How close?

The events of this time are historic, so remember them.

The American government has admitted that unless it spends $700 billion – an unprecedented gamble for taxpayers – there’s a good chance of a new Depression. For those unsure of what this means, it is runaway deflation. The value of money soars as the value of commodities plunges.

Wages fall as prices collapse, but debt remains static. That means financial obligations become harder and harder to meet, leading to widespread defaults, personal bankruptcies, foreclosures and bank failures. The whiff of this is already in the air. Bear Sterns, then Lehman, then Merrill, then almost AIG, along with Freddie and Fannie. This string of disasters is unprecedented since the 1930s, as is the current misery in the American housing market.

If the gamble to the south of us does not work, then the results will be worse than if Washington had not even tried. The government’s ability to manage the economy will have been discounted, the greenback will fall, foreigners will question the value of American paper, Wall Street will plummet, the financial sector will be decimated and it will take a decade for the damage to be even slightly repaired.

In such a scenario, Canada would be affected instantly – as it was in the Thirties. Canadians, after all, are just as indebted as Americans, with just as little saved, and just as much of their equity sitting in residential real estate. In fact, we are even more susceptible to grief, with a commodity-based economy and most of our product flowing south.

So, will the bailout succeed?

As I write this, it is unknown, although the massive rally on stock markets Friday showed many traders think it will. But then, they believed in Bre-X, too. Yeah, and Nortel and Cisco. US lawmakers are working hard to approve this deal before the bright light of public scrutiny can be shone from below. There are many who rightly question why the blood should flow on Main Street, amid foreclosures and erased middle class wealth, while the manipulators on Wall Street get bailed.

Rest assured, the entire governmental machine will be backing this rescue, including Obama and McCain. Trillions of dollars are now at risk, since Bush and Paulson have rolled the dice so dramatically.

Odds are there will be no immediate worsening of the situation, and a pervading sense the worst is in the rear view mirror. Bay Street economists will dance hard. Central bankers will pray. Political leaders will hope against hope collapse does not happen on their watch. Almost nobody will be telling citizens the truth. As a result, those Canadians even paying attention will breathe a little sigh of relief, and continue on as they have in the past.

God rest their souls.

183 comments ↓

#1 $fromA$ia on 09.21.08 at 10:39 pm

Well gold is bouncing back.

Garth, again tell me… will you change your view on GOLD?

Gold’s got to go up as inflation is no doubt going to hit us hard, high oil prices or not somethings got to give.

Care to speculate?>

That’s exactly it – speculation. You can’t eat it, burn it, live in it or even buy anything with it. It will gyrate wildly, posing buy-sell opportunities, but long term, it’s just shiny stuff. — Garth

#2 $fromA$ia on 09.21.08 at 10:41 pm

I am holding assets in cash, I think it is safer than R.E.

Gold looks like it could be more stable in tough times ahead.

Again, care to speculate?

#3 observer on 09.21.08 at 10:48 pm

I just don’t understand, perhaps it’s my own ignorance. I’ve been watching the various financial broadcast programs and I’m dumb founded at how quickly it appears everyone is ready to spin a full 180 and generalize that we are now going to be ok. The Feds have saved it and we can go back to business as usual. I must truly be missing it, for it appears to defy all logic.

#4 Jim_s on 09.21.08 at 10:51 pm

The fiasco is far from over. The nail in the coffin is home prices and the personal home ATM machine falling hard and fast. More debt by the gov’t is being thrown at normal market forces: Over valued housing cannot last, but debt can.

Good luck to those that think their spec house for sale now is going up in value. Good luck to those that plan on selling their home for retirement equity.

There is no question that housing will fall in Canada as time goes on, because debt accumulation cannot turn into productivity overnight. The US is our largest customer…. duh! If their economy falters, so too will ours. We may not have the debt problems in our banking system (although I’m convinced it’s worse than the big 5 are admitting), but housing certainly will plunge.

->

#5 SoWhat on 09.21.08 at 11:09 pm

Garth… This question is for you and I really would like to hear an answer.

So What..? really we need to work on a rescue plan, reading this I can’t figuer out a way to protect whatever equity I have, if RE is toast and so is commodites i.e. Gold and silver coins and so is the finicial sector and banks…then what if every and each form of equity and wealth is going down..this can’t be right, there must be a way out.

As values fall, cash rises. The answer should be obvious. — Garth

#6 outtacontrol on 09.21.08 at 11:15 pm

“Gold’s got to go up as inflation is no doubt going to hit us hard, high oil prices or not somethings got to give.”

$19 Trillion wiped from stock markets this year

The Fed/Treasury cannot out-inflate the world wide DEflation that is our reality.

Garth, what would you say is the level of understanding of our politicians for what is happening in the financial world? Can we expect Harper to bail out institutions with no opposition from the Liberals? Or do you think your house of commons colleagues will allow our Canadian institutions to fail as they should if they are insolvent?

#7 charles on 09.21.08 at 11:18 pm

Great post Garth. While I disagree with your political views, I must commend you for your open and truthful posts about money issues on your web site. I think they are all right on the money. A lot of Canadians have a real smugness about them when it comes to this current financial crisis in the U.S., and think this kind of a crisis couldn’t happen in Canada because we are so much more smarter and responsible than our American neighbors. Thank you for “explaining the facts of life” to Canadians.

If you can, could you please try and get, and post on your web site what the total government, corporate, and consumer debt is in Canada, and what is the total unfunded liabilities for Governments in Canada for Medicare, Canada Pension Plan, Old Age Security, and Guaranteed Income Supplement. I think if Canadians could see these figures, it would be a real wake up call for them.

#8 dd on 09.21.08 at 11:22 pm

Garth,

I don’t think we (Cdn and US) have dodge the bullet yet. The Fed might clear the financial system up, however, there is going to be a longer recession. A world wide recession is most likely, if it isn’t already here.

On a short term basis commodity prices will decrease world wide. However outside of North America the hunger of commodities will increase with China’s and India’s middle class coming of age.

Could commodities decline for 10 years? Could oil fall back to $50? Gold to $200? I guess if we had 30% unemployment. It is a question that is not easy to answer.

I hope Western Canada will excape the majority of the commidity slow down.

#9 dd on 09.21.08 at 11:27 pm

Garth, what does your portfolio look like?

Are you 50% in cash?
Gold? Oil? Cdn T-bills?

#10 dd on 09.21.08 at 11:37 pm

#3 observer,

You are not missing anything. The fat cats have eaten and the taxpayers once again are left with the bill.

The political and weathly hope that “we” don’t take notice. Private profits and socialized losses.

Isn’t time the fat cat went to the jail?

#11 POL-CAN on 09.21.08 at 11:38 pm

# 7 Charles

I will take a stab at the numbers….

Canadian debt: 722 billion
Canadian debt per person: 22 k
Canadian debt per worker: 44 k

http://www.ndir.com/SI/education/debt.shtml

US debt is at 9670 billion without social security, medicare, etc.

http://www.brillig.com/debt_clock/

Considering we have 10 % of their population things get scary fast

#12 dd on 09.21.08 at 11:43 pm

Cash? Gold? Oil? Shelter? Food?

What do people have faith in?

Cash = you have faith in the country and government

Gold = you have faith in hard assets (not paper)

Oil = you have faith in peak oil

Shelter = you gotta have cover (at a reasonable price)

Food = you gotta eat

#13 Geoff on 09.22.08 at 12:33 am

I am concerned that our monetary authorities are about to inflate our currencies in order to pay down debt with devalued dollars. The US appears to be cranking up a Weimar-style money machine to staunch the wounds inflicted by rampant speculation and profiteering over the last 8 years. Unbelievable. What value will savings and investments be when the currency presses are run at warp speed? I am appalled at the smugness of the current crop of “Conservatives” on both sides of the border; their profligacy has destroyed the dream that was bought and paid for with the sweat, toil, and blood of the wartime generation. How strange that the so-called Conservative/Republican administrations have been unable to conserve nor protect the people to whom they are accountable. The electorate on both sides of the border has to act or they will find no chicken in the pot, and no pot to cook it in. Worse, when the foreign sovereign wealth funds move in, can our sovereignty be sustained?

#14 Crystal Radio on 09.22.08 at 12:44 am

Hey outtacontrol, attribute your quotes, for a minute I thought you had lost control or something:)

#15 Central Banker on 09.22.08 at 1:06 am

From Asia said:

Well gold is bouncing back.

Garth, again tell me… will you change your view on GOLD?

Gold’s got to go up as inflation is no doubt going to hit us hard, high oil prices or not somethings got to give.

Care to speculate?>

That’s exactly it – speculation. You can’t eat it, burn it, live in it or even buy anything with it. It will gyrate wildly, posing buy-sell opportunities, but long term, it’s just shiny stuff. — Garth

GOLD AND SILVER HAS ALWAYS BEEN IN HISTORY REAL MONEY AND WILL BE AGAIN AS WE GO FORWARD NO DOUBT ABOUT THAT PERIOD.

Bankers and politicians really HATE gold and silver.
Extremely few politicians like a currency that is backed by a commidity like gold and silver, Bankers?… forget it.

Without a backing like gold and silver, people like me (Central Banker) and governments are allowed to print money out of thin air (monetary inflation).

So gold may be really really shiny, but boy oh boy it is sure fantastic discipline for people like me and politicians!! :)

GOLD IS REAL MONEY

Central Banker

#16 Blacksheep on 09.22.08 at 2:57 am

There is no place to hide from the depreciation of assets.

If the US dollar stays stong, cash will be King.

Dumping 1,000,000,000,000+ of freshly created, debt dollars, into the markets will cause inflation to spike and the US$ to drop Like a rock.

If the dollar declines below 70.00 on the USDX, the FED will be forced to increase the intrest rate to prop it up, can’t have a global loss of confidence, more than now?

Raising rates in a severe recession is a great way to insure a depression, but the alternative is a dollar collapse, not good.

So buy process of elimination, when cash or no other asset class seems safe[maybe oil?], investors will run to gold and silver.

We saw this starting last week.

Post#5 SoWhat,

“So What..? really we need to work on a rescue plan”

“As values fall, cash rises. The answer should be
obvious”. — Garth

No rescue plan available, housing must bottom and move the surplus out, this will take time.

Meenwhile, if the currency becomes unstable, PMs are my Plan.

Garth, your opinion please?

Thanks, BS

#17 kc on 09.22.08 at 3:05 am

My take on the history of how we got to where we are, and where we can be heading, written in febuary 08

I have been following the houseing/credit/manufacturing crunches over the last 18 months / 2 years. I have been reading many different sites, and I have studied the great depression (a hobby of mine) for the past ten years.

When 9-11 (2001) occured I said to the people around me “Here is the start of the next great Depression” What has happened since then? US declares WAR on the world. Remember that famous quote “you are with us, or you are against us” G.W. Bush? Mainly to fuel the war machine of the states. What divides the general population the most? Fear. What makes fear? simple words like terrorism, WMD, hatred, racism, Osama BinLadan…. Wether the US gov. had N.Y. targeted is for an entirely different place, however, lets pay close attention to a few facts here.

The states goes off looking for bad guys hiding in caves and holes with shock & awe. The general population of the US is confident that they will conquer in a matter of months. At this same time, the minor slump is over from the dotCON bubble. (remember that one)? The states was in a recession. The war on the world help to start the economy, however the next bubbles were starting to take hold in boardrooms. Sub-prime and easy (low) credit were to follow. The houseing boom took full flight. Not only were 1000’s or homes being built, people also took out loans to up-grade their exsisting houses to make a profit on the houseing market. No govt. was going to say no to all this extra taxes from the sales of building supplies etc, wich in turn creates a mini false economy in general sales. (side note) look around in your home at the origin of the goods you bought while you made the renovations. made in USA? Canada? more than likely not, unless you bought lumber.

Now, during the period from 2002-2006 all this (free) money was being given out for people to buy homes with, make them feel good about life, need a bit more cash to furnish your new home? No problem we will give you that also. Keep the sub-prime population on a credit wheel, banks sell the mortgages to new suckers on the stock market and woola no one is the wiser. Win-Win: people get homes and bankers make millions.

Step back in time to the mid 1920’s. Grand times, new inventions, radios, autocars, EASY Credit and the stock market!! During the early days of tradeing anyone could buy stocks, broker houses were for the big boys. In the late 20’s the general population held every stock imaginable as this get rich scheme. the factories were producing millions of products to an ever more greedy population that was prospering and buying. No one could foresee what was to happen next in that over inflated price index called the markets. The first crash happened, (caused mainly from a breakdown of credit and fear). Factories started shutting down becuase the population was over stocked and over produced. The roaring 20’s were a memory and the dirty 30’s were born.

Lets jump and look at what is happening today. The countries that manufacture goods that are shipped to N.America to be bought on credit and credit cards have over produced (including US and Canada) and before you hit me with the but we mine the coal and it is our resource jobs that fuel the economy jab, then why are we exporting the raw materials instead of producing the finished products here? Easy answer … WalMart, we want the lowest price when we buy, however, we place our work forces into the tank. There is a Recession taking place in the States, Canada isn’t far behind. We also have full warehouses of products that aren’t being bought up. over produced. Economy slows, jobs are lost. Vicous cycle.

Lets now add into the mix the world wide credit debt. And extremely over priced houseing that is also world wide. all these factors when examined together on the whole points to one huge problem. how high and for how loong will this continue to take place? Not long now, there is a bubble bursting sound coming from N. America, and the world is going to feel it.

The stock market was the major straw that broke the camels back in the 20’s, as will take place in the 2000’s. Ever heard of a RRSP? that is the same buying into a good thing that happened in the 20’s. everymonth millions are being pumped into the market to support the ones who are on top of the pyrimid. if people all pulled out the money from the RRSP over the next week what you think would happen to the banking systems? Now lets look at the next problem that is beginning to happen. Ageing boomers pulling out there RRSP’s. WOW that wasn’t suposed to happen, get more suckers to join in under them to keep the numbers stable.

Here’s a challenge, listen to the radio and listen to see how many times you hear about reverse home equity, RRSP commercials. You think they would spend millions on those ads if they thought you wouldn’t buy into them?

Are the prices in vancouver going to crash? yes they are, however, don’t feel alone for the world will be right along beside you.

How you survive is your doing. But here is what my parachute looks like. I hold absolutley NO credit cards, and I owe no banks one cent. I owe nothing on any credit, for I was tought to pay cash all my life, because no banker can ever take away what you own. I own no RRSP’s. I have 50K cash in term deposits. I do not shop for new unless I really need it or it is a neccessity. You may think I am broke if you met me, however, 50K in cash is richer then 500K in mortgage when the bottom falls out.

parting thought;

Here is an insightful quote from page 135 “The Stock Market Crash of 1929” by Gordon V. Axon

“The old saying that a stitch in time saves nine applies with force to controlling speculation and a booming economy. The nation as a whole can produce only so much wealth. No country, no system, has found the means to rapidly stimulate national wealth, over a period of years, without facing either serious social problems or a dramatic setback. Wealth does not normally increase rapidly, but through the slow processes that increase industrial and argricultural productivity as the years pass. So any stock market boom that rapidly outpaces the economy is bound to collapse sooner or later. Any economy that is stimulated to excess will surely have setbacks that undermine the future.”
How can Canada not be in some sort of “bubble”, and in that quote substitute “stock market” with “houseing market”

#18 Rob in Madrid on 09.22.08 at 3:42 am

Here’s what Dr Doom aka Peter Schriff had to say

Just three days ago, after looking at the prospect of bailing a string of distressed financial institution in the country, the government seemingly drew a line in the sand, and refused to bail out Lehman Brothers. The authorities clearly saw Lehman’s demise as a trial balloon to see how the markets would react if the government stayed on the sidelines. That trial balloon quickly turned into the Hindenburg. Immediately reversing course, the Government has decided to go “all in” and bail out every institution with financial exposure to U.S. mortgages. Simply put, Americans will not be allowed to visibly suffer losses after the greatest asset bubble in U.S. history. But make no mistake, the losses are real and Americans will pay one way or another.

Moving beyond the guided munitions of selective bailouts, the Government is now trying the financial equivalent of carpet bombing (for AIG, Merrill Lynch, and especially Lehman Brothers, this gives new meaning to being a day late and a dollar short). To continue with the military analogies, Paulson’s bazooka turned out to be a nuclear tipped ballistic missile.

By committing trillions of tax payer dollars (not the “hundreds of billions” that Paulson predicts), the plan will save commercial and investment banks from certain bankruptcy. In his statement today, Paulson made clear that Congress must pass new legislation to allow the Government to acquire even those loans too poorly collateralized to currently qualify for GSE or FHA absorption. The losses baked into these mortgage products, which Wall Street has been reluctant to even estimate, will now be borne wholly by taxpayers.

In his press conference, Paulson assured us that this plan was designed to safeguard our savings. But in typical government fashion, the plan will have the reverse effect as savings will be wiped out through inflation. He also claims that the plan will safeguard home equity by keeping real estate prices high. Since when did high home prices become a strategic national priority? If the plan succeeds, the gains for home sellers will simply be matched by losses for homebuyers, who end up paying inflated prices, and taxpayers, who get stuck with the losses when those buyers default.

Paulson’s distress and confusion was clearly evident when he fielded questions from reporters. The first asked Paulson to describe his fears regarding the probable economic consequences of government inaction. Paulson provided no answer and promptly exited stage right.

When the U.S. government owns all mortgages, the real estate market will be completely subject to political, rather than financial, concerns. Will foreclosures be outlawed? Will loan term easements and principal reductions become standard campaign issues?

While it is dizzying to predict how this plan will be implemented, it is fairly simple to foresee the macroeconomic consequences. The U.S. dollar will be shattered beyond repair. The government simply has no means to make good on the trillions of new liabilities. Interestingly, while both Paulson and President Bush acknowledge that the plan will put “significant amounts of taxpayer dollars on the line,” they did not mention any tax increases. Given the politics, no such move is forthcoming. The printing press is their only solution.

The government has also decided to insure all money market funds, adding trillions more in unfunded liabilities to the Federal balance sheet in the blink of an eye. Of course, since bad real estate loans are not the only toxic assets on the balance sheets of financial institution, we will also need to absorb other classes of asset-backed securities, such as those backed by credit card debt and auto loans. So while the move ensures that depositors will not lose money, is does insure that the money itself will lose value. Is the trade-off really worth it? Washington thinks so.

Further, since I assume the plan will apply to all mortgage debt, U.S. taxpayers will also be on the hook to bail out foreign institutions that loaded up on the financial sludge. However, once the government takes them off the hook, do not expect them to re-invest the windfall back into other U.S. dollar denominated assets. This get-out-of-jail free card will likely scare them straight. The global mass exodus from the U.S. dollar and Treasury debt is about to begin: do not get caught in the stampede.

Although gold initially sold off as the apparent need for a financial safe haven ebbed, look for a spectacular rally to commence as its traditional role as an inflation hedge returns with a vengeance.

#19 David on 09.22.08 at 4:47 am

Profits are always private and huge losses always seem to be the burden of taxpayers. Great Waste of Life had an exposure of $448 million in Lehman et al. Its not real money in any event and capital deserves to be pissed away, since it is insignificant on the balance sheet, which is yet another fabrication of imaginative minds.
The only market for junk mortgages in default seems to be the market place of taxpayers.

#20 Stoneleigh on 09.22.08 at 7:54 am

The rally we saw last week in the American markets did not represent genuine buying interest, relief that the worst was over or any kind of return of confidence. Hank Paulson’s rule-changes-on-the-fly (mimicked by other jurisdictions) forced a short-squeeze, where those who were shorting stock had to buy it to cover their positions, thereby pushing up prices. Bear market rallies are often sharp because shorts get caught with their shorts down, so to speak.

Unless it lasts long enough to inspire some buying interest from the buy-the-dips crowd (which such rallies sometimes do), my guess is that the rally will be short lived. If no general buying interest develops, once all the aggrieved shorts have made their forced move then there will be nothing to support prices at anywhere near their current level and no reason for them not to crash hard.

Paulson is trying to backstop a $750 trillion credit bubble in the derivatives market with a promise to buy up $700 billion worth of distressed assets. If he thinks this is going to work, he has another think coming. All he can do is postpone, not prevent, a collapse of this particular house of cards, and he may not even be able to postpone it for long. Once confidence is gone, it is very hard to reignite. Instead of commanding and believable, Paulson looks desperate, as indeed he is, and desperation does nothing at all to restore confidence. Think Enron, as the dynamic is the same, although the scale is completely different.

The danger for the US is that the bond market may react to US promises to bailout everything in sight by forcing higher long term interest rates. It depends whether or not they find the promise credible. If we do see long term rates rise, the US would be left with the worst of both worlds – higher rates for a debt-junkie economy and no increased domestic liquidity to show for all the ‘printing’ (monetizing debt). It isn’t possible to increase liquidity under circumstances where cash hoarding prevails – it just ends up being sucked into a giant black hole of credit destruction and the velocity of money plummets. This is called the liquidity trap and the global economy is sailing right into it.

#21 mike on 09.22.08 at 8:03 am

What the US is proposing is simply scandalous. The middle and poor loose houses, go bankrupt and loose jobs but the Wall street titans get the biggest gift in history with no scheme to give back what they poached
No surprise the bailout comes b4 Goldman Sachs tanks … Paulson used to be ceo of Goldman … The rich take care of their own. The US people must wake up to the crime being perpetrated against them. Watch paulson pitch this solution to the media all weekend… Scammers…
Wasn’t it last week when we were told No Bailouts…. Didn’t he know like we all knew even a year ago…talk about political machinations.

#22 Stoneleigh on 09.22.08 at 8:10 am

Over at The Automatic Earth, we have lately been discussing the legal and political issues that are arising as a result of the desperate attempts to stave off deflation.

We are witnessing nothing less than the abandonment of the rule of law, as the powers granted to Congress are delegated to the very players who created this mess in the first place. This represents an enormous power grab by those who would remain completely unaccountable as the largest ever transfer of wealth from public to private hands proceeds. The taxpayer is being saddled with unpayable debts while the bankers whose reckless gambling inflated the global debt bubble walk away with staggering sums of bailout money.

Canadians (myself included) are not going to be immune to any of this. As a country, we seem to think that American economic turmoil will stay on their side of the border. On the contrary, this threat is truly global, and Canada is as vulnerable as anywhere, if not more so due to our extreme dependency on American purchasing power. We have been asleep at the wheel as a nation, but we urgently need to wake up and understand what is happening.

#23 midas on 09.22.08 at 8:40 am

How you can recommend CASH in hyper inflationary times that must follow this insane printing of money through bailouts is beyond me? These bailouts are only the beginning: General Motors, Ford, the Airlines and countless others will soon be lining up at the trough of government largesse. Where does it all end and what is the end game except a financial crash of Biblical proportions worldwide?

Do politicians have to take an oath to deprecate real money Gold and Silver that that have stood the test of time and never failed? Would you have advised Germans to hold on to their Reichsmarks in Weimar Germany? If your answer is NO then you ought not to recommend your readers to hold on to their soon to be worthless dollars that will be more useful as toilet paper than as real money? I am glad that the clueless general population has not clued into the real value of holding real money gold and silver keeping these precious metals relatively inexpensive. The middle class still has an opportunity to maintain their middle class status through these precious metals. Those who trust in paper will soon find that all it takes to make paper is a few trees and a printing press but printing presses do not money make – just ask the citizens of Zimbabwe!

It is the currency of life now. This is not Zimbabwe, and never will be. You bullion bunnies would be better to get a shack, a coonhound and lots of ammo. — Garth

#24 Stoneleigh on 09.22.08 at 8:41 am

My view of gold is that it will hold its value for the long term, as it has for thousands of years, but that in the short term its price is likely to fall in nominal terms as deflation crowns cash king. Deflation drops nominal asset prices across the board, although some may simultaneously become less affordable as purchasing power is likely to fall faster than price. Some assets, such as food and fuel, are likely to fall by much less than others, as a far larger percentage of a far smaller money supply pursues essentials. I wouldn’t expect gold to be seen as an essential yet, though it may well be in the future.

How long this situation may last is not clear. It depends partially on the longevity of the international debt financing model. While the power of the bond market to punish ‘money printers’ persists, so will constraints on ‘printing’ with reckless abandon. It also depends on cash hoarding behaviour that acts to limit liquidity and thereby forces continued deleveraging in a positive feedback spiral.

If you can afford to be debt free, to hold adequate liquidity, to have at least some control over the essentials of your own existence and still have money left over to buy gold at what are still inflated prices, then you could do so as an insurance policy. However, most people will not be in this position. The other items should be higher on your priority list.

#25 Mike B formerly just Mike on 09.22.08 at 9:47 am

To say the US is out of bullets is putting it mildly… even the heavy weight investors are saying that. Even with this proposed retarded bailout they ain’t got much left in the kitty. In fact they ain’t nothing in the kitty…US has been insolvent for years resting on their laurels and saying their enormous GDP will pull them out . Lowering rates won’t help… printing more money will devalue the dollar and coax the Chinese and other nations funding the US greed to reconsider all things.
Truly the central banks around the world are freaking out and simply keeping quiet. I for one think Paulson is just putting off the inevitable and dumping the debt upon our children and their children. Massive incompetence and arrogance. Stay tuned… Those coon hats and a shack might be a very good solution indeed.

#26 Calgary Rip Off on 09.22.08 at 9:48 am

Garth:

USA upper level management would have you think that $700 billion is required to fix things. That is unlikely. The $700 billion is required to bail out high level upper execs. From a monetary standpoint you cannot print $700 billion as if it were monopoly cash and then assign it an arbitrary value. It is still worthless. There is no gold backing it up. Inflation at worst. The real problem is that China could call the loans in at any time and the USA is a goner. The U.S.A. is a third world country.

This negative fact has not seemed to affect Calgary’s housing, unfortunately. There are those that think 40% off of the current market value for single family homes is a lot. Those people are a bunch of idiots/losers. Truly amazing. Again, houses in Calgary for the most part are only worth $200K. I am one of those intelligent individuals who knows when to buy. I would gladly acquire a home for say $250K.

Good luck to all those who make less than $80,000 a year. You may as well just leave Calgary, or pray like hell for a total crash(boycott the oil industry-its all just middle east people and progressive conservative scum in Alberta).

#27 Chincy on 09.22.08 at 9:57 am

#24 Stoneleigh is 100% correct. The inflation deflation debate will continue, but as of today, there has been upwards of 15 trillion dollars taken out of real estate values and stock markets globally, sorry but incomes are not growing, they are eroding, job losses are coming…how does this equate to inflationary times at this moment?

#28 y3maxx on 09.22.08 at 10:24 am

GARTH…

Time to quit the spewing of the “Sky is Falling” rhetoric.

…IF YOU ARE SO GOOD AT PREDICTING THE END GAME…THEN NOW IS TIME FOR YOU TO PROVIDE THE SOLUTIONS & IDEAS.

UNTIL YOU BEGIN TO DO THIS YOU ARE NO BETTER THAN ANY OTHER POLITICIAN.

jmo

I do not contribute to this blog as a politician, but rather as an author and interested Canadian. So, blow the rhetoric out your ear. — Garth

#29 dd on 09.22.08 at 10:27 am

26 calgary riff off,

China will not pull the pin yet. The US still buys too many goods from them. However, there is a major shift underway. China will not be satified with T-Bills or Bonds for much longer. The Chinese government is looking for ownership. Watch how this banking crisis unfolds. It was mentioned in the news that China may be backing a 49% bid on some banks.

And for Calgary RE, when a family can buy a house for $250,000 in the burbs … then RE in Calgary will be reasonable. It is still way too expensive.

#30 Joanne on 09.22.08 at 11:18 am

” The oxygen left the room.” was quoted after congress was given the news of how dire the financial picture was being painted. I am no economist or claim financial expertise, but given the sheer magnitude of how this multi-billion or perhaps trillion dollar bail-out ramification that is about to unfold has left me frighten for the future generations of our children and grandchildren. This enormous debt cannot simply be absorbed into the world’s already emploded debt tally without serious and long lasting consequences. Our lifestyle and theirs is about to slowly unravel . What we have taken for granted and expected will only be given to those of privilge. Donot expect an early retirement or padded pensions. Basic services will come with a high price tag. With all our resources being directed to just the essentials there will be no allowance for saving. Day to day existence willl be front and centre.

#31 POL-CAN on 09.22.08 at 11:24 am

This made me laugh….

SEC bans frowning

by Peter Forth, StockReflex| September 19, 2008
Print

In an unexpected move intended to prevent the continued slide of financial stocks, the SEC has banned all forms of frowning, scowling or cursing with regards to stock market activities.

“We needed to find a way to keep speculators from forcing valuations of our insolvent financial institutions to zero” said SEC Chairman Christopher Cox. This move follows another earlier move today in which the SEC banned short selling of nearly 800 financial stocks.

“Stopping evil shortsellers from making us recognize when companies are bankrupt is at most a stopgap solution. What we really need is to change the attitude of investors in America. Once they recognize that our failed institutions are actually too big to fail they will realize that the only failure was our attitude”.

“People need to start treating our venerable financial institutions with a little more respect. Until shortsellers forced them to open their books, our bankers have never let us down”, said Treasury Secretary Hank Paulson, “In fact, some of my best friends are bankers.”

One of the foremost experts on the great depression, Fed Chairman Ben Bernanke, added “It is not possible to have a depression in America if everyone just keeps smiling.”

What’s the next move in the government’s unconventional bag of tricks? “Which is worse: an evil shortseller or the financial analyst that recommended a stock be sold short?” speculated Mr. Bernanke, “These people are advising and inciting others to commit criminal shortselling activity and should be punished. We really need to be hearing only positive things to help us through this time of crisis.”

The Bush administration gave its blessing to the new moves, “We all just need to completely forget about this nasty episode, start smiling and buy lots of stocks”

This article is intended for comedic and sarcastic purposes only and none of the quotes contained therein are actually real.

http://financialsense.com/fsu/editorials/2008/0919.html

#32 Peter in TO on 09.22.08 at 11:40 am

Garth a thought that came from m wife during discussion.

Ok right now the stock market and bond markets are about to implode. This will make for a recession/depression of epic proportion.

Next off you have billions in US debt held by foreigners in US currency. The debt holders will see the value of this debt tank, as the US market gets assessed down.

This tanking of debt will adjust the value of the US dollar downward causing hyperinflation of all imported products. Can you say a pair of underwear from China at ($100). The worst portion being the price of oil in US dollars will be horrible ($1000).

The US being the biggest oil pigs in the world will look for means to continue to feed the beast and get the econmy going will declare that they are under economic attack (they love talking in-terms of attack rather than the fact that they are bankrupt).

In Canada we will fare much better due to being an oil exporting nation. We will not have the huge import inflation (Maybe we will get our underwear from the US?).

The US seeing the price of oil skyrocketing will target the number one enemy (ie the closest provider of oil)…….Canada. Canada will be annexed.

#33 Bill on 09.22.08 at 11:52 am

one question. with all this happening, where are interest rates going? isn’t printing all this money a precusor to higher interest rates.

#34 Mike B formerly just Mike on 09.22.08 at 12:20 pm

Cooking the books… pulling an Enron… What next down there. as if the US public haven’t been hammered enough they now give Goldman a free pass and ask the tax payer to cough up 700 Billion fully at the secretary’s discretion. Are they retarded down there… everyone smoking crack??

#35 Dawn in Calgary on 09.22.08 at 12:40 pm

Just another bit to add to the discussion….

++++++++

How Wall Street Lied to Its Computers
By Saul Hansell

So where were the quants?

That’s what has been running through my head as I watch some of the oldest and seemingly best-run firms on Wall Street implode because of what turned out to be really bad bets on mortgage securities.

Before I started covering the Internet in 1997, I spent 13 years covering trading and finance. I covered my share of trading disasters from junk bonds, mortgage securities and the financial blank canvas known as derivatives. And I got to know bunch of quantitative analysts (”quants”): mathematicians, computer scientists and economists who were working on Wall Street to develop the art and science of risk management.

http://bits.blogs.nytimes.com/2008/09/18/how-wall-streets-quants-lied-to-their-computers/?ref=technology

#36 dd on 09.22.08 at 1:05 pm

Bill …

Interest rates … UP UP UP in the long run.

Higher risk Higher rates needed.

#37 smwhite on 09.22.08 at 1:06 pm

Inflation, deflation, what a [email protected] mess…

http://news.goldseek.com/DollarCollapse/1222100841.php

#38 dd on 09.22.08 at 1:08 pm

Not so fast. If the US dollar implodes the market could sky rocket … read the following:

AMERICAN CAPITAL MARKET: Ask ten
thousand investors around the world which market was
the strongest over the course of the past year and few, if
any, would report smartly that it was the market in
Zimbabwe. With the government in dissary; with inflation
running in excess of 60,000%… yes, that is one of the
numbers we have seen… with Mugabe’s Marxist theories
still at the centre of the economy, the Zimbabwean stock
market has soared.

The chart this page is a bit outdated (no chart) , for it goes back onlyto mid-last year, but it makes its point: amidst the
confusion and inflation that was and is Zimbabwe, the
stock market soared. It was, as we have explained many
times previously, the only place for money in Zimbabwe
to run to protect itself from inflation, and run it did, taking
the stock market violently, psychotically, shockingly
higher.

We are about to see the same thing happen here in the
US, we fear. Money will flee from the bond market, and it
will flow to gold and to equities. If there is a lesson to be learned from whattranspired last week, it is this:
that reflation is the only wayout of the current mortgage
market dilemma; that Dr. Bernanke understands that as a student of the Depression and has made it clear he will
err upon the side of inflation rather than deflation, and thatmonetisation of these “toxic” assets is now upon us. We do not wish to be hyperbolic, but the harsh reality is this harsh reality. In the cold light of day that is what we see,and we shall trade accordingly henceforth.

#39 Wealthy Renter on 09.22.08 at 1:22 pm

“It is the currency of life now. This is not Zimbabwe, and never will be. You bullion bunnies would be better to get a shack, a coonhound and lots of ammo. — Garth”

Mr. Turner,

Would you extend this logic to the strengh our commecial banking system?

About two years ago, we cashed out our resources stocks (way early,) and have our money split in various international banks, operating in Canada.

Do you think it is in the realm of possiblity that there might be a run banks in near future? Not in Canada?

Thanks,

#40 Sphinx on 09.22.08 at 1:38 pm

I say deflation, and agree with Garth on gold which had its good run already during last 4 yrs. When the US feds bailouts the corrupts with $700Bs, that’s not inflationary, it does NOT go through the system to the main street Joe, it goes back to the Fall St. gang in exchange of toxic BS that sits in yet another RTC, and paid for by …main street Joe.

Besides, interest rates will shoot up probably after US elections, that’s only way to lure foreigners to lend US…Canada will follow..

Gold does not pay dividend, and cannot use it to buy a litre of milk…it’s just a hedge, and will never ever replace the FIAT system, govs around the world will make sure the paper system continues because the alternative is the mother of all deflations that even the most dedicated gold bug will hate all metals.

just my 2 canadian cents.

#41 Calgary Rip Off on 09.22.08 at 1:42 pm

Peter:

As an American(now Canadian) I disagree strongly with the “annexation” of Canada. Not gonna happen.

Culturally, Canada and the United states are very different and have been from the start.

Do you really think Canadians will tolerate such a move? I dont want it!!! Think of the implications for health care alone. Although wait times in the ER are extremely long in Canada, they are also very long now in the U.S.

This is just one possibility of unification with the United States.

It’s not even a possibility of happening. And if the United States decides to invade Canada, there will be plenty of Canadians willing to fight to keep them out and defend the homeland.

#42 squidly77 on 09.22.08 at 1:46 pm

edmonton house prices in biggest free fall since 1983

#43 Mississauga_man on 09.22.08 at 2:19 pm

This is a great site , lots of good info but sometimes my
head is spinning from ALL this info..
I do believe that tough time are coming and have a question what would you people do in my situation ?

I am 46 years old ,working for the same company for 21 years making about 80K/year, wife 24K/year.
Have no debt except 220K mortgage.
I can sell the house and pocket about 50-60K.
There is a lot of talk here about deflation , inflation
so I am wondering whether I should sell and rent
or keep the house and how either of the scenarios (deflation or inflation) would affect my situation.
Thanks in advance for any advice !

#44 dd on 09.22.08 at 2:22 pm

If the buck falls the employment picture will not be good in the US short term. Very painful. However factories will come home to the US long-term. With 300 Million people to cloth and feed there will be a market at the US home base. Remember Canada a couple of years ago when the $ was falling. Ontario was booming!

#45 ballkan on 09.22.08 at 2:48 pm

Garth you can not eat gold as you can not eat $20bill.

You can not sleep on gold bar as you can not sleep on $100 bill.
But you can burn the bills or wet them down you can cut them in pieces and loose thier value.
Any of the above done on Gold it makes it shyne even More !!!

#46 y3maxx on 09.22.08 at 2:51 pm

Garth responds to my post #28

“”I do not contribute to this blog as a politician, but rather as an author and interested Canadian. So, blow the rhetoric out your ear. — Garth””
———————————————————-

GARTH…

Time to quit the spewing of the “Sky is Falling” rhetoric.

…IF YOU ARE SO GOOD AT PREDICTING THE END GAME…THEN NOW IS TIME FOR YOU TO PROVIDE THE SOLUTIONS & IDEAS.

UNTIL YOU BEGIN TO DO THIS YOU ARE NO BETTER THAN ANY OTHER POLITICIAN.

jmo

#47 y3maxx on 09.22.08 at 2:52 pm

Futher to my Post # 34…

We need leadership not excuses Garth.

You are a politician, show leadership.

jmo

#48 Bob on 09.22.08 at 2:56 pm

Wow,now we are talking about depression in US and Canada?
First trading and value pattern in inflation is increased
value of Gold,Silver,Oil,Food and etc.
Inflation with low interest rates also can not support
decrease of Commodity prices.
Canada doesn’t have real sub-prime problem like US,and still interest rates can going low to 1%,
and in US as well.
If this scenario happen than Gold and Silver will jumped up 100%. Why?
Because everybody who has real money would like to protect himself from inflation bust.
With HIPERINFLATION You can not invest in the stocks Market,RE Market or goverment bonds, so you have to invest in the real money Gold or Silver.
Did you see Gold/Silver price from last week?
Just 23% increased prices of:
Gold was $ 735- today $ 906
Silver was $ 10.32- today $ 13.5
The Central Banks and goverments in US and Canada will doing everything to avoid Depression.
First step is very,very lows intersest rates 1%.
This case will cause hiperinflation,and after that last
situation will be Depression.
You are talking now about Deflation? What Deflation?
Deflation is real when interest rates are 12% to 20%.
My prediction is now that US and Canada will chose Hiperinflation with low interest rates. Why?
Because when US Goverment is in debt over $11,500 billions than as every country will try to rid debt off
with Hiperinflation,just with printing of money.
Today is completly different situation than Depression from 1929-1933.Why? Because USA that time was biggest lender in the world and not in debt as today.
If US Goverment will prefers Deflation than we have to see immediatly increasing of the interest rates and no any intervention with money on market,banks,etc.
Than in this scenario Gold,Silver,Oil will going down between 20% to 40%.

RE Market is commpletly different kind of investment and it has different valuation.

#49 Indicator on 09.22.08 at 2:58 pm

Yes it is Bill.

How dare they blame the short sellers !!!

The Fed & Co. like to play god and screw all the middle income earners.

#50 bb on 09.22.08 at 3:16 pm

dd says it right. China is more interested in assets versus t-bills, etc…Warren Buffet had it right with his essay from a few years back.

http://www.berkshirehathaway.com/letters/growing.pdf

#51 christopher C on 09.22.08 at 3:35 pm

I went to school, pay taxes, have a good job family…. have some investments. It seems, to understand what to do in this environment you need a freaking degree in financial wizardy of some sort. I just dont have a clue what all this talk is really about and what it really means for me and my family. Buy gold, dont buy gold. U.S.A. is screwed, Canada ok. USA is screwed, Canada is screwed. Oil up to almost 150, now below 100….etc etc etc etc etc. What can the average guy do? I dont have time to study economics to understand all this stuff. Goverments interfering, breaking their own rules, calling elections when THEY SAID THEY WOULDNT. You cant trust any of these pricks. Makes you feel pretty hopeless. Any one got any good news?

#52 Peter in TO on 09.22.08 at 4:00 pm

Calgary Ripoff

What makes you think that the US will care what Canada wants?

Hmm, Iraq population 28M (most younger population fighting age). CDN population 33M (Mostly middle age and older).

Iraq 4th or 5 th largest producer for the US. Canada # 1 producer.

Distance to Iraq for troop deployment- Far
Distance to Canada- Let’s start at niagara falls

As far as fighting the US hmmm?

US spend on military $700B
CDN Spend on military $18.9B

US military size 1.4M
CDN military size 60K

Hmmm I don’t think Canada would offer much of a fight.
I think any resisters such as yourself would be considered an enemy combatant.

Read Naiomi Klein she provides a great perspective of how the US thinks (Yikes!!!!!)

The US is the epitomy of the spoiled bully in the playground. They will change the rules to meet their needs and with their huge army they can make it happen.

#53 Downsized and Delighted on 09.22.08 at 4:09 pm

I don’t see a run on Canadian banks in the near future, but what I do see is a run on hedge funds. Most of them require 30 days notice for withdrawals and restrict them to quarterly. I don’t have any money in them or I wouldn’t even bring up the subject, but I wouldn’t want to be the last guy trying to get out of those funds. I don’t think the government is too concerned about bailing them out!

#54 The Tallyman on 09.22.08 at 4:25 pm

Invest in BLUES MUSIC

On the charts this week:

#1 “Born On The Wrong Side Of Wall Street”

#2 “Bushwacked and Barefoot”

#3 “Govment Dun Luv Me Till It Hurt”

#55 Bill L. on 09.22.08 at 4:33 pm

I agree wth christopher C’s comment. What the hell are we reading and hearing about and what on earth are we supposed to do to understand it all. What a complete load of crap that seems to never end with constant ‘ do this today but don’t the same thing tomorrow’. We need a Boston tea party and we need it quick.

#56 The Tallyman on 09.22.08 at 4:49 pm

To #51 Christopher C

Good News?

Yes, chuck all you ever learned in school about economics.
Trust your own judgement. Don’t trust the pricks…
Especially Government.

Make your own plan that will enable you & your family to ride out this insanity.

Everybody’s plan will be different.
In my case I have eliminated debt where possible
and will avoid getting sucked into any new debt by the spin mongers.

My feeling is we’re going to be like stranded passengers in an airport on this bailout.

And Cash! (not in a bank) the more the better.

#57 The Tallyman on 09.22.08 at 5:09 pm

Re: The US Bailout

How can they do this?
Those trillions of new dollars do not even exist.
They are simply being printed, invented!
That money is based on nothing tangible.

Isn’t this the same kind of shell game the investment companies were doing when they passed along the
“hot portfolio” to each other like a game of musical chairs.

Looks like (govt/you & me) are the last ones holding the hot portfolio.
The hucksters have gone to go pig out on cake and play the game another day… while we the greater fools lie trapped beneath the printing press wheel.

#58 christopher C on 09.22.08 at 5:11 pm

ok now gold well over $100…..see my point? the world has gone crazy

#59 jelly on 09.22.08 at 5:35 pm

kc,
just a couple of small points, everything you wrote
was very obvious and are well known facts to the
average person. Also just to let you know, drop
the E and add ING! ie: houseing (sic)
People often won’t take others seriously if their
spelling is bad.

#60 Crikey on 09.22.08 at 5:38 pm

Does anyone else think that the spike in oil today is nothing but Hedge Funds covering shorts?

#61 jelly on 09.22.08 at 5:43 pm

mike,

check out definitions of LOOSE and LOSE.
This is something 4th graders know!
So annoying, get more knowledgeable!
Don’t you ever read?!

#62 lgre on 09.22.08 at 5:50 pm

“Do you really think Canadians will tolerate such a move?”

Canadians will tolerate anyting handed to them, they will whine a little and then just accept it..this is the Canadian way.

#63 Brent on 09.22.08 at 5:51 pm

Is gold back trading over $900 an ounce because of the uncertainty of the fed 700 billion bailout with congress? If the bailout goes through will gold fall back to $700ish an ounce. There’s a lot of beat up resource stocks out there right now trading for .10 cents on the dollar.
Opinions?

#64 dd on 09.22.08 at 6:11 pm

#39 Wealthy Renter,

Yes this is not Zimbabwe, and never will be. But then you ask Garth if a run on bank is possible in Canada.

Banks are folding fast in the states as we read this. The difference in the states is that the country has taxing power and resources. However in the short run anything can be possible. Did you think last year at this time that big Wall Street bank would be folding? In a year from now there will be at least 200 bank failures.

How locked in is BMO or CIBC to this mess? You don’t know. Grath doesn’t know. Even the CEO of BMO or CIBC doesn’t know.

This is a very serious situation. If investors “think” the country is in trouble, look out. They will jump ship.

Very interesting times.

#65 Bobby in Victoria on 09.22.08 at 6:28 pm

With the credit markets imploding people with large mortgages on depreciating homes will start to panic. In fact, some already are, looking at the number of homes for sale. I saw 8, yes count them 8, homes for sale on one street alone. It is already a buyers market. Just wait till the banks want some money back to renew a mortgage as values and equity decline.
It’s gonna get really ugly!!!!

#66 dd on 09.22.08 at 6:31 pm

#40 Sphinx

Gold can buy anything. What do you think people did before FIAT money. There are gold coins from the Canadian mint. You can convert gold into paper and paper into gold. Gold can be converted into what ever currency you want. It doesn’t have to be the CDN or US dollar. It could be the British Pound if if is a better deal.

FIAT money is backed by the faith in the country and government. Faith that the government will honour its debts.

The US will pull out of this, however, they have to show the world that they have a plan and will stick to it. They have to start paying off there debts. Taxes will have to be raised. Spending on social programs will have to be cut. Families will have to save more than they spend. Ture banking regulations will have to be inacted.

The US cannot spend its way out of this one. Time to tighten the belt and pay the debt off. The US has alot of room. Taxes are too low and can be raised. They can pay this debt off faster that Canadians can. Everyone will have to pay. Time to stop “passing the buck.”

But do they have the will?

#67 dd on 09.22.08 at 6:38 pm

51 christopher C,

You don’t need a degree.

If you spent more that you made what would you do? Would you go and borrow more or live within your means? If your house went up in value, would you go out and buy toys with the new equity of just stick to the plan and pay down debt?

A lot of people on Wall Street and Washington have degrees and MBAs. And look where we are now.

#68 jelly on 09.22.08 at 6:54 pm

Calgary Rip Off Re: #41
“As an American(now Canadian) I disagree strongly with the “annexation” of Canada. Not gonna happen.
Culturally, Canada and the United states are very different and have been from the start.
Do you really think Canadians will tolerate such a move? I dont want it!!! Think of the implications for health care alone. Although wait times in the ER are extremely long in Canada, they are also very long now in the U.S.”
The above that you wrote about is the least of our worries! Don’t you think if the [email protected] ever hit the fan in the US big style (and it obviously looks like it is),
the US could just take our resources! A full on depression could create a lot of chaos and what is stopping the US from occupying us based on some made up excuse just to steal our water, oil, food etc?
I know this totally sounds out there but I challenge any of you to state 100% this would never happen.
I think most of us know that you cannot trust people in power and as we have seen from the US regarding Iraq,
they take care of #1. Anyone who trusts them and thinks they will always “protect” us militarily it totally naive. No country does anything out of the goodness of their hearts, there is always an ulterior motive.
Bottom line is things could get really scary in the bad times ahead…
The fact that we have no military strength to speak of in comparison to the US is terrifying since they certainly could do whatever they want.
Look at their track record.
What do you think they will do if they have a water crisis? Calgary Rip Off, saying we “won’t tolerate it”
is a joke, we wouldn’t be able to do jack shit if the US wanted to take our resources from us. What, so we’d complain about it on a blog? Please, open your eyes man! Just because you have not seen an occupation, chaos, or a depression, does not mean it can’t happen!

#69 dd on 09.22.08 at 7:12 pm

So the plan for the US:

1)
Raise taxes
Lower spending
Save and invest (invest in people and communties)

2)
Deal with your own mess.

Keep out of other peoples business. You can no longer be the world cop. You cannot afford it. Work with the world community. The world has grown up and you haven’t. Think before you act.

3)
Come up with an energy plan. Look to leaders like TBoone. You may not have to invade other countries for oil.

4)
Be honest with your people

#70 t from calgary on 09.22.08 at 7:21 pm

#29 dd

You are right they want assets. I wouldn’t doubt that they go into the african countries and overpay market prices for oil and raw materials. They are holding onto too much US$ and have to find a way to get rid of it with out triggering a massive exit by everyone else at the same time.

#71 squidly77 on 09.22.08 at 7:51 pm

looks like the REIC has gotten to the Canadian government

#72 Kate on 09.22.08 at 7:54 pm

Garth, when you say cash, do you mean actual cash at home or deposit accounts?

#73 dotava on 09.22.08 at 8:20 pm

islander is not showing-up lately – but just additional 2c about Sweden socialism comparing to us, or even better Norway (who I am more familiar with). There system trying to increase productivity trough longer vacations and shorter working hours (as the most west European countries do – and produce results). Norway had similar advantage as we did in past few years as we did – BUT Norway government took all extra profits and put in pension founds for all Norwegians not like here – PUT ALL BURDEN on ordinary people and profits in private pockets. SHAME

#74 dotava on 09.22.08 at 8:34 pm

#29 dd on 09.22.08 at 10:27 am

Yes – but
#26 Calgary Rip Off on 09.22.08 at 9:48 am
mentioned

“Good luck to all those who make less than $80,000 a year.”

Do U thing that you can have inflation less than 3-4%/y and increase in median salaries from present 50K to 80K? Not to mentioned – AGAIN – that our biggest customer is going belly-up and dragging us down.

#75 islander on 09.22.08 at 8:42 pm

Garth write: …there’s a good chance of a new Depression. For those unsure of what this means, it is runaway deflation….

Inconceivable, considering the amount of money being printed. The jab that gold hounds should stock up on ammo is unworthy of a Grade 5 debating class, much less a man who once sat at Kim Campbell’s cabinet table.

#76 nearmilton on 09.22.08 at 8:47 pm

On a radio show last Sunday on CHIN radio, I heard ‘the financial advisors’ suggest this event is nothing to worry about we will all be laughing at it in the future when we look back. Invest in September, it’s the best time of the year to do it. Perhaps so…but I have similar comments as #51. It is no longer clear what the average person can do to make basic investments. Doesn’t matter how hard or efficient I have worked since I graduated 12 years ago – 700 billion has wiped it all out.

In fact, it is appearing if you did not participate in this debt orgy, you may in fact ‘have missed out’. Why save money? Anything left over in cash will somehow get eroded by the system. I am not sure Ca$h is King…

I do not want to start thinking the best way to live is spend all the money you get and borrow as much as you can, find that slacker job, and drink all the cognac you can as long as you don’t blow out your liver. Is there any solid advice out there on how to view this bailout event?

#77 3rdman on 09.22.08 at 9:01 pm

Well if we do slop into a depression..

Sadly Uncle Sam invented nukes which means no major powers @ war with each other. He can’t pull himself out of a depression by supplying arms en mass like last time.

Perhaps some gutsy infrastructure programs to quake-proof more California realty and bolster all -[coastal]- lines from storm surge/rising sea levels? E.g. that pricey dam/wall thing around the tip of Florida for starters. But wait unemployment hasn’t got that desperate yet. There are serious wild cards on top of all this financial meltdown. A hard California quake, a west coast tsunami, a global flu pandemic – all playable anytime. Shake in your boots.

#78 christopher C on 09.22.08 at 9:20 pm

uh…i meant oil….woops…

#79 JO on 09.22.08 at 9:20 pm

Many are stuck between inflation versus deflation and the reality as we all know is that no one “knows” what will happen. I am still leaning toward deflation first for a year or two before the true printing starts which will lead to high inflation, with an outside chance of hyperinflation. It is likely in my opinion that we should expect to see a 30-50 % devaluation of currency values worldwide on the next 2-3 years. Bottom line, if you are concerned, consider having some PM exposure (15-20 %?, not necessarily gold/silver stocks but actual bullion), and keeping higher than normal amount of cash held in T-Bills / short term foreign gov’t bonds (Swiss, etc). Of course, you need to consider your goals and risk level and realize you could be wrong, but a mix along the lines above will help protect against either inflation or deflation. Stay away from most corp bonds and non-blue chip stock. The goal in my opinion is to focus on capital preservation rather than going for home runs in the next 4-5 years. Paydown debt and have emergency funds around. We will get through this and it is a necessary adjustment. If the USD takes out its previous low of 70 or so on the US dollar index, it may mean inflation will take over. Gold will likely move sharply higher with silver going up faster. In this case, move out of all cash/bond assets in the deflating currency into PM. As for the nonsense of bailouts, this latest attempt to defraud US taxpayers has a high chance of failure. The best case scenario is a delay in the inevitable. Bottom line is that even in the unlikely case US banks will be able or willing to lend, most consumers and a growing number of businesses are not able nor willing to borrow; hence, this plan will only fail. House prices are too high in many areas and supply in many US markets is still too high. The “plan” will not create large numbers of jobs nor improve the infastructure in the US. As usual the plan will hurt who it is intended to help. What they are trying to do is pay inflated prices for bad debt in order to bailout executives, derivative couterparties, and bondholders (possibly) of banks. The short selling ban is a complete farce. Watch out for crash like conditions in the stock markets as these bans are gimmick/PR stunts to cover the failure of regulators and the system. Whether you are long or short, if you spread false rumours, you should go to jail. Likewise, many SEC enforcement actions are started by short sellers who notify the SEC on possibly illegal accounting or shady trends in poorly managed companies. This short sale ban will only help markets decline even more effectively than they would on their own. In the last 6-7 years until Oct 2007, the SEC and other regulators stood by and ignored, and even in some cases helped accelerate, an environment of excessive lending with poor underwriting, inflated/fraudulent appraisals, excessive executive compensation, horrific accounting practices, and poor financial management by many households which helped most financial institution stocks rise on “profits” which we know never existed. Why not ban buying of all financial stocks? Oh by the way, the “rallly” of Friday has been mostly undone by today..and the short sellers didn’t participate in the dumping of FI shares. A quick look at a chart of this action in 2008 as well as most of these actions over the course of history proves short sale bans are a tactic to deflect blame and hide the truth.
JO

#80 Shifty on 09.22.08 at 9:25 pm

christopher C
Your post pretty much says it all.

#81 dd on 09.22.08 at 9:36 pm

I have over spent once again. Ran up my credit card.

Dad can you pay it off? Sure son but don’t do it again.

OK Dad.

#82 dotava on 09.22.08 at 9:48 pm

To straight things out (related to oil) – we will need oil in next ~50 years (plastic is made from it) and that is not the problem and people who presently working in oil industry WILL NOT stay out of the job – but extra profits (what are not reflecting on there salaries) will go down, and that is the key why they are scaring us with green cars & green energy and everything behind.

#83 Adil Burney on 09.22.08 at 9:49 pm

http://canadahousingcrash.blogspot.com/

Look I am bearish but all this Great Depression talk is a little premature. I definitely don’t rule out that possibility but if we are really going to have a Great Depression, is it only going to take a hastily crafted bailout package to reverse it? We are in a regular bear market thus far (down 26% on the S&P; average is 30%) with a depression in financials. I believe that we may get to 50% down on the S&P eventually but we did that in 2002 as well. We are at 6% unemployment. Not even as bad as a regular recession yet.

The combined deflation in housing and the stock market will be terrible for the economy, no doubt. But to instantly extrapolate Great Depression is a little premature.

The housing market must come down its true long term value which is roughly to 2001 prices (equal to perhaps 1997 on an inflation adjusted basis). The longer we prolong it, the more we are going to resemble Japan.

The correct approach is to fix the structural problems in the US over the medium to long term and quit prolonging the pain with stupid stimulus cheques and bailout proposals.

http://canadahousingcrash.blogspot.com/

#84 dotava on 09.22.08 at 9:55 pm

#74 islander on 09.22.08 at 8:42 pm

hi buddy – U R back. :-) (“Vultur” kind of guys – are welcome).
Real democracy is to give the chance to let your people say and if (barely needed in real democracy) correct them with your wisdom – not with your position.

#85 y3maxx on 09.22.08 at 10:05 pm

Random musings…

…Manifest Destiny…Thomas Jefferson’s belief that the U.S. control all of North America.

…Easiest way out of a recession/depression is to wage war.

…Canada has mucho land, natural resources and a small population…hmmmmm
——————————————————-

…China and Russia will wage war over Siberia…mucho land, natural resources with tens of thousands of Chinese already living in Siberia…hmmmm

…Japan, India, Korea, have neither, are overpopulated, will suck wind and starve.

…Israel will be nuked.

…Solar/nuclear power, electric cars are the way of the present, and the sooner the better.

…The new North America, the Amero currency, Mexico, U.S. and Canada will close their borders and go into isolation while the rest of the world kill each other.

#86 Noz on 09.22.08 at 10:31 pm

Living in the US, I can tell you guys that this bailout was purely for show….and purely political. It was simply done so that the unfolding of the economy does not happen on George Bush’s watch. Pure and simple.

Otherwise it’s business as usual. What you folks are witnessing is a transference of wealth that happens every once in a while so the process can start again. Drain the rest for the 0.05% of the population who call the shots.

#87 Calgary rip off on 09.22.08 at 10:56 pm

Jelly and Peter in TO:

You guys are typical Canadians. Just lie over and take it if the Americans decide to take over. So much for standing on guard for Canada. Pathetic. I am American AND Canadian. There is a saying in I believe, New Hampshire, close to my native Massachusetts, “Give me freedom or give me death”.

I would rather be dead than have my likelihood taken from me.

So if Canadians arent willing to fight for what is ours, than of course they are going to take it.

This reminds me of when I rented a superb property last year. I came in, was shown the property simultaneously with another couple that had three kids, and the other dude was waffling. I wrote a cheque for $1600 to the potential landlord(who I respect a great deal by the way) and said “Sir, I would hope you consider me a candidate for your property”. He chose me because I acted on what I wanted.

A heads up for you Canadians who dont think like an American: If they decide to come here, you need to decide to defend what is yours. If you dont, it will be taken. Period.

Dotava: As far as inflation goes, yes it does affect my wage, even though Im in healthcare at a hospital. The reality: I am prepared psychologically to have everything taken away at any moment. It could happen and I suffer anxiety because of it. But I would deal with it.

#88 Republic of Western Canada on 09.22.08 at 11:00 pm

#51 christopher C – The good news is, if you try really hard, you’ll be able to think analytically for yourself and figure out what your environment is doing. Then you’ll realize it’s stoopid to dump the rest of your earning years on a little shoebox, or swallow the crap on TV and most newspapers, or wallow in a domestic morass until you’re obese, culturally bankrupt, and mostly out of touch with the rest of the world, and instead and select a little quality into your life.

The U.S. of hey is collectively way beyond the point of rescuing itself, and the Establishment there now has a throat-lock on just about any individual who wants to better themselves.

Go to school, go to the gym, go to the library, get some good friends, and dump the idea that just because you’re an ‘average guy’ (whatever the hell that means) that you’re somehow entitled to kind treatment and eternal consumerism.

#89 christopher C on 09.22.08 at 11:45 pm

Thanks everyone….I think the pain of this all stems from it unfolding “slowly” before our own eyes. Although a quick shock to the system would probly be much worse as so many would have no idea what to do. Lately I keep imagining life ( in Canada and USA) as images burned into my mind from the comfort of my living room through the television, like life here being like the images I saw from Germany when the wall came down, or when I get really deep images of nazi germany and concentration (aka FEMA) camps, or even Iraq or places around there where poverty, terrorism, mass killing etc is an everyday occurance.

Could our life ever become like what we see millions of others people life is like on tv, here, in our home, on our land?

9/22/2008-Prt 2 Ron Paul Advisor Peter Schiff On Glenn Beck

paste it into you tube search….YIKES

Bye Bye America, glad I took my two week summer vacation there, because I knew I would never see it the same way again…that America is gone.

#90 Mike R on 09.22.08 at 11:47 pm

Garth good for you for being one of many forecasting a housing slump. Now can you get over yourself? These smug calls you are making on gold tell me you haven’t researched your subject in depth.

I have followed the metal for more than 20 years. It is no storehouse of wealth, but only a speculative commodity with a huge potential to destroy the welath of neophytes who dabble in it. So, get over yourself. — Garth

#91 SoWhat on 09.23.08 at 12:17 am

Hyper inflation will bring depression, because who will be able to buy HDTVsets, or games, or toys, or ps3…no one, and also no one wiill buy cars..so from Future shop to canada computers all will close.. then services will close because of eroding customer base and so on untill the whole domino chips fall one after the other and we end with deflation, which is not bad for the fat cats in WS as they willl simply use their money to buy cheap assets that they can sell later for more money, isn’t this the story of the FIAT Econmy since it was incepted.

So thebest way out for all of us is a slight or controlled inflation if we can get it where evvery body losses allittle but we survive, wel the powers above listen..Hmm wgo knows.. maybe sombody jsut want this to happen to start clean and reshape the world, I don’t buy that such sophisticated well connected and in control people in WS just got stuiped and didn’t see what they are doing…Well only time will only tell, but If Gold dipps to 650 or 700 CDN I will cahnging my position from 100% cash to may be 50% cash and 50% GOLD.

Garth..thanks for your answer to my question while you are in the middle of an election campagine.

#92 anonymous on 09.23.08 at 12:30 am

There are two reasons to own gold.

1. You are a goldbug who gets-off on owning gold for several reasons. Maybe it’s Nuclear War, Anti-Fiat Currency, “International” Bankers, or general gun-loving cook that hates the government.

2. Because you can make money when it goes up or down in price.

I’ve been thinking about owning a little gold in my portfolio for the second reason. I think we could have a big move in gold to the upside as investor/traders don’t know what the hell is going on in the stock markets.

I don’t if it has a use or not (and I don’t care), because it does move up and down in value.

I can trade in and out of it.

#93 jelly on 09.23.08 at 12:59 am

Calgary Rip Off,

Who the hell said I would not do anything if it came down to being occupied by the US? You can’t just assume that because I am a realist and realise we would not have a chance if they really wanted to get aggressive with us, it does not mean I would sit on my hands. It goes without saying that most people from any country would fight to defend what is theirs.
Does that mean we would win because we were really brave if the US military decided to fight us?
Of course not, that’s just being stupid.
We would certainly die trying if it came down to it.
Now if you actually made a clever comment and stated we are apathic when it comes to our governments repeatedly screwing us over and us taking it repeatedly, I would have to agree with you. But it is hardly something that Americans do not do. They are as bad as us, actually worse at letting their government get away with murder. So spare me your blanket statements about Canadians not fighting for what is theirs. I see nothing brave about going to a country to steal oil and make up BS crap in order to be able to do it.
As for your silly rental analogy that you pump yourself up about, it has no relevance whatsoever to what we were talking about. What are you smoking?
Talk about not coming across very intelligently.
I usually respect everyone’s opinion and do not want to resort to insults but I must say, it must be nice to live in a world where you are a cross between Braveheart,
Gordan Gecko, and a Trailer park boy all rolled into one.
I have found your previous posts to be quite aggravating and ignorant so there you are.
Just calling it as I read it…
I will not waste my time reading your posts in the future, life is too short…

#94 Jimster on 09.23.08 at 1:10 am

If we have gotten to the situation where a bunch of paper pushers control everything, I think we should just let it all collapse.

JUST SAY NO TO BLACKMAIL BAILOUTS, YES TO CAPITALISM!

#95 Slopetester on 09.23.08 at 1:38 am

Garth, you;ll never believe who wrote this:

In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.

This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.

Allan Greenspan, Gold & Economic Freedom, 1966. Essay here: http://www.usagold.com/gildedopinion/greenspan.html

#96 Slopetester on 09.23.08 at 1:59 am

Or how about this?

“Until the control of the issue of currency and credit is restored to government and recognized as its most conspicuous and sacred responsibility, all talks of the sovereignty of Parliament and of democracy is idle and futile… Once a nation parts with the control of its credit, it matters not who makes the laws….

“Usury once in control will wreck the nation.”

Prime Minister of Canada, William Lyon Mackenzie King, 1937.

Garth, “usury” is theft, theft by FIAT. Usury is the tool of the banking class. Our monetary system in Canada is usurious and it will “wreck the nation” eventually. Only Gold (and Silver) stand in the way. There exists today, and has existed for many years, an organized, co-ordinaed effort to suppress the Gold price. Guess who’s behind it? Here’s a clue” “Central Banks stand ready to lease Gold should the price rise” … Alan Greenspan, Congressional testimony, July 24h 1998.

Garth, Study your history, you’re wrong on Gold.

Also visit this website, http://www.gata.org (Gold Anti-Trust Action Commitee).

#97 Brittanny on 09.23.08 at 2:19 am

AHHH Yes. There has not been a change of this magnitude since the late 60’s. Wow, SNAFU at it’s epitomy. Nothing like a crisis to wake the sleeping masses.

#98 Brittanny on 09.23.08 at 2:25 am

Mike R. “You studied gold for more than 20 years?”

That’s like saying you studied the history of economics for 20 seconds.

Are you gen “X” or “Y”

#99 David on 09.23.08 at 3:35 am

Gold is a commodity product same as toilet paper and toothpaste. After the Soviet intervention in Afghanistan gold prices went wild for a few months before a severe crash that lasted for several years. The gold as storehouse of value theory has about much merit as people believing homes are the storehouse of middle class wealth creation.
Blue Chip is not so blue chip anymore. AIG used to be on the Dow Jones, now index replaced by the makers of Macaroni and Cheez and Cheez Whiz. When times get tough no one asks too many questions about the origins of ersatz cheese. Derivatives have now been replaced by Velveeta on the Blue Chipper portfolios.

#100 brazer on 09.23.08 at 7:35 am

Inflation rate rises to 3.5 per cent August from 3.4 per cent in July
http://ca.news.finance.yahoo.com/s/23092008/2/biz-finance-inflation-rate-rises-3-5-cent-august-3.html

Tue Sep 23

OTTAWA – Canada’s annualized inflation rate rose to 3.5 per cent in August from 3.4 per cent in July.

Statistics Canada said today that on a monthly basis, consumer prices after seasonal adjustment rose 0.2 per cent last month.

The 12-month rise in the consumer price index is the steepest since a 4.2 per cent year-over-year increase in March 2003.

#101 NeutralPosition on 09.23.08 at 8:20 am

Hello everyone,

Interesting times we are experiencing. Here is what I can’t quite comprehend- with all the dramatic developments in the US financial markets and credit markets worldwide, how is the S&P/TSX index only down less than 10% YTD and 9.34% over the past 1yr.?

I, like many here, believe that there is severe distress in the Canadian economy as a result of the foundation shaking crisis in New York. It is incomprehensible to me how Canada, and even more specifically Toronto, can escape a deep recession from this crisis- lending around the world will evaporate to the point that only strong companies and individuals will be able to borrow money and prime rates and all others will have to pay a premium or be shut out entirely. Basically this is the way lending used to be before this credit bubble went into overdrive starting about 10 years ago.

Isn’t the best investment a short position on the TSX? How can Canadian companies, who borrow like other companies around the world, be immune to this realignment of risk? One would think that a short position on the TSX should be an easy 20% return in the next few months.

Am I crazY?

#102 y3maxx on 09.23.08 at 8:59 am

More random musings…from post #84

The U.S. will adapt quickly now…they should have learned from the 1970’s oil squeeze,.

…Hybrid electric/gasoline autos

…Same holds true for solar & wind

…Gold is a commodity only since it is not used to back any major currency…it will rise and fall.

…The wealth in the U.S. is transferring from the east coast to the west coast….same holds true for Canada.

In my posts #46 & #47 I’ve asked Garth to provide solutions and ideas…he hasn’t to this point…read his response to my post #28

CANADIANS NEED SOLUTIONS AND IDEAS, NOT THE OBVIOUS “SKY IS FALLING” SENSASIONILISM.

jmo

#103 Successful investor on 09.23.08 at 9:33 am

Investors take heart and read:

http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2008/09/dept-of-finance.html

#104 Calgary Rip Off on 09.23.08 at 9:49 am

Nice post Garth.

I eagerly look forward to the effect that this has on Calgary’s overpriced market. I consider myself happily married to a woman who is perfect: When she gets mad, she doesnt say anything, because she doesnt want to talk about it. Where can you find a woman like this? Forget about commodities, Ive got platinum in my wife!!!

Keep those posts coming Garth. Any other party but the conservatives needs to come into power, especially in Alberta, the land of the conservative goons.

#105 Ron on 09.23.08 at 9:52 am

#51 christopher C

Have a look at this documentary:

http://www.zeitgeistmovie.com/

You’ll be up to date after this ;)

#106 GrandePrairiegirl on 09.23.08 at 9:53 am

Congress has the ball and they’re stumbling. Markets are shaking again. Game over coming up.

#107 Mike on 09.23.08 at 9:58 am

Re JELLY post 59 and 61,… Get bent … this blog does not exist for your amusement at how people spell words.
Using a phone to type can render double lettering sometimes. Considering you wrote “So annoying, get more knowledgeable!” I hardly think you are in any position to question people’s grammar.
This forum is for people brining insight into the topic presented not a dumb ass critiquing how people write .
Get off butt head.

#108 smwhite on 09.23.08 at 10:06 am

For all you screaming “deflation” because you can buy a TV or car cheaper today the last year.

http://canadianpress.google.com/article/ALeqM5gExLQzdYd3PGqqewUb_iEO8DEIqQ

Here’s a title that might be a good pick-up for some of you that don’t have your nose turned up at gold.

http://www.amazon.ca/exec/obidos/ASIN/047038378X/ref=ord_cart_shr?_encoding=UTF8&m=A3DWYIK6Y9EEQB

#109 smwhite on 09.23.08 at 10:29 am

“We’re having a hard time making enough coins, Michael White, a spokesman for the U.S. Mint in Washington, said yesterday in an interview. There’s very high demand across the market for gold.”

http://www.bloomberg.com/apps/news?pid=20601087&sid=awFy4i6wSdmg&refer=home

Off we go on the second metals bull run. Looks like demand is dropping for jewelry…

http://www.research.gold.org/supply_demand/

I wouldn’t want to be hanging on to any gold past this spring, when all the moms and pops start running for it via investment time. It may go up fast but it goes down just as quick…

#110 smwhite on 09.23.08 at 10:37 am

Thought this was interesting when considering the price of commodities from 1995 – 2000, where oil ($15 – $20 a barrel) and gold ($250 – $300 an ounce). We had the largest jump in population in history, so hence the current undertaking of “demand destruction” of energy.

Slow down those birth rates via economic uncertainty and global instability!

Hey housing specualtors, the next large group is currently the under 16 crowd, so give them 10 – 15 years and we’ll start this housing bubble up again.

———————————————————-
According to the 2006 CIA World Factbook, around 27% of the world’s population is below 15 years of age.[14]

Before adding mortality rates, the 1990s saw the greatest number of raw births worldwide, especially in the years after 1995, despite the fact that the birth rate was not as high as in the 1960s. In fact, because of the 160 million-per-year raw births after 1995, the time it took to reach the next 109 reached its fastest pace (only 12 years), as world population reached 6000 million people in 1999, when at the beginning of the decade, the reaching was designated for the year 2000, by most demographers. People aged 7 through 17 make up these births, today.

#111 Slopetester on 09.23.08 at 10:56 am

Gold is a commodity yes. Gold is also Money, “honest” money, or “sound” money. Here’s an couple of examples of Why-Gold. In ’66 a top-of-the-line Ford Mustang Convertible could be bought for approximately 50ozs of Gold (approx $2,000). Today, a similar Ford Mustang Convertible can be had for 50ozs of Gold (approx $45,000). Gold does not go up in Value, Dollars go down! Our system of ‘measuing’ wealth is flawed, by design. A dollar is NOT an IOU for anything; it is a debt instrument. It has “counter-party risk” (like those Credit Default Swaps everyone is talking about). Gold is the ONLY form of monet WITHOUT counter-party risk. Here’s another example: a barrell of Oil in the 60’s cost roughly 4.5 grams of Gold, today the price is just slightly higher. So in terms of Gold, Oil is nearly the same price is was 50 years ago. It is not Oil going up in value, but dollars going own. The Dollar is about to be dumped, into the $Trillions, by Central Banks and Governments world-wide. Gold will react accordingly.

#112 if you don't like it on 09.23.08 at 11:40 am

Politicians and real estate agents will be working together flipping burgers, while the x ceo’s of large companies supervise at the local McDonalds.

Can I get that super sized?

#113 smwhite on 09.23.08 at 11:46 am

#110 Slopetester, bang on!

– It is not Oil going up in value, but dollars going (d)own. –

I guess this is what happens when you inject(or talk about injecting) billions and trillions of cash into the system, you get inflation.

The PRIMARY currency(USD) we use to buy and sell commodities is going down in value because of the magic printing press they have, therefore the opposite effect happens to commodities prices, its really not that hard to wrap your head around. This is the same reason the Euro and the Canadian dollar have risen against the American dollar.

There is only so long that the deflation of salaries, manufactured goods can continue with the inflation of food, energy and raw materials until the system “snaps”, it won’t be soup lines, it will be tent cities…

I find it disgusting that the American machine is attempting to print themselves out of debt, at the cost of the rest of the world’s future standard of living.

#114 dotava on 09.23.08 at 12:03 pm

#85 Noz on 09.22.08 at 10:31 pm

That is exactly why “democracy” with just two parties is not gone work (even more stupid is majority – recipe for dictator/disaster what we have now).

ABC

#115 Noz on 09.23.08 at 12:24 pm

Chris C #88

9/22/2008-Prt 2 Ron Paul Advisor Peter Schiff On Glenn Beck

paste it into you tube search….YIKES

Glenn Beck is a 100% douchebag….sub human POS if you ask me.

#116 The Tallyman on 09.23.08 at 12:43 pm

Y3maxx said: “In my posts #46 & #47 I’ve asked Garth to provide solutions and ideas…he hasn’t to this point…read his response to my post #28

CANADIANS NEED SOLUTIONS AND IDEAS, NOT THE OBVIOUS “SKY IS FALLING” SENSASIONILISM”
——————————————–

y3maxx… instead of whining about someone giving you ideas & solutions…. tilt your head back… look up…
notice…the sky is falling.

Think for yourself, save your ass or continue to hide under your bed until mommy gets home.

#117 brazer on 09.23.08 at 1:08 pm

Inflation at 5-year high
Sep 23, 2008
http://www.thestar.com/Business/article/504154

“The Canadian economy is struggling, but as anyone who lived through the ’70s remembers, that doesn’t bring an automatic or immediate cure for inflation,” commented CIBC World Markets economist Avery Shenfeld.

#118 Mike B formerly just Mike on 09.23.08 at 1:10 pm

Actually GOLD is the collateral for all money. Essentially money is obviously just paper so banks presumably keep gold on hand as form of collateral.

#119 brazer on 09.23.08 at 1:12 pm

#100

Isn’t the best investment a short position on the TSX? How can Canadian companies, who borrow like other companies around the world, be immune to this realignment of risk? One would think that a short position on the TSX should be an easy 20% return in the next few months.

For now, you can’t short even if you wanted to.
http://www.thestar.com/Business/article/504153

#120 brazer on 09.23.08 at 1:15 pm

Industry expert warned of financial meltdown
http://www.thestar.com/Business/article/503974

Average Canadians may feel removed from the crisis, but Das warns they are not immune. As Canadian banks deal with ongoing financial fallout, consumers can expect to pick up at least some of that tab.

Domestic banks have an estimated $823 billion of “notional exposure” to the world’s troubled credit default swap market. The notional amount is the face value of the assets underlying the derivatives. Actual losses would likely be smaller, unless their entire value went toward zero.

#121 dd on 09.23.08 at 1:17 pm

Inflation the crowd yells

http://www.globeinvestor.com/servlet/story/RTGAM.20080923.wrubin0923/GIStory/

#122 brazer on 09.23.08 at 1:17 pm

U.S. home prices drop 5.3% in July
http://www.reportonbusiness.com/servlet/story/RTGAM.20080923.wushousing0923/BNStory/Business/home

WASHINGTON — U.S. home prices in July fell a record 5.3 per cent compared with a year ago, a government agency said Tuesday, and have now receded to October, 2005, levels.

#123 christopher C on 09.23.08 at 1:22 pm

In reply,
I have seen Zeitgeist. its a good MOVIE.

Noz… My point is to comment on the commentary. I do not have cable nor do I watch CNN. I found that clip by searching Peter Schiff’s name on youtube. I have no idea who Glenn Beck is…

What are your thoughts on Peter Schiff and the other commentators and more importantly, what they said?

#124 dotava on 09.23.08 at 1:23 pm

#103 Calgary Rip Off on 09.23.08 at 9:49 am

Do U like to trade for a while that U don’t get bored. LOL

#125 Keith in Calgary on 09.23.08 at 1:33 pm

Glenn Beck is great……..unless you are a leftist.

#126 Shifty on 09.23.08 at 2:02 pm

Looks like the Canadian banks are the safe haven for investors.

#127 Future Expatriate on 09.23.08 at 2:24 pm

Gold bears probably have a reason for being so; they probably lost a ton of money on prior crashes.

The difference between those times and these? The complete worldwide collapse of the fiat money/banking system. No matter how much of the middle class are destroyed to bail them out.

This time it’s different. This time it’s going to stick, and for a very long time. Even if the currency deflates, gold holds its value. Currency fluctuates; not the value of gold.

If they used gold and gold coins easily and handily in the Old West as currency, gold coins can and could easily be used for real currency again once the infrastructure reverts back to that of the Old West.

Which seems to be coming. Once people figure out that all paper is only worth as much as the person or entity giving it to you; i.e., all governmental currency, bank i.o.u.’s, and investment paper is utterly worthless.

#128 Calgary_rip_off on 09.23.08 at 2:41 pm

smwhite:
The only thing anyone ever had of certainty is that they are mortal. The real problem with this “bailout” is attempting to hang on to something that is not there. What real value do you have in stocks, paper money? Both are represented by the value you attach to them. They are worth the same as monopoly money, they are symbols in essence. It’s truly amazing that money is used to buy anything. The buyer and seller trusts that the money is worth something. Therein lies the problem.

The USA is attempting to print themselves out of debt? Not attempting. They’re going to do it, unless Congress stops them.

Its truly amazing that all this technology has made things like this. It looks like AlQaeda succeeded in 1)showing how greedy Americans are, and 2)how they are utter fools in terms of inhibiting having to have their whatever. The problem is not the normal person wanting a decent place to live. It is the rich wanting more and more and more. Look at Donald Trump, for example, who endorses John McCain. Donald may have tons of money, this however just gives him more problems, not less. He sleeps 4 hours a night!!!

Democracy is non existent in the USA. There is no socialist party. And yet they require it urgently to save their asses….should have followed Sweden’s example long ago guys…

Eagerly awaiting the impact this will have on the crap that goes on in Calgary. No changes on the mls.ca site for the overpriced Calgary shacks as of late. Hopefully the whole damn thing collapses.

#129 Jen on 09.23.08 at 3:02 pm

Correct me if I am wrong but, wasn’t gold once confiscated not too very long ago by the governments and if this were to happen again, what then?

#130 Noz on 09.23.08 at 3:53 pm

Chris C:

Noz… My point is to comment on the commentary. I do not have cable nor do I watch CNN. I found that clip by searching Peter Schiff’s name on youtube. I have no idea who Glenn Beck is…

What are your thoughts on Peter Schiff and the other commentators and more importantly, what they said?

I agree with Peter Schiff. He’s right on the money.

But this government will print as much money as it wants to prop things up.

Look….this was a move by the current administration WITH the Fed to prop up the economy as much as possible until the next elections…NOTHING MORE, NOTHING LESS.

And they are going to get away with it. It’s as simple as that in terms of the underlying reasoning.

Glenn Beck states that we voted these people into office like Bernanke….WHEN, HOW? THROUGH WHAT MR. BECK??

TO GLENN BECK:

We’ve not elected a top official in this country into office for decades…wake up Beck…get your head out of Rush Limbaugh’s big fat ass.

#131 smwhite on 09.23.08 at 4:04 pm

http://www.moviesfoundonline.com/fiat_empire.php

Great movie, talks about the hidden tax, inflation… :)

The more you hear about the “risk” and failure of the current system, the more you wonder how long people will accept it.

Ron Paul for Prime Minister…

#132 RJT on 09.23.08 at 4:13 pm

Garth.

If the Great Depression part 2 comes soon, will everything revert to black and white again?

:)

#133 POL-CAN on 09.23.08 at 5:07 pm

There have been quite a few questions about the very basics of economy on this thread… Here is an excelent primer that explains how we got here and where we might be heading…. Please give it a chance , watch all 18 short chapters and you will have an understanding of at least the basics and all that is happening these days will make sense….

http://www.chrismartenson.com/crashcourse

#134 kabloona on 09.23.08 at 5:19 pm

NOZ: The amazing part about the United States is the incredible power that unelected officials wield in their system…and they often hang around for decades, never having to seek elected office. Take that dummy Greenspan (puh-lease!)….now it’s Paulson seeking untrammeled power to spend the loot….

yeah, Glenn Beck’s an idjut and Ron Paul’s a kook who would probably trigger a World-wide economic depression if he were in the White House, but at least he’s an intelligent guy who can discuss the relevant issues in a coherent manner…unlike the current occupant. ;-)

#135 ballkan on 09.23.08 at 6:20 pm

Garth, Garth, by disregarding Gold
you just prove again that you are a POLITICIAN as all of them that do like the paper money the ones you can PRINT TILL THE COW COMES HOME to futfill the promises DURIN the ellection.
Gold AS MONEY is your limmit to over spend as a POLITICIAN.
GET RID OF THE PAPER MONEY AND YOU DO NOT HAVE TO PROMISE A LOT …….. BUT JUST OT DO THE BEST YOU CAN AND PEOPLE WILL UNDERSTAND THAT AND WE WILL NOT HAVE THOSE BIG DEBTS….
I HOPE YOU GET THAT!!!

Garth howcome with the study of gold of the last 20 years you concluded that it is a just a speculative metal???
In the first 10 years of that period it did not move a bit.
But if you study the 5000 years of gold history you may
notice that gold is the only money around for now !!!

#136 jelly on 09.23.08 at 7:04 pm

Mike,
Very convenient of you to say.
Perhaps…
Why am I not in a position to comment
on stupid spelling mistakes? I do not
make silly spelling errors like you do
so don’t imply that I do.
I would want someone to tell me if I
was mispelling words and looked dumb.
While I understand that spelling is not
the main point of this blog, it is annoying
when adults make multiple mistakes that
are obviously due to being unaware.
Just trying to enlighten them, why am I
so wrong to do so?
Get over yourself.
Your just pissy because you look like an ass.

#137 jelly on 09.23.08 at 7:05 pm

Oh Mike, so sorry, I meant to say YOU’RE not Your-just
so you don’t freak out about it.

#138 Bill L. on 09.23.08 at 7:09 pm

I watch Glenn Beck and Lou Dobbs all the time. Reason is these two guys tell it like it is. I also listen to Roy Green on he weekends for the very same reason.

You may not like any of them but many, many times they are the first ones to tell you what you need to know and it is explained in a everyday way and fashion.

#139 jelly on 09.23.08 at 7:09 pm

Mike,
By the way, I have to say, amazing that you spelling
lose- loose TWICE wrong. I find it hard to believe
this was an accident, nice try.
I happened to come across the posting again.
You are an idiot!
You didn’t know the difference did you?
ha ha

#140 T.O. Girl on 09.23.08 at 9:46 pm

Have been keeping my eye on north toronto listings have seen some price reductions but prices still overinflated!!! There are still quite a FEW GREATER FOOLS purchasing 60yr old bungalows for 600,000 or two storey dumps for $800,000 !! When is this madness going to turn around, I know may people who are living way beyond their meens
hope all this will come to an end soon!!!!!

#141 EJ on 09.23.08 at 10:01 pm

#133 Kabloona:

The Bank of Canada’s board is not elected either. They are appointed. Take a look at the background of the current governor, Mark Carney. Goldman Sachs for 13 years. These guys aren’t much different than their US counterparts. They tell the party in power their version of how things are, and what should be done, and the party just kind of tilts their head, and says “duh, ok, you’re the experts”.

And I disagree about Ron Paul. He’s was the ONLY candidate who had a firm grasp on economics (Peter Schiff is his economic adviser). Not saying he could have prevented this, since it’s far too late, but his ideas regarding the removal of the FED is a step in the right direction for future protection of the economy, IMO.

#142 Calgary rip off on 09.23.08 at 10:45 pm

Mike: Watch out, jelly has PMS. If “jelly” is not enough of an indicator, she is probably someone of the female gender you dont want to know, which is quite obvious by her judgemental posts. Be thankful you are not married to her. Hopefully you are married to a woman who knows when to talk and when to shut it, because irregardless of gender, this blog is not about the Ye Olde rules of English grammar, and yet she thinks it is. Highly relevant that English gammer is when your equity is pooched along with your waistline and backside, the ultimate quality combo…

More than likely she is part of the Calgary coalition of greater fools who is now in a hole in Calgary. She shoulda held off on her purchase of that thar shack.

Last time I checked the mls hadnt dropped to baseline, so that thar equity in the hills should be all good.

#143 GrandePrairiegirl on 09.23.08 at 10:52 pm

History shows that fiat currencies always fail. Always.
The proposed $700 billion bailout will not solve anything long term. I feel it’s a stop gap (is that two words or one?) measure and will only delay the inevitable. Bush does not want to go down in history as having the system collapse while he’s still in office. Whoever takes office following him, Democrats or Republicans, I feel it won’t make any difference. Both parties essentially answer to the same group of people and it’s not average Joe the taxpayer.
Wish I had a crystal ball sometimes, as I have no idea how long they can stall the inevitable.
A total meltdown/collapse of the U.S. would take Canada right along with it as well as affecting most if not all other countries globally.

For Calgary Rip Off – I would most certainly fight as I have absolutely no desire to be a part of the U.S. and I know many others who feel the same way. Sad to say we’d be the underdog in every regard. Number of people we have are too few not to mention weaponry etc. Did you know that the U.S. & Canada have signed a reciprocal agreement which allows U.S. forces to be on Canadian soil and vice versa? In the name of security issues,civil unrest,disasters etc. Hhhmm, civil unrest.
The financial system collapse will definitely cause civil unrest on both sides of the border I’d say. They’ve been getting their ducks in a row for quite some time as they know what’s coming. The forces agreement, ever increasing powers given to the Homeland Security Dept.,expanded and beefed up FEEMA camps and who knows what else. The fascist police state is just around the corner.
And to all of you who are so undecided and where to put your “money”, is it gold or is it this or that? If it were me and my family & children and the scenario of collapse were looming, get rid of debt, have at least a six month supply of food and basic necessities etc etc etc. I also wouldn’t want to be living in any large urban centers. If it happens it will be extremely fast,when the sheeple start to panic you’ll see them changing extremely fast. Of course this would be where martial law comes into effect as I’m sure they’d have it here as well as the U.S. Bush has a provision in the Patriot Act for that, for as long as he deems there to be an emergency.
And to those who’ll tell me to take off the tinfoil hat etc.,
I say read for yourself. Not mainstream newspapers either. Too many things are changing and transitioning and taking place or have already played out it’s not just theory stuff anymore.
Advance apologies on any spelling errors I may have
made. I can’t believe there’s quibbling on typo’s here, very petty.

#144 GrandePrairiegirl on 09.23.08 at 11:07 pm

Here’s an interesting theory on the so called crisis.

http://www.infowars.net/articles/September2008/220908Reporter.htm

#145 Jen on 09.24.08 at 12:08 am

I am still waiting for an answer to my question. Gold confiscation. Can I get an answer please.

#146 kel on 09.24.08 at 12:28 am

jelly, you seem to have stumbled on a blog that you really do not bring any meaningful insight to. please go back to chastising kids on the playground for their bad grammar ,as you seem like the type to do so, and take your petty name calling with you. please tell me that you don’t base your intelligence on the fact that you are a darn good speller. you are obviously incapable of any intelligent debate and I await your response for which I am sure it will be a barage of name calling and hurtful words like “idiot”. please troll somewhere else.

#147 j on 09.24.08 at 2:31 am

As for the US invading Canada, all Canada needs is a ‘crisis’, and we’ll be welcoming US troops into the country:

http://www.ctv.ca/servlet/ArticleNews/story/CTVNews/20021210/patrol_canada_us_021209?s_name=&no_ads=

http://www.canada.com/topics/news/story.html?id=403d90d6-7a61-41ac-8cef-902a1d14879d&k=14984

http://www.globalresearch.ca/index.php?context=va&aid=8323

#148 David on 09.24.08 at 2:42 am

Repealing the Glass-Steagall Act at first glance looked like a stroke of genius for Hillbilly Bill Clinton. This past week yielded a bitter harvest. Blurring the four pillars of finance did not prove to be a panacea. The wisest thing to do would have been to let the Wall Street geniuses stew in their own juices. The middle class was for the most part excluded from the Wall Street prosperity rackets, so why all the need for buying bum assets at a premium price when private capital markets will not touch this garbage?
There are no bailouts for family restaurants that serve lousy meals or barbershops that give poor haircuts. The leading spokesmen for unregulated finance capitalism, lower taxes and no government intervention developed laryngitis this past week. Bailing out these incompetent fools will not save LIFE AS WE KNOW IT. Letting these useless wastes of human DNA fail in record numbers would if anything open the doors to building a new middle class economy.

#149 Thriller on 09.24.08 at 2:43 am

Here is a better pic for the heading of this topic:
http://upload.wikimedia.org/wikipedia/commons/1/12/Victims_of_the_1921_famine_in_Russia.jpg

#150 Noz on 09.24.08 at 3:14 am

Kablooma:

NOZ: The amazing part about the United States is the incredible power that unelected officials wield in their system…and they often hang around for decades, never having to seek elected office. Take that dummy Greenspan (puh-lease!)….now it’s Paulson seeking untrammeled power to spend the loot….

The whole US system is based of fraud, etc….I don’t know why everyone is so freaking proud of it.

Read Ian William’s Rum: The Real Social Drink of 1776….fantastic book on how much of a screwed up way the US was formed…and has never changed.

#151 Mike.Slob on 09.24.08 at 3:53 am

Here’s why Washington’s $1 trillion bailout is little more than a band-aid on a massive wound …

Why more than 1,000 banks are still in danger of collapsing no matter what Washington does …
Why scores of household-name companies are still at risk for huge stock losses or even bankruptcy …

It was a surreal moment: Senator Christopher Dodd told ABC’s “Good Morning America” that Treasury Secretary Paulson and Fed Chief Bernanke had just informed Congressional leaders “We’re literally days away from a complete meltdown of our financial system.”

Things got even scarier when he told CNN, “There was dead silence in the room for five to 10 seconds. The oxygen went out of the room.”

No wonder Congress is falling all over itself to pass the $700-billion bailout bill to buy toxic mortgages!
Combined with the $25 billion spent to bail out Bear Sterns, $100 billion each for Fannie and Freddie and $85 billion for AIG, Washington has now pledged more than $1 TRILLION to fight this crisis so far — and still, it’s only the beginning:

Two days ago, Paulson announced he’s adding another $50 billion to ensure the money market funds …
He’s also expanding the bail-out to include car loans, credit card debt and more …

And Democrats in Congress are clamoring for hundreds of billions more for a second economic stimulus package, for a bailout of homeowners at risk for losing their homes and more!
And still — even if Congress gives Paulson everything he asks for and more — there’s still one, glaring, “inconvenient truth” nobody’s talking about…
None of these unprecedented actions
are enough to end this massive debt crisis!

1. They do little to guarantee that more financial institutions won’t fail: Sure — Washington is going to buy toxic loans from the institutions that invested in them. But don’t think for a moment banks and other companies are going to get top dollar for the poison in their portfolios.

Although the details of the bailout are still sketchy, it’s clear that Washington will pay a deeply discounted price for that bad paper. That means the financial institutions that own those lousy investments are still going to take huge losses.

And in many cases, those losses are likely to be large enough to push many of these teetering firms over the brink.

Forecast: Despite this massive, historic, unprecedented bailout, you will still continue to see a chain reaction of bank failures and corporate bankruptcies.

2. They do little to slow the explosion in mortgage defaults that caused this mess in the first place: With the economy slowing, unemployment surging, home values still plunging and monthly payments on six million adjustable rate mortgages set to rise, the tidal wave of mortgage delinquencies and defaults we’ve seen so far is almost certain to grow larger, not smaller.

As Senator Chuck Schumer (D-NY), chairman of the Joint Economic Committee, told FOX News Sunday, “If you don’t solve the mortgage crisis, you’re not going to solve the financial crisis.”

3. They do nothing to address the $180-trillion derivatives time bomb at U.S. commercial banks: Thirty years of deregulation have allowed a parallel financial system to arise in America in which more than $180 trillion dollars in derivatives are held and traded by U.S. banks with scant government supervision or accounting.

The truth is, no one has any idea of the magnitude of the deleveraging ahead or the size of the debts that will ultimately have to be written down!

4. They do virtually nothing to cause lenders to end the credit drought that’s spreading the contagion to other sectors: To survive, banks are desperately raising credit requirements … slashing lines of credit for corporations and spending limits on credit cards … turning down all but the most highly qualified borrowers.

And that’s what’s causing so much pain at companies making products that consumers buy on credit: Autos, home improvement products, electronics and other high-end merchandise.

BOTTOM LINE: As massive as it is, the Paulson-Bernanke plan can’t even begin to resolve this crisis. In fact …

*This $1 trillion bailout virtually guarantees
this crisis will spin wildly out of control!

Look: Until last week, the White House projected that the 2009 federal deficit would be $482 billion. Now, just with the bailouts announced and proposes so far, Congress is tacking on 1 trillion to that number, or even more.

That means plunging prices for Treasury notes and bonds plus soaring interest rates. And that, in turn, means rapidly rising payments on ARMs — a coup de grâce for millions of homeowners who are barely clinging to their homes as it is.

It also means the recession will be deeper and longer than it otherwise might have been. And it means scores of U.S. companies that manufacture and sell products requiring consumer credit will be hit even harder.

#152 crashing yuppy on 09.24.08 at 6:18 am

Dont Worry Mike,

Spelling is all Jelly has. Usually I find people with no valid arguments default to this as it is the only thing there minds can grasp.

It is a small argument from a small mind.

#153 mike on 09.24.08 at 7:40 am

Jelly 138…. Do you actually read your own posts…”amazing that you spelling” is what you wrote retard. Is that some form of moron English. Grow up and learn to critique your own writing and of course thanks for your insightful posts. Sarcasm if aren’t quick enough to pick that up brainless.

#154 dotava on 09.24.08 at 9:54 am

#127 Calgary_rip_off on 09.23.08 at 2:41 pm

In non banana country someone finish in jail doing such thing. Let see is Canada country ruled by law or just banana country.

#155 Al on 09.24.08 at 9:56 am

Inflation vs deflation.

All those write offs the banks are taking is the destruction of money. It’s deflationary. The new money creation by the central banks is not keeping up to the destruction. The seizing of credit markets is the slowing of money, which is also deflationary.

For those that point to the rising price of commodities as the proof of inflation, think about what the remaining money is doing. People are afraid to buy debt. The stock market is too small to absorb the money fleeing debt (and of course markets are falling as well) so the money is going into commodities as the ‘safe’ play. Add in perceived shortage of oil, and you’ve got raising prices even though everthing else is falling (I say perceived shortage because I’m not sure about peak oil, could be true or not.)

For gold bulls, keep in mind that gold really isn’t usefull. The only value it has is the same as fiat currency, trust you can trade it again later. If people won’t accept it, it’s useless. And pointing out that fiat currency always fails is as valuable as pointing out that civilizations always fail. Until it fails, you’re better off participating. I’m not saying don’t put money into gold, I’m just saying don’t put too much into gold thinking it’s the only safe bet. It may or may not be more safe than some places to put your money, but either way you’re better to spread it around (diversification!)

#156 Calgary Rip Off on 09.24.08 at 10:00 am

Grande Prairie Girl:

Its a known fact that the state of California has I believe the population of California, so indeed Canada would encounter a significant issue if USA were to invade Canada for resources. It seems very unlikely, however.

The direct correlation remains to be seen as to what will happen in Canada as related to the US proceedings. If the US dollar does decrease vastly as is very possible, then tradings with Canada will become problematic. More than likely the mills on Vancouver Island will shut down permanently as the tariffs compounded with the inability to sell “expensive” wood products/lumber south of the border will eliminate a trade partner.

Its also extremely interesting that all regulations were off for free trade in the markets in the USA, and yet when problems arose, socialist banking tendencies are now in the making. One issue is that the United States is too big for its current state of democratic “process”. Its always been interesting that the states largely bordering the oceans are often democratic, whereas the plains and centre are republican. Perhaps the USA should divide itself, this may lead to better government.

It appears that the regulations in place for Canada apart from the 0% down 40 year amortization period have protected homeowners and main street from the general disaster occurring.

Whether USA becomes a fascist state truly remains to be seen, the steps are in place though.

#157 Calgary Rip Off on 09.24.08 at 10:00 am

typo: California has the population of Canada. oops.

#158 Bobby in Victoria on 09.24.08 at 10:44 am

The 700$ billion is not a bailout. It is solely to restore confidence to prevent a run on the banks.
The government wants to avoid people withdrawing their money in fear that their financial institution will collapse.

#159 Dave on 09.24.08 at 10:52 am

#150 Mike.slob,

Respectfully I disagree with you.

The important difference is between the net toxic debt and the gross total of various derivatives and securitized mortgages/etc.

Take a step back and view the big picture.

Start with the lost residential real estate equity.

Remove the portion that was originally a paper gain and was not borrowed against.

Remove the portion that will be retained by the homeowner.

The remainder (ie the mortgage defaults) is the problem.

Of the mortgage defaults, a certain portion will have been retained along the way by various institions, and the remainder is the “toxic” debt that everyone is talking about.

Depending upon which $’s you use for your assumptions above, the total “toxic” debt will likely be in the range of $1 to $2 trillion.

Looking at the declared losses thus far ($500billion+?), I think that Paulson’s estimate is dead on the money.

Most importantly, it removes the fear and panic from the market.

However, as I see it there do indeed remain 3 problems with the plan.

1. The details of how they implement it, and prevent abuses by opportunistic market participant.

2. I don’t think the plan will prevent an overall economic malaise (recession) from continuing to grow.

3. I think the place represents a betrayal of many fundamental, contitutional, American principles.

It is #3 that I think is the biggest problem. Long term I think there will be far ranging political, economic an reputational ramifications if the US implements this bailout.

In conclusion, I think we need to offer up a hearty congratulations to George W.Bush for this highlight of his career.

Yes indeed! It appears likely that he will finish his 8 years WITHOUT having bankrupted the federal government. This will be the FIRST organization/company he has ever led that has NOT gone bankrup1.

Bravo George W!

#160 confused and a little crazed on 09.24.08 at 10:58 am

If we have to fight US …sign me up. I personally don’t like guns but we have to survive and honestly with our resources it would be more like a resistance than an army

#161 McSteve on 09.24.08 at 12:17 pm

(10,000 B.C. in a cave somewhere)

Zog run low on food, have to borrow deer from Berg in next cave…

Berg give Zog deer but Berg want 1 Deer and 1 Duck in 3 months. Okay…

Then Zog borrow Moose, then a deer, then some ducks.

After some winters, Berg get angry and want moose, deer and ducks back. Zog offer Berg promise written on Birch bark and Zog’s “lucky rocks” to hold. Berg sort of happy – always like Zog’s lucky rocks because rocks are shinny red. Berg REALLY like red rocks!

Then, Zog borrow more moose, give more birch paper and more lucky rocks to Berg. Zog run out of red rocks and give Berg gray rocks. Berg confused… Zog convince Berg grey rocks WAY BETTER than red rocks. Berg not too smart and now happy with grey rocks.

Zog smart! Zog stop hunting and spend almost all day eating moose and telling hunting stories by fire. When moose run out, sometimes Zog go looking for grey rocks and birch bark to give for Berg’s moose. Way easier to get rocks than to get moose. Also, way more fun to eat and tell stories than get own moose.

This work for many winters. Than Berg get hungry. Berg notice that Berg is hungry and Zog fat. Berg tell Zog Birch paper and rocks no good to eat and want all moose, deer and ducks back.

Good thing Zog’s club is bigger than Berg’s. But now Berg tell friends not to lend Zog more deers or moose.

Zog in trouble with no friends and winter coming…anyone want grey rocks?

#162 bob on 09.24.08 at 12:20 pm

Canada could be headed for mortgage meltdown, says Merrill Lynch Canada
2 minutes ago

TORONTO — Merrill Lynch is warning that Canada could be headed for a housing and mortgage meltdown similar to the one that has devastated the United States economy.

A report issued Wednesday by Merrill Lynch Canada economists says many Canadian households are more financially overextended than their counterparts in the United States or Britain.

They say it’s only a matter of time before the “tipping point” is reached and the housing and credit markets crack in Canada.

The Merrill Lynch Canada report by economists David Wolf and Carolyn Kwan acknowledges that the analysis is more pessimistic than the prevailing view.

Many economists have been saying that Canada’s housing and banking sectors are much more stable than their American counterparts and will likely slow down but not crash.

But Merrill Lynch – whose U.S. parent is one of the biggest victims of a crisis in financial markets that is rooted in the American housing and mortgage meltdown – says Canadians should be wary.

Household net borrowing in Canada amounted to 6.3 per cent of disposable income in 2007 – meaning they’re carrying more debt than households in the United Kingdom and not far off the peak U.S. shortfall in 2005 – just before the subprime mortgage crisis erupted.

“These data imply that the Canadian household sector is now overextending itself as much as the U.S. or U.K. ever did, challenging the consensus view that Canadian lenders and borrowers have been far more conservative through the cycle,” the Merrill report says.

It also says housing prices are now falling and inventories of unsold homes are rising sharply in Canada suggesting that this market turnaround will not be a transitory phenomenon.

However, the prevailing view is that Canada’s lenders have issued few of the type of subprime mortgages that sparked the U.S. crisis, which is continuing to ripple through the financial system.

In addition, many observers argue that Canadian residential properties are, by and large, not overvalued – considering the strength of regional economies in resource-rich provinces.

#163 M in Toronto on 09.24.08 at 12:24 pm

Late to the party… ?

http://www.reportonbusiness.com/servlet/story/RTGAM.20080924.wmortgage0924/BNStory/Business/

#164 squidly77 on 09.24.08 at 12:40 pm

TICK TOCK TICK TOCK TI….

#165 POL-CAN on 09.24.08 at 12:43 pm

#157 Bobby

The 700 B bailout is a scam…. First it is not just 700 B but 700 B at a time thus it could turn into trillions!

Second it is for the benefit of two IBs (GS and ML)… i.e. it is a bailout for the creators of this disaster… Think derivatives….

Third it is theft… pure and simple…. from the tax payer to the PTB

Fourth it will not restore confidence or prevent bank runs…

The best thing to do is to let the insolvent corps fail, take the losses and hardships worldwide and get on with life…. The worst thing to do is delay this recession/depression a few weeks/months at a time….

Sorry for the rant

#166 Dawn in Calgary on 09.24.08 at 12:46 pm

Read an interesting comment today in regards to the FBI investigating the big four (Freddie/Fannie, Lehman, AIG). Give more fuel to the global conspiracy theorists.

“How can the FBI do an “independent” investigation when they are in the same cabinet Paulson is? There will be a rubber stamp on Freddi/Fannie, so why waste more TAXPAYER dollars?

Congress has increasingly voted more power to the FED (over 200 times) — no questions asked. The Federal Reserve (FED) is NOT a Federal agency but a private bank owned by 12 extremely rich families mainly from Europe (Rothschilds, Warburgs, Harrimans, Rockefellers, Lehmans). All the FED does is “print money” — the entire national debt is owed to these 12 families. Kennedy, Lincoln, and Jackson had the U.S. start printing its own money, and they were shot.

The current financial meltdown by the FED has been planned for many years, but their time was running out and they had to speed it up. An hour of research on the FEDERAL RESERVE at google and on YouTube reveals volumes.

After deliberately “creating” this nightmarish” financial crisis, the FED intended to “force” Congress (very quickly as in Paulson’s dire warnings) to hand over the entire U.S. fnancial system, where the FED makes the rules and the U.S. has no more control. Congress would be obsolete. They would control all the banks, credit unions, investments, and insurance.

For years now all government employees, social security and Veteran’s recipients have been required to direct deposit their paychecks. The FED intends a cashless era, where you will be unable to use your debit card (or microchips) except at the mercy of the FEDERAL RESERVE’S 12 rich families.”

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

But back on topic — the CREB lists the median home price in Calgary today at $395,000 — once that $400k threshold broke, it’s just coming down fast! ;-)

#167 GrandePrairiegirl on 09.24.08 at 1:44 pm

Calgary rip off,
Thanks and well written. Unfortunately I’m not an eloquent writer as some on here. I did know about the pop. of California being the same as Canada’s entire pop. Have vacationed through the entire west coast and would move to Oregon in a minute if it weren’t for the government and the earthquakes,lol.

And today’s doom & gloom from Merril Lynch Canada.
So there you have it, NO politicians can be trusted. Harper & Flaherty’s reassurances mean nothing.
http://www.mytelus.com/money/news/article.do?pageID=ex_business/home&articleID=3001993

#168 anon - GTA on 09.24.08 at 1:46 pm

Canada could be headed for mortgage meltdown, says Merrill Lynch Canada

http://www.680news.com/news/business/more.jsp?content=b092458A

#169 dd on 09.24.08 at 1:59 pm

Bobby 157,

Not a bailout? So this money is for what? Confidence? Money might appear out of thin air, however, these are real debts that have to be paid.

Wake up. This is a massive bailout.

#170 smwhite on 09.24.08 at 2:06 pm

Holy Jebus Jen #144 don’t be so lazy, google “gold confiscation” for pete sake… add “1933” if your really struggling.

Gold is more then just jewelry or coins, many uses in electronics and computers, dentistry and medicine… Same thing with silver and PGMs, they have many uses more then their ability to be exchanged for goods and services.

The following link is a good read on both the effects of inflation and deflation and has good points from both sides:

http://www.gold-eagle.com/gold_digest_04/bugos022604.html

Peter Schiff’s take on inflation versus deflation:

http://www.todaysfinancialnews.com/us-stocks-and-markets/inflation-versus-deflation/

#171 Missed the boat on 09.24.08 at 2:16 pm

Garth you are a prophet. Let’s saddle up for this long, hard ride…..

Canadian housing crisis warning
U.S. mortgage, housing woes could come here, Merrill Lynch says
September 24, 2008

THE CANADIAN PRESS

Merrill Lynch is warning that Canada could be headed for a housing and mortgage meltdown similar to the one that has devasted the United States economy.

A report issued Wednesday by Merrill Lynch Canada economists says many Canadian households are more financially overextended than their counterparts in the United States or Britain.

They say it’s only a matter of time before the “tipping point” is reached and the housing and credit markets crack in Canada.

The Merrill Lynch Canada report by economists David Wolf and Carolyn Kwan acknowledges that the analysis is more pessimistic than the prevailing view.

Many economists have been saying that Canada’s housing and banking sectors are much more stable than their American counterparts and will likely slow down but not crash.

But Merrill Lynch – whose U.S. parent is one of the biggest victims of a crisis in financial markets that is rooted in the American housing and mortgage meltdown – says Canadians should be wary.

Household net borrowing in Canada amounted to 6.3 per cent of disposable income in 2007 – meaning they’re carrying more debt than households in the United Kingdom and not far off the peak U.S. shortfall in 2005 – just before the subprime mortgage crisis erupted.

“These data imply that the Canadian household sector is now overextending itself as much as the U.S. or U.K. ever did, challenging the consensus view that Canadian lenders and borrowers have been far more conservative through the cycle,” the Merrill report says.

It also says housing prices are now falling and inventories of unsold homes are rising sharply in Canada suggesting that this market turnaround will not be a transitory phenomenon.

However, the prevailing view is that Canada’s lenders have issued few of the type of subprime mortgages that sparked the U.S. crisis, which is continuing to ripple through the financial system.

In addition, many observers argue that Canadian residential properties are, by and large, not overvalued – considering the strength of regional economies in resource-rich provinces.
thestar.com

#172 dd on 09.24.08 at 2:20 pm

155 Calgary Rip Off,

If we provide water and oil the US will not invade. The main reasons the US wants to open up the NAFA again is to cement the “US Water Rights” into the agreement.

Peter lougheed keeps mentioning this time and time again.

http://www.ctv.ca/servlet/ArticleNews/story/CTVNews/20051214/lougheed_waterpolitics_20051214?s_name=&no_ads=

#173 GrandePrairiegirl on 09.24.08 at 2:25 pm

Enjoy Stage 1 of the collapse. You’ll miss it when it’s gone.http://cluborlov.blogspot.com/2008/09/adieu-stage-1-collapse.html

#174 The Tallyman on 09.24.08 at 2:38 pm

To Jen: Gold Confiscation

In 1933, in order to stabilize the monetary system, President Franklin D. Roosevelt, under Executive Order No. 6102, confiscated all privately owned gold in the United States.

Just google “gold confiscation” for more info.

Could it happen again?
My opinion is no law is a guarantee. Laws can and are changed at will by those running/manipulating the show.

I’m thinking any legit gold purchases leave a paper/digital trail right to your door…. so if big brother ever decides he wants it, he knows where to get it!

Not trying to spook anyone.
Just a nudge to avoid putting all your eggs into gold,
you still have to buy the basic food ect… to survive crisis.
Not saying this will happen, but preparation for a rough ride is always good.

I could never imagine trotting into a 7-11 to buy milk and plunking down a gold coin.
In a crisis where banks & institutions may not be around to handle gold transactions… good luck.
the guy at the 7-11 probably won’t even touch that gold coin…. he’ll throw a slurrrpeee at you and tell you to take a hike!!!

I’d keep lots of cash on hand,
It’s devaluation may be brutal but as long as the general
public is still using it… cash will save a butt or two if things get really out of whack.

On a side note:
A lot of people are asking where do I invest now?
Should I invest in gold?

I’m thinking more like… should I even be thinking about
investing in anything right now?
Seems like we’ve been trained like monkeys to hand over all we own to others. Like we can’t trust ourselves.

Wear a helmet to ride around the block but take absolutely no precautions in handing over all our money to strangers.

The best place to invest right now, YOURSELF!
I’m getting help for my investing addiction and the doctors are telling me the money that’s burning a hole in my pocket won’t leave any scars.

#175 smwhite on 09.24.08 at 3:24 pm

http://www.cbc.ca/money/story/2008/09/24/canada-housing.html

Oh dearest Garth, do I smell an election issue brewing?

#176 Noz on 09.24.08 at 3:36 pm

Calgary Rip Off:

It appears that the regulations in place for Canada apart from the 0% down 40 year amortization period have protected homeowners and main street from the general disaster occurring.

Whether USA becomes a fascist state truly remains to be seen, the steps are in place though.

Nothing protects people from over-priced properties…and I don’t care where on this planet you are.

Canada is as vunerable and as “out there” as is the USA. For you to think otherwise is pure delusion.

#177 Greg in Victoria on 09.24.08 at 4:26 pm

VANCOUVER (Reuters) – Canada’s housing market is in good shape and there is no risk that it will collapse, Prime Minister Stephen Harper said on Wednesday after a report from Merrill Lynch Canada suggested otherwise.

Merrill said the absence of a credit crunch in Canada like the one in the United States should be cause for concern, not comfort, and added that the market is too optimistic about prospects for the housing sector and the overall Canadian economy.

Harper was quick to pour cold water over that notion when asked about it by reporters during a campaign stop in Vancouver, British Columbia, ahead of the October 14 general election.

“I don’t accept that conclusion, not at all,” said Harper.

“Firstly, we have seen that the housing market and the construction market are much stronger in Canada than in the United States. We don’t have the same situation here with mortgages as was the case in the United States with the subprime mortgages there. And so therefore I think our market is in a much stronger position.”

http://news.yahoo.com/s/nm/20080924/wl_canada_nm/canada_us_economy_mortgagescan_1

#178 Mike on 09.24.08 at 4:52 pm

The 700 billion is being used to buy back the bad debts on the banks balance sheets so that they can then move on to promote and acquire new capital. I am not sure how you can’t call it a bailout. It’s just the opposite of what the american system is founded on… free market.. I guess the banks feel the word free means free money when they need it. It is still putting the losses of the banks onto the balance sheet of some fictional entity that will hold all these debts to do whatever god only knows. It is truly NOT a free market where if you gamble big you win big. The banks want it both ways and argue that it would cause too much turmoil in the world if they were forced to go bankrupt.
Furthermore I am not sure how much confidence is created when a minimum of 700B is needed and when Hank and Ben have to beg for cash from the Senate Banking Committee . That does not make me confident they have things in order.
Merrill Canada feels Canada is heading for a mortgage meltdown just as Garth has predicted many many months ago citing that Canadians have a ton of debt on their plates, also pointed out by Garth quite some time ago. Obviously the realtors think differently and say the market is more “balanced”. Whatever..

#179 Calgary_rip_off on 09.24.08 at 5:21 pm

Garth your view on the below article?

PM rejects Merrill housing-market warning
Reuters
Published: Wednesday, September 24, 2008
VANCOUVER (Reuters) – Canada’s housing market is in good shape and there is no risk that it will collapse, Prime Minister Stephen Harper said on Wednesday after a report from Merrill Lynch Canada suggested otherwise.

#180 dd on 09.24.08 at 5:43 pm

Yup … gold is dead.

Not much of a return since then. Oh look … $200 to almost $1000 in six years!

Thank God I stayed away for this asset class. I would have made nothing but gold.

#181 Sam on 09.24.08 at 6:11 pm

Merrill Lynch Economists Has Doomsday Forecast For Canada’s Housing Market

**********************
http://www.allheadlinenews.com/articles/7012415249

#182 Drmemmo on 09.24.08 at 6:12 pm

ML’s Canada “The tipping point” report, hot off the press (PDF):

http://cfcr.ml.com/GetDoc.aspx?e=we%2f5N0iuZK6i0yToLhuauIHZFdKmBw5nBhIlTGqkN%2fyvsisdXbdtEgw5eRyin0Z3%2fVA03LtWMfy8alkPgH7TSA%3d%3d&ctbDocIDs=10769189&v=1&m=XPCq%2bVyX27bchJxbYHbpknemGiM%3d

ML’s David Wolf and Carolyn Kwan believe the crash in Canada’s housing market is imminent, calling it “simply a matter of time.” They present a compelling case, with superimposed charts comparing key economic indicators from the US, UK, and Canada. The unnerving trend here is that Canadian households seem to have now reached a potentially breaking point, which will likely accelerate the fall in Canada’s RE/financial markets.

Your comments on this report will be appreciated. This is adding to the mounting wave of (recent and widely publicised) evidence that our RE market is in severe trouble.

By the way, Garth, I loved the book; it helped reinforce my long-standing resolve to resist the pressure (social and otherwise) to “take the plunge” into contemporary RE ownership. This blog has become part of my daily reading and of my ongoing “education” in finance and economics. Thanks to all the helpful posters, please keep the insights coming.

#183 revolutionary on 09.26.08 at 4:27 pm

To: y3maxx post #28

“…IF YOU ARE SO GOOD AT PREDICTING THE END GAME…THEN NOW IS TIME FOR YOU TO PROVIDE THE SOLUTIONS & IDEAS…”

Look up here for what to do:

http://video.google.com/videoplay?docid=-9050474362583451279&total=35&start=0&num=10&so=0&type=search&plindex=8