliott via @TaxAnalysts. Check out explanatory video here
http://goo.gl/7ha82X

“In widely held partnerships, there can be thousands of direct partners, many of which might themselves be partnerships. And because ownership in some partnership is traded, just like ownership of stock, someone can be a partner for just a matter of minutes.

There are partnerships that have several hundred thousand ultimate partners. That’s a lot of tax bills to issue. Chances are: the IRS won’t bother with it.

These partnerships essentially shield the partners’ income and deductions from challenge by the IRS. Any partnership item claimed on the partner’s individual return is essentially untouchable.

You are accountable to the I.R.S. for your income. But the owners of some large businesses – some of the wealthiest people in America – aren’t.”

Find out more at tax.org

#165 Zeeman1 on 05.14.14 at 3:11 pm

Garth, food, clothing and groceries are twice as expensive in Canada.

Housing,fuel and taxes are also substantially higher north of the border.

Yes, many Canadians, especially those that are almost mortgage poor, are screwed.

But hey, you were warning them.

#166 Condo Minion on 05.14.14 at 3:19 pm

Real estate criminal captured in Toronto (did he flee here thinking he could start up the same kind of racket soon?)

——————————————————————

Broadcast time: 14:56
Wednesday, May 14, 2014

Fugitive Squad
416-808-5930

On Wednesday, May 14, 2014, members of the Toronto Police Fugitive Squad, working along with the RCMP – GTA Financial Crimes Section and the FBI, arrested international wanted fugitive John Star, 43.

He was wanted by the FBI in New York for fraudulently obtaining over $10 million USD in loans through a mortgage schemes.

It is alleged that:

– between January 2005 and May 2007, Star and others (unknown) developed a scheme whereby they purchased real estate properties at foreclosure auctions using shell companies. The properties were then resold to straw buyers for inflated prices.

He had been arrested in New York on April 6, 2010, and released on bail. On April 28, 2010, Star failed to appear in court. It is believed he fled the USA to Canada at this time under an alias.

Information was received by the RCMP – GTA Financial Crimes Section that the fugitive may be living in the Toronto area under the alias Elvis Ized. The Toronto Fugitive Squad was contacted to assist in his location and arrest. The Fugitive Squad worked with the RCMP and FBI to identify him as the wanted fugitive.

On Wednesday, May 14, 2014, a Provisional Arrest Warrant was obtained and he was arrested without incident in the Jane Street and Highway 401 area.

For more news, visit TPSnews.ca.

#167 sciencemonkey on 05.14.14 at 3:20 pm

@90 Andrew
Very well written post.

#168 Big Brother on 05.14.14 at 3:21 pm

#142 Smoking Man on 05.14.14 at 12:03 pm
#107 bigrider on 05.14.14 at 6:55 am
#42 Smoking man- ” trillions of stars…believe in ET”
Trillions of stars, actually 100′s of trillions yes, ET mathematically from a probability standpoint, therefore probable existence BUT
Trillions multiplied by trillions of kilometres separating these stars not to mention millions upon millions of years of civilizations coming into existence and extinction(also probable) and since the speed of light is fastest speed (governed by physics proved by Einstein) Stephen Hawking would agree with ET existence but not in their visits to earth.
……………….
Einstein and Hawk are Wrong….. Period.
CERN shot a neutrino from Switzerland to Italy..
Faster than light.. Proves Tesla (ether) theory.
Ether is the by product energy of my theory of shrinking matter.
Not only can we go faster than light, but much faster.
Einstein was an idiot.. He got most of his stuff from the patient office and his Serbian wife physicist.
Tesla a Serbian…
Smoking Man 1/2 Serbian 1/2 Alien…

;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;
MKULTRA says 1/2 Serbian 1/2 Greek…….
Zero percent Alien.
One Hundred percent loony {:-0
See you in Vegas at the poolside bar.

#169 Dean Mason on 05.14.14 at 3:37 pm

Here we go again! Canada, U.S. bond yields deflating but it is intensifying today.

U.S. bonds, 30 year 3.37%, 10 year 2.54%, 5 year 1.56% versus 3.92% 30 year, 3.01% 10 year just about 9 months ago.

Canada bonds, 30 year 2.82%, 10 year 2.28%, 5 year 1.55%.

Remember the 5 year Canada bond was as high as 2.25% just about 9 months ago.

Canada 30 year bonds yields hit a high of 3.25% and Canada 10 year bonds hit a high of 2.87% just about 9 months ago.

The Canadian government should of waited issuing their 50 year bonds just below 2.97% about 16 days ago.

#170 Porsche on 05.14.14 at 3:44 pm

Sears tells Canada to take a hike.

It’s an interesting idea as it comes in the wake of Target’s having established Canada as the Vietnam of American retail expansion opportunities.

Moody’s says Sears Holdings exploration of strategic alternatives for its interest in Sears Canada is a credit positive.

#171 I'm not buyin' what they're sellin' on 05.14.14 at 4:10 pm

To paraphrase Moody’s: “If they have the money they will shop at Target”

Surely there must be more to retailing than that.

#172 G-Dawg on 05.14.14 at 4:21 pm

Obozo tells Fannie & Freddie to drop any pretense of mortgage integrity today……back to the good old days of liar loans and no-doc morts……..yahooooooooo……it’s election year!!!!

1.99% morts are what becomes of ZIRP rates on CSB’s and GIC’s. Private money is begging for a return and it took a private banker to put it into the market. The spread is huge…so look for rates to tank even further…..I’d say 1/2 point above GIC’s…… This is not the ‘global bond market’……this is mom & pop savers desperate for a return and too afraid to go into the investment markets on their own.

#173 Son of Ponzi on 05.14.14 at 4:36 pm

“In widely held partnerships, there can be thousands of direct partners, many of which might themselves be partnerships. And because ownership in some partnership is traded, just like ownership of stock, someone can be a partner for just a matter of minutes.
——————
Wow, High Speed Partnerships.

#174 HogtownIndebted on 05.14.14 at 4:40 pm

#156 Ralph Cramdown

That is some pretty fallacious and illogical reasoning there, Ralph. Check your unspoken premises.

You said, about Stephen Harper:

“By elimination, we must conclude that he was a political genius. ”

This is obviously how you regard Harper taking over from that brilliant leader, two-time college dropout Stockwell Day in 2001, in a completely fractured right of centre body politic. Hmm….Wow.

Like others, you fail to appreciate how intellectually underweight conservatism has been in Canada for a long, long time. (The other parties have also had their troubles, too) The simplistic deductive logic you invoke to imply Harper’s intelligence is more like reductio ad absurdum.

It would be the same silliness to say Justin Trudeau beat Harper with his brains, when the inevitable happens. Harper’s impending defeat will have far more to do with his own stupidity and cupidity than the brains of either opposition party. Harper is simply not very intelligent, and his recent actions and statements about the Supreme Court reinforce that. Don’t confuse his anti-democratic cynicism and arrogant bullying with Machiavellian machination, which some valorize as political intelligence.

Your deduction reminds me of this underrated Simpsons episode, when Homer outsmarts (!) the two carneys (including the late Jim Varney, aka Ernest) who tried to steal his house. One carney, Cooder, says to the other after they were outfoxed by Homer:

“We were beaten by the best, boy”

http://seasonwars.com/the-simpsons/s9-12/

(see minute 20:55)

#175 G-Dawg on 05.14.14 at 4:41 pm

There is no such thing as HAM……There is no such thing as HAM….There is no such thing as HAM……now click your heals together and fly away to a never never land where the truth doesn’t exist…

http://www.vancouversun.com/opinion/columnists/Barbara+Yaffe+Vancouver+house+prices+pushed+apathetic/9835246/story.html

Suggesting the influence of HAM in certain circles will see you branded as a racist……so just shut it.

#176 Mike T. on 05.14.14 at 4:43 pm

‘So in Edmonton the average household earns over $100,000 and has debts of $164,000 (including mortgage). Wheres the problem???’

I mean no dis-respect

problem – reading comprehension and a fundamental mis-understanding of statistics and percentages

the problem is yours though un-fortunately

#177 Wei Chi go game on 05.14.14 at 4:56 pm

Best to stay playing Go or chess and ignore all the other problems. Dont leave the house if you dont have to in Calgary.

Now from the latest wankers in Calgary:
http://www.calgaryherald.com/business/real-estate/Calgary+prices+repeat+home+sales+Canada/9837721/story.html

Who are all the morons who support articles like this? This helps no one! Higher prices: Harder to sell sometimes, higher property taxes.

“It’s a reflection of all the positive conditions in Calgary that have been supporting the housing market,” said Lurie. “It’s all the net migration. That’s the main driver I would think at this point. How many people came into this city over the past two years. It’s fuelling so much of this demand and basically supply hasn’t kept pace and that’s why we’ve seen those big price increases.”
Translation: There are jobs here in Calgary. And that big salary will be offset in a big way by housing costs.

Calgary is and will remain, a RIPOFF!

#178 Smoking Man on 05.14.14 at 5:28 pm

#172 Big Brother on 05.14.14 at 3:21 pm

You following me to area 51

#179 Smoking Man on 05.14.14 at 5:39 pm

#157 bigrider on 05.14.14 at 1:52 pm

Time you ask….

Time is only a bi product and illusion of motion.

If you can suspend motion, you can stop time..

Think about that one my little rocket science monkey..

#180 Millenial on 05.14.14 at 6:00 pm

Garth,
What percentage of my assets would you recommend I have invested in physical gold/silver. I’m 32 yrs old, not married, no kids, got $310k in the bank with a paid-off 2009 beat-up camry.
Thanks in advance for your response.

Zero. Of course. — Garth

#181 Old Man on 05.14.14 at 6:05 pm

#164 shawn – we are talking about 50+ business entities and the debt is about $28 billion as the financial statement changes like the wind. They cannot show a consolidated profit, so they are rearranging the deck chairs on the titanic. Hell a hotdog truck makes more money, so they sold a few gems into a new company to raise $2 billion which will be burned to keep the ship afloat. Time is running out as they know its going down and when they are finished others will be holding the bag.

#182 Ralph Cramdown on 05.14.14 at 6:37 pm

#168 jess — “In widely held partnerships, there can be thousands of direct partners, many of which might themselves be partnerships. And because ownership in some partnership is traded, just like ownership of stock, someone can be a partner for just a matter of minutes.”

How is this different from more traditional equities?

Sure, I can buy an LP unit and sell it five minutes later, but I’m not going to get a distribution in that time, and my brokerage reports the purchase and sale to revenue in case I’m remiss claiming my capital gains. If I do get a distribution, I get a T slip at the end of the year. I can get audited, and so can the general partner.

If revenue here or in the US is too lazy or understaffed to audit, that doesn’t have much to do with the vehicle.

The one LP I owned converted to a public corporation last year, so no dealing with that goofy T slip next year. I’ve heard tell of US based ones which require the limited partners to file a state income tax form in every start the partnership does business in. You can bet those suckers are discounted accordingly.

#183 Big Brother on 05.14.14 at 7:50 pm

#182 Smoking Man on 05.14.14 at 5:28 pm
#172 Big Brother on 05.14.14 at 3:21 pm

You following me to area 51
:;:::::::::::::::;;:;;;;;;;;;;;;;::;;;;;;;;;;

We are Area 51!
Where do you think we get our info.

#184 GeorgeSoonToBeRetired on 05.14.14 at 10:08 pm

Ralph #156 and Hogtown $178

Ralph, I think you just got your butt whipped.

No sense trying to defend Harper, no how.

Play nice everyone.

#185 jeff on 05.14.14 at 10:41 pm

re. Target’s bust

Because, says Moody’s, Canadians are tapped out. We are more “economically stressed” than Americans, and it’s being tied expressly to our piggy-like devotion to debt. “The challenged macro economy has created even more competition for the scarce consumer dollar. This makes Target’s entry even more challenging as it tries to carve out a profitable niche.”

____________

no, it’s because their prices and selection suck compared to the Target stores in the US, plain and simple, they are trying to gouge us like every other retailer

#186 Daisy Mae on 05.15.14 at 10:08 am

#137 Old Man: “#132 Daisy Mae – the best piece of furniture I own is a Victorian king chair. Someone threw it at the curb for a junk pick-up…

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

Good find! Our original clubhouse furniture was chosen with care by an interior decorator. It was heavy. But then to withstand the rigors of many, it’d have to be. Present council consulted with the social committee — a special interest group who moved it periodically for their little functions — and sold the furniture. It wasn’t theirs to sell. Two infractions.

I’m biding my time to see what happens next. So far? Nothing.

#187 NM on 05.15.14 at 10:45 am

OR Target is failing because of poor decision making. My wife loves Target US stores because as she puts it, they have better products and deeper discounts. She prefers to shop at other Canadian retailers locally. This sentiment is shared by her friends as well.
When you have an agenda to press every piece of data can be seen to support your cause.

#188 Garth Turner on 05.15.14 at 10:49 am

Moody’s, whose conclusion this is, has no discernible agenda here. — Garth

#189 Enthalpy on 05.15.14 at 4:15 pm

Ive been noticing for quite some time, the behaviour of people at the gas pumps. Yes the cost is up per liter and Im sure that plays a role, but I think(as indicated by this post) that the problem is deeper.

Most people dont fill up their cars. Its $10, $20 or maybe $30. And they float along perpetually doing this. The only time I behaved that way was when I was a poor student with low income/debt and couldnt afford a full tank hit.
I think most people cant either these days. $75 or $100 to fill the tank? Cant do it. Have to pay that mortgage. Oh and the roof just started leaking.
$20 it is and pray it lasts longer than last time.

#190 kelly s. on 05.16.14 at 2:24 pm

Scary stuff. The banks and CMHC have really managed to wreak some havoc.

Another decent response to some terrible bank analysis:

https://www.youtube.com/watch?v=6JpSN__pBG8&list=UU5kjgwwYwNXyoxHWTWYNU0g