Choices

CHOICES modified

And this week started so nicely with Sako the hero dog and Mike the hero paramedic. Then we degenerated into bashing old rich white guys, corporations and me. Oh well. One more thing to blame on the socialists.

During the melee I hinted that the crappy financial position many people are in – which makes them think, ‘what the hell?’ and vote for the NDP – results from choices. This was not based on ideology, but experience. It’s worth a few paras.

A premise of this pathetic blog for years now is that people who make owning real estate their life’s goal assume massive risk in doing so, unless they move carefully. But most don’t. Moist virgins rush headlong into mortgaged condos. Couples scour MLS as soon as they get pregnant. Sixtysomethings routinely retire with mortgages. The savings rate has tanked while homeownership has spiked. Most people have no idea how a dividend works, but they sure know HGTV.

The middle-class has embraced a one-asset strategy, and we know what the consequences are. House prices are at record highs. There’s more household debt than ever existed previously. And the income gap between the 1% and the 99% is yawning wider each year. These things are correlated. There’s a connection between society’s house horniness and a struggling middle class. It’s called choices.

I’ve shown in post after post over the years how renting, for example, is wiser than owning for a wide swath of people. Their shelter costs decline, cash flow improves and liquid investments can build net worth without a debt overhang. No property tax. No big insurance. No maintenance. And no illiquidity and pain, as is now the case in Calgary.

Consistently people underestimate the cost of ownership, because they’re blinded by trumped-up gains in house prices in a narrow slice of markets, and baffled by realtor BS. For example, RBC routinely spells out the shocking truth. Its ‘housing affordability index’ measures the amount of pre-tax household income needed to service the costs of owning a house that you bought with a (for most people) massive 25% downpayment.

Nationally that number is 42.7%, which works out to 58% of the take-home pay for the average family. That leaves 42% for food, cars, transit, clothes, kids, saving and investing. But look at the numbers in Canada’s two bubble markets: in Toronto it’s 57% of pre-tax income (73% of actual cash flow) while in Vancouver it’s 82.4% (which, astonishingly, is 97.3% of take-home pay).

It gets worse. Even once people get houses, they can’t stop dicking around with them. Inflating them. HGTVing them. Throwing their remaining cash flow at them. Borrowing to aggrandize them. Using cash that could be earning money and elevating their income, and piling it into the same asset. In other words, penalizing themselves.

Here’s some proof. The average homeowner (and remember, this includes 70% of Canadians, and virtually all of the downtrodden middle class) plans on spending $17,142 this year on home renovations. The top three expenditures are on painting, laying flooring and upgrading appliances. In contrast, the average RRSP contribution – despite the fact eight in ten people have no defined benefit pension planes – was just under $3,600. The average TFSA contribution, which allows people to invest for tax-free growth now and untaxed increases in income, is $4,800.

Yesterday the rabble back in the comment section of this blog trashed me mercilessly for suggesting BORW guys were paying a fair share of tax (the top 1% provide 22% of government income taxes). That’s because they’re rich, they cried over the moat. And we’re not. We are struggling, and it’s unfair.

All true. The wealthy are getting moreso. But as I have shown here in the past, they’re also more diversified, financially literate, less invested in real estate and tend to focus a lot more on building a business than renovating a kitchen. The rich hold assets. The rest hold debt.

In many cases, this is the direct result of choices.

Kids choose to trade freedom, mobility and often job opportunity for a condo Mom helped finance. House-buying couples today in the GTA or YVR are taking on epic levels of debt at historic low rates to buy the most expensive properties ever. It keeps them from building liquid assets, or augmenting their incomes. It prevents them from exploiting shelters like the TFSA, available to everyone. It guarantees ongoing costs for property tax, insurance or maintenance. And it’s a recipe for heartbreak, because they’re gambling – that prices will always go up and rates never will. Good luck with that.

The real estate fetish has kneecapped millions of our colleagues. It’s made the middle class not only more indebted and less flexible, but it’s suppressed average incomes.

In conclusion. Life’s unfair. But pulling someone else down will not lift you up. At the end, you’re more responsible than anyone for the life you led.

In this space I’ve gifted tools and knowledge to assist you. If that’s not good enough, well, you know what you can do.

293 comments ↓

#1 EL on 05.08.15 at 7:10 pm

I am a cat person.

#2 JL 15 on 05.08.15 at 7:12 pm

Rocco Galati was interviwed on CBC’s The Exchange with Amanda Lang.

http://www.cbc.ca/news/business/rocco-galati-challenges-role-of-bank-of-canada-in-latest-case-1.3065650

#3 Yogi Bear on 05.08.15 at 7:19 pm

Relevant:

http://www.theglobeandmail.com/report-on-business/careers/careers-leadership/laurie-campbell-credit-canada-ceo-shatters-debt-myths/article24342120/

#4 sideline sitter on 05.08.15 at 7:20 pm

As a renter, I know EXACTLY what my monthly nut is… it doesn’t change. That allows me to other things, like vacation in Europe!

Hello, and good night… it’s late here!

#5 crowdedelevatorfartz on 05.08.15 at 7:22 pm

Careful Garth.
Hell hath no fury like the truth scorned.

#6 Paul on 05.08.15 at 7:23 pm

In today’s world when is it ever good enough!

#7 mark on 05.08.15 at 7:23 pm

Take comfort you’re not alone. Kids already owning homes are begging the oldies for cash to buy better ones.

http://www.idiottax.net/2015/05/bomad.html

#8 Karma on 05.08.15 at 7:23 pm

“The middle-class has embraced a one-asset strategy, and we know what the consequences are. House prices are at record highs. There’s more household debt than ever existed previously. And the income gap between the 1% and the 99% is yawning wider each year. These things are correlated. There’s a connection between society’s house horniness and a struggling middle class. It’s called choices.”

That perfectly sums up why I believe in karma. People who make stupid choices deserve their consequences, myself included. I’m not immune to bad choices, nor is any human. But it’s, IMO, best to not get emotional about what’s “fair” or “unfair”, and whether things are getting worse or better. Emotions only hinder one’s objectivity.
———————————–
“In conclusion. Life’s unfair. But pulling someone else down will not lift you up. At the end, you’re more responsible than anyone for the life you led.”

Bingo! Life is unfair. And it’s up to the individual to take charge of their well-being.

I have a simple test for determining what’s “communist” or “capitalist”: Does this policy or activity lead to people being brought down to a lowest common denominator? If so, it’s communistic.

#9 samiam on 05.08.15 at 7:24 pm

Thanks for writing and educating on this blog. This is one of the most selfless blog I have come across. Even after providing the tools people don’t get it then what can? It’s like taking the horse to the water and forcing it to drink. Am a regular reader and a silent follower.

#10 Squirrel Meat on 05.08.15 at 7:26 pm

https://www.youtube.com/watch?v=Io9zr7qcPJc

#11 PM on 05.08.15 at 7:27 pm

I agree with you on everything except this:

Yesterday the rabble back in the comment section of this blog trashed me mercilessly for suggesting BORW guys were paying a fair share of tax (the top 1% provide 22% of government income taxes).

There’s a logical hole in that so huge you can drive a truck through it. Of course wealthy/1%/BORW people are paying a higher percentage of taxes now than 10/20/30 years go. It’s because wealth disparity has had them earn more money than the 99%/middle class/peasants (or whatever class labels you want to apply).

In the middle ages royalty spent more on public services than anyone. They also commanded all resources. It’s easy to pay more when you make more.

I’m sure most would be happier to pay a larger share of the tax bill if they got a bigger slice of pie.

As usual, housing is up. Savings is down. People are stupid.

Question for the rest: market timing is always impossible but I’ve some savings that shouldn’t sit in cash anymore. Still the gains from the beginning of the year are tapering as uncertainty is rising. How would you invest for a 6 month to 2 year outlook. Still the balanced portfolio?

#12 Brian on 05.08.15 at 7:33 pm

Port Moody townhouse is sold! We payed 428K in 2007, and a greater fool just payed 462K for it. Its a dismal return over the 8 years, I’m happy to make a little bit of money. Secured a sweet rental property on a luxury home in Anmore for $500 less than we were shelling out for the townhouse. Doubled our sq footage, an acre for the kids to play, everything is better.

Now… what to do with my 250K. Wife is scared of anything risky, as this money is her “house down payment”. Sigh.

But probably while we rent home values will rise another few hundred G’s?

#13 SI2K on 05.08.15 at 7:40 pm

I don’t know where this cog in the argument fits, exactly, but a number of Gen Xers we know (including ourselves) bought in Toronto once pregnant with #2 because in a tight rental market no landlord near our jobs would rent to couples with toddlers. We bought a clunker in those several years of early childhood in order to not have to leave our jobs in the city due to rampant rental housing discrimination, then we sold when the kids were 10 and 12. By then we were ‘a nice family’, and that raises the prop value. But renting during that birth to ten stage in a landlord’s market is a real problem. Our credit is super high, too. We’re a prof and a banker, but landlords wouldn’t touch us ’04 – ’14 due to babies. Not the condo bought by mom demographic, but I think it’s a real pressure point for young couples.

#14 JRH on 05.08.15 at 7:41 pm

I wonder how long this can continue. Sooner or later somebody has to pay ! I think the powers that be, might have to have a debt reset ? This debt can never be paid off or serviced if interest rates go up.

#15 BottomsUp on 05.08.15 at 7:45 pm

This article made me feel dirty

http://business.financialpost.com/news/economy/the-debt-crisis-in-canada-if-your-paycheque-is-100000-plus-that-means-you

Louise Wallace, who runs a marketing and design business in Salmon Arm, B.C. describes her family as middle class – “Every average that is out there, I’m pretty much right on it,” she says. But after going back to school in her 30s and becoming an entrepreneur she found herself so deep in debt that she ran a blog for a year called 365 Debt Defying Acts, with daily tips to help others (and herself) cut down what she owed.
Canadian culture has shifted to a point where debt is much more acceptable
“I certainly dispute this idea that my debt is a result of bad choices,” she says. “My debt is a result of trying to build a living. I’m not jetting off to Mexico, and buying big screen TV’s.

For many younger Canadians, the fear is that the gap will only get bigger, and houses more expensive. So they’re stretching their budgets on homes they might not otherwise feel they can afford, says David MacDonald, an economist with the Canadian Centre for Policy Alternatives. “It’s not worth saving up because you’d have to put off home ownership for much longer,” he observes.

Really, the only way for many younger Canadians to finance the middle class life they’ve grown up with is to borrow. “On average, younger Canadians are developing an awareness of debt by necessity, which is a new development that wasn’t there before,” says Paul Kershaw, professor at the University of British Columbia’s School of Population & Public Health.

“It is rational for Canadians to carry more household debt,” says TD’s Alexander.

The bottom line: Going into debt is not about a “lesser work ethic, or poorer judgment with respect to the housing market” than our parents or grandparents, says Prof. Kershaw. “I don’t know how you escape becoming more comfortable with debt. Because that’s the marketplace we live in.”

#16 Financial Freedom at 40 on 05.08.15 at 7:47 pm

Quite the day in the Mope & Wail, articles on:
1. Some wonder if it’s time Vancouver acts to slow foreign buyers
2. In deep: The high risks of Canada’s growing addiction to debt Add to …
3. Infographic: Canada’s households now owe a record $1.8-trillion
4. Where high net worth investors have their money Add to …

If you hear the same message enough times in enough places, it starts to stick.

#17 Herf on 05.08.15 at 7:47 pm

#1 EL

“I am a cat person.”

‘Too bad. You have my condolences.

(Just kidding). I like cats too, but I think I still would prefer a dog. As my late mom once said, “Get a dog. A dog will perk up its ears when you call it, come to you, wag its tail when its happy, greet you at the door, . . .”, etc. I think she was right. But cats have their place in peoples’ lives, too.

When I was child, we had two cats (strays we adopted). I remember one day, picking up the one cat and carrying it a short distance home, only to put it down and see all this brown stain on my white t-shirt. Guess I squeezed it too hard or held it the wrong way.’

Oh yeah. I also remember the same cat that crapped on me, one time (for no apparent reason) took a swipe at my face and scratched my eyes after I was standing over it looking at it. I guess it didn’t like being “stared down” and/or it felt threatened. I was something like five or six years old at the time.

#18 pwn3d on 05.08.15 at 7:48 pm

You don’t become wealthy on a salary, I hate to break it to all the bitter whiners out there. The people making the real cash get paid in stock and dividends and make wise investments. So sure, raise taxes on 200k+ and in Ontario 150k+ but it’s not going to hurt the people you’re trying to, just high paid professionals like doctors who worked their ass off for many years spending lots of money on education while you sat on the couch watching tv.

#19 Macrath on 05.08.15 at 7:50 pm

The real estate fetish has suppressed average
incomes ?
How so ?

I thought it was because all our jobs have been shipped
out to some god forsaken slave labour regimes and the part-time, minimum wage, no benefit, workers that are left are being replaced with imported foreign workers.

Great post by the way !

#20 ._. on 05.08.15 at 7:51 pm

“…tend to focus a lot more on building a business than renovating a kitchen…”

Absolutely true.

Mind you, a world where everyone is building a business exists only in the dream of Objectivism, which is about as objective and realistic as Marxism.

The world where everyone rents and puts all the money into ETFs might be as horrible as a world where everybody is chasing real estate.

Acknowledging and embracing variety, multiple paths to happiness and intellectual freedom from sheeple ideologies is a priceless investment for any individual.

#21 Lisa on 05.08.15 at 7:52 pm

This post proves you have more in common with Mr. Money Mustache than you think! He would say, “Wah, Wah! Life is so unfair! Quit blaming others for your own stupid choices!”

#22 Marco from Van on 05.08.15 at 7:53 pm

Garth, If anything this post is a summary of the entirety of this blog. If should be published on page 1 of all the papers carrying RE adverts for a living (to make them worth of the label NEWSpaper).

I can’t have a conversation in van with people unless it has to do with how much their house is worth (house next door got sold), how much debt they carry but leverage is good or, how broke they are. Many of the latter said one or both of the former in the prior years I have known them.

I have opted for renting despite having liquid assets in the 7 figure range (80% of which are managed by a fee based adviser in a balanced portfolio yielding 7% average in over the past 5 years (actually a hair ir two above that).

The business I run here is keeping hiring flat as the hiring costs and infrastructure costs are too high for the productivity and innovation we get in return. I hire abroad and run from here. If RE. cost 1/2, employment overheads (such as the NI and other employment costs I have to pay for out of our operations, before taxes on profits) were lower and people cheaper I would be hiring and creating productive careers here.

But most of those I hire, tell me they need a high paycheck because they have high costs, and aside from designer bags and car leases, my guess most of that is high mortgage repayments (or renting from the bank) for their homes.

With the writing on the wall in paint so bright, I don’t understand why people are so blinded by ignorance instead.

One comment that was missing in the rich bashing (and “rich” is such a stupid label itself) was correlating the concept of “risk” with wealth. Many, of the wealthy have made a lot of their wealth from taking “risk”. I spent the first 15 years of my career, some of those years with very young kids, where I could lose EVERYTHING if things went the wrong way.

Now I am wealthy (but not stupidly – I am still working) and have bough some buffer, but am still much more at risk than many of the more “average” people who denigrate me for being in the 1%.

Most of them have great public sector pensions, that I partially contribute to, many work in task based jobs doing things for those who took risks.

Money should not make people better than one another, nor should it drive status – that is marketing and the need for some with a lower degree of self confidence who need to flash what they have, so to overcome the vacuum inside themselves (I drive a 6 year old car, don’t wear a watch and only use a plain bank debit card and simple charge card).

A more appropriate measure of status would be those that take risk to create certainty (employment) for others, and those who don’t want to take risks and need someone to provide them certainty (employment)…

You chose!

#23 EL on 05.08.15 at 7:53 pm

I came to YVR when I was 18 to pursue the Canadian dream. Surprisingly, it is getting harder and harder to have what I dreamed of, all because of the ridiculously high real estate prices. I thought where I came from was bad. My boss says sometimes, if I have known about this ever appreciating real estate market, might as well dump all my tuition in it. That’s what the society has become?

Bought my condo in 2008 after graduation, with significant help from parents. Lost mobility to explore other career path and got tied down with the mortgage (can’t risk leaving my job…) I didn’t know anything back then, never did any research before signing the dotted line. Now we plan to have a child and I am getting pressure from wife and parents since we “need” a bigger place. Hard to convince them that renting is the better option. In their opinion, a rented place does not feel like home. And parents from both side are willing to chip in the down payment. 99% in line with your blog entry posted a few days!! I am not a rich immigrant. Most of my friends are struggling.

Thank you, Mr. Turner for sharing your wisdom. What you said is so true and spot on. Whenever I mention your name in front my boss, he wants to take out your book he bought and swears to burn it…

#24 Marco from Van on 05.08.15 at 7:55 pm

Garth, If anything this post is a summary of the entirety of this blog. If should be published on page 1 of all the papers carrying RE adverts for a living (to make them worth of the label NEWSpaper).

I can’t have a conversation in van with people unless it has to do with how much their house is worth (house next door got sold), how much debt they carry but leverage is good or, how broke they are. Many of the latter said one or both of the former in the prior years I have known them.

I have opted for renting despite having liquid assets in the 7 figure range (80% of which are managed by a fee based adviser in a balanced portfolio yielding 7% average in over the past 5 years (actually a hair ir two above that)).

The business I run here is keeping hiring flat in Van as the hiring costs and infrastructure costs are too high for the productivity and innovation we get in return.

I hire abroad and run from here. If RE. cost 1/2, employment overheads (such as the NI and other employment costs I have to pay for out of our operations, before taxes on profits) were lower and people cheaper I would be hiring and creating productive careers here.

But most of those I hire, tell me they need a high salary because they have high costs, and aside from designer gear and car leases, my guess most of that is high mortgage repayments (or renting from the bank) for their homes.

With the writing on the wall in paint so bright, I don’t understand why people are so blinded by ignorance instead.

One comment that was missing in the rich bashing (and “rich” is such a stupid label itself) was correlating the concept of “risk” with wealth. Many, of the wealthy have made a lot of their wealth from taking “risk”. I spent the first 15 years of my career, some of those years with very young kids, where I could lose EVERYTHING if things went the wrong way.

Now I am wealthy (but not stupidly – I am still working) and have bough some buffer, but am still much more at risk than many of the more “average” people who denigrate me for being in the 1%.

Most of them have great public sector pensions, that I partially contribute to, many work in task based jobs doing things for those who took risks.

Money should not make people better than one another, nor should it drive status – that is marketing and the need for some with a lower degree of self confidence who need to flash what they have, so to overcome the vacuum inside themselves (I drive a 6 year old car, don’t wear a watch and only use a plain bank debit card and simple charge card).

A more appropriate measure of status would be those that take risk to create certainty (employment) for others, and those who don’t want to take risks and need someone to provide them certainty (employment)…

You chose!

#25 Mike T. on 05.08.15 at 7:58 pm

‘“It is rational for Canadians to carry more household debt,” says TD’s Alexander.’

ha ha

said the guy that sells household debt

life is about choices but what does it say about your society when the wrong choices are so heavily encouraged by those in positions of ‘trust’?

I already know and it doesn’t matter….all I’m concerned with is figuring out the divinity of being human…houses, debt….that’s someone else’s plan for me

no thanks

#26 AK on 05.08.15 at 7:58 pm

“The middle-class has embraced a one-asset strategy, and we know what the consequences are. House prices are at record highs. There’s more household debt than ever existed previously.”
====================================
And now they are blaming Foreign Investors. LMFAO..

Petition urges restrictions on foreign investors buying Vancouver homes

#27 rawdiswar on 05.08.15 at 8:01 pm

And yet many will contend that they don’t have a choice.

Debt is the new normal.

#28 RedDeer1 on 05.08.15 at 8:03 pm

I thought you were taking a break from discussing politics.
Too hard to resist mentioning the NDP again I know. Ideology.
You must be hanging out with Kevin O Leary.

We could keep the topic of True Lies contained to the real estate cartel, but somehow it always comes back to politics and Choices.
If you don’t think Alberta made the right choice just come out and say so, or would you prefer we carry on as Sheeple?…

#29 Leo Trollstoy on 05.08.15 at 8:09 pm

The wealthy make better financial decisions than the middle class.

That’s why they’re wealthy in the first place.

And why the middle class are middle class.

Obvious is obvious.

#30 Grimsky-Korsakov on 05.08.15 at 8:16 pm

Garth, I generally understand and agree with just about all you say. I have learned much from you. However, this “choice” you speak of really smacks of privilege. Not everyone comes from the same background or has had nearly the same opportunities that you have had. It’s quite rich to blame someone for their situation based on choices when you and I know a black kid from Jane and Finch will never have the choices you and other BORW guys have had.

I blamed nobody. But the black kid has choices, too. Say, what are you doing to help? — Garth

#31 Happy in Kelowna on 05.08.15 at 8:16 pm

Awesome column Garth! Thank you – you nailed it right on! My wife and I are retired at 58 years old. We did not make a pile of money nor receive a huge inheritance. We started in our 20s, lived well below our means and saved diligently. We both worked all the time, we invested steadily in a balanced portfolio and now have a large enough investment account to pay us enough to live on comfortably. The biggest problem now is resentment from family and friends. They want to know how we got so lucky!??
Anyway – thank you again. We appreciate all your efforts to educate the masses. p.s. We also put two kids through post graduate University Degrees. It can be done.

#32 mitzerboy aka queencity kid on 05.08.15 at 8:17 pm

thanks garth..
from this old cowboy living in the city

#33 LazyJason on 05.08.15 at 8:17 pm

High net worth people have about 29% in real estate. Wonder why?

http://www.theglobeandmail.com/globe-investor/investment-ideas/a-look-at-where-the-high-net-worth-investors-have-their-money/article24336593/

#34 Heisenberg on 05.08.15 at 8:22 pm

I know a guy who just sold his East Vancouver house for almost a million dollars OVER what he paid around 10 years ago. In crappy East Van!
How could anyone say that Real Estate is a bad investment? Why, because there MIGHT be a 10-20% correction, which will eventually be overcome again? That’s not risky at all. I’ve had stocks that have completely disappeared from the stock market from one week to the next – thousands of dollars vanished. A house won’t do that. Even if it loses half its value, guess what, the whole house is still intact.

I still think Real Estate is the best investment out there, as long as you stick to a few simple rules:
-don’t buy a condo or apartment or townhouse or strata of any kind.
-learn to do your own basic house maintenance. It’s not rocket science.
-buy a fixer-upper in a bad neighborhood. In my experience, those are the houses that have the best chances of increasing in value.
-give yourself some wiggle room in case interest rates do go up. Don’t go and mortgage yourself to the hilt.
-and for Dog’s sake, forget about owning in Vancouver for your first house. That’s the equivalent of moving to California and whining that you can’t afford a house in Bevery Hills. Get real. Start in a cheap suburb like North Surrey and learn to love the skytrain commute…it’s safer and quicker than dealing with all these clowns who purchased their driver licenses for $20.

#35 MATHMAN on 05.08.15 at 8:30 pm

Kudos Garth for speaking the truth this week.

As I young man I was told there are no free lunches and you need to work for everything you have. I was very fortunate to be born in Canada, and this country owes me nothing in return. My current employer treats me with respect, pays me very well and also owes me nothing other than a pay check. My only entitlement is a fair wage for my labour, nothing more, nothing less.

I am a member of the 1%, not because I was given anything I worked for it. It is the entrepreneurs and innovators that will be the future of this country.

The rich bashing is nothing short of ignorance, and in terms of paying a fair share i look at absolute dollars. My last employer was a smaller co. The gentleman who started the business is probably worth a few hundred mil and pays seven figures in taxes every year. He also employs 300+ highly paid people, with an expontential mulitiplier effect on the economy from the fruits of his labour. does he pay his fair share based on his contribution to society, absolutely. does he contribute more to the economy then 10,000 whining teachers and Gov’t employees, guaranteed.

the key to wealth creation is paying yourself first and living within your means, but both of these simple concepts have been lost in our world of rampant consumerism. If the 1% have earned what they have and lived by these two principles, then it is no surprise why they gap is widening.

#36 Rodthebod on 05.08.15 at 8:33 pm

Hi Garth, thanks so much for sharing and giving good financial advice. I’ve found it quite helpful in guiding my own finances. I totally agree that no one is owed anything and you need to take care of yourself if you want to have enough dough to live and retire comfortably. I’m just not sure I see this as a political issue at all. I think terrible financial decisions transcend all political stripes. Anyway, I am someone who for sure has different political views than yourself but I can still appreciate what you’re saying. In a broader sense maybe politics plays a role in things like inequality (which I view as bad for everyone in the long term) and fairness (meh, life aint fair). Maybe the increase in corporate taxes in AB will mean even worse times for everyone, but maybe it won’t be so bad after all. In the end it’ll be weather or not projects are feasible, and I’m not convinced an extra 2% tax will be the deciding factor on that.

#37 DUAL on 05.08.15 at 8:33 pm

Hey Garth thanks for the blog. I am a Canadian who happens to have American citizenship. With the increase in the TFSA, do you think it is now worth it to just pay the $1000 fee my accountant would charge to do the paperwork for my American taxes? I have 40k in the bank doing nothing and would really like to take advantage of the TFSA but it is quite the hassle with the IRS….what you think?

#38 Smoking Man on 05.08.15 at 8:33 pm

Southside Johnnys is packed , long on Longbranch

7 nice custom Hogs outside.

#39 Contrarian Coyote on 05.08.15 at 8:34 pm

Is GTA RE at the peak yet?

http://www.thestar.com/business/2015/05/06/couple-goes-door-to-door-in-their-desperation-to-find-a-house.html

“Allan and Roxy Fisch have lost out on eight bidding wars during their 18-month search for a house. They’re now distributing customized postcards in neighbourhoods where they would like to live, hoping to connect with somebody looking to sell.”

Uh-oh. Look out below.

#40 Hot Albertan Money on 05.08.15 at 8:35 pm

In conclusion. Life’s unfair. But pulling someone else down will not lift you up. At the end, you’re more responsible than anyone for the life you led.

Excellent

#41 Jeff B on 05.08.15 at 8:40 pm

“[renting] … No property tax.”

That’s like saying that we don’t pay for trucking when we buy produce at the local grocery store.

Renters don’t personally deliver property tax payments to the local city hall, but they certainly do pay them to the landlord as part of their rent. Mr. Turner, I think you know this … am I overlooking something?

Yes. Landlords subsidize tenants. — Garth

#42 Brian Ripley on 05.08.15 at 8:40 pm

“The rich hold assets. The rest hold debt.” Garth

I have all my charts updated with April data now. Vancouver and Toronto single family detached houses appear to have escaped low earth orbit:

http://www.chpc.biz/6-canadian-metros.html

Some people are making very large speculative bets on continuing momentum.

#43 Godth on 05.08.15 at 8:40 pm

O.K. people aren’t that savvy, they believe what they’re told and their personal down to earth perspective. For the boomers housing was the ticket, until now. There’s been plenty of leadership that has led the herd into this desert too though.

The only thing I can say is that the public shouldn’t be on the hook for this fiasco. There’s been plenty of irresponsibility by the banks, governments and all the house horny loons. Somehow those responsible should suffer losses, isn’t that what capitalism is supposed to be about?

What happened in 2008 wasn’t capitalism at all but it was the most egregious example of socialism for the rich the world has ever seen. If you want to live by the sword …

Head to Head – Has capitalism failed the world?
https://www.youtube.com/watch?v=iOEUd54NN4Q

#44 Ryan on 05.08.15 at 8:40 pm

This post perfectly sums up everything I have read here over the past year. If this can’t change people’s financial habits, then there is nothing left to do. You have done your part Garth, go have a drink and enjoy the weekend.

If I were to add one point to this post, it’s that people don’t value having flexibility in life. I can tell you first hand, there is nothing more enjoyable than knowing that you have “real freedom”, the ability to take jobs anywhere around the world, the chance to travel, or just downsize into a smaller suite and take a year off work. Worst case scenario, you give a months notice.

Enjoy life, it’s much more rewarding than having 3 empty bedrooms in that massive house you want.

#45 John in Mtl on 05.08.15 at 8:49 pm

In Quebec, I dare say “Here, it is different”.

Hardly any house price inflation. Incomes are low but prices pretty much follow that traditional 3X income thing, give or take a few points.

#46 Freedom First on 05.08.15 at 8:49 pm

Best Post ever Garth. Freedom rocks.

#47 Scully on 05.08.15 at 8:49 pm

Garth, I just want to thank you for writing this blog AND putting up with more sh$t and abuse than any person deserves because you never give up on us. I try to bring people to see both sides but RE has become one of those topics where “if you aren’t with us you are against us.” And then I get the sh$t and abuse. I honestly don’t know how you keep going some days. But if you stopped there would be a lot of lost dogs out there destined for the pound – or worse. So thank you for putting up with us.

#48 Cp on 05.08.15 at 8:51 pm

I notice nobody calculates percentage of total wealth spent on taxes. Probably cause it would shame rich old white guys.

Top tax bracket in Ontario us now 52%, regardless of net worth. — Garth

#49 Investorz on 05.08.15 at 8:55 pm

“Petition calling on British Columbia lawmakers to restrict foreign investment in Vancouver’s housing market.”

Citizens of Vancouver, it took you way too long to do this. Should have acted earlier. Less complaining, more doing.

For those who think foreign investment is a myth, well, I guess that petition won’t hurt anyone and prices will keep going up… Wanna bet?

Blaming corporations, 1%ers, immigrants for your own situation. See a pattern, anyone? — Garth

#50 Not as rich as you think on 05.08.15 at 8:56 pm

The middle-class has embraced a one-asset strategy, and we know what the consequences are. House prices are at record highs. There’s more household debt than ever existed previously. And the income gap between the 1% and the 99% is yawning wider each year. These things are correlated. There’s a connection between society’s house horniness and a struggling middle class. It’s called choices.

Sounds like the PC Party in Alberta,one asset (oil) were at near record highs and they still couldn’t save for the future and run a deficit in spending for years. Your right Garth there is a wider gap between the 1% and 99% when politicians can call an election a year early even though they made it a law they can’t and then spend 28 mil of tax money they don’t have to pay for it. Then have to pay out severance in the 13 mil range because the 1% can pay themselves 3 months severance for every year worked. And the middle class is the problem

#51 Mister Obvious on 05.08.15 at 8:57 pm

Great post. I will bookmark it. I think I’ll be needing it for reference in the not-too-distant future when people ask me what ‘all of a sudden’ went wrong.
————————-

Here’s a thought experiment:

Imagine the number of households in Canada who own but for sound financial reasons really should NOT own. In other words, by owning, they are flirting with financial suicide and a lifetime of debt.

Suppose those people were instantly homeless and in search of immediate rental accommodation.

I don’t think even a small percentage of them could find a rental even if they lowered expectations dramatically.

If that’s the case, then for many, ownership is actually baked into the system, even if every marginally employed punter who contemplates buying should magically come to know better.

That’s why this blog can’t speak to everyone but only to those who can recognize the existing situation and are inclined to embrace a financial philosophy that keeps them from becoming a greater fool.

#52 ANON on 05.08.15 at 8:57 pm

Now that we’re back to our regular schedule, there’s a loonie in this!

#53 What about CMHC? on 05.08.15 at 8:58 pm

Thank you Garth for coming back to your blog – RE, $ and economy.

I thank you for benefiting my family with your wisdom. In spite of being modest single income family, we have been able to maximize RRSP, RESP, TFSA and have some money in non-Reg. We were also able to go on a cruise vacation in March using cash from our savings.

The RE stupidity has been going on for more than 10 years now. It seems the pot is now boiling over in most parts of the country in spite of rock bottom mortgage rates.

#54 sort of happy on 05.08.15 at 8:59 pm

Eight years ago we moved from a big fabulous house in Northern Canada, to a teeny condo in YVR. Recently we’ve watched as friends gloated about the increase in their net worth, because of the ballistic YVR housing increases. So we began to feel envious, as well as squished … we thought needed a double garage. BUT a wise friend said, Don’t buy a house, you can buy a fancy new car for the price of the legal transfer, the realtor’s fees and insurance. We haven’t bought a house, we thought better of it and now we feel smug even though a bit too cozy. The feeling of being debt free is worth it.

#55 Made in BC on 05.08.15 at 9:01 pm

#2 JL 15 on 05.08.15 at 7:12 pm
Rocco Galati was interviwed on CBC’s The Exchange with Amanda Lang.

http://www.cbc.ca/news/business/rocco-galati-challenges-role-of-bank-of-canada-in-latest-case-1.3065650

+++++++++++++++++++++++++++++++++

A conspiracy theory until its proven not to be. As is happening a lot these days. We will all benefit as Canadians when we do not have to pay “interest” on money created by our own public bank.

Surely a thinking person cannot fall for this fiction. — Garth

#56 Jay Currie on 05.08.15 at 9:02 pm

Freedom does not involve much debt. When you pay cash for a car or a house you gain something and lose an income steam. If there is a trick it is to buy very few things and do it using the income stream. There are brilliant houses for rent. There are gorgeous cars, lightly used, that someone else has paid the depreciation on.

Want a designer bag? Go to Rice and Beans and buy a mint Chanel for 20% of retail. Need a shiny laptop – Craigslist is your friend.

But, even more importantly, ask what you actually need. Keep that list short and you have few worries.

#57 Retired Boomer - WI on 05.08.15 at 9:05 pm

#24 Marco From Van

Very well said! Money is a terrible indicator of the person as it should be. You don’t know if was “earned” through wages, “earned” through investment, “earned” through inheritance, or even “earned” via fraudulent means.

People are either worth knowing, or not on their interactions with you over time. Their personal wealth, or lack thereof we often don’t know, and usually can’t easily guess. (I can’t anyway).

Show me somebody’s credit report, and it provides to ME a fairly clear indicator of their conduct, not perfect, but an indicator nonetheless.

Yesterday’s rants were…. amusing might be the most appropriate indicator. Naturally, I needed to throw my torch onto the pile. Amusing, yes. Sad…too

#58 Made in BC on 05.08.15 at 9:12 pm

#26 AK on 05.08.15 at 7:58 pm
“The middle-class has embraced a one-asset strategy, and we know what the consequences are. House prices are at record highs. There’s more household debt than ever existed previously.”
====================================
And now they are blaming Foreign Investors. LMFAO..

Petition urges restrictions on foreign investors buying Vancouver homes
+++++++++++++++++++++++++++++++

Do you have any proof foreign investment is not affecting prices? Where is this proof please?

Do you have solid proof the tides are not at least partially responsible? Cough it up. — Garth

#59 Made in BC on 05.08.15 at 9:14 pm

A conspiracy theory until its proven not to be. As is happening a lot these days. We will all benefit as Canadians when we do not have to pay “interest” on money created by our own public bank.

Surely a thinking person cannot fall for this fiction. — Garth

+++++++++++++++++++++++++++++++++++

Garth did you take 18:40 minutes to listen to the interview? Did you hear the part about how he has won 63% of his cases against the govt? Dozens and dozens of them? So either the judicial system “is fiction” or the govt is involved in ongoing conspiracies all the time.

#60 bigtown on 05.08.15 at 9:15 pm

On the front page of the Toronto Star is the story of a couple exposing their challenge of bidding wars experienced trying to buy a home in Toronto. They are not young 20 somethings but close to middle age as one is in his 40’s.

Their photo shows them to be healthy as if they owned a dairy farm near London not what they really are which is professionals or white collar workers. Their goal is to have a home for the family they plan in our great Metropolis.

Too bad they feel they need to spend their last buck to live in Toronto. I have to admit I made the same mistake as they did back in the 80’s. I was so stupid not even aware I could have put our savings in a GIC paying like FIFTEEN percent for five years. See how stupid we can be. Live and Learn as I am sure this beautiful couple will surely discover.

#61 subsidize on 05.08.15 at 9:16 pm

Yes. Landlords subsidize tenants. — Garth

———

Not by the handbook of how Capitalism works.

Is it this a new rule or weird anomaly?
How long can you count on it?
Can you plan the future on subsidy?
Would you plan your investment on 20% yearly return?

#62 Nagraj on 05.08.15 at 9:22 pm

Is Canada a politically unstable country?

Given the Alberta voters’ volte face, and assuming a kind of repeat of 1993 this October – could that qualify Canada as politically unstable? Or does it imply no more than an angry, “restless”, electorate?

Stupidity explains nothing. Canadians were no stupider BEFORE 2008, and young people were no lazier in Poloz’ day (before he told “the millenials” to work for free).

The deadly Canadian housing bubble and the deadlier Canadian debt bubble aint bust yet, but the youth unemployment crisis is here and now. Obviously things aint not gonna git no better.

Some rational people describe Canadian collective economic behaviour as stupid, selfish, uninformed, “innumerate”.
How about neurotic? How about house-lust as a mental illness? How about “debt-crazed” as a pre-psychotic episode?

How about Canada as a frightened society? Ask yourself what Ontario would like today if Queen’s Park didn’t owe $300B.

Whatever’s rotten in this Denmark, the simplest answers are most likely irrelevant.

#63 David G. McKenna @ FindingOptimal on 05.08.15 at 9:24 pm

Garth, this is one of your best posts ever, and one the best, clearest financial posts I’ve ever seen.

Thank you.

#64 John in Mtl on 05.08.15 at 9:32 pm

…”I’ve shown in post after post over the years how renting, for example, is wiser than owning for a wide swath of people. Their shelter costs decline, cash flow improves and liquid investments can build net worth without a debt overhang.” …

I beg to differ, despite rental boards in some places, and some owners subsidizing tenants at times; rents do keep going up a few %-age points every year. Shelter costs decline only if you own long enough and don’t go overboard with renos, despite land & school taxes going up once in a while. The only ways a renter can see his costs decline are A) – move to cheaper accomodations or B) – have the brains to build a balanced portfolio that will give good returns and apply that against the rental cost.

#65 ANON on 05.08.15 at 9:36 pm

#59 Made in BC on 05.08.15 at 9:14 pm

Interest is fiction, has been this way since about 5-6 thousand years. There’s no conspiracy, it’s the mathematical “why” it builds, and then blows up in everyone’s faces, periodically since that time.

#66 Smoking Man on 05.08.15 at 9:43 pm

#63 David G. McKenna @ FindingOptimal on 05.08.15 at 9:24 pm
Garth, this is one of your best posts ever, and one the best, clearest financial posts I’ve ever seen.

Thank you…
……..

So true, but he’s gutless , look at all that wasted writing skill, I would be over the moon to even have one tenth the stuff he’s forgotten.

He should absolutely do fiction, he would blow the greats out of the water. I’m sure of it.

Garths writing is , witty, fast, easy to follow. He’s so damn talented.. You feel it when you read it.

But he’s consumed with sanity and image. That’s jail to me.

#67 Made in BC on 05.08.15 at 9:44 pm

And now they are blaming Foreign Investors. LMFAO..

Petition urges restrictions on foreign investors buying Vancouver homes
+++++++++++++++++++++++++++++++

Do you have any proof foreign investment is not affecting prices? Where is this proof please?

Do you have solid proof the tides are not at least partially responsible? Cough it up. — Garth
+++++++++++++++++++++++++++++++++

I’m only reading the hundreds and hundreds of links posted on your blog like everyone else. Yet I have not clicked one link proving there is no evidence foreign investors are not causing the price increases. And maybe links have been here proving that. I may have missed them. Please someone post something for us to see.

#68 David McDonald on 05.08.15 at 9:46 pm

When your team is losing you fire the manager. Sports and politics agree on that. Alberta voters were mad and justifiably so; the comparison between Norway’s and Alberta’s heritage fund is just too painful especially when the economy goes south.

Norway wisely invested oil money abroad for future generations and avoided artificially raising the Krone. Canadian industry by contrast has suffered from the Dutch disease for at least 8 years with devastating effects. The Bank of Canada may deny it but the dollar correlation with oil has been obvious since last fall.

I am no fan of the NDP and still remember Rae days however change was needed and I wish Premier Notley well.

#69 raisemyrent on 05.08.15 at 9:46 pm

People are so bitter. And mostly, stupid. Always someone else to blame. Change the government, and problem solved (don’t we govern ourselves?).
My guess for blame on the upcoming real estate crash is a ‘perfect storm’ of oil, low dollar, higher rates in the USA (we just HAD to follow suit), and possibly government change (we needed stability through the real estate crash). That will be the Joe blow version of what happened. Not “we leveraged the shit out of our lives and it all blew up in our face”.
People in Calgary who should be thinking “oh shit” are thinking more like “I made $5k only (they didn’t), but you know, oil. Things will get better now with the NDP” (that’s just instinct. You MAKE things better.)

I for one think Garth has been on fire for the last few weeks. If you don’t like his comments, go buy a GIC (which is the equivalent of… yourself).

#70 Iceflow on 05.08.15 at 9:49 pm

#34
Not that Garth didn’t get this already but, the thing you missed is that rent and cost are determined in at least two different markets.

I ‘own’ a rental unit and I rent a unit. They are very similar places in very different markets.

In the high priced market (where I rent) the price of a house is around 6x higher that of the low priced market (where I own a rental.) The taxes and insurance are around 2x (both related to the value.)

But, the rent is around 2x higher. Rent (read: revenue) is determined in the rental market, price it too high and you don’t get tenants (vacant property is very expensive.) Costs for SFHs and many condos are determined in the residential real estate market.

So, my landlord has dramatically higher costs (and opportunity costs) than I do for an asset that brings 2x the revenue. I win.

If my landlord has the same borrowing terms as I do (doubtful, mine are very good) s/he is losing thousands a month but, can’t jack my rent because of price controls (2-3%/yr max) and can’t rent it for what it costs because the rental market won’t bear the price and it will stay vacant.

Hence, I am subsidized and do not actually pay the taxes (in fact, I probably don’t even cover the mortgage.)

Commercial residential real estate is determined in capital markets where value should be correlated with the revenue (rents) and represent a more accurate/true value. ie: what it can earn the buyer.

Thanks to Mr Turner and the commenters. Part of the day I look forward to.

#71 subsidize on 05.08.15 at 9:55 pm

When I moved to Canada some 25 years ago, I rented a Greenwin apartment at Yonge and Eglington area.

Out of curiosity I looked up their website to check out how they are doing, with subsidizing renters.

“Our founders, including the late Harold Green, were among the first homebuilders to concentrate on typical suburban communities within Toronto.

In the early 1950s, Greenwin began residential development in Don Mills – one of Toronto’s first suburban satellite communities. From there, we began developing multi-family properties. In the 60s and 70s, we built more than 10,000 residential units, including single-family homes, condominiums, rental apartment buildings and community housing.
….
Today, Greenwin is one of Canada’s largest privately owned residential property management companies. Headquartered in Toronto, our company has a combined staff of 500+ employees. We professionally own and/or manage more than 1,000,000 sq.ft. of commercial space and 20,000 residential units in town homes and apartment buildings of all sizes throughout central Canada.”

Imagine if they didn’t subsidize renters, they might be rich by now.

News flash: It’s not 1990. — Garth

#72 Uncommon Sense on 05.08.15 at 9:55 pm

Garth,
I propose that you seriously consider charging a nominal fee for access to your blog.
Those of us that embrace and appreciate your messsage have been patient and are now completely fed up with the relentless ignorance of those consumed by house horniness.
So please, I beg you, give it some thought. I know this is not your MO but even something as nominal as $4.99/month will rid those of us that are serious about learning and applying the guidance you provide, the aggravation of the “wrong and strong”

Kinda like an NDP minimum wage for me? — Garth

#73 RedDeer1 on 05.08.15 at 9:56 pm

Things have been better, they have been worse, but if our Canadian economy really blows up it won’t be because of low oil prices, it won’t be because Alberta elected a new government, it will because the housing bubble finally pops along with all the many associated industries. Don’t worry about the NDP, many major cities in Canada should be much more worried about that.

#74 Tremblant110 on 05.08.15 at 10:00 pm

i follow your blog regularly and understand your suggestions are right on but few follow. From day one I put aside the max RRSP contribution. Switched to ETFs and discount brokers when first out when I realized why should my investment advisor be smarter than the other million out there. Though capable never upgraded house from second one I bought n 1974. Max out TFSA in discount broker with ETFs etc.As a senior doing very well though I do think we are given more perks unrelated to net worth than deserved. That being said I never say no to discounts . My disappointment is that a substantial number of the younger generation do not listen to you. But keep preaching you are making difference. Real progress and change is slow !

#75 Retired Boomer - WI on 05.08.15 at 10:06 pm

Dear Garth-

Yesterday, BORW Guys were merely paying their “fair share” of Taxes. I am kinda, sorta one myself (not by income, but by net worth).

Sorry to inform the great majority that investing money, AND living below your means is your surest route to prosperity. No, it does NOT work like a microwave, it works like a Croc Pot.

Just sign me, Happy in Life not a 1% er but close enough!

#76 surfeitndearth on 05.08.15 at 10:13 pm

Not even a comment on JL 15’s submission:

Rocco Galati was interviwed on CBC’s The Exchange with Amanda Lang.

http://www.cbc.ca/news/business/rocco-galati-challenges-role-of-bank-of-canada-in-latest-case-1.3065650

Not one comment. Interesting. Could be a ‘game-changer’. Carry on, nothing to see here.

No game-changer. Not worth commenting on. Nutbar stuff. — Garth

#77 Godth on 05.08.15 at 10:14 pm

#25 Mike T. on 05.08.15 at 7:58 pm

So there’s a wise man. The lunatic games never end.

#78 waiting on the westcoast on 05.08.15 at 10:19 pm

#22&24 – Marco’s rant…

+1 from me. I took lots of risk and you know what… even losing the odd deal had not been that bad.

I am a serial entrepreneur. First deal made me some good money… Lost everything on second deal and ended up 90k in debt with now divorced young family. Over next 10 years built back up to sizeable 7 figure net worth. All assets in businesses (cash flow and some Angel $$$) and investments (etfs).

Still don’t own property… Can’t rationalize buying in Vancouver when so overvalued. Looking at the island and still waiting for Victoria RE Update to give me the green light. ;-)

In the meantime, keep investing in businesses…

#79 RedDeer1 on 05.08.15 at 10:20 pm

#28 RedDeer1
Garth, I will assume you believe Alberta made the right choice and that we aren’t as full of Sheeple as we’ve appeared. Sometimes you’ve got to take risks right.

#80 cmj on 05.08.15 at 10:23 pm

Garth,
Your last few posts have been excellent. They give us a lot of food for thought about our choices. Keep up the good work with comprehensible facts. Thank you for the wide range of information you have given me. Many of us are listening and making more responsible choices

#81 John in Mtl on 05.08.15 at 10:23 pm

@ #15 BottomsUp on 05.08.15 at 7:45 pm:

…”Canadian culture has shifted to a point where debt is much more acceptable…

“On average, younger Canadians are developing an awareness of debt by necessity, which is a new development that wasn’t there before,” says Paul Kershaw, professor at the University of British Columbia’s School of Population & Public Health.

The bottom line: Going into debt is not about a “lesser work ethic, or poorer judgment with respect to the housing market” than our parents or grandparents, says Prof. Kershaw. “I don’t know how you escape becoming more comfortable with debt. Because that’s the marketplace we live in.”

The world IS different now. I don’t know that good ‘ole fashioned “save now, pay cash”, “live below your means”, “buy what you can afford”, values and decent savings rates will ever come back in this manipulated world we live in. Just maybe, what we have now IS the “new normal”.

Personally, if I retired with mortgage debt but could afford the payment, I’d say “meh… big deal, who cares”. The heirs can take it over or sell it and pay back the bank. After all, property still is a “valuable asset”.

#82 subsidize on 05.08.15 at 10:26 pm

#71
News flash: It’s not 1990. — Garth

=====

I know… wish it was, don’t you?

The quote and data is not from 1990, either.

#83 Notta One Percenter on 05.08.15 at 10:33 pm

It’s funny to read people here praising today’s entry Garth, because to me and people I talk with, it is the worst of a bad week’s effort.

First, some praise, well-earned. You are an excellent play-by-play guy when it come to the housing market/bubble/whatever that we are witnessing. Your deciphering of realtor and BofC BS is welcome and helpful. On those details, you are a stalwart and add real value.

But on the macro issues, you seem to continue to confuse cause with effect, and seem to want to blame rather than properly analyse. You seem to want to conflate the travails of the house-horny middle class with bad character. The “stupid” must pay, you have intoned many times.

That’s a terrible straw man argument, and suggests a profoundly narrow vision and a paucity of understanding and compassion. But I can’t believe you simply got up on the wrong side of the bed every day this week; this seems to be a part of your own particular conservative ideology, more obvious this week than before.

“But pulling someone else down will not lift you up. At the end, you’re more responsible than anyone for the life you led.”

Really? This is your closing statement today about wealth inequality, one of the forces that leads the middle class to chase houses, feeling they have little chance anywhere else in the economy, perhaps burned by our equity markets which have been horribly corrupt over the years and still are lacking in proper oversight.

Piketty makes it clear that the well-to-do are no longer really making money, they are inheriting it and having it gifted to them, which will be the global norm by 2030. We should not challenge this? Really?

You want to hurl invective at people for merely pointing this out?

In the name of ridiculous corporatist conservatism, jobs are outsourced and fewer and fewer, especially the young today, have any hope of climbing a ladder that was so easy for earlier generations, by comparison.

Your sage analysis of the real estate situation continues to be helpful, so thanks for that.

But the columns this week, culminating in today’s still-narrower and more judgmental climax, are disappointing, part of the problem and not a solution.

You clearly believe in the game as it is played now, in artificial scarcity, in the need for everyone to keep playing musical chairs faster and faster to simply stay even, or not fall behind to super rich quite so much, and that, for you, seems satisfactory.

Many of us instead believe in fairness, in abundance.
And we are growing in number, emboldened by our direct experiences of so many other totally unjustified disparities.

So for the haters?

NDP in Alberta is just the tip of the iceberg.

Don’t like it?

Go to the US and a gated community. But be sure to bring a lot of guns.

In the meantime, please don’t disingenuously suggest it’s all about “choices”, when for so many it is simply about trying to follow a normal life path in recognition that many choices have been curtailed for far too many people.

The real estate bubble (at least in major centres) has been a “fetish” as you say.

But we need to look deeper into who benefits from the indebtedness of the aspiring middle class.

#84 [email protected] on 05.08.15 at 10:39 pm

http://video.cnbc.com/gallery/?video=3000353564

Have a listen to someone who isn’t a cheerleader Garth

Who cares about a 3-month-old news clip? — Garth

#85 debtified on 05.08.15 at 10:48 pm

Garth, thank you for the Sako post.

Also, I admire how you handle all the nasty comments and emails that you have been receiving from the nasty people. Keep up this great, and free, public service.

#86 noise on 05.08.15 at 10:51 pm

While on the subject of choices, did anyone watch the Globe and Mail video of the soon-to-be lawyer with $150,000 debt. I’m not sure what her point was. She didn’t take responsibility, nor did she blame anyone. She simple said that society needs to “talk about debt and salary”.

Well here’s what I have to say. She knew or should have known about the debt. She will still be making almost double the average Canadian salary immediately and over 6 figures in 5 years. She’ll pay off her debt while still enjoying a lifestyle better than most.

She’s afraid that the debt will limit her choices. Welcome to adulthood and be thankful that your only choices aren’t between McDonalds or house cleaning.

#87 Smoking Man on 05.08.15 at 10:55 pm

The challenge of the great fiction novelists .

Bitch slapping the machine in a cryptic way, and the machine don’t get it, loves you for it. Its not easy.

Its mountain climber thing of sorts.

Which brings me to mark, my late nephew..

Think about you every day man..and I’m just an uncle with no blood ties.

You where special.. Everyone you met loved you. I would be happy for 1 in a hundred I love you thing.

Boating season…tell god , game on…..

#88 Randy Randerson on 05.08.15 at 11:03 pm

“Life is fair. You’ve made a choice, and just like any other choice any other human being has ever made, it has a consequence.”

#89 Matt on 05.08.15 at 11:05 pm

Garth, your words truly are gifts each day. You’ve made such a difference in my life. Thank you.

#90 Shawn on 05.08.15 at 11:07 pm

Tax Rate on Wealth

Cp on 05.08.15 at 8:51 pm
I notice nobody calculates percentage of total wealth spent on taxes. Probably cause it would shame rich old white guys.

Top tax bracket in Ontario us now 52%, regardless of net worth. — Garth

********************************************
True, top marginal tax rate on ordinary income is high.

Question asked about tax rate on wealth, not income.

We heavily tax the wages of labour.

We lightly tax the realized wages of invested capital.

We do not tax wealth as such (stagnant wealth or even unrealized gains in wealth)

You can be extremely wealthy and your wealth can increase by a lot in a year and yet you may pay little tax.

Does our economy need less labour and more invested capital? That is what the tax rates might suggest.

Does investing capital create jobs? Always? Sometimes reduce jobs?

What area of the economy needs more capital invested and will be profitable and create jobs? What is stopping the capital investment?

#91 waiting on the westcoast on 05.08.15 at 11:23 pm

Looks like Canadians cannot avoid using payment plans to buy everything they want… Even their funerals. Great FP article…

http://www.financialpost.com/m/wp/news/blog.html?b=business.financialpost.com/news/economy/the-debt-crisis-in-canada-if-your-paycheque-is-100000-plus-that-means-you&pubdate=2015-05-08

Of course, when people start using payment plans (ie debt), they can pay higher prices which help make us mean old capitalists even more money… It is amazing how we take advantage of people…

#92 x-moose on 05.08.15 at 11:32 pm

“That’s because they’re rich, they cried over the moat.”

Perfect metaphor, Garth, and not all too far fetched. They sill be swarming over that moat soon enough, with the orange banner turning redder and redder.

And with the lights dimming inside the BORW scull smashed with hammer and sickle, the last thought would be: Perhaps Leaman’s failure wasn’t that bad after all and perhaps GS and JPM and AIG should have followed, rather than creating the tinder box of unprecedented levels of inequality…

#93 Tornado Bob on 05.08.15 at 11:35 pm

A ‘Petition’ is being circulated in Vancouver to initiate a limiting of ‘foreign ownership’ in the city. Politicians continue to insist the buying as being ‘open market’…while insiders insist it is money laundering by PRC crooks. Looks like the topic of Ham is being heated up again.

Mayor Moonbeam was caught up in the press recently when the Communist party mother of his girlfriend was arrested in China for looting the treasury she was partly responsible for in Harbin.

China has launched an international push to retrieve it’s crooks and the missing loot….some which they say has been lodged against property titles in Canada. China has recently signed extradition treaties with 62 countries and has been repatriating crooks by the thousand and recovering stolen loot. China says some 1.5 trillion has ‘disappeared’.

There is some opinion that there is no extradition treaty with Canada….. yet….because of the ramifications in certain circles leading up to the next federal. But after an extradition treaty is reached….all that ‘safely laundered money’ could become the proceeds of crime and that would cause the liquidation of thousands of properties in Vancouver owned by ‘foreigners.

There is also speculation that the reason many of these ‘foreign deals’ that have gone over 2 million to list is that there are certain elements that are desperate to push cash into the laundry of ‘safe Canada’ because as soon as the money is registered in Canadian property it becomes immune to Chinese authority…thereby protection the crook who looted it from what social organization in China.

Think of what might happen if Canada signs an extradition treaty with China? We rushed to extradite Marc Emery…’The Prince of Pot’…. What of the thousands that China has eyes on? Food for thought methinks.

#94 lala on 05.08.15 at 11:37 pm

If lala have to incarnate between a dog or a cat he will pick cats. Dogs are followers, cats not, they have they own agenda, so does lala. The mission….don’t ask, take…don’t follow, lead…..so far so good. Thank you Garth The Turner for letting me release some steam of my brains.

#95 Muttley O'Toole on 05.08.15 at 11:38 pm

“In conclusion. Life’s unfair. But pulling someone else down will not lift you up. At the end, you’re more responsible than anyone for the life you led”.

Should be printed in large type on all visible extremities of every citizen, both rich & poor, physically handicapped or otherwise.

#96 Godth on 05.08.15 at 11:41 pm

#76 surfeitndearth on 05.08.15 at 10:13 pm

Garth thinks he’s part of the global 1% with his piddley 6-7 million so he defends lunacy as he realizes that he could be wiped out in a New York second by the big boys. Edmond Burke would roll in his grave given what these neocon. socialists are up to.

No game-changer. Not worth commenting on. Nutbar stuff. — Garth
Let’s let the courts decide shall we? You aren’t Godth.

#97 Rexx Rock on 05.08.15 at 11:43 pm

Its all about the end game.When home owners in Toronto and YVR cash out its like winning lotto 649 but it takes 10 to 20 years.The one good thing is many home owners will retire 5 to 10 years early freeing up desperately needed jobs for the young generation.Real estate has made freedom 55 come alive again.

#98 Nightmare upon us on 05.08.15 at 11:45 pm

http://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/canadian-households-now-owe-a-record-18-trillion-and-more-debt-statistics/article24322565/

#99 Drunk&whistler on 05.08.15 at 11:46 pm

http://www.businessinsider.com/bp-just-won-the-right-to-dispute-some-claims-from-the-gulf-oil-spill-2015-5

Here is sad story about a poor corp just trying to make a buck and create some jobs but these nasty explosion victims are trying to take advantage of them , shame if only they’d go away they could hire more people

#100 Mark on 05.09.15 at 12:17 am

“What area of the economy needs more capital invested and will be profitable and create jobs? What is stopping the capital investment?”

Telecom and railways. What is stopping the investment? In telecom, its the CRTC which is constantly seeking to confiscate the upside from the telecom investment community through excess regulation. In railways, its regulation and government subsidies towards other less efficient forms of transportation.

In government, routinely, investment in productivity is stymied by unions. Likewise, in the fast food industry, the use of temporary foreign workers has effectively allowed employers to substitute cheap labour for investment. Employers that had to pay market rates for labour would seek to improve productivity through the use of technology.

Does our economy need less labour and more invested capital? That is what the tax rates might suggest.

Have to disagree here. Business investment is only depreciable on a relatively slow schedule. While employment of labour is immediately deductible. The tax system has a distinct preference for employing people, versus employing capital.

We lightly tax the realized wages of invested capital.

Hardly. The concept of integration implies that realized wages of invested capital are taxed at rates similar to that of personal income. Corporate income tax + personal income tax on dividends ~= personal income tax on employment earnings.

You can be extremely wealthy and your wealth can increase by a lot in a year and yet you may pay little tax.

Again, must disagree here as well. Capital gains are not increases in wealth unless they eventually lead to an increase in income. Income which is eventually taxed.

Don’t confuse the ‘stock market’ which is a speculative vehicle on future income streams from the equity component of a businesses’ capital structure, with actual income. The two can spend a significant amount of time divorced from each other in terms of valuations, but eventually valuations converge to the net present value of all dividend streams from a stock. The gain of a seller of overpriced stock is the loss of a buyer of overpriced stock. The only wealth created in stocks over the long run is the dividends paid by stocks. Even Berkshire Hathaway is worthless as a company if it does not eventually pay a dividend.

#101 Squirrel meat on 05.09.15 at 12:29 am

The incoming dippers… holy crap.. we are so screwed…

Nine teachers, seven nurses or medical assistants, five social workers, four full- or part-time union bosses, two NDP party apparatchiks, two students, two minor civil servants, an electrician, a bus driver, a yoga teacher, a shipper-receiver and at least one unemployed. And one lawyer, a labour lawyer, the premier. Zero small businessmen, executives, farmers, accountants, even serious academics.

http://business.financialpost.com/fp-comment/albertas-ndp-leaders-will-be-like-kids-running-the-candy-store

#102 Buyer - You are right but on 05.09.15 at 12:43 am

You are right Gathello, but… you know how short life is…. what’s wrong with having a garden, an oasis, a hammak… yes, money-wise renting saves you a little in the piggybank… but it is worth the pain, the suffering….cockroaches, bed-bugs, shared laundry, unprofessional staff….thrifty landlords… lack of space?…

#103 len on 05.09.15 at 1:02 am

No matter how many times this is repeated, it does not describe the problem.

There is no income gap between the 1% and the 99% – it is a wealth gap that is widening. If you earn income from labour of any sort, you are not in the 1%. Not only does the 1% of families accrue more wealth, with that wealth comes incredible power and it is this that is destabilizing democracies.

Choices of investments do not determine membership in this group – the Oligarchs accrue wealth through political capture of institutions and on the backs of working people via favourable (to them) legislation.

As for high net worth individuals, it was interesting to see the confidential survey published in the Globe and Mail just today showing that HNW wealth is 29% in real estate, 21% in equities, and 11% in fixed income investments.

#104 IndexMan on 05.09.15 at 1:05 am

Mr Turner:

I am a great fan of your work and never miss a book or a post. My sincerest apologies if my earlier comment caused you any concern or offence or was simply too far off-topic to print.

Your post today was spot-on, and I agreed with you entirely.

I was only trying to make a joke about the subject at hand but clearly I failed miserably! I will comment here no more. Again, my apologies.

#105 randman on 05.09.15 at 1:08 am

Piketty is a communist hack and mouthpiece……

#106 Brydle604 on 05.09.15 at 1:17 am

Great blog tonight, Thanks Garth.

Canada s Subprime car loan problem

http://www.canadianbusiness.com/economy/canadas-subprime-car-loan-bubble/

#107 PokerPlayer on 05.09.15 at 1:25 am

Roughly 99% of poker players are losers(financially).
http://www.officialpokerrankings.com

A good portion of them curse and whine and are quick to say how “lucky” the 1% percent are or how “unlucky” they are. They’ll put their entire bankroll on one tournament and claim that the game is rigged when they lose!
For the most part, the 1% are just efficiently and emotionally robotically investing in long-term odds.
Sound familiar?

I knew NOTHING about investing until I was put on to your blog, Garth. I’m not a pro but am confident that I know enough to significantly better my future.

Thank you very much…again!

#108 Mister Obvious on 05.09.15 at 1:39 am

#61 subsidize

“Is it this a new rule or weird anomaly?”

Anomaly.

“How long can you count on it?”

Until it changes, which it will someday.

“Can you plan the future on subsidy?”

Wouldn’t dream of it.

“Would you plan your investment on 20% yearly” return?

No, but 7% average after fees is doable. I’ve done that over the last 12 years. For the last 5 of those a landlord has been subsidizing me. But one day he’ll wake up, I’m sure. And I’ll be ready.

#109 Lobster Man on 05.09.15 at 2:43 am

#90 Shawn on 05.08.15 at 11:07 pm

Property Tax is a form of tax on wealth. And there is usually an increase in the amount of property tax payable even with unrealized gains (exceptions being in California since Proposition 13).

#110 Nagraj on 05.09.15 at 2:49 am

Nagraj would be remiss – if he didn’t comment on the LOOKS of things. Yes.

Don’t any of yas pay no attention to the LOOKS of things, eh?

When I saw the picture Garth posted of St. Prentice, I thought Holy Cow! It’s really DR. MABUSE! If yas googles DR. MABUSE and clicks on Images you’ll find several Prentice lookalikes. Sheesh, shudder!

Then there’s Garth’s picture gracing this blog. Talk about MEPHISTOPHELIAN fer godssakes. (Sad to say, I kinda looks like that myself.)

Now yas all should know that the devil (this is Jungian stuff) is also an archetype of intelligence. SO Prentice is smart, Garth is smart, and I’m smart. And we look EVIL. Stupid men look cute and innocent, like cherubs.

It is NOT a good idea for devilishly clever-lookin’ boys to git into politics; for that you want JT cuz obviously that boy couldn’t hurt a fly. (Nagraj ALWAYS goes with the winner, no matter who.)

Which brings us to Garth’s INSENSITIVE selection of Ms Notley’s photo. That picture I’m told was taken as she was fighting back tears re remembrance of her late parents. Indeed, if you look at it closely, that’s what it is.

Which brings me to Harpo playing Claudius; (if memory serves:)
Though yet of Prentice our dear brother’s death the memory be green, yet so far has discretion fought with nature, that we with wisest sorrow think on him but mostly with remembrance of ourselves come October next.

Light! Give me light!!!

(Where’d I put the Bombay Sapphire?)

#111 RAL on 05.09.15 at 3:06 am

In this space I’ve gifted tools and knowledge to assist you. If that’s not good enough, well, you know. — GARTH!

——————–
Thanks!

#112 juno on 05.09.15 at 3:09 am

With 70 percent of people owning, how many people are left to buy houses.

http://www.cbc.ca/news/canada/british-columbia/b-c-has-highest-child-poverty-rate-in-canada-report-1.2440909

Note about 20 percent living in proverty what is the scope of potential buyers?

#113 juno on 05.09.15 at 3:19 am

Yes life is simple, it used to be:

– you come into this world with nothing,

– You grow up, experience life
– see the world
– get married, have kids
– Have a starter home
– Teach them all you know
– get a bigger house
– watch your kids grow
– see them graduate
– Watch them leave the nest
– Grow old
– downsize to a smaller place
– end up in a old person home
– When you leave you leave with nothing, but have savings to pass onto your kids

But now adays

– your born,
– grow up
– Graduate
– Buy the biggest honky house you can leverage on
– Can’t afford , vacation, have to have both parents working so you can pay the mortgage
– Stay in one job, because a missing paycheque can be doom and gloom for the house
– Mabey have kids, but they are expensive
– Continue to stress out until you die,
– when you leave you leave with nothing, but will pass on a honking debt to many generations to come, only if the banks don’t take it away from you because over a lifetime, you\ve hardly made a dent in your mortgage.

Man did you live life to the fullest, or experience death right after graduation?

#114 HFT Dude on 05.09.15 at 3:30 am

Brilliant post.

#115 Oot der Hoos on 05.09.15 at 6:19 am

I quote muddled understanding of capital and savings. below.

Quote:
#272 Shawn on 05.08.15 at 3:11 pm
Ralph Cramdown said:
And what is with this BIZARRE theory that capital is scarce and that it needs to be pandered to, lest it run off to more hospitable climes?

Capital is not in short supply right now.

******************************************
I agree.
If capital were in short supply interest rates would not be so low. The central banks could not force them this low if there was a great demand for capital.

No. Real capital and savings is always scarce. The central banks (and commenters) think they can tamper with capital without ill effects.

The demand [and supply] of capital is measured by the growth of debt and equity assets. Look at the Canadian debt numbers; house debt grew, USA margin debt is at a record high, corporate debt is high compared to equity, total government debt is high.

Capital demand creates its own savings supply. There is no growth limit, except the inflation in prices and quantity has to be ignored for various reasons by the central banks, so they do not raise interest rates when they should. The central banks long ago abandoned their role of allocating scarce real savings, prudently.

Price effects of huge demand for capital are house prices, stock prices, bond prices. I gave quantity measures in my second paragraph.

#116 Ralph Cramdown on 05.09.15 at 7:16 am

#41 Jeff B — “[renting] … No property tax.” That’s like saying that we don’t pay for trucking when we buy produce at the local grocery store.

This is a surprisingly good unintentional analogy.

The produce buyer at the grocery store does not care about the grocer’s costs. Good price, he buys. Bad price, the produce rots on the shelf. Once the produce has been trucked in, it must be sold for what the market will bear, or it becomes worthless.

Canada’s Bluenose schooner was the product of a market where the first fish back to the wharf got the highest prices.

Over the long term, rents must cover costs plus reasonable profits, unless there’s a continuing supply of idiot landlords — and that’s an open question. Real estate goes up with inflation or a bit more, over the long term, and landlords now factor that into their P&L projections. Most of them are too dumb to know what a sensitivity analysis is… i.e. how much a slight change in their growth projections affect their profit projections.

#117 Brunett43 on 05.09.15 at 7:27 am

“Choices” great subject for this blog but also such a powerful word that can make or break the direction ones future going forward. It’s a word I often used in discussions with my “special needs” son. Through out elementary school he was bullied and it always caused him grief and pain and he would always get in trouble for displaying his frustrations. I was repeatedly told by counselors that “these kids” usually end up doing poorly in life, drugs, jail what have you. Every day before school I would tell him…hey kiddo, you have a choice in how you handle things, you can let it anger you or you can ignore it and rise above it, be the better man. Prove them wrong and be the exception. Now at 19, he’s the exception, has goals, and in college.

This has spilled over to our family finances, (both boys still at home) we save and have investments, something I have been drilling into them when they came of age and started making their own money.

We live in a upper class neighborhood, I own a modest condo townhouse that is almost paid for. Homes in this area range from $300- $1.5 mill or more. There are a lot of new houses going up around us. For the past couple of years as I watch the once green farmers fields and woodlands turn to pavement and luxury housing I shake my head wondering “who’s buying these”? Here in London we have one of the highest unemployment rates so this makes no sense. Until, of course I started reading Garth’s blogs….. The house horny that’s who!

I have zero credit card debt and a small mortgage that’s it, and I live within my means and the majority of my assets are are invested in a highly diversified portfolio. However, most people I know are up to their eyeballs in debt. So many are living beyond their means, big homes, new cars, vacations, stylish clothing, etc..etc. A close friend of mine lived his whole life like this and @ 55 was in so much debt (he blames the wife) that it cost them their marriage, they divorced, claimed bankruptcy and now he’s broke and lives in a divey one bdrm apartment, not to mention he lost his job …probably because of the stress he was under. But that was his choice. For years I kept telling him to cut up her credit cards, but he didn’t and after $85 grand it CD debt, well…kaboom! But he’s not alone. I know a many others in the same boat.

As a society we are so heavily bombarded with consumption and consumerism we’ve lost our compass in life. Living to accumulate more and more possessions rather than just living and enjoying the ride. Again, as you say it’s all about “Choice”.

Garth…you are soooo…right on the money on this one

#118 Obvious Truth on 05.09.15 at 7:34 am

#23 should read #24

#23 Now that you know better you have created a real problem for yourself. Seems to me you want a secure financial path but are meeting up with resistance from the uninformed. A tough spot.

You have to be thoughtful on this one because you have bigger decisions to make than you think.

Start by taking you wife to see a couple financial pros. And possibly a couples counsellor. You are outnumbered by your family. You need someone in your corner.

Read books suggested on this blog with her.

Good luck navigating this one.

#119 maxx on 05.09.15 at 7:51 am

#14 JRH on 05.08.15 at 7:41 pm

“I wonder how long this can continue. Sooner or later somebody has to pay ! I think the powers that be, might have to have a debt reset ? This debt can never be paid off or serviced if interest rates go up.”

Surely you jest. The over/mal-indebted can simply suck it up and pay it off in full or let go of the house or go bankrupt, just as all before them, since time immemorial.

They are of legal age and I’d wager that none have signed loan contracts with an “x”. The fools having “won” bidding wars are likely to be the prime demographic braying for this nonsense.

Debt reset is about as likely as tax forgiveness.

Some will be struggling to pay off debt for as long as they live. Wadr and sympathy to those who’ve had rotten luck, the rest took it on knowing full well they’d have to pay it back.

Debt reset. Not at the consumer level.

Pay now or pay never.

#120 Squatter on 05.09.15 at 8:15 am

People don’t choose, they are skillfully brainwashed by advertising and they use their $$$ accordingly.

#121 Colin on 05.09.15 at 8:41 am

And politicians have no blame in all of this? Socialist Norway has $1 trillion in that oil fund. Capitalist Alberta has a debt of $13 billion.

Alberta’s NDP sure did a number of people’s heads with that Norway comparison. Norway is a weensy sovereign state. Alberta is one of ten provinces, integrated into a massively bigger economy and society, without overall energy jurisdiction. There is no valid comparison. — Garth

#122 CalgaryRocks on 05.09.15 at 8:54 am

#83 Notta One Percenter on 05.08.15 at 10:33 pm
NDP in Alberta is just the tip of the iceberg.

Don’t like it?

Go to the US and a gated community. But be sure to bring a lot of guns.

We live in Manhattan now. Central park one block away. You obviously haven’t been here in a long time.

In the 80s this place was a crack den. Now it’s safer and cleaner than ever. Rents are ridiculous but so are salaries. Obviously there’s a lot of money here.

As someone whose parents moved to Canada with 2 suitcases in their mid 40’s, I can vouch for the trickle down theory. It’s trickling a lot right now and it’s pretty awesome. You guys just need to get off your ass first though. Stop buying houses that tie you down and move around where the action is.

#123 Mister Obvious on 05.09.15 at 9:08 am

#112 juno

Thanks for detailing ‘past and present’ life paths.

Here’s my Canadian view…

You come into this world with whatever your parent’s circumstances and generosity make available to you.

As you grow up in a capitalist democracy and observe the greater world in context, your incredible luck eventually becomes apparent.

You observe that success is largely up to the individual and begin to develop a working understanding of the system that sacrificing fore bearers have gifted you.

You come to recognized that organized religious systems still in place are dying vestiges of bygone centuries and take steps to avoid their most negative effects as they slowly crumble into obscurity.

As more time passes you begin to read profusely discovering new philosophical points of view that help you make sense of the so-called ‘human condition’.

If all goes well you become primed to recognize that what passes for ‘the serious business of the world’ is largely a charade and you see two clear choices:

1. Have some fun playing the game without ever losing awareness that it is only a game. (It’s advisable to adopt the golden rule if one takes this path).

2. Refuse to play and simply drop out of the game. (Bitterness is poison on this path. It’s advisable to adopt the ways of the monk).

#124 Nemesis on 05.09.15 at 9:28 am

#Choices?… #SpotTheDifference… #ConnectTheDots…

[TheProvince] – 27th Shooting Since March 9th, Three in hospital early Friday after targeted Surrey shooting

http://www.theprovince.com/news/Reports+shots+fired+Surrey/11040888/story.html

[G&M] – Some wonder if it’s time Vancouver acts to slow foreign buyers

…“I don’t think it’s a bubble,” Dr. Shaw says. “I can’t see Vancouver and Toronto and Melbourne and Sydney becoming unsafe places to invest. I think it could go on for a very long time.”

The effects of an unaffordable housing market can be profound. Last year, a study found that one in seven Australians is living in poverty, partly due to high housing costs. Dr. Shaw argues that simply throwing more supply at the problem won’t create affordability. Instead, the focus should be on the demand, which isn’t going to stop any time soon.

“The inequities are already profound, and it’s dividing cities – which is an interesting and highly problematic situation in itself,” she says. “Because that alone could contribute to a level of destabilization no investor or economist is thinking about.”

Other cities under tremendous pressure of foreign investment are taking a lot more action than Vancouver.”…

http://www.theglobeandmail.com/life/home-and-garden/real-estate/some-wonder-if-its-time-vancouver-acts-to-slow-foreign-buyers/article24341903/

#125 AfterTheHouseSold on 05.09.15 at 9:46 am

#75 Retired Boomer – W1
“…route to prosperity. No, it does NOT work like a microwave, it works like a Croc Pot.”

Well said. Thanks!

#126 chris on 05.09.15 at 9:54 am

Thank you for the blog.

#127 devil's advocate on 05.09.15 at 10:04 am

Alberta’s NDP sure did a number of people’s heads with that Norway comparison. Norway is a weensy sovereign state. Alberta is one of ten provinces, integrated into a massively bigger economy and society, without overall energy jurisdiction. There is no valid comparison. — Garth

——

Speaking of choices…

“Norway is a weensy sovereign state. Alberta is one of ten provinces” — this is the result of a past choice, hoping that being part of something bigger will yield better outcome.

“… integrated into a massively bigger economy and society, without overall energy jurisdiction” — this was and is a choice, again…

Was Alberta picking the good or the bad options when she had to make up her mind about these particular choices?

#128 TJM on 05.09.15 at 10:05 am

I do wish people would stop putting out numbers in terms of “percent of pre-tax income.” It’s almost a meaningless number, one that grossly underestimates the actual financial burden the higher up the tax scale someone is. Someone who makes $16k a year and spends 40% of their pre-tax income on housing is also spending 40% of their after-tax income on it. Someone who makes $100k a year who spends 40% of their pre-tax income is probably spending about 60% of their after-tax income on it, because their after-tax income is significantly lower than their pre-tax.

Plus, reference to averages is kind of misleading because it disguises a whole range of cases away from the central tendency.

It’s not your fault, Garth. But damn, if these various agencies are looking to make a case, why can’t they pick numbers that actually mean something?

#129 inspirational on 05.09.15 at 10:13 am

#121 CalgaryRocks

Success stories are great, congratulations!

Give us more details what you guys do there, how you did it.

#130 LP on 05.09.15 at 10:14 am

#66 Smoking Man on 05.08.15 at 9:43 pm

He should absolutely do fiction, he would blow the greats out of the water. I’m sure of it.

Garths writing is , witty, fast, easy to follow. He’s so damn talented.. You feel it when you read it.
*******************
Now who’s being a suck-up?

#131 Nemesis on 05.09.15 at 10:39 am

#ThereIsAbsolutelyNoTruth… #ToPersistentRumours… #ThatGT… #DinesRegularly… #WithTheBullingdons… #AtMark’sInMayfair,Or… #ToTheVictorsGoTheSpoils…

[Independent] – David Cameron enjoys celebratory post-election meal at exclusive Mayfair private members club

…”The club is highly rated by respected Zagat restaurant guide, which notes members reportedly claim “if you have to ask how much it costs, you can’t afford to eat here”.

The Prime Minister will have enjoyed the privacy offered by the club, which prohibits photography and “the use of mobile telephones on its premises, for any purpose.”

However, Mr Cameron appeared to flout the club’s dress code, which stipulates “Gentlemen are required to wear a suit and collared shirt as well as a tie at dinner”, appearing in an open necked shirt.

Mark’s, acquired by entrepreneur Richard Caring, is among London’s most exclusive clubs and is described as offering members an environment “discreetly insulated from the hectic pace of the city outside.”

The Mayfair townhouse also offers members “a quiet spot to enjoy a postprandial cigar”…

#TheBullingdonBoyz… #Context…

http://tinyurl.com/36tjotz

#132 Nemesis on 05.09.15 at 10:41 am

#Addendum

http://www.independent.co.uk/news/uk/david-cameron-enjoys-celebratory-postelection-meal-at-exclusive-mayfair-private-members-club-10238125.html

#133 Doug in London on 05.09.15 at 10:45 am

Financial Freedom at 40, post #16:
The Mope and Wail you say, I thought that was funny! None the less, the Mope and Wail business section today has a good article about the debt problem in Canada. What’s well worth noting is these people overburdened with debt aren’t uneducated types. Many are highly educated professional people. It goes to show you that academic intelligence and common sense street smarts are 2 different things that don’t always go together. Why that is I don’t know, it seems so counterintuitive.

#134 CHERRY BLOSSOM on 05.09.15 at 10:47 am

I do believe we are seeing the very beginnings of a social revolution. But the people should be careful. Although everyone wants more more more they may end up with less less less. We are about to enter a CONSUMER RECESSION cause people have to focus on food and not HGTV. I think it could become a CONSUMER DEPRESSION. We need a Great Depression to being everyone back to their senses about what really matters. And it may be on its’ merry way.

Not in this lifetime. — Garth

#135 saskatoon on 05.09.15 at 11:03 am

#122 Mister Obvious

“capitalist democracy”

FYI:

this country is NOT capitalist.

it is socialist–doesn’t matter whether it is PC, LIB, NDP.

SOCIALIST.

people thinking otherwise is partly to blame for the mess canada is in.

you have been tricked, my friend.

#136 Great Expression on 05.09.15 at 11:10 am

#132 CHERRY BLOSSOM

We need a Great Depression to being everyone back to their senses about what really matters.

=======

I love the colorful, crazy, rich, exciting world that is made up by a mixture of things of different people, that really matters to them and I would have never even thought of.

#137 Godth on 05.09.15 at 11:15 am

#122 Mister Obvious on 05.09.15 at 9:08 am

How’s the game going?

The Day After Damascus Falls
https://consortiumnews.com/2015/04/29/the-day-after-damascus-falls/

We’ve been playing various iterations of this game for ten thousand years and it always ends in tears. Not much of a learning curve really. We’re just apes though, so that’s funny.

#138 Shawn on 05.09.15 at 11:28 am

Responding to Responses

At 90 I brought up again the topic of taxation of business income and of wealth versus taxation of income and the various incentives to invest in capital.

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

Lobster Man on 05.09.15 at 2:43 am

#90 Shawn on 05.08.15 at 11:07 pm

Property Tax is a form of tax on wealth.

**********************************
lobster Man makes an excellent point property wealth is taxed. Which may raise the question of why we don’t much tax other forms of wealth which constitute most of the value of many corporations The most valuable corporations these days consist mostly of intellectual capital and almost every successful company has massive wealth beyond its land and buildings (which are always taxed to some degree) and machinery (which used to be taxed but I am not sure it is much taxed these days). Most of the value of most corporations is not taxed. The income is taxed.

When shares are sold there is some tax on the capital gain but lower than tax on income. It’s usually half and often zero.

*************************************
Mark responded at 100 and disagreed with everything I said.

#139 Daisy Mae on 05.09.15 at 11:31 am

#60: “I was so stupid not even aware I could have put our savings in a GIC paying like FIFTEEN percent for five years…”

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

I had a GIC in those days, as well. RBC called me in and actually tried to convince me to switch to something else. They weren’t successful.

#140 David Hawke on 05.09.15 at 11:32 am

I seem to remember that back-in-the-day it was said that a mortgage payment should be a maximum of 30% of after tax income.

People in YVR/YYZ must be insane!

But what do I know, just a cat/dog loving, KIA driving POWG living in the tropics on the OAS dole.

#141 Daisy Mae on 05.09.15 at 11:41 am

#72: “….will rid those of us that are serious about learning and applying the guidance you provide…”

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

Or….we could simply scroll past posts we have no interest in?

#142 rosie "moving forward" in the knowledge that, "this won't end well" on 05.09.15 at 11:43 am

#83 Notta…

These are the people that are going to change the way it is?

http://ontario-wind-resistance.org/wp-content/uploads/2012/03/lemmings-cliff-cartoon.jpg

#143 oncebitten on 05.09.15 at 11:44 am

http://www.pressprogress.ca/en/post/corporate-canadas-cash-tax-havens-explodes-199-billion-under-stephen-harper

#144 Daisy Mae on 05.09.15 at 11:47 am

#85: “Also, I admire how you handle all the nasty comments and emails that you have been receiving from the nasty people….”

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

Yeah, we get to scroll past the obnoxious….but poor Garth has to read ’em all and decide if they need delete-worthy ;-)

#145 Ralph Cramdown on 05.09.15 at 12:08 pm

Well, it’s official. The ghost of MacBeth’s wife just lost the Ontario PC leadership. The crown goes to “Who-dat?” mk.II

Just goes to show what can happen to you in politics when you figure it’s a coronation and forget to actually WORK for it. Oh wait, we already had that lesson this week…

Points to the Mop and Pail, for backing a loser, yet again.

#146 debtified on 05.09.15 at 12:09 pm

“In conclusion. Life’s unfair. But pulling someone else down will not lift you up. At the end, you’re more responsible than anyone for the life you led.” – Garth

I once felt that it was unfair why others had so mucb and I had nothing. I once thought that only if those with plenty share more that those with less will be better off. The biggest

#147 Mister Obvious on 05.09.15 at 12:15 pm

#133 saskatoon

“this country is NOT capitalist…. you have been tricked, my friend”
————————-

I’m a Canadian like everyone else. I’ve also got a fair bit of capital which took most of my life to acquire. Nobody stood in my way. It now affords me a comfortable living in my retirement.

It looks like that will continue until I die.

Tell me then, where did I go wrong?

#148 debtified on 05.09.15 at 12:16 pm

“What’s the world’s greatest lie?… It’s this: that at a certain point in our lives, we lose control of what’s happening to us, and our lives become controlled by fate.” – The Alchemist, Paulo Coelho

So, for those who say that if you had nothing it is other people’s fault and you are not responsible to make things better, I can only say this: I once had nothing and was bitter about it. It was only when I took responsibility of my situation and worked hard that things actually improved. Last year I joined the 1% club (then promptly quit). There will always be rich people and there will always be poor people. Make a choice. Make your move.

#149 Stoopid Idiot on 05.09.15 at 12:29 pm

Haven’t read the blog in a while but enjoyed this post. How often my mortgage broker wife tell of stories of the lipstick on a pig as people dress up their lives to qualify or get a mortgage. How the bend an ear to realtors not realizing their not your fiend but their next paycheck. Their dismissive approach as they convey the “ I don’t have time for this” persona as they believe their own Buffet like musings on Macro Economics. For the most part people are truly dumb and all too fast to point the finger and blame others for their self-imposed circumstances and bondage to debt. Sure… they will even factor in your benevolence to their mistakes. No Garth, we tear other down to elevate our self’s…. It’s human and far from over

Danger-Economy Slowing Down, War and More War, California Drought and No Plan

https://www.youtube.com/watch?v=tMIhY6uzEk8#t=1010

#150 Julia on 05.09.15 at 12:32 pm

#119 Squatter
“People don’t choose, they are skillfully brainwashed by advertising and they use their $$$ accordingly.”

A cop out and part of the problem. It is very much a choice, not someone else’s fault.

#151 Mister Obvious on 05.09.15 at 1:06 pm

#135 Godth

“How’s the game going?”
———————–

Very well, thank you. Happy, healthy and looking forward to quite a few more leisurely years of the same. Of course, bad luck could always intervene at any time but worrying about that would be most counterproductive.

“We’ve been playing various iterations of this game for ten thousand years and it always ends in tears…. We’re just apes though, so that’s funny.”
———————–

Not quite. We are apes who have evolved the ability for self awareness and the consequent contemplation of our ‘destiny’. It quickly went south when we realized we have nothing more important to do than any other random ‘unaware’ animal.

But now we ‘know’ it. Horrors!!!

Let the games begin…

#152 saskatoon on 05.09.15 at 1:09 pm

#145 Mister Obvious

dude…

i didn’t say you went wrong.

i just pointed out that the idea a modern canadian “capitalist democracy” is a myth.

#153 crowdedelevatorfartz on 05.09.15 at 1:10 pm

@#132 Cherry Blossom
“We need a Great Depression to being everyone back to their senses about what really matters….”
+++++++++++++++++++++++++++++++++++

Its not just cherry blossoms you’re smoking these days is it.

careful what you wish for my little neophyte anarchist….you’d be the first to squeel “foul” if it all when to shite and there was no social safety net..

#154 Roial1 on 05.09.15 at 1:48 pm

I was just reading your post from yesterday and I see one GLARING omission.

The 750,000,000$ spent by our present Fed. gov. on political advertising at our expense.

And that does NOT include those stupid mail outs that they send (in droves) to my mail box. (Also at my (taxpayer) expense.)

Personally I believe that the new AB gov. should send a deputation to Norway to learn how they did it over there, and as much as possible copy it over here. I know that some of the Norwegian system will not work for AB but it should be a shot in the right direction.

And before you go on about the poor investors in the oil companies, MOST of them are offshore and do NOT pay any Canadian tax.

Like the purchasers of the oil co’s that got sold off when Stevies gov, killed the trusts. (Which he promised not to do to get votes from the holders of these trusts.)

#155 JacqueShellacque on 05.09.15 at 2:00 pm

Large-scale social activism, enabled by big gov for the last half century, is sending society to hell in a handbasket:

“In conclusion. Life’s unfair. But pulling someone else down will not lift you up. At the end, you’re more responsible than anyone for the life you led.” (Garth)

This would’ve been uncontroversial in the mid 60s. But today’s “citizen” (to use the term loosely) is a confused figure. But big gov has put the squeeze on us all: Bureaucracy enables the moralizers and puritans to tell us how we should raise our kids, what we should eat, what attitudes we should have…leaving a dumbed-down citizenry that doesn’t want to bother to think for itself. This human husk is easy prey for the rent-seekers, those who want to take advantage of people who can’t think and/or won’t act in their own best interest. An active, responsible citizenry would have no trouble telling [email protected] where to go, would be able to pay for its own retirement without significantly burdening the succeeding generations, wouldn’t throw out its financial future for dreams of some soulless consumerist utopia. In many ways life sucked in the 50s, but that doesn’t mean we can’t look back and adopt again what people then did well.

#156 CalgaryRocks on 05.09.15 at 2:01 pm

#127 inspirational on 05.09.15 at 10:13 am
#121 CalgaryRocks

Success stories are great, congratulations!

Give us more details what you guys do there, how you did it.

My wife has a great new job here in NYC. (After many years of working really hard and being unappreciated by her former employer)

I will take credit for it as I saw the posting on my LinkedIn feed and nagged her for days until she finally called the guy and applied for it. (She was afraid to be under qualified)

The guy knew both of us because we had worked on projects for a different company in a different lifetime with him.

Of course, everyone we work for/with we keep in touch with, either on LinkedIn or FB.

We were living in California at that time, I was working for a startup and hated it almost the first week in.

So I dumped the startup and we moved to NY as soon as she got thru the interview rounds.

Once here, with her gainfully and happily employed, I specialized my skill set and optimized my LinkedIn profile. I have people emailing me quite often about jobs, projects etc.

Most of them are recruiters and I always try to email and talk to all of them. Frankly, most can’t help much, or are for full time positions that I am not interested in, but I never know if I don’t reply.

If I feel that they’ll waste my time, I just tell them that I am not in the market and that we should talk in 6 months or so.

Most will forget about me. Those that call back in 6 months may be useful.

Once in a while I get a decision maker that will email me directly from LinkedIn. The CEO of a startup, a director of the IT department, stuff like that.

These are guys that put real money in my pocket. I usually start with a small project and then keep in touch and work on bigger or longer or more complex stuff.

I work remote, from home, sometimes they fly me in for a week to visit with their onsite team. It’s fun, pays well, provides freedom.

And because I work with so many people not only do I build a more varied experience I can leverage my work for multiple customers which of course makes me more effective and cheaper than my competition.

#157 Joe2.0 on 05.09.15 at 2:27 pm

I retract my FED statement after more research, but not my prediction.

#158 Silent the People on 05.09.15 at 2:31 pm

As massive debt is accumulated by governments and private individuals, the 1% are worried! Printing money is not helping either! We’re heading for trouble but it’s only money! Life will go on… Enjoy it while you can!

#159 waiting on the westcoast on 05.09.15 at 2:56 pm

#148 Muster Obvious

Re: self aware apes with nothing to do…

I agree but think we have a tremendous opportunity to leverage that self awareness to do good. Imagine I’d we applied that knowledge to improve everyone’s lot.

Ironically, most unaware (that we believe) creatures have natural checks and balances on the planet. Our capacity for knowledge and tools has allowed us to act more like parasites and the host is now getting quite ill.

#160 Daisy Mae on 05.09.15 at 3:08 pm

#119 Squatter: “People don’t choose, they are skillfully brainwashed by advertising and they use their $$$ accordingly.”

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

Still a choice…

#161 Godth on 05.09.15 at 3:17 pm

#148 Mister Obvious on 05.09.15 at 1:06 pm

It’s Alright Ma (I’m Only Bleeding) – Bob Dylan (5/7/65) Bootleg
https://www.youtube.com/watch?v=jHGrWTmXK6w

#162 Mark on 05.09.15 at 3:24 pm

“Alberta’s NDP sure did a number of people’s heads with that Norway comparison. Norway is a weensy sovereign state. Alberta is one of ten provinces, integrated into a massively bigger economy and society, without overall energy jurisdiction. There is no valid comparison. — Garth”

Very true. Also, Alberta’s oil is extremely capital intensive to extract. Even at the relatively recent “high” prices of oil, it wasn’t particularly profitable to extract. Meanwhile, Norway’s particular form of physical reserves were relatively cheap to extract.

“The most valuable corporations these days consist mostly of intellectual capital and almost every successful company has massive wealth beyond its land and buildings (which are always taxed to some degree) and machinery (which used to be taxed but I am not sure it is much taxed these days). Most of the value of most corporations is not taxed. The income is taxed.”

Value is only value if it can be eventually converted to income. I’d argue that capital taxes are highly offensive and discourage capital investment and savings.

#163 Blacksheep on 05.09.15 at 3:27 pm

Julia # 147,

#119 Squatter

“People don’t choose, they are skillfully brainwashed by advertising and they use their $$$ accordingly.”

“A cop out and part of the problem. It is very much a choice, not someone else’s fault.”
————————————————
100 % agree…

All Citizens must take responsibility for themselves, but it’s much more complicated than that. It is only a choice, if the ‘Citizen’ is exposed to the realities of our indoctrinated society.

This is very much a RED pill, BLUE pill deal. The system does its best to keep Red pill ideas quashed. If by chance these non conforming ideas manage to get into the MSM, the system discounts it as:

Not worth commenting on. Nutbar stuff.

#164 Blacksheep on 05.09.15 at 3:34 pm

Surf # 76,

“Not worth commenting on. Nutbar stuff. — Garth”
——————————————–
Speaking of.

I researched this, many years ago, it is straight out of the Garthsonian era.

The Auditor General of canada report, released in1993, Section 5.41:

“From Confederation up to 1991-92, the federal government accumulated a net debt of $423 billion. Of this, $37 billion represents the accumulated shortfall in meeting the cost of government programs since Confederation. The remainder, $386 billion, represents the amount the government has borrowed to service the debt created by previous annual shortfalls.”

From: http://qualicuminstitute.ca/federal-debt/

“In other words, of the accumulated debt of $423 billion, the government really needed to borrow only $37 billion—accumulated over 127 years—to cover its shortfalls on real spending for goods and services. The rest of that accumulated debt was monies borrowed to service the debt, essentially a payment of interest on interest to the private sector when the government could have created the money to cover the shortfall at what amounts to be no interest.”

1) Garth, you just supplied us with the Gov of canada Finance Dept. link, showing were the 271.2 Billion in federal tax $’s are harvested from.

2) 10 % or $ 28.2 Billion in revenues collected, goes directly to servicing our national debt, that is currently sitting at $ 611 Billion. (high % being accumulated private interest)

3) If we take the $ 28 Billion required to just service, our national debt and divide it by the 26 Million tax payers in canada, you get $ 1076 per working stiff, per year.

4) Now this doesn’t sound like much, but since many households represent two taxpayers that’s $ 2152 a year, compounded at a modest growth rate of 5 % over 40 year career, = $ 272 K, per couple. (Imagine the sum Garth, if you were handling these funds @ 7 % returns!)

Yes….Of course the Cattle would lack the discipline to bank these currently ‘unnecessarily harvested’ funds, but that is not the point.

This is:

The government is a sovereign in control, but It behaves like a currency user (Greece anybody?) If the courts are just, This Lawyer will prove, its is acctually, a currency issuer.

It pays interest not because it has to, but because it chooses to, as at some point, lobbyist coerced politicians, into relinquishing said control to private parties, all in name of privately owned bank profits.

Game changer? I don’t believe so.

Corruption at highest levels of government?

That, is a certainty.

Naive. Governments routinely spend more than they harvest. They make up the shortfall by borrowing on the bond market and paying interest to bondholders. I gather you would rather they print all the money they spend and not be bothered with matching expenditures to revenues, thus avoiding a structural debt. Of course that policy would debase the currency quickly, creating substantial inflation and requiring a cycle of printing to match it. Trust me, the outcome would be far worse than what we now have. Better that governments run surpluses, reducing the debt over time. This is why you should not vote NDP. — Garth

#165 Linda on 05.09.15 at 4:44 pm

Ralph Cramdown #143

As a PC party member in Ontario for many years, and a Bill Davis fan, I am sadly not surprised by the selection of Patrick Brown, but still disappointed. He was the wrong choice, as you say another Hudak dinosaur, and this will keep us out of power for another election cycle at least. He will try to court the same immigrants who are protesting against sex education and pull us back into the dark ages. But it won’t work, much too narrow a view, and our own internal polling has told us that for years.

What bothered me the most in the last few weeks was all the innuendo I heard from party types that Christine Elliot would not be seen as “an attractive candidate” by Ontarians.

As a woman, I take this exactly for what it is, a disgusting personal attack based on whether men view her as “pretty” or “fetching” enough for them. I said as much to many in the party, and got sidewise glances but no honest answers.

I got the same vibe when I attended federal conservative riding association meetings, and am frankly just appalled at the backward, anti-female hard core that still finds such a comfy home in the conservative movement in Canada.

Where else to go is the question I face now. I’ll be turning in my federal and provincial memberships before the October election, is all I know for sure.

#166 BS on 05.09.15 at 4:50 pm

Blaming corporations, 1%ers, immigrants for your own situation. See a pattern, anyone? — Garth

This is a common theme in society in general. Too many people think bringing some else down will benefit them. It won’t. It will usually do the opposite.

If those complainers spent as much time making changes to their own life as they did complaining they could have a bigger slice of the pie.

If you think corporations make too much money then buy some shares and enjoy some of those profits. If you think rich immigrants come here and throw around money like it is nothing then why not try to get a piece of that money? If they are throwing it around someone is catching it. Why not you? If you think 1%ers have it made, then why not become one yourself? Sure there a few 1%ers who got handed everything, but most made wise decisions and earned what they have.

#167 fixie guy on 05.09.15 at 4:53 pm

“It’s called choices.”

Without the federal government shielding lenders from mortgage risk, using taxpayer dollars no less, those choices wouldn’t be as widely available. Historically they weren’t, they’re artificial creations of policy.
King Stephen massive swelling of the ranks of ‘qualified’ buyers necessarily did the same to housing demand. Price and demand are positively correlated. That’s what stimulus does. The rich are certainly getting richer, they’re the real benefactors of Harper’s ‘Action Plan’.

#168 old gringo on 05.09.15 at 5:02 pm

I may stand corrected,but as I read and listen to the NDP responses, it seems they are going to raise corporate taxes , and install higher levels of pollution controls for the tar sands.
This , combined with the low oil prices, may put the final nail into the Alberta coffin.
The only winners will be the gov’t workers who will be rewarded with more money to waste on more useless gov’t programs.
Relax, this only an opinion!

#169 BS on 05.09.15 at 5:06 pm

And politicians have no blame in all of this? Socialist Norway has $1 trillion in that oil fund. Capitalist Alberta has a debt of $13 billion.

I have spent time in Norway and it is not the panacea the left like to make it out to be. Most people living in Norway have a lower standard of living than people living in Alberta. Norway has a VAT tax of 25% on everything and an income tax rate of 55%. Other things have massive taxes such as alcohol which is about triple the price of Canada. People in Alberta pay about 1/2 the taxes of those in Norway.

Personally I would prefer to pay 1/2 the taxes and keep that money in my own account which I can do with what I please rather than have the government hold it in a sovereign wealth fund which I may never benefit from.

#170 Shawn Allen on 05.09.15 at 5:21 pm

Thinking About Debt

Here is an interesting contention to think about:

Every house that gets built has been fully paid for by someone at the moment it is built. Also true of every highway, every building every power plant, every factory, every hamburger, every everything.

The world and humans as a total population are never ever in debt collectively by even one cent.

Some humans owe “money” (future consumption) to others. But in the aggregate there is and can be no net debt.

Perhaps this is obvious, but I am not sure that everyone would agree.

This is not to say that being in debt is good, it is simply to say that in the aggregate the population of the world is not and cannot be in a net debt position. (That may change when we discover a new planet to borrow from).

Looking around at the total installed base of highways, houses, factories, building, cultivated land, power plants, cars and all manner of things I have to say that the world as a whole is a very wealthy place as all of this (other than the earth and natural resources) has been created by humans and there is no net debt outstanding. Well done humanity!

#171 Godth on 05.09.15 at 5:26 pm

Naive. Governments routinely spend more than they harvest. They make up the shortfall by borrowing on the bond market and paying interest to bondholders. I gather you would rather they print all the money they spend and not be bothered with matching expenditures to revenues, thus avoiding a structural debt. Of course that policy would debase the currency quickly, creating substantial inflation and requiring a cycle of printing to match it. Trust me, the outcome would be far worse than what we now have. Better that governments run surpluses, reducing the debt over time. This is why you should not vote NDP. — Garth

So the people that created the Bank of Canada as a national bank with a specific purpose were naive fools. It was only used successfully to build the country. You, and you ilk, want to parasitize the vision that built this country – we know. Just do us a favour and move to the USA where you can worship your religion freely, without restraint. Some of us would still prefer to live in a society, preferably a sustainable one, not a dystopian oligarchy.

Capitalism is the West’s Dominant Religion
http://www.counterpunch.org/2015/05/08/capitalism-is-the-wests-dominant-religion/

The Bank of Canada was created to stabilize and protect the money supply, not to provide the government with cash. I have no doubt you will grow out of this. Just stay away from matches in the meantime. — Garth

#172 pretty when cry on 05.09.15 at 5:27 pm

#163 Linda

What bothered me the most in the last few weeks was all the innuendo I heard from party types that Christine Elliot would not be seen as “an attractive candidate” by Ontarians…

As a woman, I take this exactly for what it is, a disgusting personal attack based on whether men view her as “pretty” or “fetching” enough for them.

==========

We are a visual society now.

Everybody must be pretty.

Beauty, height, handsomeness, age or charisma directly translates to better hiring rate, promotion, salaries – regardless of gender.

Hell, even for political representatives.

It is what it is, we are a visual societies. Maybe we always were, but we can do it more openly now.

Just like wealth. It used to be in vogue to be shy about it. Now it’s the opposite.

If you insist on membership, you can always elect to join a fancy club and enjoy life visually.

#173 Protest Movement Count me In! on 05.09.15 at 5:44 pm

Never known a plutocrat who made much sense to me. Kevin O’leary’s unpatriotic chant to international investors, “Leave Alberta now or lose your investment?” Pathetic. Blog Dogs know from Garth’s insight, international investors are already miffed. A tanking Canadian dollar decimating any hope of reasonable returns.

It’s captivating watching shepel flex their muscles. It’s refreshingly hopeful a place like Alberta voted things needs to change. In a big way and quick. Maybe it’s naive but I believe under an NDP government, for the past few decades, Alberta would be more Netherlands rich than pitiful poor. It’s a pity….

It’s scary witnessing the theory of Thrift and Dept Paradox unfolded as it is written. People vote on pure emotion in the age of anxiety. It can make for amazing inspiring change and the flip side not so much. Xenophobes come out to play their nefarious games.

Woof. lol Where is the best place in Canada for economic and societal insight? Right here on Garth Turner’s blog. Mixing real estate, with sound economics and investing at its best. Some Garth politics even better. The narcissistic I invested wisely and made ton of money or Canadians are entitled children posts an occupational hazard worth enduring.

Just an FYI about the NDP and union falacy and favourite whipping boy Bob Rae. No Priemer in Ontario levelled the realistic temperament Bob Rae levelled on the public sector unions. Rae Days – A 20% pay cut. The wild thing is though the civil service worked less didn’t really notice.

I so miss the Canada, I never knew and have only read about. History which seems like fiction. A country devoted to leaving a legacy worth inheriting. A culture which produced, civil servants like, Sir Adam Beck, chairman, of the world’s first public utility, Ontario Hydro in 1922, who said, “The gifts of nature are for the people.” Inspiring nations think different.

I’m pretty sure Ontario wasn’t a raving socialist horror show in 1922. Where careers like teaching, policing and fire fighting where vocations. For those who wanted to enhance their society. In return, they where offered reasonable, undoubted pay and employment for life. Not the damn any employer moral hazard what’s in in it for me, we endure today.

Want to start a movement Garth Turner? Turnerites is taken sadly. Gatherites: A Canadian movement founded in 2015, Garth Turner, with a surreal canine inspiration, based on a Luditite sense of alienation, tempered with neo-classical economics and paying homage French Phisocrat economic theory. Swept a nation with common refrain, “You reep what you sow”

#174 jean on 05.09.15 at 5:53 pm

Garth, it’s all very good for you to point out every day that houses are overpriced (but not in Vancouver!! or Toronto!!) and people have too much debt but you offer no solutions, ever. You also refuse to accept that Vancouver and to a lesser extent Toronto house prices are being inflated by overseas investors parking cash. Because there are no stats on this in Vancouver (how convenient) you and the realtors deny the notion.

My son spent his childhood in UK and is moving back in a few months to take up a job there. He will never own a house in central London. Never. That makes me sad. My daughter would like to live in Vancouver. She has abandoned the idea and is looking for work elsewhere. Yet another young person who could contribute to Vancouver, priced out of the city completely. I’m not in a position to gift my kids a few million for a house in either city. So it’s sad for me to know that my children will never have the lifestyle I did.

Ignoring the destruction that overpriced houses cause to the young generation today makes you part of the problem, and whinging about debt levels won’t fix it. We need government policies that make houses affordable and if that means crashing house prices across the country and telling foreigners to park their cash elsewhere then that is what should happen.

Why do your kids need houses? Why can’t they live in the burbs? Rent? Commute? Change cities? Stop blaming others for the unsatisfied sense of entitlement you’ve obviously instilled in your children. — Garth

#175 Godth on 05.09.15 at 6:06 pm

I have no doubt you will grow out of this. Just stay away from matches in the meantime. — Garth

Capitalism (however you define that) is the match that’s lighting up this planet. Infinite growth on a finite planet -lol. When the oceans are (for our purposes) dead, your wealth will mean what? I’m old enough to know there are no easy answers but at the same time it’s blatantly obvious what the answer is not. If we’re going to survive we’re going to have to outgrow your ideology, I seriously doubt it will happen though – in fact I’m completely pessimistic but I’m willing to be wrong. I don’t know what the answer is other than to say LESS! STOP! I’m not holding my breath either though, we can’t help our self interested (petty) selves. This game is too far gone and in the end mother nature will pull the plug (as always). So enjoy your McMansions and whatever other bullshit you value so dearly, your children and grandchildren will sort through the rubble of your entitlement.

…but I’m a citizen of Rome, just give me bread and circuses and leave me alone.

Fundamental Change is Necessary
Renewable Energy isn’t a Shortcut to Reversing Global Warming
http://www.counterpunch.org/2015/05/08/renewable-energy-isnt-a-shortcut-to-reversing-global-warming/

I’m so glad there are people like you to save us. You can take it from here. I’m going riding. — Garth

#176 Mark on 05.09.15 at 6:11 pm

“Perhaps this is obvious, but I am not sure that everyone would agree.”

I agree with you Shawn. However, we have a lot of nutbars running around claiming that banks lend 20X their deposits, or some nonsense like that. Not realizing that every dime a bank lends out must have been originally borrowed, and represents a liability on their balance sheet, and an asset on someone else’s balance sheet.

Now, of course, there can be more debt outstanding than exists collateral to support debt. Which is how deflation comes about — a systemic revaluation of debt relative to the carrying capacity of the economy. I personally believe Canada won’t be terribly negatively affected by deflation as there is plenty of room for upwards valuation of many types of collateral within the Canadian economy. Particularly in our resource sector where many assets sell for a fraction of their replacement cost. But I’m not so sure about Japan/Europe/USA, given their relatively higher levels of debt and less significant natural and industrial resources compared to their population base and GDP.

#177 Retired Boomer - WI on 05.09.15 at 6:32 pm

I glanced through my local real estate offerings today, just for grins, as well as those from my hometown newspaper.
What I discovered was the range. From a decent looking 3 bedroom ranch in Lake Geneva (no water rights) for 170K to a gorgeous 7 bedroom with wonderful lake frontage for a mere 6 million. Uh, yeah they are within walking distance to each other. Property taxes 43K a year on the lake home 2.7k on the rancher. If you have deep pockets go for the lake home, if you are an average dude, the other is more in our style.

Similar price ranges here in the Coulee region.

It seems prices have firmed up over the last few years, as money is cheap, and foreclosures are much lower. Still, you need a decent down payment, good credit history or you are NOT getting a loan. I suspect in most areas the same prevails, with a few exceptions.

If your local price realities show renting to be the cheaper way, why not go that route until things change. They ALWAYS do change, but always quickly. No reason not to improve your buying strength while waiting is there? Save more money for the right time.

#178 Nagraj on 05.09.15 at 6:35 pm

Ever since Garth Mephistopheles Turner penned “True Lies”, humour on this blog’s gone down the tubes. It now suffers from an excess of seriosity. Which is a sort of psychological measles no doubt. (As if Canuckistan weren’t noodly enough already.)

“Do you poop out at parties? Are you unpopular?” Lucy asks when advertising Vitameatavegamin (which is 23% alcohol); after a few swigs: “Do you pop out at parties? Are you unpoopular?”

Will ya look at what popped out of the poopular OPCs. No doubt this Mr.Brown is smart and full of good intentions. BUT OMG THE HAIR!

WHY OH WHY is this current crop of leading politicians Notley and JT as rare exceptions) so damn homely?

Is Canada just an ugly country?

Izzat a bottle in front of me or did I have a frontal lobotomy?

#179 CP on 05.09.15 at 6:37 pm

I notice nobody calculates percentage of total wealth spent on taxes. Probably cause it would shame rich old white guys.

Top tax bracket in Ontario us now 52%, regardless of net worth. — Garth

What percentage of people who Are in the 1% actually send the government 52% taxes? Zero would be my guess. If I had a billion dollars, but only made 10 bucks this year. I should only pay a few bucks tax? That seems right.

How about we just admit the system will be fixed in favour of rich old white guys, until we reduce income taxes for everyone and put a wealth tax in place. Please stop defending the current taxation system.

When 1% of people pay 22% of the taxes they’re obviously shoveling a lot of money into government coffers. Learn a little. — Garth

#180 jean on 05.09.15 at 6:37 pm

So your advice to my kids is they should just resign themselves to become part of generation rent. They can just rent forever. Hmmm, okay. I rent at the moment because I refused to pay the ridiculous prices in Canada, so I have no real problem with renting.

However, expecting young people to have to live in suburbs or second rate crap cities is just going way to far. So, renting it is. Forever. Garth’s best advice to the young. Rent forever so foreigner can park their cash in empty apartments in Vancouver. No wonder NDP won.

That was just amazing. — Garth

#181 Linda on 05.09.15 at 6:40 pm

pretty when cry #170

“We are a visual society now.

Everybody must be pretty.

Beauty, height, handsomeness, age or charisma directly translates to better hiring rate, promotion, salaries – regardless of gender.

Hell, even for political representatives.”

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

Interestingly, this seems not to apply for male politicians.

Rob Ford, Diefenbaker, Ignatieff, Harper etc…. lots of ‘ugly’ (or just odd looking) dudes make it. Why is it only women get subjected still (particularly among backwards conservatives) to this old ‘standard’?

I think you missed the point, but that kind of response shows what we are dealing with.

(BTW, is your moniker some kind of veiled jab at women? Just wondering…)

#182 devore on 05.09.15 at 6:45 pm

That was just amazing. — Garth

Amazing indeed. Turns out our choices are limited to “buy now” or “rent forever”. I’m so outraged, I’m off to make a hashtag sign and twitter myself.

#183 Silent the People on 05.09.15 at 6:56 pm

Garth, what pills do you take to stand all the crap you get dished out? I want some! Thank you for all you have to put up with! Keep going! I’m sure there are times you want to give up….

#184 Smoking Man on 05.09.15 at 7:00 pm

#128 LP on 05.09.15 at 10:14 am
#66 Smoking Man on 05.08.15 at 9:43 pm

He should absolutely do fiction, he would blow the greats out of the water. I’m sure of it.

Garths writing is , witty, fast, easy to follow. He’s so damn talented.. You feel it when you read it.
*******************
Now who’s being a suck-up?
…….

It was an insult disguised as a compliment.

Or a compliment disguised as an insult.

Its a thing with dyslexics, you will never really know what we are really saying..its a gift.

Plus , whats wrong with tossing a bone to fellow dog.

#185 Ralph Cramdown on 05.09.15 at 7:10 pm

No talk of ugly politicians would be complete without mentioning Henry Waxman, democrat out of Los Angeles. 40 years that man got elected, with a face only a mother could love. His official portrait:
http://upload.wikimedia.org/wikipedia/commons/5/52/Henry_Waxman,_official_portrait,_111th_Congress.jpg

#186 Slim on 05.09.15 at 7:12 pm

How much damage can the NDP do in Alberta after four years?

They have the answer for those who want to own a small business. Buy a big one and wait. — Garth

#187 CP on 05.09.15 at 7:19 pm

I notice nobody calculates percentage of total wealth spent on taxes. Probably cause it would shame rich old white guys.

Top tax bracket in Ontario us now 52%, regardless of net worth. — Garth

What percentage of people who Are in the 1% actually send the government 52% taxes? Zero would be my guess. If I had a billion dollars, but only made 10 bucks this year. I should only pay a few bucks tax? That seems right.

How about we just admit the system will be fixed in favour of rich old white guys, until we reduce income taxes for everyone and put a wealth tax in place. Please stop defending the current taxation system.

When 1% of people pay 22% of the taxes they’re obviously shoveling a lot of money into government coffers. Learn a little. — Garth

Oh Garth – please teach me. That 1% pays 22% of the taxes but own more that a third of all the wealth in the country. Why is it they don’t pay at least 33% again? I guess if rich old white guys are born with silver spoons they should get to keep them? That must seem fair in your would. I’m beginning to understand the title of this blog.

Silver spoons? Most wealthy people started businesses. If they inherited anything, it was balls. — Garth

#188 Slow Guy on 05.09.15 at 7:24 pm

Furthermore, if you think her kids are entitled to a house that’s like saying our houses are NOT overpriced then, are they???
Make up your mind hypo…..

#189 Daisy Mae on 05.09.15 at 7:25 pm

#161 Blacksheep: “All Citizens must take responsibility for themselves, but it’s much more complicated than that. It is only a choice, if the ‘Citizen’ is exposed to the realities of our indoctrinated society….”

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

Now we’re talking excuses. It’s complicated…only if you allow it to be.

#190 money agnostic on 05.09.15 at 7:32 pm

Hey all,

I don’t care if you rent or mortgage.
I don’t care if you prefer blue, red or orange.
I don’t care about your tax rate.
I don’t care if you T2 or T4.
I don’t care about your religion, whether you worship Marx or Ayn Rand or anyone in between.
I don’t care if you are native or from St. Athanasios Island.
I don’t care if you love or hate Garth.
I don’t care what you think of Smoking Man.

Let’s talk ETF, stocks, bond – whatever that makes money without all the ideological entertainment side show.

That’s my choice.

#191 Slim on 05.09.15 at 7:38 pm

In my opinion, Liberal leader Lawrence Decore should have been premier of Alberta. Instead, Ralph Klein stole the show and got himself elected as premier.

Things might have looked much different today.

#192 Daisy Mae on 05.09.15 at 7:38 pm

Perfect response to #169:

“The Bank of Canada was created to stabilize and protect the money supply, not to provide the government with cash. I have no doubt you will grow out of this. Just stay away from matches in the meantime. — Garth”

#193 Smoking Man on 05.09.15 at 7:41 pm

The young, the newly schooled . your doomed.

Government giving away crazy loot to young Entrepreneurs. Venture capitalists looking for yeild, any yield. But teachers like Wynne and the like taught you..

Follow the rules, don’t question. Follow our plan, and you will succeed..

Ya, insuring useless teachers always have jobs and two month paid summer vacation..

To bad none of you are my kids, yes daddy’s rich, they won’t see a dime. Bail , drug rehab , that’s different.

But I planted the seed.. Plan going perfectly.

#1son the top salesmen in a public multinational corp.
When he was 15 writing him self checks from my bank account. I knew the prick would need to find a way to maintain that life style. I played dumb the whole time.

#2 son, the pro hockey player who got Hooked on pain killers , thanks to his trainers. Calls me to say good buy before Jumping off a bridge. Talked him into going to a bar for a final drink with dad, had the cops track his phone and get him. Rehab , Trios collage to learn to be a heeler. At 40k to 100k to rehab drug addicts for a one month stint.. He’s future look good, next year , Smokey’s sons rehab center.

#3 Son , a wild man with a big Scottish red beard., younger better looking version of dad. Only kid that listens to me to a tee, except when it comes to forex. At earls , tryed to set him up with a young lady from the tax farm that I adore. As a future father inlaw sort of way, what’s he do… He leaves the bar with a modle he just met. He never came home.

He’s in a boot camp to learn IOS, he’s not that good, hes made buddies with the top of the class code smiths.
He’s the idea man… Already talked them into working for him. promising riches, he’s got two good ideas for apps, I’m investing a small piece, then he’s going to dilliver a biz plan to some VCs .

The beard will get him the loot, if he pulls it off and makes a billion , cool, if not, cut the beard off and try again..

Now you idiots with obidiance certificates, polish up your resume and go beg for low paying job and a pat on the head.

#194 Daisy Mae on 05.09.15 at 7:47 pm

#168 Jean: “However, expecting young people to have to live in suburbs or second rate crap cities is just going way to far. So, renting it is. Forever.”

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

What crap this is. Kids start at the bottom — as all past generations have — doing whatever is necessary to advance. And if they have gumption, they will.

#195 saskatoon on 05.09.15 at 8:11 pm

#177 CP

racist AND dumb.

#196 Min In Mission on 05.09.15 at 8:19 pm

Having read this “pathetic blog” ( which I don’t believe it is ), for a year or so, I have tried to pay attention.

Max’d out TFSA, after all this is a good thing, and hope that the Government keeps its hands off the proceeds. RRSP’s are so-so. No mortgage and heading into retirement.

Not really that worried. I am not as financially literate as most of the ‘blog dogs’, just doing my best.

#197 DON on 05.09.15 at 8:25 pm

Garth: Your blog is a sanity check.

BottomsUp: Thanks for the Chuckle.

“It is rational for Canadians to carry more household debt,” says TD’s Alexander.”

What he should have said: “It is stupid for Canadians to carry more household debt,” Herd mentality – hard to convey to the younger folks that history rhythms. At today’s prices even slight increases in interest rates will squeeze people, some more than others. As the pressure mounts, cracks appear and holy shit is the new word of the day.

Just spent the day in my hometown, changing my mothers brakes. Retirement mecca of the West. Driving downtown at 7pm on a sunny day…no one on the street. Pass by fields that once had soccer, baseball etc and now fly fishing lessons, or generally empty fields. Where is the future of this community.

*****************
“I don’t know how you escape becoming more comfortable with debt. Because that’s the marketplace we live in.”
********************************

Their is good debt and bad debt. And marketplace change.

Ah the so called experts – maybe in one field but not all.

#198 Tornado Bob on 05.09.15 at 8:28 pm

Well ….it’s happening…..what you’ve been harping about for years is here….a bond market collapse sending rates straight up. …..hockey stick up.

http://business.financialpost.com/investing/ouch-a-bond-market-implosion-this-big-has-only-happened-twice-in-the-past-15-years

So…..inflation is also back….bad for a balanced portfolio….but good for commodities…oil is a buy…gold……hards. It’s the end of our governments subsidizing the stupid….forced by the market reaching the end of it’s rope.

Will this also mean that the end of stupid social spending is at an end……our governments are going to have a very hard time paying back what they loaned themselves at zero percent.

Where do you think the money to be made in this environment…Garth…anyone? Is this a good time to buy back the depressed preferred…the battered oil stocks….the XGD…?

#199 HJD on 05.09.15 at 8:28 pm

#120 Colin: And politicians have no blame in all of this? Socialist Norway has $1 trillion in that oil fund. Capitalist Alberta has a debt of $13 billion.

“Alberta’s NDP sure did a number of people’s heads with that Norway comparison. Norway is a weensy sovereign state. Alberta is one of ten provinces, integrated into a massively bigger economy and society, without overall energy jurisdiction. There is no valid comparison.” — Garth

No valid comparison?? While Norway wisely saved a significant amount of its oil profit for future use by Norwegians, Alberta’s Conservative governments unethically and intentionally allowed most of the oil profits to slip into the hands of their big-business partners.

Norway has a 25% sales tax and average 55% tax rates. Be careful what you wish for. — Garth

#200 Nemesis on 05.09.15 at 8:33 pm

#TodayWasVerySpecial… #OldFansWillUnderstand… #TheMetaphor… #EspeciallyIfTheirVTwin… #IsItalian… #It’sAForePlayThang…

https://youtu.be/IACjOvyx5hs

[NoteToGT: Just kidding… As per usual, just one Coffman cartridge… &HeTurnedOnTheFirstCrank.]

#201 Snowboid on 05.09.15 at 8:38 pm

#188 money agnostic on 05.09.15 at 7:32 pm…

Bravo, I agree 100% – let’s get back to the business of making money!

#202 Smoking Man on 05.09.15 at 8:40 pm

Jesus Chris, melting at stir at Senica , in the zone.

These losers , chairmen club members , hi Smokey how are you.

I was real good till you said hi to me. I’m trying to write meaning full shit on garth s pathetic blog.. You’re killing my train of thought.

Why aren’t they banco rupt yet.

Gabling sould only be the entertainment entry on your in your tax return.

Not your life savings…

People is all im saying.

#203 Sideshow Rob on 05.09.15 at 8:43 pm

Alberta took the orange pill. Side effects include vomiting in 6 months.

#204 Mimose on 05.09.15 at 8:47 pm

I asked that USD ETF spread question a few days ago and would like to thank all those that replied, much appreciated! Really helped a lot to avoid further mistakes when buying ETFs in other currencies. Have a great Sunday!

#205 Nemesis on 05.09.15 at 8:48 pm

“Most wealthy people started businesses. If they inherited anything, it was balls.” — HonGarth

https://youtu.be/R7qT-C-0ajI

[NoteToGT: You do realize that it is now, officially, MillerTime – and I would rather not have to concentrate on your education.]

#206 Leo Trollstoy on 05.09.15 at 8:54 pm

Some banking basics for those who have no money and an even less understanding of it:

Loans create a lot more than deposits.

http://www.cnbc.com/id/100497710

#207 Nemesis on 05.09.15 at 8:57 pm

#I’mJustKnowThatI’m… #GoingToRegretThis…

http://tinyurl.com/qay37al

#208 Buddha on 05.09.15 at 8:57 pm

Musing……

So, what or who’s to stop a country from simply using proxies to purchase ….say …as much land around the globe as they want.
So much cheaper than ‘old fashioned’ war.

Back to sleep.

#209 Smoking Man on 05.09.15 at 9:01 pm

DELETED (Gross)

#210 Sheane Wallace on 05.09.15 at 9:05 pm

There is nothing left of the economy except housing and all services driven by it.

FIRE – financials, insurance, real estate, and all retailer and derived services, even manufacturing is driven by renovations. If the article is true, it implies 150 billions + driven by home renovations only. It is 1/3 of our declining ‘manufacturing’ .

And everything is driven by credit. If there is normalization in credit and money pricing there would be no economy and jobs left. But we will keep going until we destroy the last value of the confetti we call Ca dollar.

#211 Sheane Wallace on 05.09.15 at 9:11 pm

#123 Nemesis

I have absolutely no problem with foreign investments in the Canadian housing market. Let’s then just disband CMHC and transfer the risk for 1.1 trillion in mortgages back to the banks.

#212 Sheane Wallace on 05.09.15 at 9:16 pm

‘“It is rational for Canadians to carry more household debt,” says TD’s Alexander.’

Absolutely, Can he please take back the risk for these mortgages from the taxpayers? And then he can lend as much as he wants. I won’t hold a single penny in a Canadian bank. They are not paying interest but taxing my accounts instead.

#213 Sheane Wallace on 05.09.15 at 9:19 pm

Norway has a 25% sales tax and average 55% tax rates. Be careful what you wish for. — Garth

But you are conveniently not mentioning the services they get in Norway. Really free health care, free universities, government caring for their people. It is convenient to compare oranges and apples to justify corruption and theft. I will peak Norway in a heart beat.

Here you go. Can we help you pack? — Garth

#214 Sheane Wallace on 05.09.15 at 9:19 pm

pick damn it

#215 HJD on 05.09.15 at 9:36 pm

#197 HJD: No valid comparison?? While Norway wisely saved a significant amount of its oil profit for future use by Norwegians, Alberta’s Conservative governments unethically and intentionally allowed most of the oil profits to slip into the hands of their big-business partners.

“Norway has a 25% sales tax and average 55% tax rates. Be careful what you wish for.” — Garth

Garth, It’s been quite a few years since you left politics and the Conservative Party. And yet, every so often you slip back into responses that sound like they’re coming from a typical, tap dancing politician. Hard to change, eh?

Attacking me does nothing to change the validity of my statement. But nice try. — Garth

#216 Made in BC on 05.09.15 at 9:43 pm

Norway has a 25% sales tax and average 55% tax rates. Be careful what you wish for. — Garth

++++++++++++++++++++++++++++++++++++

Which is not that different than living in BC with all its taxes except that what you DONT get in BC that you DO get in Norway is the following:

Beautiful efficient infrastructure
FREE schooling – no 100K make the banks rich loans
$25 per hour minimum wage – WTF !!!!!!
Advanced efficient healthcare – no waiting 2 years for MRI

and much more…….but this is the province of Bring Cash so you can subsidize all the foreign investment which does nothing to actually “help” people in BC when all the money from foreigners remains……..foreign in foreign banks and not taxed here.

The argument of “higher EU taxes” WAS TRUE…..like 15 years ago. But with the hundreds of new taxes (but no wage increases) in BC…..we are falling faster than a meteor in comparison to the EU.

So move. — Garth

#217 Blacksheep on 05.09.15 at 9:48 pm

Ref # 162,

“Naive. Governments routinely spend more than they harvest. They make up the shortfall by borrowing on the bond market and paying interest to bondholders. I gather you would rather they print all the money they spend and not be bothered with matching expenditures to revenues, thus avoiding a structural debt. Of course that policy would debase the currency quickly, creating substantial inflation and requiring a cycle of printing to match it. Trust me, the outcome would be far worse than what we now have. Better that governments run surpluses, reducing the debt over time. This is why you should not vote NDP. — Garth”
————————————
I did not, suggest the government just print $’s. Did not, address how much $’s the government spends. Did not, complain about the actual, government debt. Did not, suggest anyone vote NDP.

I did complain that a high % of our debt national debt, is pure, unnecessarily interest.

Obviously, the government O canada, must still borrow the $’s required for budgetary shortcomings, BUT it can and should be done with out interest.

The bank of canada, along with the good credit of the canadian government, simply ‘creates’ a new deposit into the governments account. This is no more inflationary than this exact same procedure that takes place daily, down at the local commercial bank, when a new mortgage is given.

Inflation does not run wild because: The principle debt, MUST be repaid and then disappears from whence it came.

It just takes place with out accumulating interest, for the benefit of the citizenry.

Oh. Like magic. I get it. — Garth

#218 Nagraj on 05.09.15 at 9:49 pm

Dear LINDA,
Have you by any chance noticed how in the US House almost all the Republican women look like used Barbie dolls?

Should you eventually choose to run for a leadership position amongst Conservatives, here’s a hint on how to do it successfully: google Chikni Chameli.

Your pal, N.

#219 Blacksheep on 05.09.15 at 10:04 pm

Daisy # 187,

#161 Blacksheep

“Now we’re talking excuses. It’s complicated…only if you allow it to be.’
———————————————
Admit it, you have no idea, what I’m actually talking about…do you?

#220 Luis on 05.09.15 at 10:10 pm

DELETED (Ad hominem)

#221 Conservatives conserve the wealth of the rich on 05.09.15 at 10:13 pm

Sideshow Rob on 05.09.15 at 8:43 pm
Alberta took the orange pill. Side effects include vomiting in 6 months.
__________________________________

Orange Norway $1 trillion dollar and conservative blue Alberta $17 billion dollars. You lose.

#222 crowdedelevatorfartz on 05.09.15 at 10:20 pm

@#169 godth
“Some of us would still prefer to live in a society, preferably a sustainable one…..’
#173 godth
“This game is too far gone and in the end mother nature will pull the plug (as always). So enjoy your McMansions and whatever other bullshit you value so dearly…..”
+++++++++++++++++++++++++++++++++++

So……..1st your going to join a utopian society where greed, avarice and waste is considered immoral and bad.
Here par chance?

http://www.google.ca/url?sa=t&rct=j&q=&esrc=s&frm=1&source=web&cd=13&cad=rja&uact=8&sqi=2&ved=0CF4Q1ScwDA&url=http%3A%2F%2Fwww.wired.com%2F2012%2F10%2Fff-elon-musk-qa%2F&ei=fr5OVaaaK9CtogSX74DYDQ&usg=AFQjCNHOHZCpSr3On3zFadYrAAPmOfE_Jg&bvm=bv.92885102,d.cGU

Then you announce its too late , we’re all doomed and we’ll reap the Hell and Damnation we’ve created.

http://www.google.ca/url?sa=t&rct=j&q=&esrc=s&frm=1&source=web&cd=4&cad=rja&uact=8&ved=0CDwQtwIwAw&url=http%3A%2F%2Fwww.youtube.com%2Fwatch%3Fv%3DjNU_jrPxs-0&ei=S79OVdCMN9PXoATc8IHwCA&usg=AFQjCNFjHwpb7ddkcqAp_B92XdXnMnPFcA&bvm=bv.92885102,d.cG

You’ve been watching movie trailers again have’nt you….

I think your getting a tad cynical in your old age. Shave yer head, give away all those evil worldly possessions, sit on a mountain with a copy of Sidhartha, work on your mellow side.
Ooooooooommmmmmmmmmmmmmmmm

#223 Bottoms_Up on 05.09.15 at 10:37 pm

#212 Jetfixer on 05.08.15 at 9:41 am
————————————————
Good one, because it should be a race to the bottom right? Because you work in the private sector and don’t have a good pension, that means no one else should get one?

Do you realize people on the sunshine list, there are those that actually work in both the public and private sector (but only their public wages are shown…I know of some (well at least one) whose private endeavours are netting them millions). There are also many that work overtime (police, nurses), thus raising their salary.

And no, I’m no where close to being on the list. But I do know for every person listed, they worked hard to get where they are. And I also know there’s likely double or more similar individuals in the private sector earning the same or more for similar type work. So let’s not go down that road ok?

And frankly, the 100k threshold is quite silly. If it is suppose to be some magical line indicating these people are ‘not worthy’, shouldn’t it be set at 200k or something? (sarcasm intended)

#224 not 1st on 05.09.15 at 10:53 pm

Garth, don’t bother debating the new age lefties. Just let us know when you think the NDP has fully crashed the Alberta economy so we can step in and vultch some real estate.

I say it will be in about 18 months.

#225 Setting the Record Straight on 05.09.15 at 11:02 pm

@len on 05.09.15 at 1:02 am
No matter how many times this is repeated, it does not describe the problem.

There is no income gap between the 1% and the 99% – it is a wealth gap that is widening. If you earn income from labour of any sort, you are not in the 1%. Not only does the 1% of families accrue more wealth, with that wealth comes incredible power and it is this that is destabilizing democracies.

Choices of investments do not determine membership in this group – the Oligarchs accrue wealth through political capture of institutions and on the backs of working people via favourable (to them) legislation.

As for high net worth individuals, it was interesting to see the confidential survey published in the Globe and Mail just today showing that HNW wealth is 29% in real estate, 21% in equities, and 11% in fixed income investments.

$$$$$&&
Not a bad post. But it’s not the 1 percent. Most of those are just middle class.
It’s the 0.1 percent and of those only the .01 percent are important.

#226 Mark on 05.09.15 at 11:06 pm

“Let’s then just disband CMHC and transfer the risk for 1.1 trillion in mortgages back to the banks.”

That would be a good idea. But if done arbitrarily, it would destroy the banks as there’s way too much leverage in the banking system for the amount of risk the mortgages represent without CMHC subprime mortgage insurance.

And no, I’m no where close to being on the list. But I do know for every person listed, they worked hard to get where they are. And I also know there’s likely double or more similar individuals in the private sector earning the same or more for similar type work. So let’s not go down that road ok?

Well there’s lots and lots of job titles on the sunshine lists for which the private sector would be hard pressed to pay even half of what’s paid in the public sector. The private sector, for rank and file employees, simply doesn’t allow compensation to run that far out of control before downsizing the more expensive workers out of the organization. Particularly in functions that aren’t too proprietary, such as human resources, finance, etc.

I have no problem with a well paid public service, but I do have a problem with the HR personnel in publicly funded organizations effectively creating artificial barriers to labour mobility. These artificial barriers, particularly for higher level positions, drive up the cost of their employment dramatically and entrench mediocrity.

#227 Entrepreneur on 05.09.15 at 11:07 pm

#169 & #173 Godth…right on! Nothing will matter when the earth and the environment are dead.

My family come from the commercial fishing industry and from experience we know that the oceans are dying.

Of the three evils, the NDP will protect Canada then we can move on. That is our experience in life. The Conservatives and the Liberals did not come through; they had their chance, a long enough one at that.

#228 Leo Trollstoy on 05.09.15 at 11:11 pm

I say it will be in about 18 months.

People have been saying that for 18 years now…

#229 A-Ok in Albertastan on 05.09.15 at 11:12 pm

Bars and restaurants still packed in Albertastan. Party on.

#230 vultch on 05.09.15 at 11:27 pm

Garth, don’t bother debating the new age lefties. Just let us know when you think the NDP has fully crashed the Alberta economy so we can step in and vultch some real estate.

====

You are depending on Garth as he was some daddy state for you?

Grow up, make your own judgment take your own risk.

If you can’t, you might as well join the NDP.

#231 cramar on 05.09.15 at 11:28 pm

#3 Yogi Bear on 05.08.15 at 7:19 pm
Relevant:

http://www.theglobeandmail.com/report-on-business/careers/careers-leadership/laurie-campbell-credit-canada-ceo-shatters-debt-myths/article24342120/

————

After reading this, my thought is that it would be far better for Ontario’s future if the educational curriculum was modified to teach personal finances through all grades rather than the new sex curriculum.

========

#27 rawdiswar on 05.08.15 at 8:01 pm
And yet many will contend that they don’t have a choice.

Debt is the new normal.

———-

And at some point in the future, bankruptcy & poverty will be the new normal.

#232 pretty when cry on 05.09.15 at 11:47 pm

#179 Linda

Canada is slower to catch up, but the ugly man are out on the way too.

Hell, even the handsome ones if they pass certain age.

“Pretty when you cry” is just an innocent song, that was playing in the background, while I was typing.

From a hot singer, Lana Del Ray, I can only recommend her.

#233 Sheane Wallace on 05.09.15 at 11:53 pm

What Garth is implying is that sh.t will keep piling and the life will go on. It won’t. And the advice to move is actually the best.

Golden words, oops, I forgot gold is just a rock.

#234 Sheane Wallace on 05.09.15 at 11:58 pm

BTW what if I have a Greek passport (supposedly the country with the worst economy where people actually live much better than here)? It would allow me to freely live and work in Norway, so no visa needed.

While kids with PHDs work at Starbucks here. If lucky

#235 Sheane Wallace on 05.10.15 at 12:12 am

#224 Mark on 05.09.15 at 11:06 pm
“Let’s then just disband CMHC and transfer the risk for 1.1 trillion in mortgages back to the banks.”

That would be a good idea. But if done arbitrarily, it would destroy the banks as there’s way too much leverage in the banking system for the amount of risk the mortgages represent without CMHC subprime mortgage insurance.
………………
Stating that a bank can fail is a crime and act of terrorism. Shame on you. Read the associations of bankers statements on their web site, we have the most prudent banks that never give sub-prime loans and actually did a service to the government (they actually allowed the government to profit) allowing it to buy their risk-less mortgages in 2009-2010 to the tune of 114 billions+

#236 Andrew Woburn on 05.10.15 at 12:39 am

Whatever the merits or probable outcome of Galati’s Bank of Canada case, it’s interesting that he has enough fans in the legal profession to have just been elected as a “bencher” (i.e. director) of the Law Society of Upper Canada, the governing body of Ontario’s lawyers.

Is this because they think he is a great lawyer or because he is willing to fight Harper’s government which is not seen as a respecter of the courts?

http://www.theglobeandmail.com/report-on-business/industry-news/the-law-page/joe-groia-elected-to-law-society-governing-body/article24225404/

#237 RainBird on 05.10.15 at 12:45 am

In 2013 I purchased ETF – XRE. For that year the ETF had a phantom distribution – for me it was $950. I knew nothing about phantom distributions and did not include in income since I did not receive the any money.

Can someone explain why a I have to pay tax on fictitious income? I understand that this will affect my ACB but why do I have to pay tax before it’s due?

What other financial gain do you get from this type of distribution other than paying tax up front? You don’t get any more units. It appears to be a penalty to the investor.

#238 chapter 9 on 05.10.15 at 12:52 am

#189 Slim

In my opinion,Liberal leader Lawrence Decore should have been Premier of Alberta. Instead Ralph Kline stole the show and got himself elected as premier.

Things might have been different today.

Ralph had to clean up the mess left by Don Getty another spendaholic. The provincial debt had hit $23 billion and the interest costs were around a billion a year. Ralph took the bull by the horns and balanced the books, paid of the debt, without a tax hike,brought in the flat tax, worked with libs in Ottawa and kick started the oil sands. No other elected official has ever followed in Ralphs foot steps. He believed that “governments should live within their means” what a concept!

#239 waiting on the westcoast on 05.10.15 at 12:53 am

#191 SM… I really enjoyed this post and then you fell back into whatever it is that you do… ;-)

Garth – you don’t understand magic because you are a muggle… Wow another reference my kids will appreciate…

To all the arguments that it is wealth disparity, not income… It takes the combination of income, risk capital (and balls) to generate the income to create wealth in a short amount of time.

Or you could work for the tax farm, be frugal, and invest wisely. Having done the former, I wish I was a lot wiser when younger. A government job with a pension and maxing out the tfsa/RRSP would have been a lot easier… But not nearly as fun (or scary)… ;-)

#240 waiting on the westcoast on 05.10.15 at 12:56 am

#225 Entrepreneur – the earth is dying without the NDP….

Hey.- maybe your namesakes will come up with innovative ways to fix damage done and create new models that create sustainable systems for our life…

Hahaha – or we can start terraforming Mars really fast… ;-)

#241 Made in BC on 05.10.15 at 12:58 am

The argument of “higher EU taxes” WAS TRUE…..like 15 years ago. But with the hundreds of new taxes (but no wage increases) in BC…..we are falling faster than a meteor in comparison to the EU.

So move. — Garth

++++++++++++++++++++++++++++++++

So the answer to Ms Wallace and myself for the theft and destruction by govt and corporations of the country we were born and raised – is to move?

I believe that is the definition of a cop out. Wouldn’t “this is how we fix this” be more appropriate?

#242 waiting on the westcoast on 05.10.15 at 1:00 am

#232 Sheane Wallace – moving is the right move…

I have Italian/Euro citizenship and my daughter wants to go to Denmark to study. I told her to go. Whether the program of study is good or bad, she will learn about other cultures and mindsets and that adaptability will help her in anything she chooses to do.

#243 Blacksheep on 05.10.15 at 1:41 am

Ref Blacksheep # 215,

“Oh. Like magic. I get it.” — Garth
—————————————–
No….not like magic.

But Just because something may be difficult, does not mean, it is not worthwhile, especially when we consider the ramifications for the citizenry.

Thank you for allowing these types of conversations.

#244 Lars Tobrucken on 05.10.15 at 2:23 am

#211 Sheane Wallace on 05.09.15 at 9:19 pm

Leaving Canada for Norway? Isn’t that just exchanging one bad weather place for another? Maybe you like rain and fjords?

#245 fisheman on 05.10.15 at 3:18 am

Entrepreneur: your family comes from the commercial fishing industry & the oceans are dying? I’m guessing you swallowed the Kool Aid. Start by observing, not reinforcing & regurgitating doomer mentality ( Garth sows many seeds on deaf ears.) One can leave Van tomorrow morning & limit out on crabs, prawns & spring salmon,have a seal &/or sea lion eat the salmon off the hook, if lucky get a glimpse of some killer whales & be home for afternoon barbecue. At least I can. Next read up on ocean sciences: biomass models & Regime shifts are a good start. You”ll need a little post graduate math.
There’s problems, a lot human greed, warm water. mysterious viruses, die offs, (the bird population is way down)’. Nevertheless, the North Pacific has tremendous life & recuperative powers. Some runs are boomers,some species are in a down cycle, some are threatened, other side, there are so many whales we gotta keep an eye out so we don’t run up on them; sea lions, seals, & sea otters are out of control. And the masses of feed? (phydo & zoo plankton,) sure haven’t noticed less.
And as far as legitimizing your “Oceans are dying philosophy by stating that your family comes from the commercial fishing industry”; I’ve got 72,000 man hours in the log books as a commercial fishing captain, mostly offshore. The ocean was very much alive when I came home last fall. I kinda doubt it got terminally ill last winter.

#246 Herb Weber on 05.10.15 at 6:16 am

Checked the local weather this morning, then made the mistake of scrolling all the way down the page on the Environment Canada website.

The Harper Government telling us how it would like us to perceive it, thrice, at taxpayer expense, of course. All’s well with politics and economics in Canada.

http://weather.gc.ca/city/pages/on-143_metric_e.html

#247 CalgaryRocks on 05.10.15 at 6:19 am

#232 Sheane Wallace on 05.09.15 at 11:58 pm

While kids with PHDs work at Starbucks here. If lucky

If you have a PHD (defined as an advanced degree) in a STEM field you most certainly do not work at Starbucks.

If you have a PHD in a field that nobody needs, you might work as Starbucks.

On the other hand, you won’t get a better job in Europe either. Considering their much higher youth unemployment rate.

So, good luck with your move to Norway and send us a card from time to time to let us know how it goes.

#248 CalgaryRocks on 05.10.15 at 6:25 am

#231 Sheane Wallace on 05.09.15 at 11:53 pm
What Garth is implying is that sh.t will keep piling and the life will go on. It won’t. And the advice to move is actually the best.

You should watch this in preparation for your Norway move. It’s pretty funny.

http://www.imdb.com/title/tt1958961/

#249 Herb Weber on 05.10.15 at 6:37 am

#192 Conservatives …,

don’t you read Garth’s response to comments, as in #120 above?

Alberta is a province, not a sovereign state, and does not control its non-renewable natural resources. Section 92A of the Constitution Act of 1982 must have been repealed without anyone noticing.

http://laws-lois.justice.gc.ca/eng/const/page-4.html

#250 Marketing on 05.10.15 at 6:59 am

Garth, I think you are miscalculating the extent to which Canadians are betting that land prices will keep rising , who wants to commute for hours. Time is money. Almost Every idiot wants a car and not public transport. Unless they don’t work and want to live on the back of financial speculation.
The Canadian and American working class has been betrayed by offshoring all jobs to China and now to robots based in North America. Capitalist paradise.
Canada is second biggest country in the world. Lots of natural resources. They belong to Canadians and migrants will keep coming.
This is the context you conveniently ignore…

#251 Bottoms_Up on 05.10.15 at 7:56 am

#243 fisheman on 05.10.15 at 3:18 am
—————————————————
You sound like Leona Aglukkaq. Anecdotal evidence is a layman’s science. Anyway, besides the point, climate change will actually be good for fisheries around North America. Acidification of the oceans because of carbon pollution is killing off coral and possibly damaging other ocean species.

The quality anecdotal comment from Leona:

“A lot of time, scientists latch on to the wildlife in the North, to state their case that climate change is happening and the polar bears will disappear and whatnot,” she told The Globe and Mail. “But people on the ground will say the polar bear population is quite healthy. You know, in these regions, the population has increased, in fact. Why are you [saying it’s] decreasing? So the debate on that … My brother is a full-time hunter who will tell you polar bear populations have increased and scientists are wrong.”

From:

http://www.huffingtonpost.ca/2013/12/05/leona-aglukkaq-dead-polar-bear-twitter_n_4393250.html

Impacts of ocean acidification:

http://en.wikipedia.org/wiki/Ocean_acidification#Impacts_on_oceanic_calcifying_organisms

#252 Mauled on 05.10.15 at 8:00 am

Garth:
Thanks to NDP this country has universal health care. I don’t suppose you prefer the unfair brutal system they have south of here?
Btw why can’t you leave sex out of your rhetoric? Is that why you quit politics so you could rant freely about horniness? I am sure you can manage without this. You are a university trained graduate.

Metaphorical mnemonic rhetoric, babe. — Garth

#253 Marco on 05.10.15 at 8:47 am

“Kids choose to trade freedom, mobility and often job opportunity for a condo Mom helped finance.”

Bingo.

#254 space cadet on 05.10.15 at 9:10 am

Better that governments run surpluses, reducing the debt over time. This is why you should not vote NDP. — Garth
__________________________________________

“conservatives” have proven they aren’t better

Where did I mention the word ‘conservative’? You are blinded by brand and ideology. — Garth

#255 Oot der Hoos on 05.10.15 at 9:49 am

To #250 Mauled

USA medicine was not as brutal as many Canadians think. But, USA tends to be monopolistic and expensive.

I think Canada is unfair to doctors and nurses, by compelling them to work for a central payment system. USA’s decentralisation and freedom allows for change, new ways, and smart talent to be nutured. Remember, universal communism failed for reasons.

Anyway, you will get what nurses and doctors will give you by their grace, and the grace of God, no matter what medical system exists. If they do not care then you will die.

#256 ChiCanada Economic Zone on 05.10.15 at 10:24 am

Canada has ample empty space.

Canada should set up the ChiCanada Economic Zone.

The ChiCanada Economic Zone would process all the manufacturing that is currently sent from North American companies to China.

This would save on shipping cost and reduce environmental impact – which credit could applied to tar sand oil, supplying the ChiCanada Economic Zone with energy.

#257 Matt G on 05.10.15 at 10:34 am

Garth,
Your statement about surpluses being ideal, and thus people should not vote NDP is incorrect.
NDP governments actually have the best track record of fiscal management of any political party in Canada.

http://www.progressive-economics.ca/2011/04/29/fiscal-record-of-canadian-political-parties/

Thoughts?

Meaningless. Socialists have been in power less and others have had to clean up the mess. Witness Ontario. — Garth

#258 crowdedelevatorfartz on 05.10.15 at 10:41 am

@#250 Mauled
“You are a university trained graduate….”
++++++++++++++++++++++++++++++++++++

BWAHAHAHAHAHAHAHAHAHAHA. BWAHAHAHAHAHAHAHAHAHAHAHAHAHAHHAHAHA.

THAT makes someone SOOOOOO much more intelligent.
Universities pumping out fresh young minds regurgitating drivel spewed forth by professors, the majority of who, have never worked in the “real world” their entire careers.
All those years of formative brain molding for the obligatory “good job” pat on the shoulder.

See Smoking Mans’ references to “sheep factories”

But thanks for the laugh my misguided, misandric, mistaken little cherub.

Happy Mothers Day Mauled.

#259 Daisy Mae on 05.10.15 at 10:41 am

#217 Blacksheep: “Admit it, you have no idea, what I’m actually talking about…do you?

YOU SAID: “It is only a choice, if the ‘Citizen’ is exposed to the realities of our indoctrinated society.”

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

We do not have to allow ourselves to be brainwashed. We can think for ourselves, can’t we….and make choices that are right for us?

#260 crowdedelevatorfartz on 05.10.15 at 10:49 am

@#225 Entrepeneur
“My family come from the commercial fishing industry and from experience we know that the oceans are dying. ‘
++++++++++++++++++++++++++++++++++++

8 billion people need food and they havent invented “Soylent Green” pills yet……

Record Lobster harvests last year on the East coast.
Record Salmon run on the West Coast a few years ago.

Time for some more “experience” instead of sensationalist rhetoric?

#261 Mark on 05.10.15 at 11:08 am

“If you have a PHD (defined as an advanced degree) in a STEM field you most certainly do not work at Starbucks. “

You’d be surprised. In many fields of STEM, for instance, Electrical/Computer Engineering, there has been very little demand for researchers. The PhD grad is hence deemed to be vastly overqualified for the run-of-the-mill jobs filled in the sector over the years. But the good PhD jobs have been steadily hacked away as R&D disappears in much of Canadian industry. The loss of Nortel was devastating to Canada’s R&D community in the telecom sector, for example.

A former teacher of mine with a Ph.D. went from having a $300k/year offer from Lucent (Bell Labs) in hand in the late 1990s. To basically being a stay-at-home dad a few years later because he couldn’t find anything. If not for the generosity of his wife, a small business owner, he could easily be relegated to working at Starbucks-like jobs.

#262 Mark on 05.10.15 at 11:16 am

“In 2013 I purchased ETF – XRE. For that year the ETF had a phantom distribution – for me it was $950. I knew nothing about phantom distributions and did not include in income since I did not receive the any money. “

Technically you have committed tax evasion then. I suggest fessing up to the CRA, paying the penalty, and using such as a relatively inexpensive education on investing in trusts.

You purchased a trust when you bought XRE. You are legally liable for income that arises from trusts for which you are a beneficiary.

The distribution may have altered your cost base. For ETFs, distributed capital gains increase your cost base. Return of capital decreases your cost base.

What other financial gain do you get from this type of distribution other than paying tax up front? You don’t get any more units. It appears to be a penalty to the investor.

The way that ETFs work is that when they make a distribution of such nature, they do a reverse split on the units such that the number of units in an account is unaffected.

As for taxes, they’re a cost of doing business, any business. XRE’s components mostly don’t pay taxes internally on account of being eligible Canadian REITs using flow-through tax treatment, so its inevitable that they pass through a significant quantum of taxable income. “F” closed the loophole in the income trusts, but unfortunately left it wide open for REITs, and now we arguably have a REIT bubble.

#263 jess on 05.10.15 at 11:23 am

“code of silence”
– where officers refuse to tell on each other for misbehavior – and a flawed disciplinary system that together allow misconduct to prosper.
Over the past decade, the City of Chicago has spent more than $500 million on police-related settlements, judgments, legal fees and other costs – a staggering sum that raises new questions about the adequacy of training and oversight in the Chicago Police Department, according to a months-long review by the Better Government Association.

By Andrew Schroedter/BGA
April 3, 2014 7:05 PM
http://www.bettergov.org/beyond_burge/
===========================

A uniform fiduciary standard needed for financial advisers
The White House has found that for retirement investors alone, biased advice costs billions of dollars a year in needless fees and commissions.
http://www.nytimes.com/2015/05/10/your-money/fees-on-mutual-funds-fall-thank-yourself.html?ref=business

#264 Richardo on 05.10.15 at 11:42 am

Fine line between social responsibilty and greed ? We clearly need alittle of both! Maybe it is time to tax wealth more and income less ? Some might say advisor fees based on portfolio value is a form of private taxation !

#265 NDP vs Communists running China on 05.10.15 at 11:43 am

# 255
Meaningless. Socialists have been in power less and others have had to clean up the mess. Witness Ontario. — Garth

=====

How about the long track record of Communists running China?

#266 Mister Obvious on 05.10.15 at 11:57 am

#248 Marketing

“Almost Every idiot wants a car and not public transport.”
————————–

This idiot uses both a car AND public transport. Each has its appropriate function. Having the choice maximizes my convenience.

#267 RainBird on 05.10.15 at 12:17 pm

Mark – your comment:
“The distribution may have altered your cost base. For ETFs, distributed capital gains increase your cost base. Return of capital decreases your cost base.”

“Distributed capital gains”? What distributed capital gains? I received nothing? Why pay tax on zero income?

They should treat “phantom” distributions same as return of capital. You pay tax – or not – when and if you sell the product. I sold nothing and I received nothing. Eventually I might receive a capital gain – but that’s after the sale. Right?

#268 dogfood from Area 51 on 05.10.15 at 12:23 pm

# 255, 263

Meaningless. Socialists have been in power less and others have had to clean up the mess. Witness Ontario. — Garth

=====

How about the long track record of Communists running China?

Funny how not a single Capitalist alpha dog jumps on this bone – ever.

As if it was dogfood straight from Aria 51.

#269 Marco on 05.10.15 at 12:26 pm

@NDP vs Communists running China.

China isn’t run by Communists. It is an Authoritarian Capitalist regime.

The United States is more socialist then China.

Cheers.

#270 Shawn on 05.10.15 at 12:37 pm

Stocks versus long-term Bonds

In comparing after-tax expected returns from Stocks versus long-term Bonds, Stocks win by a mile.

Consider a company that has just issued a 30-year bond.

The government of Canada 30-year bond yield is 2.33%. A corporation with an A minus credit rating will yield about 1.5% more than the government for a total of 3.83%. Let’s be generous and round up to 4.0%.

So let’s say an investor buys a 4.0% 30-year corporate bond. That bond is going to yield precisely 4.0% per year over its 30-year life.

One investor may sell the bond to another at a loss or gain but the one or more owners of that bond over the 30 years are going to receive precisely 4.0% of the original price of the bond in cash each year. And not a penny more. In the unlikely event of default they will get less than 4.0%.

The one or more owners of this bond will face inflation risk as the purchasing power of the cash received will likely decline over time and certainly the principal when returned in 30 years will have suffered a loss in purchasing power.

If the bond is held in a taxable account and the investor has a middle level taxable income say in the bracket of over $44,701 up to $72,064 then the tax rate is 31.15% Now this taxable bond investor is down to earning just 2.76% per year over the life of that bond.

Okay in summary a 30-year long term corporate bond bought today will pay to its one or more owners over its 30-year life an after-tax return from about 2.76% to 4.0% depending on the tax rate.

Now consider the return from investing in the stock of the same company. Unlike the bond, we can’t know the return precisely.

We can observe the starting dividend yield which can be from 0% to about 4.5% on the same high-quality A minus or higher rated corporations. And we can observe the starting earnings level as a percent of price (E/P, the reciprocal of P/E)

Royal Bank currently has a dividend yield of 3.89%. That dividend can be expected to grow. The stock price will almost certainly increase over 30 years. Royal is earning 7.93% of its stock price per year and that earnings per share can be expected to grow.

The tax rate on dividends for the taxable income bracket of over $44,701 up to $72,064 to is 8.46% and on capital gains is 15.58%.

Even if the dividend on Royal Bank does not rise at all in 30 years and if the stock price is at today’s level in 30 years, the stock will win after tax.

And considering the earnings level of 8.46% which can be expected to grow, there is really no contest. This looks like Floyd Mayweather versus Mike Duffy in the ring does it not?

It’s hard to imagine a scenario where the Royal Bank stock does not pound the 4.0% bond over the full 30 years.

CN Rail is yielding just 1.59% but earns 5.03% (earnings over price) and the 3.44% portion of earnings that is not paid out is reinvested and will likely lead to increases in the dividend and the stock price.

With CN, how does a stock earning 5.03% and where that earnings will likely (well, almost certainly) grow and where the tax rate is much lower fail to beat a 4.0% fixed bond return over 30 years?

Yeah blue-chip stocks bought today will almost certainly pound blue-chip 4.0% 30-year bonds bought today.

Now, our host may point out that that “no one” buys 30-year bonds with the intention to hold for 30 years. Perhaps few ordinary investors do. But institutional investors and bond funds often do. And when ANY investor buys a newly issued 30-year bond it must continue to be owned by some investor or other for the full 30 years. Investors have no ability to force to the company to buy the bond back.

Perhaps there is an argument for some allocation to long-term bonds but with such low bond yields the math does not seem to work for me.

Buffett said if you would not be prepared to hold an investment for 10 years, don’t even think about holding it for 10 minutes.

When stocks yield more in dividends that 10-year bonds, there is really no contest at all. Stocks can rationally be expected (but not guaranteed) to be the better investment by far.

#271 Small town Steve on 05.10.15 at 12:47 pm

# 255
Meaningless. Socialists have been in power less and others have had to clean up the mess. Witness Ontario. — Garth

=====

How about the long track record of Communists running China?

Yea like the ghost cities of China? That will end well..

#272 Andrew Woburn on 05.10.15 at 12:47 pm

#263 NDP vs Communists running China on 05.10.15 at 11:43 am
# 255
Meaningless. Socialists have been in power less and others have had to clean up the mess. Witness Ontario. — Garth
=====
How about the long track record of Communists running China?
================================

Just cause you call yourself a communist doesn’t mean you are one. Like Christians… or Conservatives.

#273 kommykim on 05.10.15 at 12:58 pm

RE: #120 Colin on 05.09.15 at 8:41 am
And politicians have no blame in all of this? Socialist Norway has $1 trillion in that oil fund. Capitalist Alberta has a debt of $13 billion.
Alberta’s NDP sure did a number of people’s heads with that Norway comparison. Norway is a weensy sovereign state. Alberta is one of ten provinces, integrated into a massively bigger economy and society, without overall energy jurisdiction. There is no valid comparison. — Garth

Yes, comparing Alberta to Norway is invalid. Comparing Norway to Canada, country to country, is valid. So where is Canada’s 1 trillion dollar legacy fund from oil?
The NDP has never formed the federal government, so the blame for the lack of a trillion dollar fund lays with the Federal Liberals and Conservatives.

Our taxes are also 50% of those in N. The credit for that goes to LIbs and Cons. — Garth

#274 moloko on 05.10.15 at 1:07 pm

“Turner claims, “Our real estate values have gone way beyond the ability of the average family to afford houses and the only way they can afford them is taking on all kinds of new debt. That’s exactly what got the Americans into trouble.”

Jean,

Apparently this is unacceptable except in Vancouver. We should just rent or move to the burbs.

What’s up with that Garth?

#275 Shawn on 05.10.15 at 1:09 pm

Stock Equity Risk Premium

Mark has correctly pointed out that over the last 30 years or so bonds have done as well as stocks. No equity risk premium was realized.

I have all the data on that and have fully analyzed it.

It occurred because bond returns were high over the period. Stock returns over the past 30 years were pretty normal (about 10% for the S&P 500 total nominal dollar return). Bond returns were similar.

It is certain that a 30-year A rated corporate bond purchased today will yield about 4% over its life. (less if it defaults but no more than the promised 4% or so).

One has to be very pessimistic to think that stocks will not return at least 4% over the next 30 years.

If stocks are expected to return even 6% then there is an expected equity risk premium going forward. And many estimates of expected stock returns are closer to 7% or even 8%. A 2% to 4% equity risk premium over bonds adds up to a HUGE increase in wealth over 30 years. $1000 at 4% grows to $3243 in 30 years at 6% the figure is $5743 or 77% more. This is before considering that the equity returns have a tax advantage in taxable accounts.

#276 BS on 05.10.15 at 1:43 pm

But you are conveniently not mentioning the services they get in Norway. Really free health care, free universities, government caring for their people.

The average Norwegian wage earner pays double the taxes of one in Canada. That would easily be $20,000 per year in additional taxes times 40 years = $800,000 in additional taxes per working person in a life time. So that ‘free’ stuff you mention might cost a working couple $1,600,000 over their career in additional taxes. I think I will pay for my post secondary education and keep my $1.6 million.

#277 LP on 05.10.15 at 2:01 pm

#259 Mark on 05.10.15 at 11:08 am
If not for the generosity of his wife,… *******************
Wow, what a strange comment!

#278 saskatoon on 05.10.15 at 2:19 pm

#263 NDP vs Communists running China

dude…you’re not going to win an argument against a pinko using stats.

the argument needs to come from moral principles.

#279 space cadet on 05.10.15 at 2:32 pm

When stocks yield more in dividends that 10-year bonds, there is really no contest at all. Stocks can rationally be expected (but not guaranteed) to be the better investment by far.
_________________________________________

that is going to abruptly change.

real rates are negative and that won’t continue much longer.

5 year GOC at just above 1% vs Core CPI at 2.4% is not sustainable.

expect the 5-year rate to move to a more historically normal rate vs CPI (1-2% above Core CPI)

#280 Retired Boomer - WI on 05.10.15 at 2:44 pm

My neighbor is building a new twin do across the street half for his family, half for his in-laws. This young late 30’s guy works a job, owns rental property, bought his old home as a foreclosure back in 2009 from one of those terminally indebted fools who bought it in 2005 at an inflated price, and who lost it when their job melted in early 2008.

His brother is a local carpenter – contractor, and he helps his brother to maintain his rentals.

Like Garth says, the “rich” own businesses, or build them.
While the brothers are ‘not rich’ yet, the building blocks are in place, and they are doing their stuff the right way! I would bet they are contributing to either a 401K or ROTH, or maybe both as these young men aren’t stupid.

I am very proud to have this young entrepreneur building in my hood, and hope we can share our collective wealth building views, much can be learned both ways.

Refreshing to see, rather than the usual debt riddled wage slaves. Yes, there IS FREEDOM in choices. Make yours carefully, or re-order them if you screwed up.

Time is a finite commodity. Politics are eternal.

#281 jess on 05.10.15 at 2:48 pm

Created by L&C Students
FUNDAMENTALS: Three Sector Balances explained

Is it really possible that both government and private sector can save and move towards surplus when running a trade deficit….
Published on May 8, 2015

You will learn.
-Basic national accounting principles
-Why not all sectors of the economy can be in a surplus at the same time: at least one of them must be in deficit if another is in surplus
-Why usually the government sector must be in deficit
-Why usually being for a government fiscal surplus implies being for domestic private deficit
-How economic sectors are related through debts: someone’s financial asset is someone else debt

https://www.youtube.com/watch?v=x2Jx5hDm-sk

#282 Shawn on 05.10.15 at 2:57 pm

Interest rates unsustainably low?

Space cadet just above said:

5 year GOC at just above 1% vs Core CPI at 2.4% is not sustainable.

**************************************
Certainly it’s not profitable. Someone should send a memo to the space cadets that eagerly buy bonds at negative real returns.

This unsustainable situation has lasted a long time.

Possibly the core inflation rate will come down. It was 1% through of 2013

http://www.statcan.gc.ca/daily-quotidien/150417/dq150417a-eng.htm

#283 the Jaguar on 05.10.15 at 3:37 pm

#278. I liked your comment. It captures a lot. Work ethic in motion. Without having to ‘Instagram’ it all to the masses. Imagine.

#284 Blacksheep on 05.10.15 at 3:52 pm

Daisy # 257,

“We do not have to allow ourselves to be brainwashed. We can think for ourselves, can’t we….and make choices that are right for us?
—————————————
To “allow our selves” insinuates one making a conscious decision, a choice.

To make a choice: action A) or action B), one must first have awareness and knowledge, not corrupted by an external influence.

A) Virginity or B) Sex ? A) University or B) Trades ? A) Marriage or B) Single ? A) Own or B) Rent ? A) Children or B) Dinks ? A) Church or B) Agnostic ? A) Vote or B) Abstain? A) Employee or B) Entrepreneur ?

If the Parents, the school system, the church and the state, have told you your entire life, your a fool to make any choice, other than action A), the odds are quite high your choices in life will be, action A).

BUT if you were to fortunate enough (?) to have a truly critical thinking influence in your life, or experience a personal trigger (similar to finding religion) prompting the seeking of real truth, you would know exactly what I am talking about.

A simple question for you Daisy, if you would humour me: Why did Building 7 fall?

#285 crowdedelevatorfartz on 05.10.15 at 4:02 pm

@#282 Blacksheep crazy conspiracy theorist.
“A simple question for you Daisy, if you would humour me: Why did Building 7 fall?
++++++++++++++++++++++++++++++++++++

Gravity?

#286 waiting on the westcoast on 05.10.15 at 4:14 pm

#282 black sheep – re: skewed by your environment…

Everyone is a product of their environment. At some point, you have to take ownership for your beliefs and thoughts and test the validity of your assumptions. If you choose to blindly follow your herd, don’t complain when you do poorly. You are the average of the 5 people closest to you is a great rule of thumb. You can choose a different path at any point. Most do not make those choices out of fear (of failure, of image, of success, of letting go of friends/family who are holding them back).

I know people that have escaped poverty and accomplished great things and their siblings still stuck in their situations making excuses for their fate. Did their programming hold them back… Their brother says it did. He decided early on to do more, save more, and ultimately, succeeded more.

#287 Entrepreneur on 05.10.15 at 4:21 pm

Both #143 fisherman & #258 crowdedelevatorfartz…both need to click on the second video of #249 Bottoms_Up. Both videos are excellent.

As for the “record lobsters and salmon,” same as “record sales in real estate.” Figures get tossed around. As for feeding 8 billion people, I guess that is why we have ever increasing fish farms.

Happy Mother’s Day to all the Mothers, hearts and flowers sent your way.

#288 Vamanos Pest on 05.10.15 at 4:27 pm

#172 jean

“We need government policies that make houses affordable and if that means crashing house prices across the country and telling foreigners to park their cash elsewhere then that is what should happen.”

Government intervention in the housing market may be the single biggest factor in housing costs today. We do NOT need government policies that make housing more affordable, we need the government to allow the market to function freely. If the government ended CMHC today, housing prices would crash tomorrow. Problem solved (at least from your perspective, because there’d be a whole new world of economic problems for Canada as a result.)

You start the petition, I’ll be the first to sign.

#289 waiting on the westcoast on 05.10.15 at 5:04 pm

#283 crowdedelevatorfartz on 05.10.15 at 4:02 pm
@#282 Blacksheep crazy conspiracy theorist.
“A simple question for you Daisy, if you would humour me: Why did Building 7 fall?
++++++++++++++++++++++++++++++++++++

Gravity?

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Yeah but who made that gravity??? ;-)

#290 Blacksheep on 05.10.15 at 5:19 pm

Waiting # 284,

“Everyone is a product of their environment.”

“Did their programming hold them back…”

“Their brother says it did. He decided early on to do more, save more, and ultimately, succeeded more.”
———————————-
100 % agree….and good for him.

But what if your environment, does not have your best interest, (parents exp.) at heart ? Those that believe the system is altruistic are victims of wishful thinking.

#291 Mark on 05.10.15 at 6:21 pm

““Distributed capital gains”? What distributed capital gains? I received nothing? Why pay tax on zero income?”

You received distributed capital gains, which were then subject to reinvestment and a reverse split by the fund. Again, this is the behaviour of a mutual fund trust, on which, instead of being taxed at the trust level, such distributions are flowed through to the beneficiary of the units.

If you don’t like this behaviour, that trustees are making decisions on your behalf to realize capital gains, then you should not invest in mutual fund trusts such as XRE. The proceeds of the realized capital gains were re-invested for you, and you have a legal obligation as a beneficiary of a flow-through entity to declare such notional distributions on your taxes and remit payment accordingly. Failing to do so is tax evasion.

#292 Squirrel meat on 05.10.15 at 7:18 pm

#287 waiting on the westcoast on 05.10.15 at 5:04 pm

#283 crowdedelevatorfartz on 05.10.15 at 4:02 pm
@#282 Blacksheep crazy conspiracy theorist.
“A simple question for you Daisy, if you would humour me: Why did Building 7 fall?
++++++++++++++++++++++++++++++++++++

Gravity?

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Yeah but who made that gravity??? ;-)
————————————————-
Mother earth.

#293 RainBird on 05.10.15 at 9:20 pm

Mark:
Take it easy on the “tax evasion” crap. I paid the tax. The question was why?

And Where is my benefit? If the gain was re-invested I may never see that gain and yet I paid the tax. That’s not how the tax Act is supposed to work. You pay tax when you earn income – you don’t pay tax on ficticious income.

And why is the phantom distribution (ficticious income) not treated the same as return of capital whereby both events affect the ACB only.