The fallout continues. More than a hundred thousand Canadians a day are applying for EI. Over 2.1 million so far, or 11% of the entire workforce. In the States 100,000 were expected to lose jobs in March. Over 700,000 did. And last month was but the start. It’s a mess. Turning off the economy to stem a pandemic has no good outcome.

A few more snapshots, then a look forward…

  • Close to 300,000 requests for mortgage deferrals now. Each of the Big Five banks has been getting about ten thousand a day. It’ staggering how many folks bought houses yet survive paycheque-to-paycheque.
  • Airbnb is disintegrating. In downtown Toronto (and Vancouver) scores of condos are hitting the rental market or being listed, even when there are no buyers. Nobody’s booking short-term rentals anymore. Cash flow is gone. It’s estimated as many as 7,500 units in Toronto alone could leave Airbnb and enter the rental pool, pressuring lease rates lower. There are few travelers and those on the road would rather stay in a hotel where management can afford cleaners and buckets of bleach.
  • One towering condo building in DT Toronto now has 110 units on the market. “This,” says a seasoned 416 agent, “has never happened.”
  • Realtors in Vancouver and Toronto just released March numbers. Gangbusters until the 15th, crickets afterwards. “Uncertainty surrounding the outbreak’s impact on the broader economy and the onset of the necessary social distancing measures resulted in the decline in sales since March 15,” says the Toronto board. “Sales figures for April will give us a better sense as to the trajectory of the market.” You bet they will. Wear a helmet.
  • Don’t work in one of those industries or services the politicians have deemed ‘essential’? Then don’t bother applying for a mortgage. You won’t get one.
  • RBC says the housing market across Canada will see a 30% sales drop this year, with lower prices.
  • Have you seen what’s happened to Robson Street? This is Vancouver’s busiest drag, home to moisters and hipsters, once famously hosting a Starbucks every few hundred feet. “Community life that has been killed by high rents, expensive real estate, property taxes and now Corona,” says Joe. Here’s what he means

Well, there’s more, but you get the point. This is why governments have opened the floodgates, thrown out their budgets and are flowing tens of billions into society. Because so many of us are prevented from working, or even going outside, the personal financial consequences are dire. Thus we have an EI overload, the two-grand-a-month emergency benefit, 75% payroll subsidies, industry bailouts, mortgage deferrals and states of emergency across the nation. More to follow.

April’s jobless numbers will surge. So will the virus stats, especially in the US. The meme is growing that Trump miscalculated the pandemic, tried to politicize it, then was trampled by the consequences. It’s possible he’ll go into the November election with the same 10% unemployment rate (or more) that Obama inherited from Bush. Mr. Market is starting to fret about that, but relieved Joe Biden is the opponent, instead of that wild-eyed commie from Vermont.  Sigh.

Politics aside (the virus is also keeping T2’s minority government alive as Tories nix their leadership contest), what should we expect in the months to come? Here are some probables…

  • There’s no way the Bank of Canada will raise rates in 2020 or 2021. Maybe the year after. So a variable-rate loan makes more sense now than it has in some time.
  • Real estate markets in Toronto, Vancouver, Montreal and pretty much everywhere outside of Alberta won’t revive until the fall. Yup, six months. The Royal Bank sees a huge 40% surge in home sales in 2021.
  • Airbnb is done. This should mean more rental units hitting the big cities long-term along with falling lease rates. Tenants are in the driver’s seat. Bad time to be a landlord, but April 1st showed you that.
  • Condos are crippled. Added to the collapse of the short-term rental market is the ickiness factor. Memories of this virus will be long and indelible. Lots of people want nothing to do with germy elevators, communal living, common hallways and garbage rooms or exercise areas coated in bodily fluids. Values will fall.
  • A federal deficit exploding from $24 billion to $180 billion is historic. But here we are. It could hit $200 billion if the economy stays turned off until, say, October. This will be the Mother of All Excuses for a suite of tax increases in the next two or three budgets. Start thinking about strategies now. This pathetic blog will have more to say on that in the days to come.
  • Recovery? It’s a given. Only the timing is in question. Normal life may not be normal for a long while, but the pent-up desires will be huge, and take place in an atmosphere of public relief and historically cheap money. Governments at all levels will want you to spend your rear off in order to generate economic activity and sales tax revenue.
  • Your portfolio will revive. Demand was turned off, and will be turned back on. Markets may plumb new lows and fluctuate dramatically, but if your stuff is balanced and diversified, the outcome is known. This is not the prelude to a depression. Turn off BNN. Definitely turn off CNN. Don’t even think about watching CBC. Virus porn.
  • So, simple. You just need to stay alive until September!

In that vein, I now give you free access to all the infectious disease control experts, public health authorities, pandemic modelers and renowned epidemiologists in the comments section. Enjoy.



Tens of thousands of Canadians are out of the country after vacationing. Most are stranded now. No flights. Closed borders. And a mess of them are running out of money. Maxed credit cards. No savings. No reserves. About to be tossed from hotel rooms they cannot finance.

Ottawa is bailing them out. The holiday folks are being given $5,000 loans to pay for lodging and food.

As detailed here yesterday, up to a million tenants have indicated they cannot pay rent. How many withheld payments yesterday is unknown. But May 1st won’t be any better. No savings. No reserves.

Governments are bailing them out with a $2,000-per-month CERB payment. Applications open Monday. The web site will be flooded, mercilessly. Meanwhile claims for EI have been at unheard-of levels. More than historic. Off the charts. People are desperate for money. No savings. No emergency funds.

In the last seven days alone over 60,000 homeowners besieged a single bank asking for mortgage payment deferrals. Multiply that by five and you can see what’s happening – a quarter million people a week who have houses but lack the money to pay for them. No savings. No contingency. No funds. Just debt.

This week came word half the businesses in Edmonton will soon fold. A major hotel in Halifax has reduced its staff from over 100 to ten. Occupancy in Toronto major’s hotels is less than 5%. Restaurant revenues have declined 100%. Says the Canadian Chamber of Commerce: “We are very concerned that without a significant increase in the assistance made available to businesses to keep their employees on the payroll, we are going to see massive numbers of layoffs and tens of thousands of small businesses going out of business entirely. It will mean that when we come out the other side of the tunnel there won’t be a business for employees to go back to.”

Government’s bail-out will cost $71 billion as it underwrites 75% of payroll costs. But businesses fret they cannot come up with the other 25% to qualify. There are calls for a hundred per cent subsidy. No retained profits. No cash flow, no business. No contingency.

The latest Nik Nanos survey finds one in five people are likely to miss a major payment this month – mortgage, rent or credit card. Among those under 34, the number jumps to almost a third. No rainy day or emergency fund. No plan. Paycheque-to-paycheque.

In response, government will be increasing spending as never before and is on track for a deficit of $180 billion in a single year – 220% above what Conservatives coughed up to get through the 2008-9 crisis. Almost all of this money will go directly to individuals. Opposition leaders say it’s too little, too slow. Parliament is coming back to authorize even more spending.

Yes, unprecedented times. Nobody thought two months ago the economy would be turned off. In fact a lot of us – perhaps the majority – believed adversity would never come. We were immune. There was no reason to be ready for it. So we were not. What we made, we spent. What we lacked, we borrowed. What we wanted, we bought.

Does it sound elitist, smug and unsympathetic to talk about debt and financial promiscuity at a time like this?

You bet. So not a single leader dares do it. Certain. Political. Death. Government’s avowed role now – after preventing people from working, paying their bills and supporting their families – is to paper it all over with borrowed billions. In the next three months there’s no option. Let ‘er rip. But the long-term consequences of our collective profligacy will be, well, Biblical.

Come September, Dog willing, we’ll all be back at it. Remaining stores and businesses will be open. A few more planes flying. Brave people traveling. Offices functioning. Houses being shown, bought and sold. Financial assets restored. Double-digit unemployment nibbled lower as the recession recedes. The subsidies, grants, loans, gifts and deferrals will be trailing away. But federal government debt will be higher by as much as 30% – in less than a year. Canada’s debt-to-GDP ratio will crest 100%. The next budget could usher in toe-curling ‘emergency’ tax increases. Ironically, those who had savings, reserves, emergency funds, retained profits or prudence will be in the crosshairs.

This episode’s painful. Scary. Terrifying. A virus 95% of victims recover from has nonetheless created public panic. Media has convinced the bulk of the population they’re at imminent risk of death.

Overwhelmed health care workers have emerged as heroes. Thank you, thank you.

May every deceased patient and their family rest in our thoughts and hearts. This is awful. Loved ones were swept from you in a storm. Undeserved and tragic.

But when this is done, Canada, we need to have a serious talk.