Rolling them

Forgive me the brevity of this post. As I said a few weeks ago, an election campaign is demanding and serious. It requires time under the best of circumstances.

My campaign has been difficult – not for volunteers or enthusiasm, ideas or spirit. Rather, for the relentlessness of the attack and the daily traps. When it is done, I will share with you just what has happened. My political blog, by the way, is at www.garth.ca/weblog.

As you know, the tenure of this campaign has changed as the world goes to hell. The prime minister, who a few weeks ago refused to talk about markets and said everything was cool, is now musing about bailing out the banks and pumping hundreds of millions into emergency jobs funds.

In the meantime, the world’s financial markets have turned thumbs-down on the US bailout, as I knew would happen. This is no fix of anything. Instead, it was a desperate throw of the dice by the professional politicians and establishment backers in Washington and New York. They lost.

As will become apparent over the next few months, this is the start of the troubles, not the end or the middle. It will be clear in future times that America would have been far better to left the credit freeze take down a bank or two – even giant ones – and to seize up car loans and new mortgage lending, rather than saddle the economy with a trillion dollars in worthless obligations.

In the last few days comes ample evidence the gamble has failed. Stock markets are in a rout. No bottom is even in sight. The Fed has been forced to spend billions and billions more buying up short term paper. Interest rates are about to plunge. Banks across half the world are in crisis. Government are scrambling to guarantee private deposits just to prevent runs on the banks.

And, of course, real estate is in the crosshairs.

I write this after a few hours of knocking on doors in one of the priciest communities in Ontario – Oakville. One of them belonged to a long-time local real estate broker who was almost in tears. Listings are exploding, once-rock solid prices are crumbling, and yet sales have vanished.

Today CIBC economist Benny Tal (I know him well) said national housing prices will bottom out with a loss of 10% of value from current levels, which are down 5% from the high. He’s dreaming, or he’s on a leash. Given events of the last week, the average house prices is going to crater by at least 25%, and a floor will not be reached until at least 2010.

Still, to have a major bank economist actually admit a 15% price drop is stunning. Just 90 days ago, the real estate industry, and the economists who support its mortgage component, were musing on a reduction in the increase in prices.

Recession is now with us, and will be for years. Credit will be much harder to get – in fact, mortgages at TD Canada Trust became more expensive as of this morning. Far too many small businesses and manufacturing entities will not survive. Retail sales will be a mess, especially in the electronics and home furnishings sectors. The price of oil could actually drop to $50 in the coming months as the US economy implodes, and I do not need to tell you what that means to the oil sands or the Alberta miracle. It’s bail time.

In the next seven days, this financial earthquake, which has been visited upon an unsuspecting nation (they don’t come to this blog) could well have a profound impact on this election. Stephen Harper acknowledges the crapstorm, but has no discernible plan to deal with it. Sadly for him, he is inextricably associated with the failed polices of the administration to the south of us and a president who just blew the legacy thing.

As for me, well, I’m in a big fight. There’s a well-funded Conservative bobblehead and her brigade flooding in. I should probably know better but, dammit, I just saddled up

Cannon to right of them,
Cannon to left of them,
Cannon in front of them
Volley’d and thunder’d;
Storm’d at with shot and shell,
Boldly they rode and well,
Into the jaws of Death,
Into the mouth of Hell
Rode, rode, rode….

100 comments ↓

#1 Daniel the Prophet on 10.07.08 at 6:56 pm

Soon you will be able to spend more of your time here with us and thats a good thing . We do like you !

#2 The Tallyman on 10.07.08 at 7:03 pm

For sure the middle class are getting all the rungs kicked out from under them as one twist after another develops.

And there will not be anyone or bank in a position to draw up a mortgage when house prices come around to reality.
As for Canada, we’re gonna take a hit too, I really hope it is not as bad here.

To add a little humour to the bad stuff happening…
On the bright side Tim Horton is sending in the troops to conquer the USA.

#3 nearmilton on 10.07.08 at 7:09 pm

Dear fellow Canadians, this weekend when you sit down with your family and perhaps share a meal, remember why we are here on earth. Think of the homeless, the pain and suffering of the past men and women who lost their lives in the war for our current freedom we have today. Think of the environment. Then take a look around what is going on today. With this in mind vote on Oct 14th.

#4 Jon B on 10.07.08 at 7:36 pm

Garth, were you in a bad mood when you wrote this?

#5 Krazy Canuck on 10.07.08 at 7:59 pm

Keep it up , fight on!

Good luck Garth.

#6 3rdman on 10.07.08 at 8:00 pm

Garth

Thank you for this blog you and your group of regulars have educated me.

Folks am I alone or are you too exasperated by the sheer number of greater fools out there who don’t see whats happening..?

#7 $fromA$ia on 10.07.08 at 8:01 pm

Vote #2 Liberal. We must weather we like it or not nock of the Conservative Party ( they are responsible for the zero down and 40 year ammortization).

#8 RimmyJ on 10.07.08 at 8:10 pm

Garth: Until a few weeks ago you suggest that the prime minister didn’t want to talk about the economy. I do not recall Mr. Dion talking about it either. All he wanted to talk about was his “green shift” plan. In fact, a week ago I received a circular directly from Mr. Dion promoting that very policy. Lest you think I am a die hard Conservative, I can tell you I have voted either Liberal or conservative in every election since 1968. During that forty years the liberals have held power 69% of the time and the conservatives 31% of the time. This economic problem did not just happen overnight. It has built up over that time due to both individuals and governments spending beyond their means. Neither Mr. Dion nor Mr. Harper can solve it. The day of reckoning has arrived.

#9 Ontariohouse on 10.07.08 at 8:15 pm

Garth I love your site. Everything you say is so true. You remind me of Peter Schiff. He’s a person who predicted the whole real estate collapse in the States way before it happened. At the time he was making his predictions people were laughing at him, they called him crazy. They labelled him “Dr Doom”. Well now these same people are no longer laughing. Too bad they didint listen on time. Many of his interviews are on youtube.

#10 y3maxx on 10.07.08 at 8:17 pm

Absolutely No “Depression or Recession” in Canada.

…We will all be able to join the Canadian Armed Forces and protect Canada from “the soon to be” invading U.S. armed forces.

Manifest Destiny and all that stuff.

#11 dd on 10.07.08 at 8:24 pm

Garth,

In your book you talk about peak oil. What is your theory today if oil is going to $50?

#12 Barbara Samson on 10.07.08 at 8:26 pm

Go, Garth, Go!

#13 Winston Smith on 10.07.08 at 8:34 pm

Since very tough economic times are ahead do you think it is a good idead to keep importing 250,000 plus immigrants each year? If adding 250,000 people looking for work into a contracting economy is a bad idea, why have you not spoke out against our immigration policy?

#14 Another Albertan on 10.07.08 at 8:51 pm

@3rdman:

I gave myself a “statute of limitations” that prevents me from expending too much energy and time on people who simply refuse to listen – people so inebriated by the velocity of their perceived ascension over the past few years that they would or could never allow for alternate, rational points of view backed by data.

In a few months all you will here from these same people is “woe is me”.

#15 confused and a little crazed on 10.07.08 at 9:11 pm

I recall this quote from Batman

” You can’t bribe them and you can’t reason with them. They just want to see the city burn”

Is this the conservative economic plan….maybe this is a little extreme…what is their plan?

#16 Peter on 10.07.08 at 9:22 pm

All i can say is Oil is possible to go to $ 50 / bbl but one thing is when massive bailout, injection of liquidity and buying bad debts from govts all over the world, this will bring in a massive float of money into the system, it can never drain out unless govt has a plan to do so..With the white house gangs keeps supporting the printing press and their workers to do maybe 36 or 48 hours work in 24 hours, they will bring in massive hyperinflation of every products in our households….I hope this wont happened but with the current situation going on, I would think it is possible that will happen after this storm…Why you all should NOT vote for PC is that our middle class will get squeezed either north or south because if you enjoyed the show down south…PC will do very much the same to you all by giving perks to the rich boys (banks and other big boys) here, lend them loads of money if something bad hits the fan (automakers, manufacturing sector with large employee base) and we will soon bailing out them before we can bail out ourselves out of debt !!!

#17 observer on 10.07.08 at 9:50 pm

#13 Winston Smith
At first blush people automatically come to the same conclusion you did. The unfortunate reality is that no one here wants the low end laborious jobs. Immigrants do. Folks (kids) brought up here feel they are entitled to 6 figure salaries right out of the box. If not that, then they choose a lifestyle where society supports them. The west coast has shown this is spades in the last few years. There were job sites hurting to find laborers to fill empty positions with all the activity of the last few years. At the same time, we have never seen so many able to work homeless on our streets. This in a time where anyone wanting to work could find numerous opportunities. I often wondered if we have so many youth begging and living in the streets with so many opportunities, what would happen if times were bad. I guess we’re going to find out soon enough.

#18 dboy on 10.07.08 at 10:03 pm

In Vancouver I had decided I was simply going to vote for whoever had the most lawn signs, the I realized i would be voting for: “FOR SALE.”

#19 i'm really tired of all the negative news on 10.07.08 at 10:07 pm

Garth i’m must admit i’m addicted to your site but i cant believe the negative bullshit from the media over the past week does anybody really know what will happen? how can someone predict that housing pricing will drop 25% by 2010 maybe it might be 50% maybe only 5% how do you support this information Garth?
i know you can assume because its happening in the states but you as a person how do you come up with this information?

I am being conservative. You should hope I’m right. — Garth

#20 Calgary rip off on 10.07.08 at 10:10 pm

Nice posts as usual Garth.

I question whether all the anxiety is worth it though. Most people have both legs, both arms, can see, can think and can breathe. The only problem is the self talk going on in their brain. Unfortunately, there are so many things a person cant control. Its too bad that George Bush has led to ruin of the global economy. Its too bad(for some) that the stock market and commodities etc are a mess.

Question: Has food production stopped? It doesnt appear so. Is their still oil? It appears so. Bottom line: Things are much much harder and greedy individuals will need to act with restraint. What a concept. Control of desires needed in an immediate gratification world. Only in the last century were things like this. Only now there may be a tapering of the greed.

Less greed and a little bit more suffering is a good thing. It’s how people grow and realize how much they do have.

#21 negative news on 10.07.08 at 10:12 pm

GARTH, how do you support the information on the housing market is going to drop by 25% by 2010 why cant it be 50% or even 5% a place like Oakville has been over priced for years it would be about time the housing prices come down in Oakville

#22 prairiegopher on 10.07.08 at 10:22 pm

My daughter received this from a realtor in Edmonton this morning:

“Edmonton resale housing market sizzles in third quarter
Edmonton, October 6, 2008: REALTORS® have been kept busy with strong sales of homes through the Multiple Listing Service® in the past three months. September residential sales were up 65.9% from the same month in 2007 and built on year-over-year sales increases in July and August.

“Edmonton may be the only housing market in western Canada that has increased sales in the third quarter,” said the president of the REALTORS® Association of Edmonton. “After peaking at record sales numbers in early 2007 the market slowed through the first half of this year. But sales have certainly picked up to the normal range and surpassed same month sales from last year.”

There were 1,140 sales of single family residences in September with an average price* of $362,097 down 1.9% from last month. Condominium sales were up from the previous month by 11.7% with an average price of $252,234 on 477 sales during September. Duplex and rowhouses sold on average for $315,690, which was up 0.1% from August with sales of 79 units. The average residential sales price (including all types of residential property) was down 1.3% from last month to $324,906.

“The sales increases may have been helped by slightly softer prices for all types of homes.” “But a bigger factor is the continuing strength of the local economy including low unemployment, low vacancy rates and economic growth at four times the national average.” It was also noted that the average price for single family homes may be lower because of the increased number of entry level priced homes being sold as compared to pricier move-up or estate sales.

“Home buyers have come to the realization that a sudden market collapse in Edmonton is unlikely and that now is actually a good time to buy a home while inventory still remains high and interest rates are low,” he said.

There were 8,808 homes in the MLS® inventory at the end of September (down 804 units) based on 3,140 listings and 1,729 sales during the month. The sales-to-listing ratio was 55% (51% in August) and days on market was down by two days to 61 days in September.

Please do not hestiate to call or email with any questions.”

I’m really mad about this, she and her husband bought a house last year and I know they are soon going to be under water. With stupid advice like this many young people will get hurt.

Anyone’s comments would be appreciated. Thanks.

#23 Rajesh on 10.07.08 at 11:48 pm

Good luck with the campaign Garth. We need you back in there.

The Tories are losing their lead, maybe a miracle will happen and the Liberals can forge a minority government and then Dion will come to his senses and appoint you Finance Minister.

BTW do you think any Canadian banks are at risk?

#24 dd on 10.08.08 at 12:02 am

Garth wrote “The price of oil could actually drop to $50 in the coming months as the US economy implodes, and I do not need to tell you what that means to the oil sands or the Alberta miracle. It’s bail time.”

Typical government inaction or useless words … this is the time to build, when the price of all material will be coming down. Ralph Kline made the mistake of cutting back in the 90’s. Calgary is still playing catch-up. Now is not the time to cut back on development of energy. $50 a barrel. HA. This is short term. Use your soap box for something useful. If industry delays projects we are going to be in worse shape when the economy picks up because the price of oil will sky rocket.

#25 anonymous on 10.08.08 at 12:31 am

Garth,

Politicians don’t really have that much control over the economy. This isn’t China for chrissake. The market does what it does…

So right now the paper and stock markets are going to hell, and soon the economy will follow.

Why get infront of that steamroller? Why do you want to be the ones in power when the shit hits the fan? You don’t have to be there to take the blame when angry unemployed Canadians need somebody to blame. Step aside and let somebody else get blamed.

If it was up to me, I would sit this one out.

But of course, it’s your nature. It’s what you do. So, I do understand it. It’s what we do… because we think we can do it better than the other guy.

I’ll vote liberal this time around. Go get ’em. I know you can do it better than the other guy.

#26 Carsten on 10.08.08 at 1:13 am

prairiegopher: Anybody with something to gain or something to loose in all of this is going to have a skewed perception of reality, that’s pretty much it.

#27 Brittanny on 10.08.08 at 1:37 am

Priarie Gopher. Name names. That will get this realtor all kinds of new business and maybe something more.

Garth – It is going to take a “great mind” to solve this global crisis. Could it possibly be you who has the courage and energy to step up to the plate?

#28 Rick on 10.08.08 at 1:46 am

#22 Prariegopher – What’s there to comment about? Realturds are Realturds, we all know that.

#29 GrandePrairiegirl on 10.08.08 at 1:55 am

#20 Calgary rip off
For Entertainment purposes only.
Putting on the tin foil hat here.
I am sure that George Bush does not deserve sole merit for the ruin of the global economy he had innumerable assistants,aides and advisors at his side.
I believe it’s quite possible this whole financial crisis rodeo was preordained to some extent for a furthering of the new world order. If so the markets will limp along for a few more weeks yet. Then there could be a new highlight,event or whatever which will escalate the financial crisis to new heights and possibly will cause the invocation of closing all banks & markets either nationwide or globally for oh I don’t know maybe a few days or a week or two. Remember the EU countries are in the same boat and not doing well either. No provisions were written into their EU agreements for dealing with the current messes. Seems some of the member countries who are in better positions are reluctant to throw their money into a community pot. Nevertheless I’m a long long way from being an expert on any of this disaster as goes for all the people here. However if I’m right, ” I TOLD YOU SO” (love that saying).
So, the banks etc. could have a temporary holiday,naturally this won’t sit well with the general public. Therefore utilizing the Patriot Act measures Mr. GWB will declare a state of emergency and initiate martial law. Due to all this he will also suspend the election campaign indefinitely thereby allowing GWB to become the inaugural fascist dic(k)tator(tot) of the U.S.S.A.
At some point troops will be dispatched to Canada,all resources will be commandeered,all dissenters will be interred at Canadian Forces Bases,Prisons with vacancies or shipped to FEEMA camps stateside.

Do I have some hope of becoming a fiction writer?

I’d like to mention as well that it’s rather unfortunate that the Federal Reserve is named so. Unbelievable how many people assume it’s a U.S. entity, it is not. Subliminal association, ‘Federal Government’, ‘Federal Reserve’. The Federal Reserve is privately owned by some of the following, there could be more but these are the only ones I’m aware of:
-Rotschild Banks of London
-Chase Manhatten Bank New York(Controlled by the Rockefellers)
-Warburg Bank of Germany
-Goldman Sachs Bank New York
-Lazard Brothers Bank of Paris
-Israel Moses Sieff Banks of Italy
Point being, a majority of foreigners call the shots. The debt they created is fraudulant,repayment is by the taxpayers, and provides much of the funding for their new world government. Rockefeller Sr. is a member of the Bilderberg Society and has influence with the Council on Foreign Relations(CFR) and the Trilateral Commission. Rockefeller Jr. is a member of the (CFR).
As I said before ‘ Banksters – Gangsters’.
Check out the vid on you tube from Congressman Brad Sherman who mentions threat of martial law if the bailout package were not voted through.

http://www.youtube.com/watch?v=HaG9d_4zij8

Also worth anyones 27 minutes of time is this,

http://www.youtube.com/watch?v=_XgkeTanCGI

#30 Bobby in Victoria on 10.08.08 at 1:59 am

Reference Post #22. The last person I would ever ask for real estate advice is a realtor. Remember they only make money if they sell a house. So much like a car salesman, they will say whatever it takes to make the sale.
People will not buy a house, or any other big ticket item for that matter, if they believe it will be cheaper next month. That is why realtors have such a positive outlook on the market. I have never heard a realtor say prices will slide, yet I have seen some spectacular crashes.
One realtor here in Victoria just wrote that he is busier than last year and sales are exploding the same month last year. Yet a look at the statistics and you will see sales off 35% from last year.
Do your homework!

#31 GrandePrairiegirl on 10.08.08 at 1:59 am

Oops typo, that should read Rothschild not Rotchild,hhmm.

#32 Joseph K on 10.08.08 at 2:03 am

#22, Real estate agents are like used car salesmen. They aren’t there to help you; they are there to make a sale. They have a vested interest in selling properties for as much as they can, and as often as they can. Pumping up the market and hype is what they do.

#33 mcbrian on 10.08.08 at 2:47 am

Yikes. To to have a major economist admit a 15% price drop makes me wonder what the real number will be. Doubled?? Tripled??

#34 islander on 10.08.08 at 3:10 am

prairie gopher: what part of that makes you mad? The facts?

calgary ripoff: you’re sick. Suffering is not to be hoped for. Ask your grandparents how much fun the Depression was while they were “pulling together.”

#35 GrandePrairiegirl on 10.08.08 at 3:10 am

What will happen with Bill C-51
I’d like to see it thrown out as well as C-52.
There are MANY who would prefer a natural remedy to a synthetic pharmaceutical one if possible. Although I believe Natural has been replaced with the wording ‘Therapeutic’ in the bill.
Garth,
Can you find or point me to statistics that show how many
people die annually from natural remedies. Versus how many die from side effects of pharma products? There probably aren’t any or none that I’d believe.

If this goes through your $9.00 bottle of vitamin c will cost you $45.00 as it does in parts of Europe. Oh wait a minute, latest dupe story, vitamin c might not be good for you after all. You should receive all you need from the foods you eat. Food that is irradiated,chemically treated,msg laced for addiction,etc etc. And lets slurp it all down with a nice cold glass of fluoride & chlorine
treated water. Fluouride a waste byproduct of the Potash Companies. Yum.
OK I’m done now. Sorry for the rant.
It’s all irrelevant and nothing really matters. Whatever party you vote for won’t matter, just as in the U.S.

#36 BBC on 10.08.08 at 3:22 am

dboy, very funny! I was thinking of voting for the ‘FOR SALE…price reduced’ ;)

#37 sigh on 10.08.08 at 3:50 am

prairiegopher:

GREED GREED GREED
It’s greed like this that got us into this global mess. I surely hope people like this and others like them get what they deserve.

Best of luck to your daughter and family prairiegopher, we need to start supporting eachother now.

#38 Grant on 10.08.08 at 5:48 am

Grath;

did you see Jon’s piece on you in this months FP Magazine.

Also! What the hell is Garry Marr smoking?? (Please send some my way! I could use the ride!)

“Housing prices in major Canadian markets dipped this summer, their 1st decline in over a decade. But DON’T FRET, OVERALL, PRICES ACROSS THE COUNTRY ARE STILL NEAR RECORD levels. AND FOR YOUNGER HOMEOWNERS, THIS IS SIGNAL THAT IT MAY BE TIME TO TRADE UP AND BUY A BIGGER PLACE!!!”

Can someone please go over to the FP office and bitchslap Brian Banks for hiring this moron!!

#39 Stephen from Toronto, Ontario ,Canada on 10.08.08 at 6:01 am

ARE WE STANDING AT THE EDGE OF FINANCIAL ARMAGEDDON

PART 3-POSSIBLE SOLUTIONS?

First a review of Asian Stock Market numbers-October 8, 2008, 3.48am EST

Nikkei-Dow 9203.32, -952, -9.38% drop
Hang Sen 15,614.72 -1189.04 -7% drop
Singapore 2,048.69 -128 -5.92% drop
Taiwan Taiex 5,206.40 -318 -5.76% drop
SK KRX 100 2706.78 -146 -5.13% drop
Aust SP/ASX/300 4369.70 -230 -5.01% drop

Europe (5am EST)

FTSE 100 4364.83 -240.39 -2.44%
DAX 5175.94 -150.00 -2.83%
CAC40 3426.02 -305.00 -3.22%
IBEX 35 10, 561.50 -300.00 -2.77%

Federal Reserve Board Chairman Ben Bernake is pumping $147 billion for Wall Street Bond Dealers and $152 billion for money market funds to stabilize the $1.7 trillion commercial paper market. There is also an indication that the prime interest rate could go lower than 2%(Bloomberg.com)

The Federal Reserve Board is establishing a Special Purpose Vehicle (SPV) to purchase 3 month unsecured and asset based commercial paper from eligible issuers. This will be done through the Commercial Paper Funding Utility (CPFF). Financing of the SPV under the CPFF will be secured by the assets of the SPV. Non asset based commercial paper will be secured by up front fees paid by issuers or by other forms of security acceptable by the FRB( wsj.com)

Chancellor of the Exchequor has arranged an 87 billion pound bailout package or UK banks. British Prime Minister Gordon Brown addresses the nation at 9:20am to outline the 87 billion pound bailout plan and to ensure calm in the capital markets.

HSBC, Royal Bank of Scotland and Barklays Bank face an
54 billion pounds (95billion dollar) of debt coming due in the next 10 years and must roll it over by April 2009. The LIBOR or the London Interbank Lending Rate now stands at 4.32% which is double than what it was last year and especially three weeks ago(Bloomberg.com)

Bankruptcies up 40% in japan. Japan Central bank has pumped $20billion yen in the system for 16 straight days to calm credit markets with little success(bloomberg.com)

What is the Effect of the Economic Emergency Stabilization Act of 2008 as Amended-Passed October 3, 2008

The EESA passed in the US Senate by a vote of 75 to 25 and ratified by the US House of Representatives on Friday October 3, 2008.

The entire text of the bill (451 pages)can be found on http://en.wickipedia.org/wiki/Emergency_Economic_Stabilization_Act_of _2008 in the External link section as a pdf file.

The original bill which included the 101 pages outlining the $700 billion bailout package was merged with an unrelated bill that was supposed to be passed earlier with little success.

What the US Senate did was to merge the second bill containing the Energy Implementation and Ext Act of 2008, Tax extenders and Alternatives and Minimum Tax relief Act of 2008. These are $150 billion of tax breaks for solar, wind and alternative fuels technology and other issues. The total cost of the new bill was $850billion. According to the New York Times most of these tax breaks would be added to the public debt within the next 10 years.

Just after the bailout package was passed by Congress, Governor Arnold Schwarzenegger informed the US Government that the state of California needs $7billion in short term loans or it will run out of money in 30 days. Other states such as Nevada, Massachusetts and Texas face huge budget shortfalls and may need help.

The bailout plan (Amendment to HR1424) should have restored confidence to the global financial markets especially with the extension of the no short rule for almost 900 financial stocks for an indefinite time frame. Stocks tumbled on monday as Wall street lost 508 points to close at 9447.11 (a 5.11% drop).

The drop was attributed to the near collapse of banks(which were nationalized) in Iceland The National Government borrowed $4billion Euros from Russia to stabilize the financial system. Germany had to rescue Hypo-Real Estate bank after a 35 billion euro plan failed. A 50 billion rescue plan was organized by the government, European Central Bank (ECB) and other private banks. There was a meeting of the European Finance Ministers in Brussels yesterday to discuss the matter, but individual governments are implementing their own bailout plan without any coordination.

In the US there were 159,000 layoffs in September, bringing the total for 2008 to 759,000. There was continuing weakness in retail sales, auto sales and house sales. House prices are still dropping with no end in site.

The poor job and economic numbers is creating fears that the US could suffer a severe recession in 2009.

According to one Republican Congresswoman(who was interviewed by CNBC) the passage of the Bailout bill gives the current Secretary of the Treasury tremendous powers to choose which financial institutions that are either illiquid or insolvent is to be taken over by the govt. The congresswoman was not convinced that this package was necessary, because they had other alternatives to stabilize the $1.7 trillion commercial paper market and people were scared into passing this bill. She feels that the nationalization of insolvent financial institutions could destroy the AAA credit rating of the US.

Jim Cramer of CNBC “Mad Money” stated on his Monday afternoon show that If you are within 5 years (or less) from retirement or need money now, sell enough stocks (not your entire portfolio-ie 401k)to obtain liquid cash NOW for the next 5 years, because the DJ300 could fall to 7700-8000 before years end and lower in 2009. He is of the opinion that the bailout can do a number of things to stop the Great Depression II. First that the FDIC stop bailing out INSOLVENT BANKS and save the ones that are illiquid. Second, use the $700 billion to stop forclosures and renegotiate mortgages to keep people in their homes. Third use a Resolution Trust Corp model to collect the bad mortgages and sell them when times are good. Use the bailout to restore confidence in the commercial paper market.

Please See Part 4 tomorrow

#40 Kash is King on 10.08.08 at 6:11 am

#13 Winston Smith, with reference to immigration:

Modern western societies have been transformed into nations of debtors and homeowers. This has kept the populations productive and docile. This causes growth and improved productivity , and that keeps the governing party at the time looking good.. and all governments in the past four decades are guilty of this…which in turn, they hope, will lead to their party getting votes and being re-elected.
Increasing the debt of the populace, and it is now at record levels, balloons economic growth as they go into debt to “own” things like cars, homes, big screen TVS , granite counter-tops, or whatever else they are led to believe they “need” in the media.
Trouble is, a debt saturation level can be reached, and consuming slows,economic growth slows, and the ruling party runs the risk of looking bad because growth is slowing.
What to do? Increase the pool of potential debtors. Immigrants have been perfect. They arrive here for a fresh start, and what do they have to do? Acquire all the things that the rest of us have. How? Cheap and easy credit. This is how immigration has been argued as “good” for the economy.
Easy credit lately has been available under false pretenses, in that “risk” was packaged and fraudulently sold to institutions around the world, as I’m sure you are now well aware.
“Risk” is going to now be back in the equation, and when risk is costed back into borrowing, credit will no longer be cheap, or easy… because risk has a cost.
This no longer fits in with the above mentioned economic model set up to ensure neverending growth, as consumers will be hobbled… especially newcomers with no credit history.

Therefore, serious consideration needs to be given to the hardships newcomers might face in a tight credit environment, and whether it would be wise to increase the number to 333,000 per year, as the Liberals and NDP want to do… or even if the 225,000 per year the Conservatives want, is indeed too much to absorb in the current financial environment. If they arrive, and can’t acquire as many things, it may be difficult to support the “good for the economy” argument.

#41 dotava on 10.08.08 at 7:12 am

#13 Winston Smith on 10.07.08 at 8:34 pm

They don’t have an option. Immigrants coming to the country mostly are well educated (what we are missing in our system) but we are not missing without reason – much easier to manipulate less educated people. More over if we care about our future – why we do not organize election on a day that our future well educated young people can express there vision (can be done – with minimal disturbance in there curriculum). If we like to deal with any problem in our lives – we have to find the root and start digging there.

http://video.google.com/videoplay?docid=7065205277695921912

TNX Igre.

#42 brazer on 10.08.08 at 7:27 am

World banks lower rates
http://www.thestar.com/article/513915

The Fed and Bank of Canada joined the Bank of England, the European Central Bank, and the central banks of Sweden and Switzerland, while the Bank of Japan “expresses its strong support.”

#43 brazer on 10.08.08 at 7:31 am

Renewed selling panic in Europe, Asia
http://www.thestar.com/Business/article/513892

European markets tumbled in early trading Wednesday amid ongoing fears about the state of credit markets despite the British government’s 50 billion pound (US$87.5 billion) rescue package for the banking system. In Asia, Japan’s Nikkei suffered its worst day since the 1987 stock market crash.

#44 brazer on 10.08.08 at 7:34 am

British PM says ‘radical’ plan needed to stabilize banks
http://www.thestar.com/Business/article/513893

A half hour before markets opened Wednesday, the Treasury said it would be investing up to US$87.5 billion in exchange for preference shares in eight of the country’s largest banks and building societies: Abbey National PLC, Barclays PLC, HBOS PLC, HSBC Bank PLC, Lloyds TSB Bank PLC, Nationwide Building Society, Royal Bank of Scotland and Standard Chartered Bank.

#45 brazer on 10.08.08 at 7:37 am

Market woes hit oil sands projects
http://www.theglobeandmail.com/servlet/story/RTGAM.20081007.wrbanksalberta08/BNStory/energy/home

“It’s pretty tough to justify building an upgrader in Alberta today … when the bitumen price and the capital costs are so high,” said Justin Bouchard, a Calgary-based analyst with Raymond James.

#46 brazer on 10.08.08 at 7:39 am

Home prices to slide, not crash: economist
http://www.reportonbusiness.com/servlet/story/RTGAM.20081007.whousingtal1007/BNStory/Business/home

As home prices continue to fall, mortgage rates are on the rise, with banks passing on their higher borrowing costs to consumers. While mortgage rates are still near historically low levels, the increase is fuelling worries that debt-laden Canadians could be in danger of tumbling into a U.S. style housing crisis.

The concern is heightened by the fact that some existing mortgages are zero-down, 40-year amortization products, which have extended some home owners to their financial limits.

#47 brazer on 10.08.08 at 7:43 am

AIG execs spent $440,000 on posh party after government bailout
http://news.yahoo.com/s/ap/20081008/ap_on_bi_ge/meltdown_aig

WASHINGTON – Days after it got a federal bailout, American International Group Inc. spent $440,000 on a posh California retreat for its executives, complete with spa treatments, banquets and golf outings, according to lawmakers investigating the company’s meltdown.

AIG sent its executives to the coastal St. Regis resort south of Los Angeles even as the company tapped into an $85 billion loan from the government it needed to stave off bankruptcy. The resort tab included $23,380 worth of spa treatments for AIG employees, according to invoices the resort turned over to the House Oversight and Government Reform Committee.

#48 Al on 10.08.08 at 8:00 am

#16 Peter,

Don’t worry about the money from the Central Banks and Govt bailouts causing inflation. The massive write downs are deflationary, destroying M3 money supply. The various ‘liquidity injections’ can’t measure up to the destruction. Inflation is money chasing assets and pushing the prices higher. No one is spending. Worry about deflation instead.

#49 Mylene on 10.08.08 at 9:45 am

Who would lead us to believe it’s not all calculated and a complete governmental manipulation?

Central Banks control

http://www.gata.org/node/11

#50 Schroedinger's Bull on 10.08.08 at 10:15 am

grandpgirl:

All the bill says is that ‘natural remedies’ should have the same sorts of studies performed as pharmas do. Just look at the reams of “diabetes cure!!” that hit my inbox every week…since I know it’s impossible, I don’t bite, but I’m sure people do…especially desperate, old, or sick people. The government (unfortunately) does occasionally have to protect uninformed people from themselves, and we aren’t talking about a simple field, we’re talking about pharmacology and medicine. I don’t expect my 85 year old grandmother to sift through medical jargon to determine whether glucosamine will help her joints or not (it won’t btw…several studies have proven that, but the manufacturers and distributors of glucosamine supplements won’t tell you that…if they were selling viagra and it didn’t work as advertised, they wouldn’t be allowed to sell it).

Also, there are very real drug interactions and other problems with so called ‘natural remedies’. I’ll find you some stats re: death as well, but that’ll have to wait as I’m late for work.

#51 peter on 10.08.08 at 10:53 am

Garth,
Can you offer your predictions on the Horseshoe Valley RE market? The area is mainly custom homes in or around a golf course community. Skyline Developments has recently purchased the Horseshoe Resort and plans to develop a “Mt. Tremblant” style community with retail shops and more restaurants similar to what is found at Blue Mountain.

Thanks

#52 first-time-buyer on 10.08.08 at 11:01 am

Garth,
hold firm, — your blog and book saved me from going head long into purchasing a house to the limit of what the banks would have wanted me to spend last winter. you’re book arrived in the market place the very day i had my first meeting with a real estate agent. Just before meeting him, I stopped at Chapters, read a few paragraphs of your books and left with it under my arm.

So, I’ve cautiously watched the housing market since then and resisted all the pressure tactics from the agent to buy now ‘cus “real estate always goes up”. I finally said to him, yeah well, I understand that you don’t remember what happened in the late ’80s. That was the end of that, no house and no agent and i just watch and read and thanks to you , understand so much more about the financial world than I did 8 months ago.

i will be watching your riding very closely on e-day. In the words of General Brock — SURGITE!

first-time-buyer

#53 The Tallyman on 10.08.08 at 12:06 pm

Scariest News Ever!

Harper’s mother is worried about the economy.
She knows the boy!!!

#54 Dave in Calgary on 10.08.08 at 12:15 pm

#17 observer

“The unfortunate reality is that no one here wants the low end laborious jobs”

Well, if oil hits $50, I will take two low end jobs with a smile. Heck, I’ll carry the immigrants luggage for a $5 tip and maybe rent a room off them.

DD: I hope you’re right about the oilsands sector using the downturn to invest… to play catch up, but I am affraid with low oil price, and frozen credit, the multinationals will just pull the plug on these big SAGDs, upgraders etc… they will have to do something to get the construction cost down to justify making money with low oil price… and you don’t get the construction cost down by keeping the projects moving.

Anyway… its too difficult for me to figure out… i just help to design these things. Praying for a bottom of $70 bbl

What did Ralphy do wrong in the 90s? I thought it was private companies that invest in the oilsands, not the Premeir

#55 The Tallyman on 10.08.08 at 12:16 pm

“18 dboy said “In Vancouver I had decided I was simply going to vote for whoever had the most lawn signs, the I realized i would be voting for: “FOR SALE.”

good one dboy!
it’s kinda like watching a fight over who’s taking control of the steering wheel of a sinking ship.

#56 The Tallyman on 10.08.08 at 12:20 pm

#47 Brazer said: “AIG execs spent $440,000 on posh party after government bailout”

I guess our invites got lost in the mail (lol)

#57 Mike as in Mike on 10.08.08 at 12:23 pm

Hey Garth,

Looks like the enviroment people like you.

http://www.voteforenvironment.ca/node/559

#58 dd on 10.08.08 at 12:32 pm

Looks like gold is the only thing “making money” these days.

#59 brazer on 10.08.08 at 12:34 pm

Flaherty joins G-7 emergency meeting
http://www.thestar.com/Business/article/513979

Flaherty added that the government is prepared to do “whatever we have to do” to protect Canada’s financial system, though he declined to outline any plans.

I’m not going to talk about what they might be,” he responded when pressed for more detail.

=====

yikes.

#60 Nicholas P on 10.08.08 at 1:14 pm

GARTH;

HAVE YOU EVER CONSIDERED RUNNING FOR A PARTY THAT HAS A BROADER VIEW OF THE “CRAPSTORM” THIS COUNTRY IS TRUELY FACING?

OUR COUNTRY NEEDS A LEADER AND I NOMINATE YOU.

http://www.canadianactionparty.ca

#61 Noz on 10.08.08 at 1:54 pm

In the meantime, the world’s financial markets have turned thumbs-down on the US bailout, as I knew would happen. This is no fix of anything. Instead, it was a desperate throw of the dice by the professional politicians and establishment backers in Washington and New York. They lost.

Garth….

They didn’t lose…they just helped out who they always intended to help out. No one else.

#62 Marcus Aurelius on 10.08.08 at 3:03 pm

Garth – Very apt to quote the doggerel about the Light Brigade, given that much like the monumental incompetence of Raglan and his friends, most consumers rode headlong into the cannons when deciding – right up until Summer/08 – to ‘bid up’ properties that had been on the market or flipping as late as 2006-7. I saw this directly in central Toronto. I’d like to go knock on those same doors and ask the ‘winning buyers’ how good they feel about their finances today. My grandad raised a family through the Depression in Toronto. This is going to be a character test for many of us – those on this blog, less so.

#63 Backstroke on 10.08.08 at 3:38 pm

How Harper Gov’t Pushed Financial Deregulation Here, Abroad

“If the Tories had really wanted to make houses more affordable for low income Canadians, one thing they could have done was to reinstate CMHC’s social housing programs. Innovative mortgage products do not do cash-strapped families any favours.”

http://thetyee.ca/Views/2008/10/08/HarperEcon/

#64 POL-CAN on 10.08.08 at 4:02 pm

Again an excelent post by Ilargi at TheAutomaticEarth

http://theautomaticearth.blogspot.com/

Ilargi: We are watching the first demise of an entire country today (and I fear for the common people), as Iceland’s last bank fails, and its government cannot make whole -foreign- deposits.

Iceland defaults on its debts. Iceland is bankrupt.

It’s hard to foresee where this will lead, we have little experience with the issue, but there is no doubt that a hard-rain’s-a-gonna-fall among the geysers. Look at what happened to Argentina, where much of the middle class, not long ago, moved into shanty towns while we were busy buying overpriced mansions. Argentina was an exception. Iceland merely is a first.

Iceland will face lawsuits up the wazoo, and it will have to do so broke. Yesterday, it announced a peg for the Kruna to the Euro, and all of a sudden today that’s already gone again. Even Iceland’s own pension funds refuse to help, and choose to leave their assets abroad. Wise move, but.

Because Iceland won’t or can’t repay foreign customers of its banks, countries like England and Holland will now have to compensate their own citizens who took their money out of domestic banks and into Iceland accounts. And if that is not ironic enough for you, how about the fact that these nations just days ago raised the amounts that are government guaranteed? The losses of those who took their money out of the local economy will be paid for by those who didn’t. The poorer (who stay with the corner bank) pay for the losses of the richer. Real cute.
.
.
.

Follow the link for more…..

#65 My_view on 10.08.08 at 4:04 pm

“Global central banks cut rates”

How is this going to help? Lowing rates is what got us into this mess. They continue to punish the savers and give credit to the spenders. This will have no choice but to reverse, rates will go up. Question is when?

#66 y3maxx on 10.08.08 at 4:40 pm

GARTH TURNER FOR U.S. PRESIDENT…..

http://www.tsgnet.com/pres.php?id=370617&altf=hbsui1&altl=uvsofs

Dude. You got a problem with that? — Garth

#67 Noz on 10.08.08 at 5:20 pm

http://link.brightcove.com/services/player/bcpid988092926?bctid=1842856410

#68 charliegosurf on 10.08.08 at 5:31 pm

boldly we ride on the jewski rollercoaster, oh so much fun. those cannons are loaded with lies and the truth hides in the trench of despair.

our soldiers protecting the pavot crops, for or freedom to get more cheap pills, frrrreeeedom to be stuck in this great fooolish act, to wait for price to go down to get aboard the train of greed.

bitch on the homeless(freedomfull)people to not come aboard, its their fault. forget about the environnemental mess caused in northern alberta, or evrywere on earth, about the real canadians(aboriginal)that live in that mess dayly, without bitching, just stuck in an awe of despair.

there is much bigger problem than percent drop in real estate, or oil or whatever, i state this for real!
percent increase to get in parlement
or in the business world
to go parle in a fancy suit,
with fancy breakfast/lunch/dinner/hotel
conference in bali or waikiki…
all expanse included,
to our expanse,
middle class, first cl ass..
low class thinking among most.
lets start a revolution,
bring back the guillotine,
garth can operate it!

Did you lose your meds? — Garth

#69 canadiancitizen on 10.08.08 at 5:42 pm

Hi Garth,

Is there any truth to this?

Stephen Harper: Bulking up Pentagon North
http://www.infowars.com/?p=5166

#70 brazer on 10.08.08 at 7:06 pm

Big banks lower prime lending rate, but less than central bank’s move
http://ca.news.finance.yahoo.com/s/08102008/2/biz-finance-big-banks-lower-prime-lending-rate-central-bank.html

Canada’s big banks have declined to pass on to consumers the full half percentage point cut in interest rates announced by central banks around the world Wednesday, citing turmoil in raising money in turbulent financial markets.

#71 dd on 10.08.08 at 7:20 pm

#54 Dave in Calgary,

Ralphy didn’t want to run deficits. So when oil and gas bottomed out in 1997 he put the brakes on a lot of public works projects. We have been paying for that delay big time for public work projects over the last 5 years because government had to compete with skill labour in the oil sands.

So here Alberta is again … 1997 all over again. Sure oil might hit $50 and natural gas $5, however, these projects will run for 25+ years. Saudis are saying $80 is the line in the sand. We will see. The projects that where started a year ago are pricing in $75-80 oil. That would leave something like a 10% return on capital.

The Saudis might have an agreement with the US to ease off oil over the next year. What the world really needs now is cheap cheap energy. However that is foolish thinking and is not sustainable in the long run. Oil and gas is getting harder to find and the price will sky rocket when this mess has passed.

I hope the Alberta and Federal Government (and I mean all parties) come together with a more focused plan and leadership towards the economy. If the sands cannot expand or upgraders cannot be built because of less liquidity in the market the Government should step in. Yes the Government should have equity stake in these projects or go to the world and issues bonds and then lead to the companies. And of course all due dilingence should take place. Lets built when prices for a lot of commodities are decreasing. It will be cheaper in the long run.

I know a lot of people do not like Alberta and what it represents. However it has been the engine of the Canadian economy for the past number of years and will be so for the next 50.

Garth … take that to the hill.

#72 dd on 10.08.08 at 9:39 pm

#70 brazer,

The bank will have to fall into line. The BOC will use other methods to hold chartered banks to the party line. I think it is just a protest vote.

#73 GenXer on 10.08.08 at 10:11 pm

Hi All – What are your opinions on mortgage rates? Are we going to see a decrease in interest rates, or is it time to lock in on a longer term?

I’m confused by activity in the market. A drop in interest rates by the Fed is only reflected at 50% by the banks, and has no impact on anything over 1 year term.

LIBOR rates continue to rise because the banks don’t want to lend to each other, and anything over a 6 month term mortgage is rising rapidly.

So – another drop in interest rates is anticipated by the end of the month, but the one announced today had no effect on rates. Will the government be able to strong arm the banks into passing along rate drops, or will the banks hold the line?

I have the option of re-negotiating early and taking advantage of rates that are still decent, or waiting 4 months to see what happens. I can’t imagine that massive bailouts will not result in long-term inflation, and I can’t imagine that dropping rates during a credit shortage won’t put additional upward pressure on LIBOR rates. Thoughts?

#74 POL-CAN on 10.08.08 at 10:55 pm

Garth….

Here is an economic blog with Canadian content… Not sure if you have seen this one before… Good read….

http://canadahousingcrash.blogspot.com/

#75 dd on 10.08.08 at 11:30 pm

#73 GenXer,

Sounds like rate will be even or come down over the next little while. We are going into a major recession so they want to keep the rates low. However when the economy pulls out of this in x years inflation will go up and then rates will go up.

Hear is one opinion:
http://watch.bnn.ca/trading-day/october-2008/trading-day-october-8-2008/#clip100925

#76 David on 10.09.08 at 12:59 am

dd your arguments make no sense.
Government should have an equity stake if the returns are too low. Intervention is advised when the return on capital is insufficient. The oil sands are a public partnership when it is a money loser and state subsidies are necessary. This is known as hairy chested free enterprise Alberta style. I love Alberta, I just do not like the all pervasive crony capitalism.
Ralphy, as you call him was a big pseudo populist. The man went out of his way to destroy the public health care system in Alberta in the name of taming the deficit. The Alberta Tories built many redundant expensive rural hospitals with the aim of pandering to all the rotten boroughs of rural Alberta. To fix the problems they themselves created, the Tories destroyed significant parts of the health care infrastructure in Edmonton and Calgary in the name of deficit cutting and efficiency. This was later sloganeered into the Alberta Advantage.
I am voting strategically this election. Stephen Harper and Radio Rahim Jaffer can go out and work at nursing homes cleaning up puke and number 2 after losing their middle class jobs that got outsourced.

#77 dd on 10.09.08 at 6:32 am

#76 David,

Returns low? David look beyond the market melt down and $50 – $80 oil. Oil is still cheap at today’s price. Oil WILL increase north of $100 in a couple years time if not more. Build know when costs hopefully will be reasonable in the next little while.

What I am saying is: Use this melt down to the peoples advantage. Buy low .. sell high.

#78 dd on 10.09.08 at 6:33 am

#76 David,

Returns low? David look beyond the market melt down and $50 – $80 oil. Oil is still cheap at today’s price. Oil WILL increase north of $100 in a couple years time if not more. Build now when costs are lower (or soon to be lower).

What I am saying is: Use this melt down to the peoples advantage. Buy low .. sell high.

#79 Future Expatriate on 10.09.08 at 6:41 am

ANOTHER reason why your upcoming elections are so VERY important:

Things could be getting VERY ugly VERY fast down south, when the race riots break out when Obama inevitably loses as Middle America overwhelmingly rejects him.

http://www.heyokamagazine.com/heyoka.16.waynemadsen.htm

All the BushCrew have to do to suspend the transfer of power indefinitely is let one crazed Obama nut get to McCain with a gun, between Nov. 4 and the inauguration. Until “order is restored.” Which translates as “Ne-ver.”

If martial law were to occur in the US, who would you want to be in charge of your country’s government? A Bush ally?

Please, vote more carefully than you have ever voted in your lifetimes.

#80 brazer on 10.09.08 at 7:31 am

White House considers ownership stakes in banks
http://news.yahoo.com/s/ap/20081009/ap_on_bi_ge/meltdown_paulson

Supporters of this approach, such as Sen. Charles Schumer, D-N.Y., argue that injecting fresh capital into U.S. banks who want to participate in the program would be an effective way to bolster banks’ balance sheets and get them to resume lending. Taxpayers would benefit because the government would receive an equity stake in the bank in return for providing the capital.

#81 brazer on 10.09.08 at 7:38 am

Ottawa weighs proposals to aid banks if crisis persists
http://www.reportonbusiness.com/servlet/story/RTGAM.20081009.wbanksfinance09/BNStory/Business/home

Under the proposal, CMHC would establish something called a term lending facility, under which the agency would absorb some of the banks’ mortgages. In exchange, CMHC would give the banks securities with the CHMC stamp, the sources said. That would leave the banks with assets that other lenders, including the Bank of Canada, would be willing to accept as collateral for short-term loans. That, in turn, would allow them to increase their own ability to lend. “They have to do this – they need things in place just in case,” said a top executive at one of the Big Five banks.

#82 brazer on 10.09.08 at 7:43 am

‘Armageddon’ in the oil patch
http://www.reportonbusiness.com/servlet/story/RTGAM.20081008.wrbanksalberta09/BNStory/energy/home

“Buy some ammunition, go to the hills and hide,” said William Lacey, an analyst at FirstEnergy Capital Corp.

“We’ve gone beyond doomsday scenarios. There’s no logic any more and this is an outright capitulation. Investors are simply throwing up their hands and saying ‘I’m out,’” he said.

#83 charliegosurf on 10.09.08 at 7:44 am

time for a glass of h20 garth

meds all around us, in us
in all of us,
from the cradlle to the coffin
the water is full of it

specially in ontario canada
50 new rafineries hook to the pipeline
now the tar sands will pollute
yur great lake even more
the west nanana meets the east

yur air is full of chemical compound
every breath you take
specially in ontario
that is all for free, too bad
cant commercialized it yet
or maybe it is nanana
called carbon offset credit…

you eat oil everyday, pesticides…
you dont care becoz its next to free
enjoy cutting yur cheez coz after
they recycle it for yu to wash with
too bad the glacier are almost gone
they would help dillute the whole mess

yu luv those new things to buy
slavery made so yu can get more and cheap
never know wich one will poison yu
so for now lets just blame stephen and gwb
sorry ive got a poor impression
of
that
mega
depression

#84 brazer on 10.09.08 at 7:46 am

#73 genxer; read this piece from GM – will help you understand better where mortgage rates are headed.

http://www.reportonbusiness.com/servlet/story/RTGAM.20081008.wmortgagecibc1008/BNStory/Business/home

#85 dotava on 10.09.08 at 8:26 am

#71 dd on 10.08.08 at 7:20 pm

“… I know a lot of people do not like Alberta and what it represents.”

Do not mix those two – that is misleading. I love Alberta as all other part of our beautiful country but what is going on there attempt to destroy all those beauties – and that is what I am against.

#86 dd on 10.09.08 at 8:51 am

US treasury may be part ower in banks re: preferred shares. This is a good thing.

http://www.globeinvestor.com/servlet/story/RTGAM.20081009.wfinancialwrap1009/GIStory/

#87 dd on 10.09.08 at 8:56 am

#76 David,

I don’t think I praised King Ralph at all. We are paying through the nose on all public projects because of the 90’s cut backs. I don’t like paying more taxes because of mismanagement!

You want to see the middle class get wiped out? Then sit on your hands and don’t invest in your country at all.
Just sit and complain.

Ye have little faith.

#88 dd on 10.09.08 at 11:20 am

73 Gen X

Here you go – BOC battle against the Big 5 Canadian Banks

http://www.globeinvestor.com/servlet/story/RTGAM.20081008.wbanksprime09/GIStory/

#89 GenXer on 10.09.08 at 11:35 am

Thanks for the links and info regarding mortgage rates – I think it is about as clear as mud where we go from here.

There definitely does seem to be a growing gap between interest rates and mortgage rates – is this the end of monetary policy as a tool for the fed?

Funny how the media continues to push variable mortgages over fixed. I’ve been paying between a 1/2 point and full point less than variable over the last 3 years because I locked in 4.5 years ago. I’m thinking that locking in soon will pay off again over the next 5 years.

The question is, how bad will LIBOR rates get? Bond markets tend to do well in recessions / depressions, causing upward pressure on borrowing costs for banks to fund mortgages.

At the same time, all these international bailouts will cause printing presses to come online and fuel inflation through increase of the money supply. So question is – will the government be able to drop interest rates, or will the bailouts cause them to bend to inflationary pressures?

So what are we in for – inflation caused by interest rate cuts and massive bailout or deflation fueled by falling commodity prices and reduction in consumer demand?

I feel like I’m watching a coin toss where the coin is sitting on its edge. Which side will it fall on?

#90 Dom-GTA on 10.09.08 at 12:26 pm

Gart, you wrote “I write this after a few hours of knocking on doors in one of the priciest communities in Ontario – Oakville. One of them belonged to a long-time local real estate broker who was almost in tears. Listings are exploding, once-rock solid prices are crumbling, and yet sales have vanished.”

I shared this story with someone I know and they basically laughed at me.

Said there had been a bidding war on a empty lot just last week and that in their neighbourhood houses were still selling great.

Obviously, some are still making money in these markets and believe it or not new millionaires are being created daily. I certainly got the impression that most in Oakville are convinced that they have a little piece o Heaven and there houses won’t drop.

I naturally disagreed, but when you compare this person’s financial track record with mine, you’d have to say he/she got it right.

Good luck to you in your quest for reelection and I am certainly rooting for you. At least i think you can rest assured that there is No way Harper will get a majority after his inane comments on how there is no economic crisis in Canada. At least he shot himself in the foot, which is great news as far as I am concerned.

Check out the stats, not one guy’s vested-interest comments. The market’s a slag. — Garth

#91 brazer on 10.09.08 at 1:02 pm

Loonie hits turbulence, drops as much as 2.18 cents US
http://www.thestar.com/Business/article/514759

The loonie was down nearly two cents in Toronto at midday, falling to 87.18 cents US at noon. That’s down 1.88 cents US from Wednesday and down nearly seven cents since the end of September.

#92 lgre on 10.09.08 at 1:13 pm

“Funny how the media continues to push variable mortgages over fixed. I’ve been paying between a 1/2 point and full point less than variable over the last 3 years because I locked in 4.5 years ago. I’m thinking that locking in soon will pay off again over the next 5 years.”

variable is better in the long run, no question about it..it is only now that it’s par with your 4.5 fixed..

#93 My_view on 10.09.08 at 1:40 pm

Bet you bottom dollar it is, no one is buying. Its time to hunker down. Just got my RRSP reports, what a joke. Got to stomach it and ride it out. In it for the long run.

Global markets down up to 40 % yoy. Harper, he makes me laugh. No reason to worry, Canada is very sound. I’m Canadian, RRSP is Canadian, my hard earned C$$$$$$ is making less in the Canadian GIC`s & Bonds. Garth, if reelected, could you be appointed the new finance minister?

#94 Ontariohouse on 10.09.08 at 1:48 pm

Dom-GTA: Oakville isnt doing all that great. Many homes are sitting unsold. Believe me, I’ve seen it with my own eyes. I think that the person who you shared this with got “pricked”. You hit a sore spot. To him you were imply that his perceived ‘wealth”, his source of self esteem and pride was going to vanish.
Many people will be getting a dose of reality soon. Their paper gains will be disapearing into thin air.

#95 Andrew toronto on 10.09.08 at 3:43 pm

the saga continues , the Dow is going to 7,000, but over the course of months vs. days per Roubini if he’s right that’s another 2000 point drop.

#96 dd on 10.09.08 at 6:17 pm

#89 GenXer,
Don’t think too much. Long-term it is always better to go variable. If you don’t like the uncertainty – lock in.

Rates are not going to sky rocket today or tomorrow. When the bottom is falling out of the financial system that last thing the BOC or Fed will do is raise interest rates. If the TD raises rates go to a broker and let them do the shopping for you. Ask the bank to “lock” you into a rate. You will have 3 months or so to make your mind up. That way you are covered on the down and up side.

#97 brazer on 10.09.08 at 6:30 pm

Dow plunges 679 to fall to lowest level in 5 years
http://news.yahoo.com/s/ap/20081009/ap_on_bi_st_ma_re/wall_street

U.S. stock market paper losses totaled $872 billion Thursday and the value of shares overall has tumbled a stunning $8.33 trillion since last year’s high.

#98 dd on 10.09.08 at 6:48 pm

It is written ” CDN real estate will not tank” so it must be true.

http://www.globeinvestor.com/servlet/story/RTGAM.20081009.wcreacall1009/GIStory/

#99 brazer on 10.09.08 at 6:50 pm

http://canwest.a.mms.mavenapps.net/mms/rt/1/site/canwest-chchnews-pub01-live/current/launch.html?maven_playerId=chchhomepage&maven_referralObject=3130644

check out garth on CHCH.

#100 David on 10.11.08 at 1:55 am

That article was simply amazing to read. A 70-85 percent correction sounds very much in order for such an over inflated market. Kelowna sounds like it became Canada’s real estate industry theme park. A town where people make a living do each others laundry with a shadow virtual economy based on rising house prices and escalating mortgage values. People should watch John Candy in the movie Really Weird Tales where he arrives in an economically depressed small town and starts preaching the gospel of making untold riches through real estate. What makes it weird is that John Candy plays a character who arrived from another planet and was practising interplanetary real estate without a license. From Rene’s comments there were a lot of people like Xarxon doing just that in Kelowna.