Less than zero

CUTIE modified

It was cute the way this blog lit up Friday when the Bank of Japan said it’ll diddle with negative rates. Lots of people believe it’s only a matter of time before RBC starts sending them a cheque every month because they’ve got a mortgage. Free money!

The news came only weeks after our own central banker boss Stephen Poloz gave a weird speech in which he said the Bank of Canada would, if the world went to hell, consider dropping its rate to as little as -0.5%. Reaction to that was just as rabid. It fed the meme among the over-extended and the moisters than interest’s a thing of the past which Boomers invented and is croaking along with them.

How can money pay or cost less than nothing?

Europe has been employing negative rates for a couple of years in order to fight deflation. So there have been negative-yield German bonds (they keep the money safe, for a small price) and negative-pay Danish savings accounts. Now Japan’s government bank will charge a tiny fee (starting in two weeks) for money that institutions move there for deposit.

There are three things worth understanding.

First, savers in Canada will never be charged for keeping their money in a bank (well, more than they already are). No interest below zero.

Second, your bank will never pay you to borrow. Lending rates will not go negative. They won’t hit zero, either. In fact, we’re likely at the bottom.

Third, if the Bank of Canada ever does drop its key rate (now at one-half of a percentage point) to zero or below, there’ll be nothing to celebrate. The economy will be diving into a recession with rapidly-mounting unemployment and a hit to the value of your real estate. Like in Japan – where rock-bottom rates (10-year mortgages have been 0.85%) and massive government stimulus, and now negative rates, have not reversed a 40% decline in house prices.

Negative rates only come with deflation, which is to inflation what Justin Bieber is to good music. Inflation raises asset values, prices and wages, and usually accompanies growth. Deflation sucks. Prices and salaries decline, real estate withers, people stop spending because things just get cheaper. Worse, debt gets harder to pay since it doesn’t reduce even though your ability to service it does. So in a country like Canuckistan, with house-horniness, high taxes and a populace pickled in historic debt, deflation’s the enemy. Only if it were approaching, would Poloz go neg.

There are lots of reasons this ain’t going to happen.

Actually we have an inflation problem at the moment, thanks to the dollar’s oil-induced decline. Negative rates would be the worst policy, driving the dollar down further, signalling economic crisis. Besides, who would buy Canadian bonds paying less than nothing? That means the T2 plan to run up $50 billion or so in new debt over the next few years would fizzle for lack of financing. No deficits, no infrastructure spending.

And in a few countries when negative rates have been toyed with – notably Sweden and Denmark – the experiment caused housing prices to spike even further as borrowers were relieved of discipline and a crashed currency allowed foreign investors to flood in. There are additional dangers. Negative rates would wound the banks, which (for better or worse) are the pillars of our economy. They’d trash borrower confidence and the encourage hoarding of cash. And the pall cast over the economy would chase away investment capital from a country where cash pays nothing.

So why would Poloz even suggest going minus?

Apart from being a drama queen, to encourage lending. In theory, it would penalize deposits that the chartered banks might leave with the central one. But in reality bankers would rather pay for safety than lend into a deflationary economic storm. In fact, there seems no evidence this wacky idea has succeeded anywhere yet.

At a time when the US has raised rates for the first time in a decade and will do so again in the months to come, when oil’s wildly volatile and we’ve embarked on a new tax-and-spend political escapade, this negative talk is, well, less than zero.

So, suck it up and pay your mortgage. No unicorns coming.

205 comments ↓

#1 Benny Tellson on 02.01.16 at 6:03 pm

First!!!

#2 Mike T. on 02.01.16 at 6:09 pm

Mr Turner,

Allow me to introduce you to your new BFF

http://www.pressreader.com/canada/the-province/20160201/281891592305468/TextView

meet the man that kills Kias for a living

no, really

#3 Fed-up on 02.01.16 at 6:09 pm

I don’t have any confidence in Poloz. He’s a clown that will surely drop us close to a zero rate policy very soon.

Zero interest rates and zero credibility.

#4 will on 02.01.16 at 6:10 pm

Tembec closing sawmill in Quebec. Job loss to be 148. This from the G&M.

#5 hang the bankers on 02.01.16 at 6:27 pm

Coming soon …… Im sure
http://republicbroadcasting.org/news/iceland-forgives-entire-population-of-its-debt-total-us-media-blackout/

#6 S.Bby on 02.01.16 at 6:28 pm

Not to sound negative, but at any rate we seem to be in a permanent state of emergency.

#7 joe on 02.01.16 at 6:28 pm

Inflation is very good for borrowers…….

so house owners are just winners!!!!

#8 Garth is my enabler on 02.01.16 at 6:32 pm

Now we need new plan

Garth for sake of us who are few G short of number required for your RJ club , how do we catch up…

it has to be the way…

#9 Fred on 02.01.16 at 6:34 pm

Make T. Horrendous site.

#10 bob on 02.01.16 at 6:37 pm

Funny how when house price goes up 25% in a year this is not inflation… But then if house price were to go down 2% then OMG we need negative rates to fight deflation.

#11 Get back Loretta on 02.01.16 at 6:37 pm

Saved By Zero (The Fixx)

Maybe someday
Saved by Zero
I’ll be more together
Stretched by fewer

Thoughts that leave me
Chasing after
My dream disowns me
Loaded with danger

So maybe I’ll win
Saved by Zero
Just maybe I’ll win
Saved by Zero

#12 earlybird on 02.01.16 at 6:38 pm

If the deflation rate is greater than zirp…yield is still positive. Pushing on a string..

#13 Raging Ranter on 02.01.16 at 6:40 pm

In fact, there seems no evidence this wacky idea has succeeded anywhere yet.

I wish the whole idea would just be tossed in the garbage can and central banks would get back to the one and only thing they are capable of doing – maintaining sound money. John Crow maintained sound money through think and thin (mostly thin) while every business owner, debtor and Keynesian in the country screamed at him for lower rates. He refused to blink until he was certain inflation was DEAD. Canada ultimately benefited from a decade of stability which we may not have enjoyed otherwise. A decade earlier, Paul Volcker did the same thing in the US. Contrast those brave and unyielding men to the scared little mice running central banks today. Every blip in the economy sends them running to a microphone to comfort the markets, promising “more action if needed”, whatever that is. Damn fools.

#14 Retired Boomer WI on 02.01.16 at 6:41 pm

I doubt Canada will go “negative.” If it should choose that route, best hang a “FOR SALE – CHEAP” sign over the whole dam thing. Poloz, though not necessarily a deep thinker, I doubt is a total stooge.

Oil is the salvation, or destroyer of Canada. What else is there? Potash, maybe, but foreign suppliers are less costly. No manufacturing that isn’t an off shoot of an American enterprise. Yes, some farming, grains, and natural resources, we know what they are currently worth. Nothing that will support a nation of delusional city dwellers who think their houses, crap that they are, are with a $1,000,000 or better.

Time for a sobriety check, Canada. Beavers, and Moose have no high value, sorry. Your oil, might have some, when all other supplies are exhausted.

Sorry to have to break the news….

#15 Nagraj on 02.01.16 at 6:47 pm

worth noting that eight days prior to Kuroda announcing NIRP he’d announced that there would be no NIRP in Japan (his Gnomes’ vote on the matter was a narrow 5/4)

there is commentary suggesting the prime motivation was to devalue the yen and raise stock prices

both ZIRP and NIRP look like desperation quackery to me

#16 Dennis Wilson on 02.01.16 at 6:50 pm

I think interest rates have nowhere to go but down and am buying 5 year GICs as money matures.

#17 BobC on 02.01.16 at 6:50 pm

We’re lucky down here. Obama can borrow all he wants.

http://www.washingtonexaminer.com/national-debt-hits-19-trillion/article/2582097

#18 jess on 02.01.16 at 6:57 pm

#253 RazzleDazzle on 02.01.16 at 6:18 pm

“A former director of the Brazilian state-owned oil company Petrobras has been sentenced to twelve years in prison, as part of a huge investigation into bribery and corruption.

Jorge Zelada, who ran Petrobras’s international division, was convicted of money-laundering and corruption…The investigation also found that Jorge Zelada had transferred huge amounts of money offshore into bank accounts he owned in China. “

#19 JackDracula on 02.01.16 at 6:58 pm

We all know RE market has an important component in immigration. Most of immigrants, if they have good jobs, some of them will buy a property.
But the latest news are GOOD for BC:

https://www.biv.com/article/2015/10/international-migration-bc-hits-brakes/

https://www.biv.com/article/2015/10/bc-immigration-crashes-15-year-lows/

#20 White Crock BC on 02.01.16 at 6:59 pm

At a time when the US has raised rates for the first time in a decade and will do so again in the months to come.
——————————–

Nope.

Strong USD is only now starting to hurt them. Like it did to us in late ’07.

#21 The real Kip on 02.01.16 at 7:04 pm

The fact that other countries are already there and Poloz mentioned it weeks ago indicate neg rates here are a very real possibility.

Add to that the fact that it is a constant topic here and I’d say it rises to a 100% certainty we’ll see rates go negative.

Pray the odds are zero. — Garth

#22 not 1st on 02.01.16 at 7:08 pm

Every night Garth rages against home owners but he always give central banks a pass no matter what nutso scheme they are dreaming about.

Central banks have killed every bull market in history.

#23 JackDracula on 02.01.16 at 7:08 pm

Also, the number of Chinese coming to BC is drastically reduced:
http://www.vancouversun.com/news/permanent+residents+from+china+drops+half/11688716/story.html.

My opinion, is due to increased language proficiency requirements for most of the programs. That’s what drastically reduced Chinese immigrants. But increased immigrants from India and Iran.

#24 joe on 02.01.16 at 7:12 pm

#14 Retired Boomer . YOu are absolutely right….

Canadians are brainwashed if they think the their technology of building a house ( particle board and insulation!!!) is good. It is biggest crap I have ever seen….those house should be for poor people….!!!!!

and the “proud Canadians” are so happy if their basement is “finished””

Basement in Europe and especially in Eastern Europe the sign of poverty…basements were used for laundry or storage of potatos , carrots and other product.

NO one like to live in a basement dump….!!!!!

So Dear Canadians you can shovel your cardboards houses…and pay mortgages..for whole your life….
It is amazing how you can be brainwashed…you have never seen before house…

you are living in particle boards, insulation dumps for million dollars…

It’s a shame…House ponzi scam!!!!!!!!!!!!

#25 Tervel on 02.01.16 at 7:14 pm

An interesting development: Snowbirds rush to sell U.S. homes to profit from tanking loonie.

http://www.cbc.ca/news/business/snowbirds-loonie-real-estate-1.3425322

#26 AB Boxster on 02.01.16 at 7:14 pm

The fact that ‘bizarre’ scenarios need to be played out in the economy, is really an indictment of how out of control the whole system has become.

QE 1 ,2 and 3.
ZIRP
Negative Interest Rates
Massive increase of the ‘known’ money supply
Massive govt debts that will never be repaid.
Vastly over valued real estate

The next ‘brilliant’ ideas are soon to become the new normals.
The more bizarre the solution now, the deeper the mess becomes.

“Hey Lets Mint a 1.2 trillion dollar coin and pay off all of our national debt!”
“Maybe Canada can become more wealthy by keeping all of our natural resources in the ground!”
“Lets create a new iphone app that will allow people to create their own money”
“Let’s let all foreign banks be allowed to lend to Canadians, to increase competition in the domestic market. And let’s make sure the laws of the lending country apply. Go Uberlend”

Really looking forward to the next brilliant idea that they can come up with.

#27 Bram on 02.01.16 at 7:16 pm

Yes, scary stuff, deflation.

I would love some sever inflation to strike Canada, just after fixing the mortgage rate for a long period.

That way, the mortgage principle will be reduced to peanuts in ‘real value.’

Like when my parents bought in 70s, and then in 90s, the original principle of the mortgage was not much in terms in ‘number of current monthly salaries.’

Inflation helps whithering away the principle.

#28 Joe2.0 on 02.01.16 at 7:16 pm

The global economy is broken.
It’s that simple.
That’s why all they can do is print money and defer more debt.
Currently the U.S. is considered the $afe haven or the best of the worst but according to the Baltic index things have ground to a halt.
Parties over people.

#29 greyhound on 02.01.16 at 7:21 pm

In deflation “Prices and salaries decline, real estate withers, people stop spending because things just get cheaper.”

What was left unsaid is that deflation benefits those with money, because each dollar you have goes further: everything you buy is cheaper in a deflation! But you have to have the dollars.

Inflation penalizes wealth and benefits debtors including the biggest debtor, government, which wants to inflate away its own huge debts by depreciating the loonie 2% every year.

The reason politicians love inflation is because there are a LOT more debtors than savers/investors. Debtors vote. MPs who advocate inflation get re-elected.

#30 RazzleDazzle on 02.01.16 at 7:23 pm

Drastically decreased immigration from China? Yes, there are fewer seekng Permanent Residency, but why would you need residency when you can simply get a 10-year visa?

http://www.scmp.com/news/china/article/1732935/china-and-canada-seal-deal-10-year-visas

As for the impact of reduced Chinese immigration on the high-end real estate market, as has been noted, ad nauseam on this blog, you don’t need to be a resident to buy RE.

#31 Brazil ex-pat on 02.01.16 at 7:23 pm

I think the phrase that needs to be remembered in today’s post is “Never Say Never”.

#32 vic guy on 02.01.16 at 7:26 pm

“So, suck it up and pay your mortgage. No unicorns coming.”

Unicorns or not, It’s a roof over your head and it’s looking like rates will be in the basement for years…maybe even 20 years.

#33 palhalghost on 02.01.16 at 7:26 pm

#215 Smoking Man on 02.01.16 at 12:04 pm Great link Where are the men http://www.therebel.media/while_migrants_rape_their_way_across_the_continent_where_are_europe_s_men – ”

Looks like they just showed up….
http://www.thelocal.se/20160130/masked-marchers-beat-migrants-in-stockholm-centre

You shoulda let sleeping dogs lie SM, nothing worse than pissing off a swede…I remember Inge Hammarstrom skating twice as fast when he got mad (or maybe because someone was chasing him!)

#34 Shawn on 02.01.16 at 7:33 pm

Who Would Buy Negative Yield Canada Bonds?

Gath said: Besides, who would buy Canadian bonds paying less than nothing?

***************************************
Maybe a large Canadian corporation such as a pension fund that has a hundred million “cash” and does not trust it to the bank (or the bank does not want a deposit that large since it can be taken away so quickly) and they also can’t keep it in the office safe.

And maybe all those insurance companies and pension funds that buy 30 year bonds at 2% in order to stay on side with certain asset allocation policies and risk management?

I can’t believe they bought 30 year at 2% but it happens. So why not minus 0.5%?

But I totally agree no retailer borrower will EVER be paid to borrow. Only AAA corporations and governments stand a chance for that to happen to them.

#35 Balmuto on 02.01.16 at 7:37 pm

“How can money pay or cost less than nothing?” – Garth

Nobody knows but central bankers seem hell-bent on making it so. It’s a dangerous experiment that will have unintended consequences. We’re in uncharted territory.

#36 JSS on 02.01.16 at 7:37 pm

That chick in the pic is hot

#37 Ret on 02.01.16 at 7:38 pm

I have no confidence in Poloz until he either starts or stops taking his medication.

He comes across as quite detached from the economic realities that the country has been confronted with.

#38 tundra pete on 02.01.16 at 7:38 pm

Just imagine 6 months from now. The oil patch lay offs will be considered the good old days. Then the EI will run out….oh no.

The rig pigs will think flippin burgers will save them. Then it will be welcome to AI. Just when the oil process techs think any ahole can serve donuts, it will be, say hi to your replacement, his name is google robot. Never calls in sick, bitches about minimum wage or goes for a smoke. Oh yeah, say hi to all his buddies, they will be starting next week.

Sad but true. Rumors are by 2020 but I think not. Will be much sooner than that. With the majority of work offshored long ago, the final push will be get the bots in place to decrease labour costs and have the CEO’s looking like heroes to the share holders. Kind of like the final frontier…….

#39 ROCK BEATS PAPER on 02.01.16 at 7:41 pm

“Europe has been employing negative rates for a couple of years in order to fight deflation. So there have been negative-yield German bond…”

I doubt this is factually correct. There has not been deflation in Germany.

“Deflation sucks.”

Yeah, who likes it when cauliflower prices are declining, or when eduaction, healthcare and stuff is cheaper. Personally, I am only prepared to buy stuff when it is more expensive, and I especially hate it when computers, cars and gadgets get cheaper.

#40 Greg Wellington on 02.01.16 at 7:44 pm

To Dennis Wilson #16

5 year GIC’s at best are 2.5% annual or compound interest. The only financial institution that has 3% GIC’s but only TFSA, RRSP, RRIF eligible right now is Duca for 80 months which is a 6 years, 8 months term.

There are other higher paying bonds, strip bonds in the provincial and corporate side which are in 3.4% to 4.0% to 4.6% but are 10 to 16 years to 20 to 22 years. These are investment grade bonds not lower grade bonds.

Garth is probably right about his interest rates picture but this central bank talking down rates and trying this negative interest rates, QE, bond buying, desperate monetary policies does impact to lower bond yields and GIC rates.

Dividend yields are down too but have held much higher than interest bearing and interest compounding GIC’s, government bonds, corporate bonds.

#41 espressobob on 02.01.16 at 7:44 pm

Back in the day when fixed income actually paid some yield and mitigated risk in ones portfolio, today it acts as ballast paying squat. At that time bonds competed with decent returns and low risk.

As if investing isn’t tough enough. More exposure to equity (Long term) and active management with regards to profit taking could prove to outperform?

No easy solution, unless rates rise. This ETF below is an example.

http://www.blackrock.com/ca/individual/en/products/239420/ishares-15-year-laddered-corporate-bond-index-fund

#42 common sense on 02.01.16 at 7:46 pm

Lots of Music titles here tonight…. Great tunes actually.

Less Than Zero Elvis Costello 1978

Never Say Never Romeo Void 1981…Not the Beebs crap.

I bet we will see Negative rates within a decade here. Look at how our demographics compare to Japan.

It’s not a thing of beauty…

#43 Cory on 02.01.16 at 7:46 pm

“#20 White Crock BC on 02.01.16 at 6:59 pm”

Pretty sure you’re wrong. If you think the Fed isn’t aware that raising rates will juice the USD, well you’d be wrong again. The talk about Saudis/OPEC looking at production cuts will materialize and will weaken the USD just in time for them to raise rates again (march? or June?). Sure it will strenghten the USD again after they raise rates, but to the level it is at now or lower if the oil production cuts are enough to do so.

I am in agreement with Garth on this one. The Fed will continue to raise rates. I know, I know, all kinds of blogs and opinions exist out there to scare everyone, but the Fed would not have raised rates only to back down later. Credibility would go to zero in an instant. As well, one point that I think many “experts” miss is wage inflationary pressures. It clearly exists in the US when Walmart (and McD’s for that matter) is giving every single employee a raise. Wage pressures do not exist unless an economy is doing well. In addition, housing sales data is not what is important, but household formation is such as is happening now in the US. In Canada, housing sales are quoted all the time, but these are sales to one another (musical chairs) as Garth has said and data shows. However, I think household formation, the more important data set, is lacking in Canada in large fashion along with wage inflation. There is a complete disconnect when housing sales and prices are continually quoted higher and higher when a country is on the verge of a recession, and wage inflation is non existent (other than for public sector). Completely deluional and obviously not sustainable.

I don’t know if the Fed will raise rates in March. Personally, I think they will. But I also suspect that once June hits, Saudis will finally blink because they will have squeezed Russia in to cooperation and shale producers will have a very hard time getting financed (like now) at higher rates and Saudis/Opec will cut production even more thus weakening the dollar a little more and then I think the Fed will do more of a wait and see approach after this. Then Poloz can safely drop rates yet again to weaken the CAD since once oil heats up a little, the CAD will go with it.

All of this is my own speculation of course but I think I will be close. If/when oil goes up (by design), the USD goes lower……it’s that simple.

This is all taking away the crack pipe. The party is over and normalization has begun.

#44 Stoopid Idiot on 02.01.16 at 7:49 pm

Worth your time, David Stockman

https://en.wikipedia.org/wiki/David_Stockman

Watch,
https://www.youtube.com/watch?v=5exbO-Ros2Q

#45 JackDracula on 02.01.16 at 7:49 pm

Agree with you RazzleDazzle, unfortunately don’t need to be resident to buy RE here.
I also agree there’s no impact on high-end RE market in Vancouver.
However, I’m interested in PR stats, since I live in Vancouver, and I don’t like when English language becomes less and less used and important in some communities. So I guess the news would make more impact on future demographics of Vancouver rather than RE market.

#46 joe on 02.01.16 at 7:50 pm

Dear canadians…Be happy that your dollar is still around 70 cents.

Ther real value should be 50 cents!!!!!

What do you produce except maple syrup???????
Edmonton , Calgary the cities of warehouses!!!!!
Toronto , Vancouver the cities of crap houses!!!!!!
What you impress the world with?????
Canadian hockey??? Gretzky is gone!!!!!

Tell me what do you produce…???
Thousands of immigrants already figure out your crap house and building it and selling to you!!!!!

So what do you want to export except maple syrup?????
So where to invest….??? Invest in what??????–crap particle board……and insulation????

Be happy and drink case of beer on weekends……….
your best way to spend time….and pay your mortgage..:) and 50cents is coming…do not complain…
50 cents is to much for canadian maple syrup…
you don’t have anything else…..except particle board…

#47 Yitzhak Rabin on 02.01.16 at 7:55 pm

“Besides, who would buy Canadian bonds paying less than nothing?”

You could ask the same question about Japanese bonds, their central bank now “owns” (or is owed) 1/3rd of the entire government debt market.

It is central bank monetization of the debt and indicates a complete failure of the monetary system, economy and currency.

Despite Japan being the most indebted nation, its bond yields are negative out to a maturity of 8 years. There are no more markets, only lesser and greater interventions.

Gold will rapidly make a comeback as one currency after another fails. The weakest fall first, take a look for example what is going on in Venezuela.

#48 Furgus McDonald on 02.01.16 at 7:57 pm

The BS behind the deflation bugaboo is that it curtails the governments own attempt to hyperinflate it’s debt away…boo hoo. What is wrong with stable and predictable pricing?

#49 AK on 02.01.16 at 8:05 pm

#1 Benny Tellson on 02.01.16 at 6:03 pm
First!!!
================================

Dude.. Another New Years resolution accomplished..

#50 Dirty Debtor on 02.01.16 at 8:05 pm

I can see myself in the future, looking back on my journey through life like a set of footprints in the sand. I see 2 sets of footsteps, right up until the point when house hornyness was at its orgasmic peak – at this point, there is only one set of footprints.

“But why Garth, when the house lust is at its absolute peak, did you leave me to walk alone” I will ask.

“No DD. it was at this time in your life, when you were too horny to go on – that I carried you.”

Amen. Preach on Garth, while we all await the second coming (RE correction, that is)

DD

#51 Greg Wellington on 02.01.16 at 8:15 pm

Venezuela is getting hit by a 79% of oil prices since 2007 plus they are the most socialist government in the world that I can see.

Their inflation hit 700%, Gold is not up 700% in one year so how did that help anyone in Venezuela.

Gold is still off its 1,920 U.S. dollars high back in 2011. When there is high to hyperinflation there in a currency, there is no escape except for leaving that country before they destroy themselves.

#52 IM in C on 02.01.16 at 8:16 pm

Mr. Turner. You just presented a well reasoned column devoted to showing why there will not be negative interest rates.
And yet, there will be negative interest rates.
The government has to protect the domestic housing market. Even Junior knows that the political party that presides over a housing crash (in Canada) will be the political party that will sent to the wilderness for the next 25 years.

#53 espressobob on 02.01.16 at 8:18 pm

I hate beating up goldbuds (not really) but? What’s their point? A storage of wealth? Oh right, almost forgot the collapse of paper currency, how silly. As if corporate America is un-profitable.

https://en.wikipedia.org/wiki/Precious_metal

#54 JSS on 02.01.16 at 8:23 pm

Negative (or near negative) interest rates are good for dividend growth stocks and etf’s.

#55 Raging Ranter on 02.01.16 at 8:28 pm

@ #50 Dirty Debtor:

You suddenly see only one set of footprints in the sand because your wife left you after your mortgage went underwater and you lost the house.

#56 Mark on 02.01.16 at 8:29 pm

“Even Junior knows that the political party that presides over a housing crash (in Canada) will be the political party that will sent to the wilderness for the next 25 years.”

Didn’t seem to hurt Chretien/Martin too badly in the 1990s. They stayed in office pretty much till their bag-men started getting too heavily into the funny business and they got caught.

If anything, a housing crash has a number of beneficial advantages, namely that it liberates capital from the housing sector, and directs it towards sectors that can actually facilitate greater economic output and employment. If anything, the poor economy seen under the Conservatives was largely driven by an over-reliance on housing as the growth engine, rather than a more balanced economy.

#57 CJBob on 02.01.16 at 8:29 pm

Garth: At a time when the US has raised rates for the first time in a decade and will do so again in the months to come…
_________________
con·fir·ma·tion bi·as noun
the tendency to interpret new evidence as confirmation of one’s existing beliefs or theories.
_________________
Yep, keep predicting rate increases and a housing crash despite all the evidence to the contrary…

#58 Entrepreneur on 02.01.16 at 8:31 pm

“Suck it up and pay your mortgage” At one time people would not think of going into debt but now everyone is conditioned to think it is okay, everyone is doing it. The way the system caters to debt that the only ones left will be the ones in debt as nesting has a short window.

For the Americans, at one time it was a disgrace to go on welfare, etc. here in Canada and we worked hard to avoid the social programs that all parties have (can’t point the finger at just the NDP). Also, would like to add that for every American assassination we stood for a moment of silence (even for past assassination). We had to know American history which to this day I enjoy.

Different world at play and who is going to survive.

#59 Chris Temmal on 02.01.16 at 8:35 pm

To IM in C

Junior is going to learn a very hard lesson. If you can’t pay your bills, it does not matter what your mortgage rate is.

Besides, banks and other lenders don’t have to use interest rates anymore, they can call it a finance charge or rental money fee.

They will get their money one way or another.

#60 vic guy on 02.01.16 at 8:37 pm

“What do you produce except maple syrup???????”.

Pretty much any natural resource available.
Water will become the most valuable…we’ll be sure to send the sludge water from our tailing ponds to whatever shit-hole country you have the privilege of living.

#61 Less than zero - Realties.ca on 02.01.16 at 8:43 pm

[…] Source: http://www.greaterfool.ca/2016/02/01/less-than-zero/ […]

#62 Stoopid Idiot on 02.01.16 at 8:45 pm

They walk among us

I wish the whole idea would just be tossed in the garbage can and central banks would get back to the one and only thing they are capable of doing – maintaining sound money

Central banks have killed every bull market in history…. Whaaat?

The reason politicians love inflation is because there are a LOT more debtors than savers/investors. Debtors vote. MPs who advocate inflation get re-elected…. And you said nothing Garth

An interesting development: Snowbirds rush to sell U.S. homes to profit from tanking loonie.

Could you imagine if you would have bought Gold at par?

Lots of Music titles here tonight…. Great tunes actually…. Agreed!

https://www.youtube.com/watch?v=JOiZP8FS5Ww

Watch all six if you can… no reading required, I promise.

https://www.hiddensecretsofmoney.com/

#63 joe on 02.01.16 at 8:46 pm

#59 Vic guy

your canada is like third world country —selling resources and your polluted already water….from oil—please visit Fort MCmurray…………:)))

When you sell all of it….what you going to do….?

open your eyes in your filthy basement….and stop reading internet…start traveling and see….
instead of drinking beer on Saturdays…..

#64 FerrisWheel on 02.01.16 at 8:53 pm

Garth,

Love what you do. Just don’t agree with your thesis that Feds will increase again in 2016. No way. I feel they had to do it in Dec to save face. The economy is dipping into a recession there with an election coming this year. Feds can’t risk it.

JMHO!

No recession, and the Fed never moves and retreats. — Garth

#65 DON on 02.01.16 at 8:56 pm

#23 JackDracula on 02.01.16 at 7:08 pm

Also, the number of Chinese coming to BC is drastically reduced:
http://www.vancouversun.com/news/permanent+residents+from+china+drops+half/11688716/story.html.

My opinion, is due to increased language proficiency requirements for most of the programs. That’s what drastically reduced Chinese immigrants. But increased immigrants from India and Iran.
– See more at: http://www.greaterfool.ca/2016/02/01/less-than-zero/#sthash.SYuVq8Dy.dpuf***********************************************

Or this could be a stunt to calm the masses in BC (Vancouver). The Vancouver sun wouldn’t post an article to hurt the Provincial gov incumbents. The media is not what is used to be. Better to calm the masses by telling them that foreign interests are reversing… as the only thing holding BC in the minimal growth standing is real estate and the gov makes a lot of taxes off it at the moment. I take it they don’t want to see their tax base disappear a year away from an election. Nothing can be taken seriously if it comes out of the mouth of a BC gov politician or sun/province newspaper. These newspapers only have one known use – lining the bottom of the rabbit cage.

#66 White Crock BC on 02.01.16 at 9:05 pm

#63 Joe

instead of drinking beer on Saturdays…..

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

Saturdays? You obviously know nothing about Canada.

Now, are we done with this trolling?

#67 Tony on 02.01.16 at 9:10 pm

Re: #53 espressobob on 02.01.16 at 8:18 pm

For most of them it’s about making money. Silver should be much the better of the two investments when gold breaks its 200 day moving average in the next week or so.

#68 For those about to flop... on 02.01.16 at 9:19 pm

I went back to work today for the first time in 6 weeks.
Mainly to get away from this blog…
Anyway a scenario came up that I had never really considered before and so I decided to play HAM/NO HAM.
A couple just purchased a 5 million west side Van house.
He was Caucasian ,she was Chinese possibly Chinese / Canadian but it got me thinking if her family sent the money or if they went 50/50 is this ham/ no ham?
I don’t really care just happy for the work but it got me thinking of different scenarios that I hadn’t really bothered with.
I am in an interracial marriage and am a dual citizen so if I was to bring some money in from Australia and buy real estate would that be ham( hot Australian money?)
I guess there are more ways to define it than I thought.

M41BC

#69 salonist on 02.01.16 at 9:20 pm

Immigration and Ethnocultural Diversity in Canada
Statistics Canada

https://www12.statcan.gc.ca/nhs-enm/2011/as-sa/99-010-x/99-010-x2011001-eng.cfm

#70 joe on 02.01.16 at 9:28 pm

#66 white crock

you just right!!!!

What I know about Canada ??
That you sell your cheap resources and selling maple syrup….:))))
and you like to live in “finished basements””‘
and the walls of your houses are not from brick but from particle boards…..:)) and you pay for it all your canadian life….::)))

#71 espressobob on 02.01.16 at 9:28 pm

#67 Tony

Silver? I dread for you. More than you could possibly imagine.

#72 Marco Polo on 02.01.16 at 9:29 pm

I usually agree with you Garth, but not on this one. The first rule of business in Canada is housing, and T2 will see to it that that continues, even into negative interest rates. “Free Money for the Middle Class”, will be what its called.

Hell, here in Alberta, the NDP hated the oilsands, really bad for tge “enviroment”. Now they’re pushing government grants for ” petrochemical” industries here ( read: plastic). So, we’re not taking dirty oil out of sand anymore, and putting clean sand back in the earth. Its more “enviromental” to create plastic from propane gas, and eventually put that in a landfill !

Point is, in finance and politics, the herd is stupid. Whatever appeases them will be done. Don’t be surprised by negative rates here, or several unchanged ones in the US. There is no inflation to fight.

#73 Shawn on 02.01.16 at 9:40 pm

Who Buys Negative Yield Bonds?

#47 Yitzhak Rabin on 02.01.16 at 7:55 pm
“Besides, who would buy Canadian bonds paying less than nothing?”

You could ask the same question about Japanese bonds, their central bank now “owns” (or is owed) 1/3rd of the entire government debt market.

It is central bank monetization of the debt and indicates a complete failure of the monetary system, economy and currency.

Despite Japan being the most indebted nation, its bond yields are negative out to a maturity of 8 years. There are no more markets, only lesser and greater interventions.

Gold will rapidly make a comeback as one currency after another fails. The weakest fall first, take a look for example what is going on in Venezuela.

********************************************
I can understand the central bank buying negative yield or basically zero% Japanese government bonds.

But corporations buy them too. Why?

And they buy even long-term bonds that lock them in at barely over zero for ten years. Why?

Habit?

No alternative? Short bonds are an alternative as are equities and real estate.

Government regulations? Idiot bank regulators may require banks to own government bonds which they consider zero risk. Insurance companies also may be required to buy government bonds.

Pension funds may buy out of blind adherence to asset allocation models which insist on a certain percentage in government bonds.

Same factors apply in North America.

Buffett in the late 70’s said pension funds were basically irrational lemmings to buy so many bonds in the 1970’s when equities looked to be so cheap. I’d like to see his thoughts on this matter now.

As Buffett said, it is always safe to be a lemming, as a species they have a poor reputation. But no individual lemming has ever gotten bad press.

#74 Raging Ranter on 02.01.16 at 9:44 pm

Mark, housing crashed in 1989-92, under MULRONEY and the PCs. Chretien/Martin got in in late 1993. The slow grind to the bottom continued to 96 or 97 or so, but the major correction happened under Mulroney’s tenure. And we know how well the PC’s did in 1993.

#75 Stoopid Idiot on 02.01.16 at 9:45 pm

I went back to work today for the first time in 6 weeks.
Mainly to get away from this blog…

Lol…. I cried, thanks

#76 Suede on 02.01.16 at 9:48 pm

Rates will go negative if smoking man’s wife allows him to drink JD and he has his phone handy to let us know.

He calls interest rates better than a central banker.

Makes you wonder what he was doing at Bilderbirg last year…

#77 joe on 02.01.16 at 9:50 pm

http://www.cnbc.com/2016/02/01/us-treasury-curve-flattens-as-oil-prices-fall.html

right now you can invest only in US!!!!

Canadian syrup good only for cheap canadian pancake :))
that’s why obesity rate is so high….:)

#78 Ret on 02.01.16 at 9:54 pm

#40
“The only financial institution that has 3% GIC’s but only TFSA, RRSP, RRIF eligible right now is Duca for 80 months which is a 6 years, 8 months term.”

Duca is a credit union so there is no CDIC insurance on those GIC’s. (Even if Duca was a bank CDIC is limited to 5 year or less GIC’s)

#79 Hotdogs from Heaven on 02.01.16 at 9:56 pm

Negative Interest Rates

The Swiss are currently doing this more extremely than anyone else. Their retail banks are forced to pay these negative rates to the central bank, but that’s as far as it goes. There are NO negative rates providing cash to their customers.

HOWEVER, because the banks are losing money doing this they are trying to make it up by raising the rates on their mortgages and other loans. Thus the negative interest rates are having the exact opposite affect that is assumed by most economists and the cost of money to borrowers is actually increasing making them want to borrow less.

Now the Swiss are doing this more for the value of their Franc than to stimulate borrowing, buts its interesting to see the outcome of the policy anyway.

#80 ed on 02.01.16 at 9:58 pm

RE #23 JackDracula

or, perhaps the (mythical) Chinese are quite smart and see the times to get off a sinking ship is before the waves are lapping at your feet.

By the way, wonder who the homegrown hillbillies will blame when stats show there never were any foreigners buying up things. Reality check: this is Canada (a good 70% of which is synonymous with Siberia); no one else wants to live here.

#81 joe on 02.01.16 at 9:59 pm

#74 Raging Renter

but your i-phone generation had chosen Justin…

MOst likely they are so smart that they got mixed up with
your idiot Justin Bieber…..

#82 common sense on 02.01.16 at 10:07 pm

With February one month with no major announcements from a central bank to influence markets, what will happen?

Let’s see if any Central bankers can stand on the sidelines and say nothing or not be seen…

Can they? Highly doubtful…

#83 Alberta Blue Blood on 02.01.16 at 10:10 pm

Joe!!!!!!!!!!!!!

You no know!!!!!!!!!!

Europe makes shit houses as well, crumbling cement, stinky, old, mouldy houses!!!!!!!!!

And they have many finished basements in Spain, Greece, Italy!!!!!!!!!!!! And even *gasp* GERMANY!!!!!!!!!!!

WTH is your problem? Can’t get it with a Canadian girl and all frustrated? Have you tried to stop yelling?

But great idea to get off the maple syrup and hockey and do our best to export our gold, diamonds, silver, uranium, nickel, copper, medical research, oil technology, industrial safety standards, trains, airplanes, ship making, wheat, rye, barley, canola oil, wine, warm winter clothing, yoga clothing, beer, and so on.

You seriously need a good jersey pull, Joe!!!!!!!!!!!!

#84 Smoking Man on 02.01.16 at 10:18 pm

I’m feeling them, Nectonites, I spent the last two hours in the gazebo warming my veins with really good scotch, looking up to the sky for the orange plasma flyer. UCC tells me it was a drone. False alarm.

I was reflecting on shit while waiting, two xmass parties ago, the day I wrote the Barrington vs big breasted beauty on alcohol mind fkd. I actually played out that scene with a co worker not realizing It was in the real world, told her how spectacular her breasts are.

Call it fantasy imitating life.

Six months later I get boomed for a thousand a day gig. If she bitched about my invitation for Chinese food and the Jacuzzi in my room, I would have been in front of HR the next day.

On GF I had some intel, I coined the phrase Rejectionist, that same day I was told your gone on Aug 1.

Scotch, Cigs, waiting for my star people, it hits me.

The London machine knew the herd was getting restless, the machine never fks up, I give you Donald Trump, the enemy of the machine. The herd rejoicing at the prospect of the architects of 911 getting served justice.

If Trumps first day as the president of the united states doesn’t round up the killers, stating with Silberstein. You will know, what I have been saying, you can’t beat the machine.

Now that robots will be taken over your jobs as Dave McKay stated at his Devious pow wow with no plan on what to do with you.

This drunk is calling eugenics, move to the country, buy weapons and ammo. Wont do you any good. The machine has a two-year lead on you.

Your only help in hell is if People from my planet, Nectonite, intervene.

#85 Yitzhak Rabin on 02.01.16 at 10:19 pm

In reply to:
#73 Shawn on 02.01.16 at 9:40 pm
“I can understand the central bank buying negative yield or basically zero% Japanese government bonds.

But corporations buy them too. Why?”

Mainly risk-free (or low risk) bond speculation, front running central bank purchases. In most cases, the central banks don’t care about the price/yield of the bonds and pay the ask price in the market.

This result is a “bond bubble” that is prone to violent sell-offs and volatility with price moves several standard deviations higher than historical averages.

Some regulation regarding “risk” also forces pension funds to buy public bonds. The current yields become a problem when the fund bases future payout projections on 8% annual returns.

We now live in a world not of risky returns but, return-free risk. This includes your bank deposits.

#86 squidly77 on 02.01.16 at 10:23 pm

Wow, there’s TFSA money to be made here boys, just be on it, you snooze, you gonna lose, but man its working good for me right now.

http://www.bnn.ca/Stock.aspx?pi_symbol=CNQ.TO
http://www.bnn.ca/Stock.aspx?pi_symbol=SU.TO
http://www.bnn.ca/Stock.aspx?pi_symbol=MEG.TO

Its casino gambling at it purest form, an adrenalin rush for sure, just be on it, and roll the dice at your risk. Its not for the faint hearted or the weak kneed.

#87 Mark on 02.01.16 at 10:25 pm

“And they buy even long-term bonds that lock them in at barely over zero for ten years. Why?”

Currency appreciation? Negative rates typically imply a strengthening currency (as currency strengthening makes up for the negative coupon), and negative rate policy is only sustainable in the context of what is believed to be a strengthening currency (ie: deflation).

However, the question that begs to be answered is why don’t investors just hold cash in such a situation.

I’d suggest that’s exactly what they end up doing, which is why, during a deflationary event, only government (ie: sovereign) credit actually is of interest to the marketplace. Private sector stuff (ie: MBS, corporates, ABS, etc.) sees very significant spread expansion, such that, its yields are significantly positive. Equities, of course, get almost completely crowded out during deflation unless they are in sectors with extreme countercyclicality (ie: precious metals production perhaps).

Ironically, deflation, at least to the bond market, starts to look an awfully lot like strong inflation — little confidence in long-term debt obligations. And over the medium-longer term, with minimal investment in industrial plant and equipment funded by bonds (and equity investment), that’s what it eventually ends up becoming. A sort of self-fulling prophecy, which ends up requiring extraordinary policy measures to combat, just as deflation and negative rates also required extraordinary measures.

This cyclicality gives us lots of great trading opportunities if we understand it. And creates the long-term volatility which causes (re)balanced portfolios to outperform. Deflation is only a “big” problem for those with unbalanced portfolios, particularly those funded with debt.

#88 squidly77 on 02.01.16 at 10:26 pm

To my post, I wouldn’t buy tonight, let it hit $29 BBL. Even then its a short term high risk.

#89 LL on 02.01.16 at 10:28 pm

…”There are additional dangers. Negative rates would wound the banks, which (for better or worse) are the pillars of our economy. They’d trash borrower confidence and the encourage hoarding of cash”…

What about banks bail out? Apparently in 2013 Harper signed something about that.

#90 squidly77 on 02.01.16 at 10:29 pm

Oil should hit $34 to $35 near the 26th or 27th of this month.

#91 cd on 02.01.16 at 10:32 pm

not part of the blog, but ted cruz beat the donald in iowa tonight (27.7 to 24.4 percent). weird.

#92 AK on 02.01.16 at 10:35 pm

#67 Tony on 02.01.16 at 9:10 pm

For most of them it’s about making money. Silver should be much the better of the two investments when gold breaks its 200 day moving average in the next week or so.
===================================

Hey Tony, I see that you are still talking smack.

Happy New Year..!!

#93 squidly77 on 02.01.16 at 10:35 pm

Let the destined to lose fools in Van and the big smoke play around with their $1,000,000+ homes. Take your TFSA money and have some sensible fun.

Does anyone out there truly believe that Oil gonna hang around in the $30 range?

#94 Smoking Man on 02.01.16 at 10:37 pm

William B Davis was an actor, Trying to figure out what the B was. Bill?

I’m Smoking Man, my tool tag, 10319

I’m from Nectonite. My mission , save humanity.

#95 LL on 02.01.16 at 10:39 pm

No it’s not Harper who signed something, it’s his Minister of Finance who proposed something like that (bail in/bail out..I don`t remember exactly) in the bidget I think.

Can it be possible we have to rescue banks if the s…hit the fan one day?

No bail-in will happen, and no consequence for depositors. — Garth

#96 LL on 02.01.16 at 10:41 pm

Correction: … “in the 2013 budget I think”…

#97 squidly77 on 02.01.16 at 10:42 pm

Oil not going to $50 BBL anytime soon, but it might hit $38 or $39 BBL within the next year. Oh and by the way, new Albertans ain’t seen nothing yet.

Know what I mean?

#98 Stoopid Idiot on 02.01.16 at 10:42 pm

I went back to work today for the first time in 6 weeks.
Mainly to get away from this blog… Come on Garth that was funny… Lol

#99 Network Admin on 02.01.16 at 10:50 pm

This is a good article on what could happen if NIRP is actually implemented http://wolfstreet.com/2015/12/16/perverse-unpredictable-effects-of-negative-interest-rates-mortgage-rates-soar-in-switzerland/

“Initially, interest rates on 10-year fixed-rate mortgages plunged to about 1%, with some quoted below 1% …

Swiss banks … jacked up mortgage rates since then, with the 10-year fixed-rate now at about 2% and the 15-year fixed-rate at about 2.5%.”

#100 ROCK BEATS PAPER on 02.01.16 at 10:57 pm

“No recession, and the Fed never moves and retreats. — Garth”

This is inaccurate (just like the idea of deflation in Germany, or did you mean dis inflation).

The FED retreated in 1937, and it was called “The Mistake” of 1937, a preemptive policy tightening in a fragile economic environment.

The similarities with extremely low yields today make it a very good comparison in some regards.

No comparison to eight decades ago. You gold guys are a hoot. — Garth

#101 45north on 02.01.16 at 10:58 pm

Cory: The party is over and normalization has begun.

yep

#102 cramar on 02.01.16 at 11:09 pm

#46, #63, #70 joe

Well “joe” I tended to agree (in a metaphoric sense) with your first posting that we have nothing major to sell to the world, even though it was a gross exaggeration. We have lots of interesting stuff we sell to the world—just nowhere near enough! But your continued rants are simplistic and juvenile. What the heck have you got against maple syrup?? And basements?

My first year of married life was spend in a basement apartment. We bought our first house in the 1970s and had it paid off about 15 years later. Since then… no mortgages, so this Canadian is not paying off for the rest of my life. Neither of our houses were/are particle board. Both brick. And I love basements.

I was shocked the times I have visited the U.S. and found no basements in houses. Must be a Canadian invention. I love my basement. I have a workshop, a movie area, my library, my gym, laundry area, and food cellar there. I’d be lost without a basement. Saves cluttering the rest of the house. Best housing invention ever. Maybe we should export basement technology to the rest of the world.

#103 Stoopid Idiot on 02.01.16 at 11:15 pm

WTH is your problem? Can’t get it with a Canadian girl and all frustrated? Have you tried to stop yelling?…. OMG Garth, we’re off the rails tonight… even Burning Man… sorry. Smoking Man is starting to make sense.

#104 squidly77 on 02.01.16 at 11:20 pm

No comparison to eight decades ago. You gold guys are a hoot. — Garth

So is that Mark guy, whats up with that guy? What a dolt he is.

And yeah, them precious (to them only) metal guys made total asses of themselves when they didn’t sell when Gold was over $1800 and Silver over $45, total greedy asses.

#105 lee on 02.01.16 at 11:20 pm

On BNN tonight Berman says, interest rates will stay low for decades to come. Time for you interest rates will rise people to put it to rest. Rates will stay low, prices of real estate will keep rising. Anyone whose investments depend on higher rates will suffer a slow melt.

Mr. Berman is a gasbag. — Garth

#106 For those about to flop... on 02.01.16 at 11:29 pm

#75 Stoopid Idiot on 02.01.16 at 9:45 pm
I went back to work today for the first time in 6 weeks.
Mainly to get away from this blog…

Lol…. I cried, thanks

/////////////////////////
I’m glad I made you laugh /cry.
I thought the boss might chirp me on that one but he knows I like to joke.

M41BC

#107 Dan from Richmond Hill on 02.01.16 at 11:30 pm

#102 cramar on 02.01.16 at 11:09 pm

Maple syrup is good, but nobody lives in basements in Europe…also, no stairs, especially for older people, I find this a lack of respect in Canada. Architects/developers here have a lack of imagination, or maybe is only greed. Smaller and smaller lots, taller and taller houses, on three levels…this is good life I suppose.

#108 White Crock BC on 02.01.16 at 11:34 pm

I wish I understood half of what Smoking Man said…

My head hurts.

#102 Cramer

so well said

For “Joe”

What do you think houses in the great USA are made of, hardened mud like in your country?

#109 Panhead on 02.01.16 at 11:44 pm

#70 joe on 02.01.16 at 9:28 pm

C’mon Joe give us s’moe ::)))

#110 Stoopid Idiot on 02.01.16 at 11:50 pm

And yeah, them precious (to them only) metal guys made total asses of themselves when they didn’t sell when Gold was over $1800 and Silver over $45, total greedy asses.

Right…. like you have a crystal Ball

#111 For those about to flop... on 02.01.16 at 11:57 pm

Being back at work without my iPad is a bit of a headache but I guess it’s better than putting up with Mark the Migraine…

M41BC

#112 rosholt on 02.01.16 at 11:59 pm

I still can’t believe how the wrinklies think that because they grew up in an age without computers and self driving cars that there HAS to be interest paid on loans.

The minister all but PROMISED that rates will go negative and we will be PAID to have debt. You oldies have been wrong for years and will continue to be.

I can spell out why – J-E-A-L-O-U-S

Because you had to pay interest you think we have to as well. Sorry, this isn’t the 70’s or 80’s. Get with the times oldies. That’s all I have to say about this.

#113 joe on 02.02.16 at 12:24 am

#102 CRAMAR — it is for you…to read below:

https://ca.finance.yahoo.com/news/flint-mich-not-alone-lead-canadian-pipes-too-003712138.html

REad on
Maybe because of the Lead in your water your are confused and don’t know what you exporting…………:))

How much your house is worth now with your Canadian dollar ????? did you calculated……??? you lost 30% on your dollar already…:))) ha ha ha

#114 Frank on 02.02.16 at 12:37 am

Sure the negative rates thing isn’t happening.

I think we have to stop looking day-to-day and step back. 2 months ago on this blog was the beginning of December and everything was looking like steady US rate normalization with Canada 6 months to a year behind. That’s looking less likely (not stopped but delayed).

So, sure the day-to-day reaction here is wild and reactionary but there is definitely a longer-term sentiment change happening.

It disappoints me because my housing costs too much (high mortgages lead to high rents too) and I was hoping for some relief in the 604.

#115 joe on 02.02.16 at 12:48 am

Falling loonie, rising food prices, selfie-obsessed PM – a look at Canada’s economic collapse
January 15, 2016 By Andrew Moran 2 Comments

For years, especially since the financial crisis of 2008/2009, Canadians have sneered at their neighbors to the south. Citizens of the Great White North have repeatedly mocked Americans for their economic and fiscal picture in addition to the nation’s foreign policy. And why shouldn’t they? $19 trillion in debt, $120 trillion in unfunded liabilities and expenditures, a part-time/temp/freelance jobs nation and an empire that is unsustainable. The American Dream, to Canadians, is just that: a dream.
But Canadians shouldn’t be so holier than thou and proud of their own economy. In just the last year or two, the Canadian economy has witnessed a horrific amount of destruction, perhaps even worse than the global economic collapse.

#116 Love my Kia on 02.02.16 at 1:06 am

#2 Mike T.
*******************
Thanks for the link to the Kia killer article, explains why my Kia is so reliable and affordable….allows me to max out on my TFSA.

#117 Big Dipper on 02.02.16 at 1:07 am

#33 palhalghost on 02.01.16 at 7:26 pm

#215 Smoking Man on 02.01.16 at 12:04 pm Great link Where are the men http://www.therebel.media/while_migrants_rape_their_way_across_the_continent_where_are_europe_s_men – ”

Looks like they just showed up….
http://www.thelocal.se/20160130/masked-marchers-beat-migrants-in-stockholm-centre

———————————–

And here I thought SM’s brain farts were his own. But no, he’s just a weak minded ditto head of a neo-fascist vomit source. The first link makes the narrative clear. European (all Western?) men have lost their balls and are unwilling and unable to protect “their” women. Molestations and rapes of European women by Muslims are the evidence.

The cause of these events? Feminism and left-liberals!

The neo-fascists miss the irony that the view that “their” women need protection, are also rooted in Islamic societies.

The rebel media is a bit light on what they expect the emasculated men to do, but a group of Swedish neo-Nazi thugs and hooligans knew exactly what was asked – and needed. About a 100 of them put on masks and start beating the snot out of Muslims as per the 2nd link.

It’s instructive to understand the mindset of the far right in Canada.

#118 pwn3d on 02.02.16 at 1:15 am

Mr. Berman is a gasbag. — Garth
———
Maybe, but demographics says low rates are the future, not just the past.

#119 pwn3d on 02.02.16 at 1:20 am

#99 Network Admin on 02.01.16 at 10:50 pm
This is a good article on what could happen if NIRP is actually implemented
—————–
Yeah, 5 year fixed at just over 1%. That would be hella sweet.

#120 Abolitionist on 02.02.16 at 1:26 am

Westjet just cancelled the Kelowna-Fort Mac direct flight.

Aaaaaand another 20% drop in Okanagan real estate.

#121 pwn3d on 02.02.16 at 1:28 am

#68 For those about to flop… on 02.01.16 at 9:19 pm

I am in an interracial marriage and am a dual citizen so if I was to bring some money in from Australia and buy real estate would that be ham( hot Australian money?)
I guess there are more ways to define it than I thought.
—————-
HAM is not just Chinese imo. It’s HK, Russia, Persia ect. I think it explains a lot of the questions about how incomes aren’t matching the house prices. That’s because these immigrants bring in a lot of cash from selling their own expensive real estate back home and buy a home here but do not get high paying jobs here. So it seems odd some guy with an 80k job has a million dollar house, but the house is already paid off so it’s easy to maintain that salary.

#122 Freedom First on 02.02.16 at 1:33 am

#84 Smoking Man

I have been tuned into the UCC for a few decades now. I am aware of the Nectonites and why they have refrained from direct contact with humans. They have been following us for centuries, and are alarmed at our lack of progress as a species. Humans are still too primitive, and they want us confined to our planet until we mature. We are a danger to ourselves and others. Nectonites are very disappointed in our species.

#123 No Canada, No on 02.02.16 at 1:52 am

Wait, the BOJ governor denied negative rates at Davos meting and then dropped the shoe.

So if BOC governor saying it would implement negative rates, well – you know, bankers are worst then lawyers. Watch what they do, not what they say.

Either way – Canada is doomed :)

#124 Kenchie on 02.02.16 at 2:01 am

#23 JackDracula on 02.01.16 at 7:08 pm
“Also, the number of Chinese coming to BC is drastically reduced:
http://www.vancouversun.com/news/permanent+residents+from+china+drops+half/11688716/story.html.

My opinion, is due to increased language proficiency requirements for most of the programs. That’s what drastically reduced Chinese immigrants. But increased immigrants from India and Iran.”

Persian chicks are pretty hot some times.

#125 Dukey Donuts on 02.02.16 at 3:16 am

“Poloz, though not necessarily a deep thinker, I doubt is a total stooge.”

On what do you base this assertion? Thus far into his comedy of errors the uneducated, untrained unprofessional appointed bureaucrat Mr Hollywood Poloz has proven himself to be the Clown Prince of Stooges.

#126 Leo Trollstoy on 02.02.16 at 4:36 am

cpc got out justin time. everybody knew the can economy was going down the tubes. hot potato passed successfully. perfect timing.

#127 My Life is a Pile of Shit on 02.02.16 at 6:15 am

“…people stop spending because things just get cheaper.”

By that logic, stores like Walmart and Canadian Tire should stop putting things on sale because people will stop buying when things get cheaper.

Why did buyers in Calgary start disappearing when prices declined? Because they knew real estate would cost less in six months. Hopefully you’re not as thick as you appear. — Garth

#128 saveday on 02.02.16 at 6:53 am

Whenever I read your blog, I hear the voice of Mike from Breaking Bad.

The badass one, right? — Garth

#129 hope & ruin on 02.02.16 at 6:56 am

I saw rob carrick interviewing an actuary, Fred Vettese on G&M site yesterday.

Says interest rates will stay low for 20 years. Not emergency rate low but we won’t see 6-7% for a long time.

An actuary. Wow. — Garth

#130 Herb on 02.02.16 at 6:58 am

#117 Big Dipper,

your mistake was assuming SM has a brain as well as a keyboard.

#131 Retired Boomer WI on 02.02.16 at 7:57 am

#102 Cramar

US Basements. Very UNcommon to find a home without a basement here in the northern tier great lakes states.

Some areas of the country they are rarely used, most likely because of the high water table (Florida for example).

Frankly, I would never want a home without a full finished, dry, basement.

(but that’s just me. Would never want a garage without heat, finished walls, water, and floor drains to keep the salt off the cars either). Anything less is just not civilized!

#132 zentao on 02.02.16 at 8:14 am

Negative rates were used in Switzerland in the late 70’s – you were charged money to deposit it. This was an attempt to try to keep their currency low; it failed. You can read about it here:
https://snbchf.com/wp-content/uploads/2012/10/JP-Morgan-on-Negative-Interests.pdf

The BOJ and EU central bank are not trying to keep their currencies low; they are trying to force capital “to do other things”. Good luck with that.

Interestingly Martin Armstrong predicted negative interest rates in 1992. This time is different – sovereign default. Should be interesting.

http://www.armstrongeconomics.com/archives/21820

#133 pbrasseur on 02.02.16 at 8:16 am

#28 Joe2.0 The global economy is broken. It’s that simple.

No it is not, it’s that simple.

What you are seeing is the end of a huge and senseless commodity bubble that distorted the allocation of capital all over the world. As a result money that was flowing towards the not so profitable energy and commodity sectors will become available for far more rewarding economic activities that depends on brain power and innovation. The main beneficiaries will be the developed parts of the world, mainly the US because of its unmatched brain power and capacity to innovate.

What you are seeing in a long overdue correction and the beginning of what will no doubt be an unprecedented economic boom.

“We fail to remember, for instance, that it was the internal combustion engine that gave oil its present value, and not the other way around.” – Warren Brookes, The Economy In Mind, p. 30

http://www.realclearmarkets.com/articles/2016/02/02/ignore_the_pundits_oils_collapse_is_the_economic_booom_101986.html

Canada in all of that? Well there you’re about right, it is somewhat broken, but still very far from Venezuela!

#134 Smoking Man on 02.02.16 at 8:32 am

#130 Herb on 02.02.16 at 6:58 am
#117 Big Dipper,

your mistake was assuming SM has a brain as well as a keyboard.
……………..

Making pals with socialists I see.

What did Hitler and Stalin have in common. What did the Z stand for in Nazi.

The word is Socialism. In the history of humanity when ever people are rounded up in mass and killed.

It’s all been perpetuated by the mind set and group think of a Socialist.

Individualist by their nature never have a gang big enough to bring harm on to others.

As an individualist, it is forbidden in our code of conduct to tell anyone who you should like and be buddies with or how you should think.

That characteristic is reserved solely for the Radical Socialists.

Look at the ferocity and frequency I’m attacked by Big Dipper. It’s the socialist mind set.

Now just think what happens when a few hundred of these beasts get together. So one always dies.

Chose your friends carefully.

#135 learningfromyou on 02.02.16 at 8:34 am

Thank Garth for your post.

The crappy Van house mentioned on this blog was shown today at CBC news for a price of 2.4M.

Yesterday the gas price was 98.9 cents/l, today 109.9 and the oil price keeps falling.
?any explanation for it apart of speculation?

#136 bigrider on 02.02.16 at 9:08 am

Meridian financial to offer 1 year fixed rate at 1.69% just in time for spring RE market.

Financial markets taking another dump, once again.

Yes, the shine will be coming off of the housing market in the GTA real soon…LOL.

#137 Rick on 02.02.16 at 9:11 am

Joe, glad to see your meds have kicked in.

#138 LL on 02.02.16 at 9:33 am

Now it’s Victoria!
Yesterday on the news they talk about RE in Victoria.

Same pattern as Vancouver: old house for sale = full buyers/bidding war = sold for the higher price ask to a local ..Chinese (I like them don’t worry!).

I guess Vancouver RE is too expensive.

#139 Smoking Man on 02.02.16 at 9:44 am

Maybe it’s the warm weather, but Ontario’s largest credit union is trying to kick off a new mortgage rate battle with Canadian banks.

Meridian said it will start today with a 1.69 per cent mortgage available on a one-year term to anyone in Ontario — a rate it claims is the lowest fixed rate product on the market.

The credit union also followed with an attack against its banking competitors for raising long-term rates last year in what was described as a falling interest rate market for bonds which mortgages are priced off.

http://business.financialpost.com/personal-finance/mortgages-real-estate/spring-market-kicks-off-early-with-first-shot-in-mortgage-rate-wars

#140 Doug in Goa, India (not London) on 02.02.16 at 9:44 am

I haven’t posted any comments as I have left London (YXU) behind for a while to do some travelling. Has anyone here missed me? I didn’t think so.

Now for my comment. Personally I don’t believe we’ll see negative interest rates on any loans and that is too bad. I would LOVE to borrow money at a negative interest rate to invest in REITs, ETFs, of stocks that pay a good yield, and as an extra bonus get paid to borrow the money! How many Rupies do I get?

#141 James2 on 02.02.16 at 9:45 am

#94 Smoking Man on 02.01.16 at 10:37 pm
William B Davis was an actor, Trying to figure out what the B was. Bill?

I’m Smoking Man, my tool tag, 10319
I’m from Nectonite. My mission , save humanity.
_____________________________________________

For a self confessed University of Google Graduate your an idiot. Google it Nectonite. Your mission is to be goofy!

William Bruce Davis

#142 Bottoms_Up on 02.02.16 at 9:49 am

#115 joe on 02.02.16 at 12:48 am
———————————
Complaining about a country that is $19 trillion in debt that has a yearly GDP of $19 trillion is equivalent to complaining about someone that earns $100,000 per year, owes $100,000 on their house, only has to pay the interest on their house debt, and is in fact immortal.

#143 Retired Boomer WI on 02.02.16 at 9:56 am

#125 Dukey

“Poloz, though not necessarily a deep thinker, I doubt is a total stooge.”

My assertion is based ONLY on the numbers of times he has been shown in the American Press.

Using that same criteria, we may assert that T2, Hillary, Donald T. Rump have all attained “Total Stooge Status.”

RB

#144 Evangeline on 02.02.16 at 10:07 am

#102 cramar

I grew up in a non air-conditioned house with a finished basement. On sweltering summer days, if not at a lake, the basement was the only tolerable place to be.

#145 Why oh why on 02.02.16 at 10:14 am

With the techincal recession we were in last year and a full-blown one possibly already with us, why oh why is the housing market not coming down? What will it take for the long melt to really begin? I am starting to think it will never happen!

#146 Evangeline on 02.02.16 at 10:17 am

#132 The BOJ and EU central bank are not trying to keep their currencies low; they are trying to force capital “to do other things”. Good luck with that.”

The way I see it is, people who finance their entire enterprises on credit, and who think cash is trash, now don’t have enough of it, so they are trying to squeeze it out of wherever they can find it.

#147 Jamie Dimon on 02.02.16 at 10:20 am

#128 saveday

You’ve clearly never heard Garth speak. He doesn’t sound badass….he just is badass. Thanks for the blog Gartho, keep it up.

#148 Garths Favorite is back... on 02.02.16 at 10:24 am

Get the horny virgins warmed up!

http://business.financialpost.com/personal-finance/mortgages-real-estate/spring-market-kicks-off-early-with-first-shot-in-mortgage-rate-wars

#149 cramar on 02.02.16 at 10:40 am

#113 joe on 02.02.16 at 12:24 am
#102 CRAMAR — it is for you…to read below:

https://ca.finance.yahoo.com/news/flint-mich-not-alone-lead-canadian-pipes-too-003712138.html

REad on
Maybe because of the Lead in your water your are confused and don’t know what you exporting…………:))

How much your house is worth now with your Canadian dollar ????? did you calculated……??? you lost 30% on your dollar already…:))) ha ha ha

——————————

Thanks for the link. My area was built later than the 1950s so no lead in pipes according to the article. Besides I never drink tap water anyway. But those poor people on crack buying the million dollar fixers, probably get lead pipes for their money.

What are you smoking? My house value is not tied to the American dollar! That is a non sequitur. And a really dumb argument. The absolute value of a house goes up and down vis–à–vis‎ anything. It is as dumb as me saying that the value has gone way up in relation to oil. I’ve tripled the house value in the last couple of years relative to barrels of oil. I’m rich!

Hey blog dawgs…how many barrels of oil is your house worth?

Besides, I don’t own my house for an investment. I own it as a place to live, and it conforms to Garth’s Rule of 90.

#150 Anthony Baxter on 02.02.16 at 11:38 am

TSX is down 215 points to 12,459. It looks like February-2016 is in a market funk like January 2016.

I remember that the TSX back in 2000 whch was the TSE reached a market high of 11,400 or so.

It is not much higher after almost 16 years by only 1,059 points or 8 to 9%.

Nobody (normal people, anyway) hold an index for 16 years without rebalancing to harvest profits along the way. They also collect dividends each and every quarter. Your statement is meaningless. — Garth

#151 Leo Trollstoy on 02.02.16 at 11:43 am

Complaining about a country that is $19 trillion in debt that has a yearly GDP of $19 trillion is equivalent to complaining about someone that earns $100,000 per year, owes $100,000 on their house, only has to pay the interest on their house debt, and is in fact immortal.

and can print their own money which happens to be the reserve currency of the planet

#152 fancy_pants on 02.02.16 at 12:08 pm

our money and banking system is flawed. Fractional reserve banking results in new money supply which always creates a minimum of 90% debt and 10% currency.

We can chase our debts with QE and low rates all we want, we will never catch up. print away all you want but the money supply to debt ratio will always get worse. we will always have less currency chasing greater debt.

The banking system has allowed us to dig our own financial grave. all they can do is extend the game as long as possible and that means lower rates to ZIRP to negative rates.

sit back with your rose colored glasses all you want. this is reality under such a system. period.

#153 Bottoms_Up on 02.02.16 at 12:09 pm

Someone should tell this woman that the cost of a zika test is a drop in the bucket compared to what she will be spending to diaper, clothe, daycare and raise her child:

http://www.ottawacitizen.com/health/pregnant+canadian+woman+refused+zika+test+after+brazil+trip/11690895/story.html

#154 NEVER GIVE UP on 02.02.16 at 12:13 pm

Nut and Yahoo is complicit in this by allowing illegal settlements.

http://republicbroadcasting.org/news/palestinian-kids-dodge-settler-attacks/

#155 Parsonage on 02.02.16 at 12:15 pm

@ Smoking man

Some science to support your ‘feminization of men’ theory.

http://www.naturalnews.com/052832_atrazine_endocrine-disrupting_chemicals_sex_changes.html

PS It’s not ALL psychological.

#156 Stoopid Idiot on 02.02.16 at 12:32 pm

#112 rosholt on 02.01.16 at 11:59 pm

Unreal… just unreal, That was a Jerry Springer moment. Gobsmacked

#157 Ponzius Pilatus on 02.02.16 at 12:37 pm

“harvesting profits”
Garth, I can tell, that deep down you are a farmer.
Probably consult the Farmer’s Almanac on perfect times for sowing and reaping.

#158 TurnerNation on 02.02.16 at 12:44 pm

My sht 1k USD FX account is holding up. Withdrew profit, trading original amount. Excellent for trading skill. Gut wrenching volatility and fake outs. One must hold conviction and hammer it hard building a position then rush to unwind. Makes equites seem so tame.

#159 Smoking Man on 02.02.16 at 12:46 pm

#141 James2 on 02.02.16 at 9:45 am
#94 Smoking Man on 02.01.16 at 10:37 pm
William B Davis was an actor, Trying to figure out what the B was. Bill?

I’m Smoking Man, my tool tag, 10319
I’m from Nectonite. My mission , save humanity.
_____________________________________________

For a self confessed University of Google Graduate your an idiot. Google it Nectonite. Your mission is to be goofy!

William Bruce Davis
………..

Another angry hostile liberal. Your kind just can’t play nice can you. You preach it to everyone but your exempt I see.

Perhaps one day you can a day off from your marxist training and attacks and contribute something of value to this pathetic blog.

Don’t think you got it in you.

#160 BobC on 02.02.16 at 1:01 pm

#151 Leo
Let’s say interest rates goes to only 4%. That’s an extra $400 billion in interest payments added to our $400+ billion deficit we have now.
More borrowing means more interest payments means more borrowing….
Add in the rising cost of the Paris agreement and the TPP and God knows what else.

#161 Pre-Retiree on 02.02.16 at 1:05 pm

#140 Doug in Goa, India (not London)

I missed you! I always enjoy your posts and was wondering what happened to you.
Maybe you are able to answer this question: I read contradictory advice about using currency-hedge ETFs in a TFSA. Some say go unhedged. Cannot figure the correct answer yet.
Have a good trip.

#162 Ronaldo on 02.02.16 at 1:12 pm

http://www.clairrockel.com/Properties.php/Details/655/8-west-21st-avenue-vancouver-bc#viewdetail

No signs of a drop in pricing here. House recently sold, 21st and Ontario on the border between East and West. 33 foot lot. Will be watching to see what happens to this one. Expect it will be another tear down.

#163 Craig Wesly on 02.02.16 at 1:15 pm

To Anthony Baxter

Actually, your comparison is not taking into account all the numbers. It is much worse for those that use a buy and hold strategy. You forgot to add all the compound interest easily doable at 6.5% government strip bonds over 16 years. It is 173% in total or 10.81% a year.

We both retired in 1991 at 50 years old after selling my business and bought 30 year government bonds at 11% giving us $100,000 a year interest and strip bonds back in 1989 at 10.6%. Those same RRSP’s and bonds come due come due in 2019 and 2020.

Our $125,000 RRSP’s are worth $2,567,815 in about 3 years. We will never see again 9%, 10% or even 6.5% interest rates again but the TSX and other stocks markets will be all down and never recover the 2007 highs or get close to 2000 year highs.

Look at Hang Seng Index 33,000 now 19,446, Japan Nikkei 225 Index 38,500 in 1990 now 17,750, FTSE 100 England 7,000 in 1999 and now 5,920, Taiwan Index in 2007 and now 8,131, Brazil Bovespa Index was 65,000 in 2007 and now 39,000, China Shanghai Index was 6,000 in 2007 and now is 2,750, 2008 Australia S&P 200 Index 6,300 now 4,980, Nasdaq was 5,150 in 1999 now is 4,541, South Korea Kospi Index was 2,028 in 2008 and now is 1,900, Singapore Strait Times Index was 2,500 in 2008 and now is 2,580.

These are all major stock markets down just their price levels, 10% to 40%. Even adding dividends but you must take away lost interest compounding of annual fees and inflation and break even at best but losses of 10% to 25% are the straight, hard numbers.

Why do we care about rates that were last available a quarter-century ago? Meanwhile investors in a balanced and globally-diversified portfolio have done quite well, despite the South Korean Kospi. — Garth

#164 not 1st on 02.02.16 at 1:32 pm

Mr. Berman is a gasbag. — Garth

This is very ‘trumpesque’ statement. As soon as you dont like another opinion bash the messenger.

Meanwhile ol yellen stress testing negative rates.

http://www.bloomberg.com/news/articles/2016-02-02/rates-less-than-zero-is-bank-stress-fed-wants-to-test-in-2016

#165 Ronaldo on 02.02.16 at 1:37 pm

#150 Anthony Baxter on 02.02.16 at 11:38 am

”TSX is down 215 points to 12,459. It looks like February-2016 is in a market funk like January 2016.

I remember that the TSX back in 2000 whch was the TSE reached a market high of 11,400 or so.

It is not much higher after almost 16 years by only 1,059 points or 8 to 9%.”
————————————————————–
Nobody (normal people, anyway) hold an index for 16 years without rebalancing to harvest profits along the way. They also collect dividends each and every quarter. Your statement is meaningless. — Garth
—————————————————————-

TSX reached 10,000 for the first time in March of 2000. At that time Nortel made up 35% of that. Major bubble. TSX should likely have only been 7500 if you discount for the bubble.

#166 MF on 02.02.16 at 1:48 pm

#154 NEVER GIVE UP on 02.02.16 at 12:13 pm

Hey pal,

I haven’t heard anything from people like you about the dozens of Israelis being hacked. Or the cafe shooter.

Not a peep.

MF

#167 MF on 02.02.16 at 1:52 pm

#158 TurnerNation on 02.02.16 at 12:44 pm

I do some paper trading fx for fun and it is exactly as you say,

Crazy volatility. Must be gut wrenching with real money involved.

MF

#168 Shawn on 02.02.16 at 1:58 pm

Congratulations on Investment Success

#163 Craig Wesly on 02.02.16 at 1:15 pm said:

We both retired in 1991 at 50 years old after selling my business and bought 30 year government bonds at 11% giving us $100,000 a year interest and strip bonds back in 1989 at 10.6%. Those same RRSP’s and bonds come due come due in 2019 and 2020.

*****************************************
Well done. Sincere congratulations.

I don’t agree with your dismal outlook for the TSX but undeniably, you chose well in 1991 buying bonds at high yields reflecting high government deficits of the day and high inflation expectations.

I would certainly not go all-in (or even any-in myself) on bonds today at very low yields, but to each his own.

#169 SWL1976 on 02.02.16 at 1:58 pm

#151 Leo Trollstoy

Complaining about a country that is $19 trillion in debt that has a yearly GDP of $19 trillion is equivalent to complaining about someone that earns $100,000 per year, owes $100,000 on their house, only has to pay the interest on their house debt, and is in fact immortal.

and can print their own money which happens to be the reserve currency of the planet

————————–

They have the world reserve currency for now…

But, but, but, that will never change. Right?

Just like we’ll never see negative intrest rates. Right?

It took America over 2 centuries to accumulate their first trillion dollars of debt. Oct 22, 1981

It then only took less than 3 decades to reach 10 trillion in debt. Sept 30, 2008

The latest trillion has taken just 14 months to accumulate

Can you see where this is going…

Or do you need a chart?

When your children have children, the US dollar will still be the global reserve currency. — Garth

#170 fancy_pants on 02.02.16 at 2:02 pm

curious simulations? not.
http://www.bloomberg.com/news/articles/2016-02-02/rates-less-than-zero-is-bank-stress-fed-wants-to-test-in-2016

#171 Smoking Man on 02.02.16 at 2:10 pm

#167 MF on 02.02.16 at 1:52 pm
#158 TurnerNation on 02.02.16 at 12:44 pm

I do some paper trading fx for fun and it is exactly as you say,

Crazy volatility. Must be gut wrenching with real money involved.

MF
…………………

This will all lead to drunken weekends in casinos, once you get the Gambling bug, it’s hard to shake.

#172 Dups on 02.02.16 at 2:19 pm

The market is all red or it is all green. It makes no sense any more. All up or all down, globally too….

#173 Smoking Man on 02.02.16 at 2:33 pm

So Microsoft is a big Hillary and Rubio campaign contributor.

Their software was counting the votes that had glitches all night.

Rubio who is the MSM’s Boy miraculously jumped from single digit support to double digit support over night.

Even exit polls put Trump way ahead.

Like I always say you can’t beat the machine.

Tin Foil Fedora, You Bet
………………….

Dave McCay CEO of RBC some of his comments about Davos.

7. Why is populism surging?

No two words hung more heavily in the Davos air than “Donald Trump”. The Republican frontrunner didn’t seem to have many fans there.

But a bigger concern was the trend he personifies: the rise of populism. Whether it’s because of economic stagnation, terrorism, or a sense of helplessness in a digital and global world, people in many countries are understandably concerned and turning inward. The economic consequences of this are sobering. Much of the talk at Davos revolved around the tightening of borders, particularly in Europe, and a quiet shift away from the open flow of people, goods, services and data. If the global village shrinks, we will all be weaker.

#174 TRT on 02.02.16 at 2:37 pm

Sit down.

YVR Vancouver average house price sets record!! Now $1.83 million.

$200,000 price increase IN 30 DAYS!!!!

Wow.

Damn locals. Lol

#175 Mark on 02.02.16 at 2:47 pm

“YVR Vancouver average house price sets record!! Now $1.83 million.

$200,000 price increase IN 30 DAYS!!!!

You do realize its because the transactional activity is narrowing to an increasingly small chunk of the high end, and you won’t actually find an actual piece of property in Vancouver that increased by $200k in 30 days, right?

Realtor transactional prices != “house prices”. All that the Realtors’ headline number tells us is the average of the houses that the Realtors happen to be facilitating transactions in at a given time. The sales mix is very important here, and most available evidence indicates that it has moved significantly to an increasingly narrow segment of the very high end of the market. Someone looking to unload their dumper of a house thinking that it appreciated by anything over the past few years is likely to be quite disappointed in most of Canada on such account.

#176 Bram on 02.02.16 at 2:48 pm

#142 Bottoms_Up on 02.02.16 at 9:49 am
Complaining about a country that is $19 trillion in debt that has a yearly GDP of $19 trillion is equivalent to complaining about someone that earns $100,000 per year, owes $100,000 on their house, only has to pay the interest on their house debt, and is in fact immortal.

Nope, absolutely not.
The US government does not ‘earn $19T per year.’
Tax revenue is $3.3T.

So it is similar to someone making $100,000 per year with a $576,000 debt but with the catch that he spends MORE THAN $100K of his income every year, so the debt grows.

Bram

#177 Steerage Bilge on 02.02.16 at 3:00 pm

#173 Smoking Man on 02.02.16 at 2:33 pm

So Microsoft is a big Hillary and Rubio campaign contributor.

Their software was counting the votes that had glitches all night.

Rubio who is the MSM’s Boy miraculously jumped from single digit support to double digit support over night.

Even exit polls put Trump way ahead.

Like I always say you can’t beat the machine.

Tin Foil Fedora, You Bet
………………….

Dave McCay CEO of RBC some of his comments about Davos.

7. Why is populism surging?

No two words hung more heavily in the Davos air than “Donald Trump”. The Republican frontrunner didn’t seem to have many fans there.

But a bigger concern was the trend he personifies: the rise of populism. Whether it’s because of economic stagnation, terrorism, or a sense of helplessness in a digital and global world, people in many countries are understandably concerned and turning inward. The economic consequences of this are sobering. Much of the talk at Davos revolved around the tightening of borders, particularly in Europe, and a quiet shift away from the open flow of people, goods, services and data. If the global village shrinks, we will all be weaker.

Isn’t smokingman on Microsoft’s speed-dial..??

#178 TurnerNation on 02.02.16 at 3:06 pm

Smoking man…casino losses not tax deductible. But there is/was some debate over FX and CFD losses/gains as that too.
I’ve only once been in casino…clients took us there. On Indian land in Calgary, people can smoke and drink on the floor.

#179 MF on 02.02.16 at 3:10 pm

#171 Smoking Man on 02.02.16 at 2:10 pm

Ha

That is only if there is actually money left over to use at the casino, because you did it the smoking man way with (minimum) 7 Twitter feeds going at all times. Ear to the pavement. I found I was always piggy backing or scalping ongoing trends which changed easily. You really have to anticipate. It’s crazy so much respect.

The paper trading fx programs are hilarious. The one is used gave me a huge number to play with. A random number like $854,234.92. Mame one good trade and you
feel like you can make money easily.. That’s how the brokerages get you. I remember you said here that it takes years of training. It’s true.

MF

#180 Shawn on 02.02.16 at 3:15 pm

Need a U.S. Government Debt Chart?

SWL1976 said:

It took America over 2 centuries to accumulate their first trillion dollars of debt. Oct 22, 1981

It then only took less than 3 decades to reach 10 trillion in debt. Sept 30, 2008

The latest trillion has taken just 14 months to accumulate

Can you see where this is going…

Or do you need a chart?

**************************************
Debt may be increasing too rapidly. It probably is. But the proper chart to show that is a logarithmic chart. And better yet one that includes growth in GDP for context.

So, yes, I need a (log scale) chart, please.

A log chart will show if the percentage rate of debt is increasing and it will also be useful to see it in relation to GDP.

Your mission, should you choose to accept it, is to find or create such a chart.

#181 Doug t on 02.02.16 at 3:19 pm

Sit tight folks – what is unraveling in China is going have major ripple effects around the globe – they will continue devaluing their currency this year and add to the shit show that has become the world economy

#182 The Other Chris on 02.02.16 at 3:25 pm

@174 TRT on 02.02.16 at 2:37 pm

At that rate of increase, the average price of a single detached home in Vancouver will hit $5 million in only 16 months.

The rate of increase might slow down a little, but I don’t think it’s entirely out of the realm of possibility for average prices in Vancouver to cross the $5 million mark by mid-2018.

That was funny. — Garth

#183 Rexx Rock on 02.02.16 at 3:29 pm

Global recession,commodities down,currency wars,zirp.All good signs the world’s economy is getting better.Go ahead and stay the course and go long on the stock market.You will get slaughtered,go short and reap the rewards of the tanking stock market.Deja vu ,2008 baby!!!

#184 Godth on 02.02.16 at 3:46 pm

Welcome to the new normal: broken.

#185 James2 on 02.02.16 at 3:47 pm

#159 Smoking Man on 02.02.16 at 12:46 pm

#141 James2 on 02.02.16 at 9:45 am
#94 Smoking Man on 02.01.16 at 10:37 pm
William B Davis was an actor, Trying to figure out what the B was. Bill?

I’m Smoking Man, my tool tag, 10319
I’m from Nectonite. My mission , save humanity.
_____________________________________________

For a self confessed University of Google Graduate your an idiot. Google it Nectonite. Your mission is to be goofy!

William Bruce Davis
………..
Another angry hostile liberal. Your kind just can’t play nice can you. You preach it to everyone but your exempt I see.
Perhaps one day you can a day off from your marxist training and attacks and contribute something of value to this pathetic blog.
Don’t think you got it in you.
__________________________________________
Marxism is an undoing of the class level and fundamentally can not and will not work in this world. Friedrich Engels and Karl Marx developed this philosophy in the 19th century and it forms the foundation of communism.
Liberal ideology not a single drop of liberal blood coursing my veins.
Angry and hostile, nope just observant. You tell us that everything can be found on google, no teachers needed, schools are for losers, doctors are overpaid idiots and so on. Then you throw out a question that my five year old daughter could answer by using a computer. Once in a while your incoherent rants actually make sense. Then you go off on your Nectonite crap with abundant nepotism to alien stuff and the wheels fall off of your apple cart Johnny boy! If your here to save humanity then we are all doomed!

#186 Godth on 02.02.16 at 3:54 pm

When your children have children, the US dollar will still be the global reserve currency. — Garth

You are Godth…your mama misnamed you.

#187 Godth on 02.02.16 at 4:02 pm

btw, what would this mean? Epic?
http://www.bloomberg.com/news/videos/2016-01-05/will-saudi-arabia-de-peg-from-the-dollar-

https://www.youtube.com/watch?v=Pqnfnqi2xW8

#188 Chris in Nanaimo on 02.02.16 at 4:16 pm

The machine is winning Smoking Man…..

Iowa ‘chooses’ Clinton & Cruz….

#189 Smoking Man on 02.02.16 at 4:33 pm

The machine is winning Smoking Man…..

Iowa ‘chooses’ Clinton & Cruz…
……………….

It always does..

#190 S.Bby on 02.02.16 at 4:36 pm

Extreme hockey stick in YVR detached. Is this the blow off end?

#191 ROCK BEATS PAPER on 02.02.16 at 4:46 pm

“No comparison to eight decades ago. You gold guys are a hoot. — Garth”

The comparison with 8 decades ago is the closest to today. That has nothing to do with gold. It has to do with interest rate levels, and FED monetary policy.

In addition, I am not a gold guy, just interested in any class that will make money. Your emotions about the gold sector are surprising.

___________________________________________

“So is that Mark guy, whats up with that guy? What a dolt he is.”

And yeah, them precious (to them only) metal guys made total asses of themselves when they didn’t sell when Gold was over $1800 and Silver over $45, total greedy asses.”

Mostly gold is on the balance sheet of Central Banks. I have never met Mark, so I would not judge him. Gold in Canadian $ was one of the best performing asset classes last year and is the best this year in all currencies showing that it does operate as a hedge. It is not useful to the greedy.

As for not selling at the top… Think Nasdaq, Real estate, S&P 500…that happens with all asset classes. People will not sell German bunds and British Gilts at 700 year highs!

#192 Smoking Man on 02.02.16 at 4:48 pm

#185 James2 on 02.02.16 at 3:47 pm
#159 Smoking Man on 02.02.16 at 12:46 pm

#141 James2 on 02.02.16 at 9:45 am
#94 Smoking Man on 02.01.16 at 10:37 pm
William B Davis was an actor, Trying to figure out what the B was. Bill?

I’m Smoking Man, my tool tag, 10319
I’m from Nectonite. My mission , save humanity.
_____________________________________________

For a self confessed University of Google Graduate your an idiot. Google it Nectonite. Your mission is to be goofy!

William Bruce Davis
………..
Another angry hostile liberal. Your kind just can’t play nice can you. You preach it to everyone but your exempt I see.
Perhaps one day you can a day off from your marxist training and attacks and contribute something of value to this pathetic blog.
Don’t think you got it in you.
__________________________________________
Marxism is an undoing of the class level and fundamentally can not and will not work in this world. Friedrich Engels and Karl Marx developed this philosophy in the 19th century and it forms the foundation of communism.
Liberal ideology not a single drop of liberal blood coursing my veins.
Angry and hostile, nope just observant. You tell us that everything can be found on google, no teachers needed, schools are for losers, doctors are overpaid idiots and so on. Then you throw out a question that my five year old daughter could answer by using a computer. Once in a while your incoherent rants actually make sense. Then you go off on your Nectonite crap with abundant nepotism to alien stuff and the wheels fall off of your apple cart Johnny boy! If your here to save humanity then we are all doomed!
…………

Well no one is perfect.

UCC tells me your a teacher, so I understand your animosity. I’ve been pretty harsh on the profession and will never apologies for it.

Why? it’s all the emails from teachers that encourage me to keep it up. They hate being forced to push the insane curriculum and social engineering most don’t believe in.

Nectonite shit comes out when I drink, my most happiest time of the evening.

On a good note, your just pissed at my immaturity, I can live that, just glad your not a psycho commie.

#193 bill on 02.02.16 at 4:49 pm

#185 James2 on 02.02.16 at 3:47 pm
maybe its time he learned of the real origin of the ‘human’ species….

”The Golgafrinchans are a race of humanoid beings who realized that there were three types of beings on the planet of Golgafrincham. Thinkers, Workers, and the strange Middle Class.

The middle class comprised of hair dressers, lawyers, telephone sanitizers, and other such “worthless jobs.”

The Thinkers built a ship and told the third class that the planet was to be consumed by a “giant space goat.” So they built a ship and sent off their third class. Telling them that they would follow soon. The Third class ended up on earth, “mucking up the program to determine the ultimate question.” While the rest of the classes were killed off by a raging disease contracted from public telephones. Golgafrincham itself soon after was consumed by a giant space goat. ”

#194 Bram on 02.02.16 at 4:49 pm

#180 Shawn on 02.02.16 at 3:15 pm
Your mission, should you choose to accept it, is to find or create such a chart.

You are welcome!

http://www.wolframalpha.com/input/?i=us+debt+%2F+us+gdp

Bram

#195 TurnerNation on 02.02.16 at 4:54 pm

I trade Forex on my phone. Even down in the PATH. Might as well while I still have the mark.

#196 Godth on 02.02.16 at 5:00 pm

#185 James2 on 02.02.16 at 3:47 pm

Marx was first and foremost a critic of capitalism and he’s being proven more correct than not. Ouroboros; it’s eating itself in a catabolic collapse now. There are no new continents to conquer.

#197 jess on 02.02.16 at 5:01 pm

$16bn-a-year in Google postbox: Inside giant’s secret Bermuda haven
January 31, 2016 9:32pm
Pete Samson and Isla HarveyThe Sun

“p o box 666”
http://www.heraldsun.com.au/technology/16bnayear-in-google-postbox-inside-giants-secret-bermuda-haven/news-story/3c4f68e876ea5e1a64eefb7270342006

#198 Leo Trollstoy on 02.02.16 at 5:12 pm

When your children have children, the US dollar will still be the global reserve currency. — Garth

yup

#199 Pete Smith on 02.02.16 at 5:17 pm

To #168 Shawn

If you asked most people they would never believe the TSX 300 at only 12,442 in February-2016.

The same goes with interest rates. Even a diversified portfolio of ETF’s, equities, REIT’s, bonds etc. will have a hard time getting close to 4% to 5% a year net of fees over the next 10 years.

The only way this can happen if bond yields like the U.S.10 year gets to 3% at minimum due to a real stronger U.S. economy and not just a short term tick up that has happened 3 times since 2010.

Not what I’m expecting. — Garth

#200 Godth on 02.02.16 at 5:18 pm

#198 Leo Trollstoy on 02.02.16 at 5:12 pm

Tell me more:
https://www.youtube.com/watch?v=K20fm2166WM

https://www.youtube.com/watch?v=VZ-IR1DHA5E

#201 SWL1976 on 02.02.16 at 5:36 pm

#198 Leo Trollstoy

When your children have children, the US dollar will still be the global reserve currency. — Garth

yup

——————————

Based on what logic or evidence?

Pure speculation.

Based on what I see and the actual numbers I provided it looks to be a loooooooooooooooong shot

I will admit though, it will not go down without an epic battle. Basic human rights and dignity mean nothing to central bankers and the creators of currency

Welcome to the machine

#202 Godth on 02.02.16 at 6:01 pm

#180 Shawn on 02.02.16 at 3:15 pm

Just how thick are you?
http://www.generationaldynamics.com/ww2010/g131020b.gif

Every time you look at your children you should say:
https://www.youtube.com/watch?v=a5d9BrLN5K4

#203 Nemesis on 02.02.16 at 6:03 pm

“When your children have children, the Confederate US dollar will still be the Continental global reserve currency.” — HonGarth

#FunnyYouShouldSayThat… #That’sExactlyWhatTheySaid…

https://youtu.be/__kQX12S9YI

#204 LL on 02.02.16 at 6:13 pm

#140- Doug in Goa, India (not London) on 02.02.16 at 9:44 am

Lucky guy! Have an interesting trip!

#205 Chris on 02.03.16 at 11:45 am

An actuary. Wow. — Garth

Says the guy who writes a blog… If that’s the best reason you can come up with for disagreeing with someone else’s point of view, it’s pretty clear who is more likely correct.

Gee, a blogist slur! I actually have a few other notches on my holster, Chris. Thankfully being an actuary ain’t one of them. — Garth