Guess not

This will be a short entry. One reason is that I am quite immersed in the manuscript for my new book, “After the Crash,” in which I attempt to make sense of the present and devine the future from it. Each day of research and thought gets me a little closer to an inevitable conclusion. The second reason is that current events right now are, simply, overwhelming. If those little hairs on the back of your neck, or wherever you have them, are not standing up straight right now, you ain’t paying attention.

This morning your national finance minister spent $50 billion buying mortgages from the banks, which brings this bailout to $75 billion. He says there’s no risk to taxpayers, which may be true if real estate values in Canada hold, and nobody defaults on their mortgage. Duh. But this is the same guy who a few weeks ago said everything was cool here. Guess not.

Meanwhile the car business is in the crapper. GM shares are down to a 62-year low and the company will go bankrupt if not rescued by Washington. But it will be. Of course. And this is why (after the bout of deflation headed our way for a few years) you will find this a world in which a dollar is worth four bits.

I just learned that in one of the most in-demand residential neighbourhoods in Toronto, Leaside, home sales so far this year are down 85%. Prices overall in Toronto are crashing by 25%, just as lots of mutual fund companies down on Bay Street (where many Leasiders work) are chopping staff.

The world will repair, of course, but you haven’t seen the worst yet. Not even close.

As for my last entry, what can I say? Some of you got it. Most did not. Am I forecasting a depression? Not yet. There are too many chapters yet to unfold over the coming few months. But anyone who thinks what I wrote was complete folly is, well, a complete fool.

141 comments ↓

#1 Joe S on 11.12.08 at 11:05 am

During the Great Depression, unemployment at it’s worst reached 30%. That means that 70% of the population still had jobs! I don’t mean to diminish how difficult it was for people and the standard of living went down for everyone, but the scenario you describe in your last post…eating squirrels, no water, etc is apocalyptic not simply a depression. I admit we are in uncharted waters and the situation could potentially become apocalyptic. My point is that what you described goes beyond “depression” and that’s what people were responding to.

#2 y3maxx on 11.12.08 at 11:09 am

Avner supports Mish’s blog posutlations…..

Gold will drop, drop, drop.

(Ladies and gentlemen…just read up Nouriel Roubini, Mish and of course Garth Turner’s new book)

Tuesday, November 11, 2008
How does China’s economy affect the price of gold, and why should we care?

‘Why gold is likely heading down: Blame it on the China price,’

Avner Mandelman argues that because it’s been selling its products below true cost (the China price), the country is “about to meet the fate of all those who sell below true cost: mass layoffs, upheaval and perhaps a change of management.”

“Why should you care?” Avner asks. “Because of gold.”

“Recently gold has been very volatile, and could tack on $50, or even $100, in the short term. But longer term, if inflation – already quashed by Freddie and Fannie’s blow-up – is further squashed by China’s punctured bubble, gold is likely heading down.

“Why? First, low inflation, even deflation, will lessen the need for inflation hedges. But second, and more crucial, as the West buys less of China’s more fully priced products, and as China’s cash needs escalate, its government, to feed the peasants and to maintain its power, will sell state assets – including gold. This, plus inflation, could push gold much lower than anyone thinks, perhaps to half its current price. How’s that for a real contrary opinion?

In 1999, Avner Mandelman founded Giraffe Capital Corporation, a Toronto money management firm, to take advantage of the pending NASDAQ correction. Subsequently Giraffe was one of only Tech investment funds in North America to have made money through the tech bubble. Giraffe’s specialty is “sleuth investing”– physical due diligence of companies, which helped it outperform the market every year since its inception.

Avner also writes about stocks and investments, both in Canada and the US, including Barron’s. Among his books is The Sleuth Investor, recently published by McGraw Hill.

Do you have a question or wish to challenge Avner on his latest or previous columns? Avner will be joining us for a discussion at 12 p.m. Wednesday. Submit your questions in advance using our comment function or join us during the discussion.

#3 AM on 11.12.08 at 11:33 am

So, our federal government is now on the hook for $75 billion of the most vulnerable mortgages. What is this going to achieve in the grand scheme of things. Just about every economic organization out there is talking “recession” and lateky the words”risk of” have been dropping from the forecasts. The sh*t is hitting the fan now and Flaherty is standing in front of it with his catchers mit. Good luck, Jimbo. The conservatives are either incompetent or in denial of the pending financial mess.

http://news.sympatico.msn.ctv.ca/abc/home/contentposting.aspx?isfa=1&feedname=CTV-TOPSTORIES_V3&showbyline=True&newsitemid=CTVNews%2f20081112%2fOttawa_mortgages_081112

#4 Herb on 11.12.08 at 11:38 am

Keep it coming, Garth. I’ve found it useful to assume the worst possible case, and then to consider anything that happens short of that as gravy.

#5 SSS on 11.12.08 at 11:38 am

The more I think about the current economic crises, the more I find my self prisoned in a cage. Its very frustrated to see a few corporation got the crap out of whole world.

#6 What will you DO? on 11.12.08 at 11:47 am

garth, you say Am I forecasting a depression? Not yet?
so does this mean a 50% chance or more of a depression coming this is how i’m reading it?

#7 Realtor on 11.12.08 at 12:02 pm

So much for Canada being “a relative rock of stability” I think our government knew before the election was ever called just how bad things were going to get and that Canada would not be the rock that some said it would be. A 75 billion purchase of mortgages from the banks is a long shot from a 700 billion bailout, but just the fact that the mortgage purchase numbers in Canada keeps increasing tells you that things are about to get much worse.

#8 squidly77 on 11.12.08 at 12:11 pm

Nationally, there was one home built for every 157 people; in Alberta, a new house went up for every 145 people.”

In the United States, only one home was built for every 374 people, he said.
lipstick on a pig
its time for some people to go hide under the bed

#9 john on 11.12.08 at 12:26 pm

So much for the Harper government telling us how sound our banking system is.The US 725 billion dollar bailout was shocking–but consider the population of the US is approx. 301 million and Canada’s population is approx. 32 million so per capita we are right up there with them with Flaherty’s75 billion bailout. I find it very scary to think of what the future holds for Canada under the current government’s dishonesty and incompetence.

#10 B on 11.12.08 at 12:38 pm

“…He says there’s no risk to taxpayers, which may be true if real estate values in Canada hold, and nobody defaults on their mortgage…”

So IE: taxes will be going up?

Thanks Garth

#11 virtual ted on 11.12.08 at 12:48 pm

I’d like to be the first to congratulate the Feds on keeping housing prices at unsustainable levels by bailing out the idiots once again. I mean, what would happen should markets cease up? Oh no, those starting out might be able to obtain affordable housing…

This is wrong and makes me mad because we should know better. I voted for prudent conservatives and I what I got was the US Republican party and their special interests lobbyists from four years ago…

I guess this proves without a doubt, that democracy is all about the lowest common demoninater (AKA weakest link).

grrrr….

#12 Rob on 11.12.08 at 12:56 pm

Many of us are having fun with you Garth, but I must say that I’m picking up a distinct, if you’re not with ‘us’, you’re against ‘us’ tone of this blog entry.

Self-fulfilling prophecy wouldn’t you say?

#13 J Walker on 11.12.08 at 12:56 pm

Before we really get going here, if anyone is going to tell us how all these mortgages are insured, so we don’t have to worry, save it. This is a monumental hand out to the industry that led us blindly into the current reality.
It will get much bigger and we will all pay the price. Count on it.

#14 ponderthat on 11.12.08 at 1:07 pm

I’m not an expert here but it seems to me that neither are the ones making the big decisions. I feel quite helpless everytime Flaherty opens his mouth. If I disagree with his decisions, (and I doubt I’m alone) what can we do other than sit back and watch??

#15 Ginger on 11.12.08 at 1:15 pm

What does it mean “worth four bits”? Garth? Anyone?

#16 smwhite on 11.12.08 at 1:25 pm

– Meanwhile the car business is n the crapper. GM shares are down to a 62-year low and the company will go bankrupt if not rescued by Washington. But it will be. Of course. And this is why (after the bout of deflation headed our way for a few years) you will find this a world in which a dollar is worth four bits. –

I agree 100%, when this asset and temporary commodity deflationary period is over, hyper inflation may very well be a serious problem.

But don’t worry, we’ll print our way out of it or just stop reporting M2 like they’ve done with M3.

Good thing the conservative party got back in to fix the very problem they created, please, hand over more of my tax dollars to the banks for more magic beans.

As somebody that THOUGHT that those that stand for true CONSERVATIVE ideals would allow those that took the bad risks to pay the price, I have little faith in the current financial system and the way it is being managed.

This fascist business model is a [email protected] joke…

Yeah, I’m pissed, and seriously considering buying a couple 1000oz bars of silver and hiding them in my underwear drawer(with the whiskey).

#17 john on 11.12.08 at 1:29 pm

Looks like the US has seen the light–what about Flaherty?——MARTIN CRUTSINGER

The Associated Press

November 12, 2008 at 11:41 AM EST

WASHINGTON — Treasury Secretary Henry Paulson said Wednesday the $700-billion (U.S.) government rescue program will not be used to purchase troubled assets as originally planned.

Mr. Paulson said the administration will continue to use $250-billion of the program to purchase stock in banks as a way to bolster their balance sheets and encourage them to resume more normal lending.

He announced a new goal for the program to support financial markets, which supply consumer credit in such areas as credit card debt, auto loans and student loans.

Mr. Paulson said that 40 per cent of U.S. consumer credit is provided through selling securities that are backed by pools of auto loans and other such debt. He said these markets need support.

“This market, which is vital for lending and growth, has for all practical purposes ground to a halt,” he said.

The administration decided that using billions of dollars to buy troubled assets of financial institutions at the current time was “not the most effective way” to use the $700-billion bailout package, he said.

The announcement marked a major shift for the administration which had talked only about purchasing troubled assets as it lobbied Congress to pass the massive bailout bill.

#18 Jeremy on 11.12.08 at 1:35 pm

First….

I am glad that I am in my 20’s right now. I’ve lost about 20% of my RRSP’s right now but being in the military with a skill set only a few dozen people have, I have no fear of the job market. This will come to pass and there will be many more crashes long before I retire, I just hope that a crash doesn’t happen when I need my RRSP’s to go along with my military and canada pensions. I look forward to purchasing a house in Victoria in about 3-5 years when they will be reasonalbe provided interest rates don’t go up to 18% like the 80s.

#19 Marc on 11.12.08 at 1:37 pm

While new presale prices have not moved for the most part, condos are dropping in value. Seems the developers are aware of this and are now offering incentives. Sell your house and buy a presale condo, and the developer will pay you for the reator fees invvolved with the sale. Sell you Langley B.C. house that is overpriced and move to a less expensive overpriced house in Maple Ridge and pocket the equity you have. Good things for a slowing economy they are saying. Buy into a presale and get a car. Buyers do not notice 20K price drops, but do notice a 16K car in the parking stall they say. Guess math is not a strong subject for most buyers?

#20 dd on 11.12.08 at 1:40 pm

The Canadian government bank bailout is $75 billion so far.

Try this on:
The US bank bailout is about $750 billion so far.
Canada is 1/10th the size of the US.
So $750 billion x.10 = $75 billion.

Looks like the Canadian government is helping out the Canadian banks just as much as the US.

Are we in that bad of shape?

#21 smwhite on 11.12.08 at 1:40 pm

http://www.financialpost.com/story.html?id=953037

No kidding Jimmy?

#22 Tony on 11.12.08 at 1:46 pm

It’s a recession Garth, not the end of the world! We’ve been through these before. We’ll make it through to the other side without most of the ridiculous scenarios that you mentioned yesterday. You’re selling books – I get it!

#23 outtacontrol on 11.12.08 at 1:49 pm

Two points Garth.

1. Take some book proceeds and spring for a spell-checker.
2. Cash is priceless, not worthless, in deflation. The cash dollars I have this year buy 25% more house, 40% more stock market, 60% more oil than last year (or a few months ago for oil). When you say the dollar will be worth 4 bits (50 cents), you’re making a HUGE mistake. Cash is king. The Fed and the Bank of Canada’s efforts to inflate are useless when banks aren’t lending and consumers aren’t borrowing. Even if they were, it would be really hard to keep up with crashing asset prices of all types.

#24 $fromA$ia on 11.12.08 at 1:53 pm

Garth, please clarify in your above thread… “A dollar is worth four bits”

Where can you buy gold?

#25 ForWhomTheTollBuilds on 11.12.08 at 1:54 pm

Kevin Depew’s latest will make the “math club nerds” in the crowd stand up and salute. You know who you are. The guys who can see whats coming, but cannot convince anyone.

Don’t miss this one if you want to see the future.

http://www.minyanville.com/articles/AXP-fre-fnm-aig-gm-fannie/index/a/19940

#26 Believer? on 11.12.08 at 2:09 pm

I can’t say I am a follower of you but what you have said before proven everything thus makes me not to believe what could happen in our future.

Basically, I have most of the items on your survival list even the generator (bought after the black out in 03) while some might think that can never happen to them but what if it indeed happens?

I guess only time will tell and I always prepare the worst coz my old man always say to me its always better safe than sorry.

Keep up the good work I enjoy reading your post and off course your insight for the future!

#27 pjwlk on 11.12.08 at 2:21 pm

Garth, there are none so blind as those who will not see…

#28 Bottoms_Up on 11.12.08 at 2:34 pm

Question: can auto loans be called? What is the likelihood of this happening?

#29 pjwlk on 11.12.08 at 2:37 pm

For those who want to know what 4 bits means. (From coin site.com:)

“Many countries, European and Asian, countermarked Spanish Milled Dollars for use within their own countries. In the United States these coins were legal tender up until the Civil War period. Milled Dollars had a powerful effect on the U.S. coinage system. Our dollar was based on the Spanish Milled Dollar and some of the slang expressions referring to this money still survive today. As an example, the 8 Real was often cut into 8 “bits” to make change. Each bit was worth 12 1/2 cents (100 divided by 8). Though rapidly fading now, the expression 2 bits still refers to a quarter dollar.”

#30 MenWithHats on 11.12.08 at 2:41 pm

Four bits is fifty cents . Two bits is a quarter hence four bits is fifty cents .

#31 Valerie on 11.12.08 at 2:59 pm

All these bailouts are prolonging the problem. Bailing out corporations and institutions willy-nilly is doing nothing to fix the basic problem of getting toxic assets out of the financial system. The original bailout plan was supposed to buy up the toxic assets to get them out of the system and that was a good idea. However that is not what is happening because valuing toxic assets for what they are worth and buying them at that price will still not stop some big institutions from going under. The geniuses controlling things are afraid to let bankruptcies happen, but until those who should be punished are punished the system will remain tainted and Joe Average Investor will continue to be shafted until the system is cleansed.

#32 dd on 11.12.08 at 3:05 pm

#1 Joe S,

Unemployment numbers: If the US reports 6.5% unemployed – that are the amount of people on Employment Insurance and looking for work. It is reported that people in the states unemployed (looking and not looking) is about 11%. Plus you add people on welfare – I bet the real count is closer to 15% unemployed right now.

Unemployed … no matter how you slice it people and society pay a heavy price.

#33 Roger on 11.12.08 at 3:15 pm

An expression from the past:

2 bits means 25 cents. So 4 bits is 50 cents

#34 Calgary Rip off on 11.12.08 at 3:45 pm

Garth,

How can you answer that real estate prices in Calgary for decent homes are still DOUBLE their pre-2004 prices? I dont see the doom and gloom here that you are mentioning. Prices are still sky high, enough to price out either sensible people from buying, and/or people do not simply have enough to get something decent. The entry to homeownership in Calgary is reserved for the elite, not the common class.

I keep looking at the mls for Calgary/Cochrane and its still all the same old overpriced nauseating crap. Bob Truman has shut down his blog and I suspect realtors and home owners trying to sell will simply remove their listing when the price goes too low, IF that happens.

So what is your prediction for housing in CALGARY? You think that houses will be $200,000 again in the NW areas? I dont see that happening. It would be better if that happened, and even BETTER if housing in that area would be $100,000 for a decent house. But I believe that is a pipe dream.

#35 Mike B on 11.12.08 at 4:03 pm

Flaherty is really a piece of work indeed. Late last year he strutted about how Canada was essentially decoupled from the rest of the world. Later he back peddled. During the election he preened about how there would be no deficit ” not on my watch ” he preached. Now a deficit.
Before the election not a peep about taking on mortgage debt. Now that he is entrenched out comes the bailout.
I concur with Garth, if anyone is freaking out at the magnitude of world events so far , well than they are just dopes. GM was a blue chip stock for most of my adult life and now a penny stock. I was speaking to a young and very bright broker from CIBC who indicated that if GM goes under, any of them in fact, the multiplier effect on Ontario would be horrendous. SO don’t think Flaherty is done with spreading out your money and mine. Time to move to Costa Rica.

#36 Lawrence on 11.12.08 at 4:04 pm

More distortions. The federal government through CMHC has offered to purchase up to 75 billion in mortgages from Canadian banks and also reduced the fees charged banks by .25 percent in the most recent announcement because NO BANKS HAVE YET TAKEN UP THE OFFER!!

There is an option here that some banks may wish to examine but to date – NONE HAVE. Clearly, if there was uptake on this alternative you might be able to make a case that the banks are in difficulty, but not yet Garth.

Garth mistates the facts again and again.

#37 Not so sure on 11.12.08 at 4:22 pm

Garth,

Your last entry caused me to read up on the depression era, and I get the distinct impression that “things” did not run out at all. In fact, inventories were huge but nobody had any cash to buy anything. What am I missing?

To be frank, I did stock up on some basics today “to be ready to go camping next year”…

#38 smwhite on 11.12.08 at 4:37 pm

#24 $fromA$ia

https://online.kitco.com/

#22 Tony

I really don’t think you get it if you think its about “selling books”. Why would the federal government hand over 75 billions in Canadian treasuries that back mortgages if its just a potential recession(Cause we know we’re not in one now right? You can’t have a recession unless you have two negative quarters of growth)?

Is the USA changing their economic model to the same as that of the Chinese?

The real terrorists are on capital and parliament hill…

#39 Dennis Forbes on 11.12.08 at 4:45 pm

Garth,

“No risk to taxpayer” was actually “No *additional* risk to the taxpayer”, which is entirely accurate because the mortgages were insured by the CMHC. If it defaults, they’re out either way.

Canada is not an island. As much as it sadly seems to hurt you, Garth, and your bunker-inhabiting fans, Canada has done absurdly well over the past two years. Now the government is trying to ensure that it doesn’t go to hell, given that our banks aren’t islands and will start to lock up credit when there’s a worldwide credit freeze, so they’re releasing the pressure a bit. No one has turned around on the fact that Canada’s economy has been bizarrely robust.

Then we get to the paradox that Ontario’s job losses were largely the results of the robustness of our economy in the fact of a worldwide meltdown, and the corresponding rise of the Canadian dollar. At 80 cents again, a bit of the exodus should slow.

#40 Downsized and Delighted on 11.12.08 at 4:55 pm

So how long have you been looking to buy a house in Leaside Garth?

Only greater fools there. — Garth

#41 Apocalypse rider on 11.12.08 at 5:01 pm

Calling everyone who do not agree with you fool does not really boost your reputation or give any more strenght to your arguments. One should really look for a truly independent commentator (if any)
I will not buy your book.

I’m crushed. Don’t let the door hit your butt on the way out of my (free) blog. — Garth

#42 mrg on 11.12.08 at 5:27 pm

Hey Garth,
recently a friend bought a new house in Squamish, has trouble selling his current house in Pemberton for the price required to make the move, and the developer says “no prob, let’s take $25000 off the price of your already signed contract”!

#43 Anon on 11.12.08 at 5:31 pm

So those politicians gave away over $2000 per Canadian to the banks?

#44 brazer on 11.12.08 at 6:15 pm

Stocks Battered on News Gov’t Won’t Buy Banks’ Assets, Dow Plunges More Than 400
http://biz.yahoo.com/ap/081112/wall_street.html

“There just doesn’t appear to be an end in sight to the bad news,” said Anton Schutz, portfolio manager of the Burnham Financial Industries Fund and the Burnham Financial Services Fund. “The selling is relentless.”

#45 brazer on 11.12.08 at 6:17 pm

Paulson: Rescue package not for automakers
http://finance.yahoo.com/news/Paulson-Rescue-package-not-apf-13546752.html

WASHINGTON (AP) — Treasury Secretary Henry Paulson called autos a “critical industry” Wednesday but said a $700 billion financial rescue program wasn’t designed for them. The White House was noncommital, but said it was open to new ideas.

#46 brazer on 11.12.08 at 6:18 pm

American Express shares plunge on bailout report
http://finance.yahoo.com/news/American-Express-shares-apf-13547722.html

NEW YORK (AP) — American Express Co. shares plunged Wednesday after a report that the credit card issuer is seeking $3.5 billion in funds under the government’s plan to directly invest in financial firms.

AmEx received approval earlier this week from the Federal Reserve to become a bank holding company, which is a similar structure to traditional commercial banks. The credit card company now has access to financing from the Fed and the ability to grow a large deposit base.

#47 brazer on 11.12.08 at 6:20 pm

Morgan Stanley plans broad job cuts
http://finance.yahoo.com/news/Morgan-Stanley-plans-job-rb-13544921.html

NEW YORK (Reuters) – Morgan Stanley (NYSE:MS – News) plans to cut 10 percent of staff in its institutional securities unit and 9 percent in asset management, it said on Wednesday, as it copes with a deteriorating economy, disrupted capital markets and falling asset values.

The cuts are in addition to roughly 4,800 jobs eliminated since the middle of 2007 by what was once Wall Street’s second-largest investment bank.

#48 brazer on 11.12.08 at 6:21 pm

Best Buy cuts fiscal 2009 profit outlook
http://biz.yahoo.com/ap/081112/best_buy_outlook.html

Days after its rival Circuit City filed for bankruptcy protection, the nation’s largest consumer electronics chain dramatically cut its fiscal 2009 earnings outlook and said it was being hammered by the worst retail environment the 42-year-old company has yet to endure.

“Rapid, seismic changes in consumer behavior have created the most difficult climate we’ve ever seen,” Chief Executive Brad Anderson said in a statement. “Best Buy simply can’t adjust fast enough to maintain our earnings momentum for this year.”

#49 The Tallyman on 11.12.08 at 6:23 pm

#35 Mike B said regarding Flaherty:
“During the election he preened about how there would be no deficit ” not on my watch ” he preached. Now a deficit.”
———-

Not only that,
Boss Harper was crowing it was a good time to be buying stocks.

God help us from this Abbott & Costello duo.
Flaherty could pass for Abbott’s double yet he kinda resembles a grumpy lawn ornament.

Any wonder Monsanto is prospering with all that BS flying around.

#50 brazer on 11.12.08 at 6:24 pm

Regulators nix credit card debt forgiveness plan
http://finance.yahoo.com/news/Regulators-nix-credit-card-apf-13550686.html

WASHINGTON (AP) — Federal bank regulators have rejected a request by banks and consumer advocates for a program to let lenders forgive huge portions of credit card debt.

The Office of the Comptroller of the Currency rejected the request for a special program that would allow as much as 40 percent of credit card debt to be forgiven for consumers who don’t qualify for existing repayment plans…

Americans are weighed down by about $900 billion in credit card debt, according to the latest available Federal Reserve figures.

======

this is going to end very very badly.

#51 Shifty on 11.12.08 at 6:27 pm

My guess is 4 bits against the American green back. If demand for our natural resources fail the loonie falls. Oil fell today followed by the Loonie. Interesting times, better than cable TV.

#52 brazer on 11.12.08 at 6:28 pm

Loonie suffers worst day ever
http://www.thestar.com/article/535521

The currency kept falling as the day wore on, dropping by as much as 2.84 cents in late afternoon. It closed at 80.81, down 2.77 cents US.

That’s the biggest one-day drop on record at the Bank of Canada and surpassed the 2.69-cent fall on Oct. 10, when the currency spent much of the day down more than three cents before rallying.

#53 brazer on 11.12.08 at 6:32 pm

No bottom in sight for stock market
http://www.thestar.com/Business/article/535359

The Toronto stock market plunged more than 500 points today as metals and financial shares pushed the main index down, and the loonie took its biggest one-day drop on record.

Toronto’s S&P/TSX composite index tumbled 501.43 points to 8,922.57 as the Canadian dollar fell 2.77 cents to 80.81 cents – its lowest close since Oct. 28.

======

now where are those folks who were posting on this blog stating that 9000 was the “floor” and we were bouncing back?

i’ve said it before…next stop 8000 …it’s inevitable.

#54 dd on 11.12.08 at 6:44 pm

#34 Calgary Rip off,

Calgary is still in a bit of a bubble here with repect to house pricing, outlook, and spending.

I really think people will not give this recession a though until the layoff start. If oil and gas keep dropping there will be layoffs. However most of the province still runs off of Natural Gas for jobs and revenues. If natural gas stays higher (7.50 to 8.00) Calgary might avoid this downture.

If people want to sell their house they have to be 10% of listing price. I know it is still too high of price. However lower sales prices will lead to lower sales prices.

#55 dd on 11.12.08 at 6:46 pm

#34 Calgary Rip off,

Calgary is still in a bit of a bubble with repect to house pricing, outlook, and spending.

I really think people will not give this recession a thought until the layoffs start. If oil and gas prices keep dropping there will be layoffs. However most of the province still runs off of Natural Gas for jobs and revenues. If natural gas stays higher (7.50 to 8.00) Calgary might avoid this downture.

If people want to sell their house they have to be 10% of listing price. I know it is still too high of price. However lower sales prices will lead to lower sales prices.

#56 brazer on 11.12.08 at 6:47 pm

CanWest cuts 560 jobs
http://www.thestar.com/Business/article/535803

CanWest Global Communications plans to cut 560 jobs, or five per cent of its workforce, as the Winnipeg broadcaster and publisher streamlines operations in a tough economy.

The company said late today the cuts will reduce operating costs by $61 million a year and involve voluntary buyouts, attrition and layoffs.

The latest cuts are in addition to several hundred jobs that have been eliminated over the last two years.

======

many more “streamlining” announcements to come.

#57 brazer on 11.12.08 at 6:49 pm

Bank of England gives gloomiest forecast in years
http://www.thestar.com/Business/article/535768

“It is very difficult to know precisely how long we’ll be in recession,” King said after the release of the bank’s quarterly inflation report. “I think we are probably in recession now.”

In Canada, the economy is also on the brink of recession, with little growth expected over the next year and a rise in unemployment expected as manufacturing companies in Ontario and Quebec continue to shed jobs and falling prices for oil, minerals and other resources weakening prospects in Western Canada.

=====

I “think” you’re “probably” right.

#58 john on 11.12.08 at 6:50 pm

We Are In a Recession-experts.————–Global Insight managing director Dale Orr said the country will lose 100,000 jobs in the first three months of 2009, and he believes Canada has already entered its first recession in 17 years.

While several of Canada’s chartered banks have previously predicted the economy will experience some slippage, it is the first time Global Insight — known for its detailed and cautious reports — has projected an outright recession
You have been right on all along Garth!

#59 brazer on 11.12.08 at 6:57 pm

ATS to cut 5 per cent of work force
http://www.reportonbusiness.com/servlet/story/RTGAM.20081112.wats1112/BNStory/Business/home

TORONTO — — ATS Automation Tooling Systems Inc. plans to trim 5 per cent of its work force — about 170 people — by next spring after reporting a quarterly profit of $9.3-million, up from a year-ago loss of $18.8-million.

#60 squidly77 on 11.12.08 at 7:02 pm

i just got home after a few pints at my local pub
i looked down the bar and guess who i saw nursing a scotch.. it was vultur and he says that he just doesn’t care anymore..poor guy
http://www.patricialin.com/images/confused.bmp

#61 brazer on 11.12.08 at 7:04 pm

Teck shares continue to tumble
http://www.theglobeandmail.com/servlet/story/RTGAM.20081112.wteck1112/BNStory/energy/home

Meanwhile, BMO Nesbitt Burns Inc. analyst Ian de Verteuil warned that the Teck loan is a “good example of how banks can find themselves at risk” from impaired loans. If commodity prices continue to fall – copper is 58 per cent off recent highs and coal is off 53 per cent – the deal could be one of the fastest “underwriting-to-default experiences in the history of banking.”

“If commodity prices continue to deteriorate, a problem could develop as early as March, 2009,” he said, adding Bank of Montreal and CIBC were the Canadian banks with the most exposure to the deal.

=====

BMO and CM will get hit VERY hard on this deal…watch and see.

#62 Bobby in Victoria on 11.12.08 at 7:06 pm

I listened to a mortgage broker on the radio this morning. He said that sellers will set the price of houses, not the buyers. Started to laugh out loud. Like most realtors he hates to admit that a house is only worth what a buyer is willing to pay. Nothing more. Moreover, he doesn’t make a dime unless a buyer decides to shop for a mortgage. I have believed for a long time that the greater fools are not the buyers, but those that make up the real estate industry. They seem to believe their own hype!!!!

#63 Mark on 11.12.08 at 7:21 pm

No more free RIDES, BIATCHES! Gotta earn your money!

#64 The Tallyman on 11.12.08 at 7:24 pm

It’s all about line ups.

To all the people who stood in line for days to buy shoe box housing.
To the ones who stand in line outside restaurants for hours “just to be seen”
You are going to love depression times.
Lot’s of long lines for your toilet paper & mac cheese rations.

To those like myself who hate lines… the smallest amount of rainy day prep will
ease some of the pain hard times bring and keep you at home out of the line up.
And no need to get out of Dodge and move to Idaho.

Even apt/condo dwellers can do much to implement
some kind of plan. Some cheap and healthy ideas are:
Get a food hydrator and store a bit of food.
Learn how to grow sprouts and make this your year round indoor garden.
And if emergency never strikes, you are well on the way to a healthier lifestyle
Not to mention the $ you’ll save on not having to buy the no nutritional value pesticide ridden veggies from the store.

One plus of apt/condo living is that in times of crisis you already have neighbors with a common property stake and it will be easier to set up committees regarding safety & helping one another.

Not saying depression times will happen but even govt promotes 72 hr emergency prep.
How much more effort to plan ahead for 1 month?

Consider there is only a 2-3 day supply of life sustaining food on store shelves even in the best of times.
Now imagine the panicked herd with no plan.
Those Michelina’s are going to be gone fast!

And worse having $$$ in hand will not feed you if stores cannot get delivery of goods and have nothing to sell you.
You have to prepare ahead. Be your own insurance company.

#65 rh on 11.12.08 at 7:25 pm

@#1

the Unemployment rate was 70%, but actually the breakdown was (approx)

50% regular employment (regular hours)
25% employed, but very underemployed, (partial hours)

#66 The Tallyman on 11.12.08 at 7:26 pm

oops…. meant food dehyrator

#67 $fromA$ia on 11.12.08 at 7:55 pm

Thanks men with hats!!!!

Garth, why don’t you reply to questions?

#68 Kitchener1 on 11.12.08 at 8:28 pm

The Bank bailout is huge compared to our population. The next big story next year is not going to be banks short on capital to lend. It is going to be that banks are full of capital but NO ONE wants to take on additional debt.

That is the crux of the deflantionary view point. BOC can print all of the money it wants but it will be of no consquence if no one is willing to take on additional debt.

Canadians are well past their abilty of manage debt, we as a nation are much worse off then the US in that regard. When people finally start saving and paying off their debts, the real deflinationary cycle will start.

Once the tide turns and peoples attitudes change, their is nothing the Federal governments or banks can do.

#69 Brittanny on 11.12.08 at 8:30 pm

Anyone buying a house in todays market is a fool. Anyone that believes that the state of the economy can not get much,much worse is a fool and does not think that history has ever been made. Anyone that believes that you get straight information from our current political boneheads is blind,and a fool.

#70 Lance on 11.12.08 at 8:36 pm

All of this government (printed) money being thrown around and near zero interest rates is going to inflate another asset bubble of epic proportions in 2-5 years from now.

May we all be wise enough to determine which bubble it’ll be, buy low and get out before it goes nuclear. And the next time, I don’t think the governments of the world will be able to save it with money printing.

#71 Pepe le Moko's casbah hideout on 11.12.08 at 8:40 pm

Anybody how did Joe Kennedy make his ‘dirty’ fortune in the last one..?

#72 David on 11.12.08 at 8:48 pm

Canada’s banking system is the envy of the G8. Canada’s banks are too big too fail. Canada’s more prudent lending practices prevented a housing asset bubble like the one south of the border. All those clichés belong in the ash pit of history.
Last month only $25 billion was needed to provide liquidity to the banks. This month another $50 billion was needed. Santa arrives in December so who knows how many more billions will be required by our estimable bankers. The government has chosen to do a massive bailout on an installment plan basis. Ottawa calls it a buying a pool of $75 billion in mortgages. Swamp is a much more appropriate choice of diction. Even though the nominal face value of the mortgages is worth right now 15% less than the net realisable value of these assets taxpayers got a great deal right? By 2015 when the dust completely settles on the housing bubble the actual losses to taxpayers could be quite startling. The pooling of mortgage risks is exactly what caused this financial mess in the first place and how engaging in more of the same lunacy will correct the problem is anyone’s guess. The financial wunderkinds may be avaricious and disingenuous, but they are not complete idiots and they found a qualified buyer for some really toxic assets.

#73 y3maxx on 11.12.08 at 9:11 pm

Y3maxx Prediction….

New York City is dying.

…..Vancouver will become North America’s business capital over the next 10 years.

All because of it’s proximity to the Far East, it’s harbour for shipping/transportation and its climate/outdoor lifestyle.

Mark my words

#74 Dean on 11.12.08 at 9:11 pm

Ginger, two bits equals 25 cents, so four bits would be fifty cents. Maybe Garth is predicting a fifty cent dollar in comparison to the U.S. dollar. The Canadian dollar and economy usually fares worse than the U.S. in times of recession or depression because we are a resource based economy. That said imo cash is where it’s at in a deflationary period. Either Canadian savings bonds, Swiss Bonds, or U.S. treasuries.

#75 Another Albertan on 11.12.08 at 9:28 pm

For dd and Ripoff:

http://calgary.ctv.ca/servlet/an/local/CTVNews/20081112/CGY_Oil_JobLoss_081112/20081112/?hub=CalgaryHome

#76 squidly77 on 11.12.08 at 9:35 pm

with yet another $50,000,000,000 50 billion dollar bailout
canadians continue to believe that our banks are prospering..look at this graph of cibc stocks
http://ctvdb.globeinvestor.com/invest/investSQL/ctvx.show_chart?pl_comp_id=181578&pl_errmsg=&iaction=Chart&pl_primary_listing=CM-T&iaction=Chart&pl_additional_listing=0&pl_period=60M&pl_chart_type=+&pl_sh_movement=0&pl_long_movement=0
RBC TD BNS they are all the same..and as you can see they are not well

#77 islander on 11.12.08 at 10:34 pm

A couple of years ago, as Edmonton real estate prices were peaking and U.S. American real estate prices were creaking, people ’round these parts were saying things like, “I think real estate prices will stay high at least until the Olympics.” They had absolutely nothing to support this fantasy, but I got tired of challenging their assumptions.

About a year ago, these same dimwits were saying things like, “Canada doesn’t have the same level of sub-prime problems as the U.S. Americans,” but I got tired of pointing out all the examples of ways Canuck banks were giving away money to people who had little hope of paying it back.

Now, many of these same people are saying things like, “Canada’s banks are in much better shape.” A guy who I respect immensely even told me on the weekend that Canadian banks were the best in the world and that the $25B the government previously handed out was an excellent investment on behalf of taxpayers.

I’m not even bothering to justify my position anymore, since I know I’m right. To the Pollyannas, rose-colored glass-wearers, ostriches, and Garth’s critics, I ask, “where’s your evidence?”

#78 timbo on 11.12.08 at 10:37 pm

question: is all the deflation of commodities a market strategy to lower costs and hopefully bring the us economy out of a coma or is it because so much money was lost last month there is no cash left to speculate?

real scary if your close to retirement and your account is imploding…lot of pissed off people soon.

#79 kc on 11.12.08 at 10:47 pm

4 bits,…. good one garth!! I was dismayed thou at all the people who answered this question of what is it… for it does give a good guide to the ages of the readers in here.

Seems that many people keep questioning the “stock bottom” I have my own theory on this, the day that the DOW and the TSX close around 1400-1500 point drop (in 1 day) you will start to actually see the final bottom.

these mini splashes are the suckers “dead cats” that keep the grease flowing… after the BIG one hits you will know that the bottom is in. There are fewer and fewer “buyers” (or suckers) that can stick there green backs in who don’t do their homework as to they are buying on dividends or just the ticker prospects of the increase. Now by just watching HOW FAST the last 3 months have deteriorated around the world, econmic, and financial… etc (no mention of bankrupted Countrys.. iceland and pakistan…. ) the profits still don’t add up for the markets to be worth the investments yet. this is why I say when she has the final SELL OFF you will know the bottom. (my gut feeling… around Dec 15…. )

cheers

#80 john on 11.12.08 at 10:48 pm

A question Garth-I have been trying to find out the total value of insured mortgages by CMHC and have been unable to find it anywhere–do you know or where i could find out? thanks..john

#81 timbo on 11.12.08 at 11:02 pm

everyone watch the markets thur & friday. me think something is coming. so much bad news. Watching cnbc overseas markets as a prelude.

#82 GenXer on 11.12.08 at 11:16 pm

Hey Pepe,

Kennedy made his fortune bootlegging and then changed to legitimate alcohol production when prohibition was lifted.

I figure you have two ways of making money through this one:
– Invest in oil while it’s low and wait for the effect of peak oil to set in
– Join Garth in raising chickens and squirrels on a quaint rural property

#83 JOHM on 11.12.08 at 11:18 pm

TONGUE TWISTERS OF THE DAY

– Bail outs to the leveraged. That leveraged the
leveraged. So they could leverage the leverage. So
now you are the leveraged or the or
the over leveraged that leveraged the levered
leverage .

– repeat… How many leverages can you over leverage
in one leveraged that you can sell by the sea
shore .

– stimulus to stimulate the toxic stimulus
and call it stimulating the stimulated
stimulus .

– or bailing the ship so that way
we can rescue the ship that shipped
the ship to the other shipwreck .

I HOPE THAT WAS FUN…..

#84 dd on 11.12.08 at 11:20 pm

#72 David,

I see Fairfax financial is shorting Cdn bank stocks. They are the insurance company that made $1billion shorting US banks.

#85 dd on 11.12.08 at 11:24 pm

#70 Lance,

What option do the governments have? We could be facing a depression if nothing is done. I would rather deal with inflation and a job then depression and no job.

Someone (governments in general) was sleeping at the wheel on this one.

#86 Gilligan on 11.12.08 at 11:43 pm

#15 Ginger – 4 old bits was a half-dollar; 4 new bits is a nibble. But that’s the easy part.

The tough one is -why was 1 bit 12.5 cents?

#87 Kestral on 11.12.08 at 11:53 pm

To #71 Pepe le Moko’s casbah hideout

This is straight from Wikipedia:

It has been noted that during the Depression Kennedy vastly increased his financial fortune by investing most of his fortune in real estate. In 1929 Kennedy’s fortune was estimated to be $4 million. By 1935, his wealth had increased to $180 million.

#88 T.O. Girl on 11.13.08 at 12:43 am

Garth you’re right!!!Only the greater fools have bought into or are thinking of buying into Leaside!! Overpriced crap!! Sales down 85% WOW more to come!! There are many $750 000 and up homes just sitting there, many have been reduced somewhat but not enough they are still way overpriced for original crap!! I’ve seen some million dollar homes sitting for months no fool is gonna spend that kind of money for that area in todays time!!! If I had a million dollars I definetly wouldn’t put it in that area on small lots surrounded by semis built by crappy speculators!!!!! Homes prices will drop anywhere from 30-50% so don’t be that greater fool! Bay street is laying off all those large salaries are gone no more McMansions!! they will be clearing them out so wait for the bargains!!!if you still have a job to buy them!!!
Housing market in toronto is collapsing people are scared and are holding back! I’d rather put money in my savings just in case I need it some day soon rather than get myself in big debt right now!!!
We are following the US and other countries in a severe depression and RE MELTDOWN!!!

#89 Calgary_rip_off on 11.13.08 at 1:00 am

“Calgary is in a bit of a housing bubble….” Ya think??

The cost of this bubble is UNBELIEVABLE. Hopefully Garth is right and this province gets pooched. Who besides the oil employees and CEO’s benefits from Alberta’s Oil and Gas? You dont see the benefits at the pump, and the housing costs, renting and owning, WTF??

So its not a bit of a bubble. The houses and condos and all housing is overpriced DOUBLE in Calgary what the stuff is worth. Nice houses in some spots, but does it make sense to spend $400K on a house that 4 years ago was worth $200, and at that time period(2004) your $400K mortgage would have bought you a mansion.

One way to describe Calgary’s housing market and realtor scene: FUBAR(fucked up beyond all recognition). Are you getting this all you conservative turds who want to sustain this unreasonable rip off????

#90 Gord In Vancouver on 11.13.08 at 1:38 am

#56 brazer

CanWest cuts 560 jobs
http://www.thestar.com/Business/article/535803

CanWest Global Communications plans to cut 560 jobs, or five per cent of its workforce, as the Winnipeg broadcaster and publisher streamlines operations in a tough economy.

The company said late today the cuts will reduce operating costs by $61 million a year and involve voluntary buyouts, attrition and layoffs.

The latest cuts are in addition to several hundred jobs that have been eliminated over the last two years.

That’s sad and I sincerely feel for those who will lose their jobs – especially those in Kelowna.

What’s ironic is that Global BC was, as recently as 6 weeks ago, repeatedly saying that the economy was on fire.

#91 Mark on 11.13.08 at 1:58 am

Garth – I’m not an expert on these things by any means. So I’ll ask you (or one of your readers can explain this to me?)

Surely the government bailing out $50b is a BAD thing to do? Surely it’s better to just let things take their natural course?

Surely by doing this, at BEST all they’re doing is delaying the inevitable (what goes up must come down). And when it does happen, it’ll happen even bigger, and surely it’d make more sense for the market to crash when all the other countries are? Rather than delaying the crash for a few years and crashing while everyone elses economies are recovering?

It makes sense to me? But not to our finance minister? So therefor i’ve obviously missed something?

Sure it may make people with homes feel safer, it may make it look like the governments doing something. But it doesnt change the fact the house prices are currently WAAAY over priced (especially here in vancouver)

You sound like an economist to me. — Garth

#92 JoJo on 11.13.08 at 2:05 am

MY PREDICTON in 2009/2010

Hiper-Inflatory Depression
$ US will colapse in 2009.

Bottom on the stock Market will be about 7,200 for TSX and 6,900 for DOW Market.

#2 y3maxx
You don’t have idea about China Economy at all.

First, you should understand that China has 9% Growth,
and second why China should sell Gold, when is not in debt. China has cash and US bonds over $1,600 billions
just in USA, plus trillions in other countries.
US Goverment has over 11 trillions debt and their economy has debt about 50 trillions.
Open Forex-currency valuation and you can see that $US doesn’t have any fundamental sign to going up, when their economy went in toilet.
Why Europe,Canada,Australia,China,Latino America
have more loss than USA?
Soon we see the biggest fraud in world economy, and how US make money from other countries.

Ouch, Oil is now $ 55, and Gold was $ 680/0z. last week.
Botom for Oil will be $ 49, and bottom for Gold $ 660/oz.
But after February 2009, $ US will turn down.
In November/2009, Gold $ 1200
and Oil price $ 100.
That month Nov/2009 you’ll see biggest fraud from US Goverment in World Economy, ever.
CASH IS KING!
Yes when you can printed $ 2,000 billions every year just for bailots, plus $ 2,000 billions for New Health Care Standards in USA and $ 1,000 bill. for wars and infrastructure.
Every country in the world when it has more money supply that is inflation.
Even when only person hold $ 2 trillions and rest of population just $ 1 million. Still you can see printed money and it’s money supply. Period.
I can’t belleive with my eyes when US has 7 times more money supply form 2001 and commodity prices are same as 2001(exept Gold).
Only in America.
However $ US will collapse in 2009, and will going back in Golden Standards.
1 Gold/oz= $ 59,000

Defflation is the World is temporrary, and 2009 you can see competly different Market and Hiper-Inflation

#93 $fromA$ia on 11.13.08 at 2:36 am

Guys, your choices for investment.

1) Real Estate
2)GIC
3)Stock Market
4)Gold

Can everybody gues which one is the winner to come?

Can Garth?

Far too simplistic a question. Short-term capital gains? Long-term appreciation? Wealth preservation or speculation? ‘Investment’ implies growth. Right now that is not the goal of most people. — Garth

#94 Don Bool on 11.13.08 at 3:08 am

When will the book(“After the Crash”)be available. Your last book(” The greater fool”) was and is right on the mark.
When will “After the Crash” be available. Lickety split I hope.

Still writing it! Due sometime in January. — Garth

#95 David on 11.13.08 at 3:42 am

These no strings attached bail outs are so appalling and such an affront to taxpayer’s normal sensibilities. There is no compelling reason for Canadians to be the unwitting holders of potentially bum mortgages in Toronto or Vancouver. Flaherty did not ask for any performance guarantees from the banks or that the liquidity flood would actually go toward financing small business or new homeowners purchasing homes. There was no mention of regulatory oversight nor was there even the vaguest mention of how much these $75 billion in mortgages are actually worth in today’s market. No doubt, there will be more requests for no strings attached mortgage bailout swaps or whatever the government chooses to call them. The people who benefited from the housing bubble get to make off like bandits and those that never saw any benefits from the bubble get to gag on a multi layered Dagwood Shit Sandwich.

#96 JoJo on 11.13.08 at 4:18 am

Poor USA,Canada,UK?
Where is Gold?

Severe devaluation of $ US like 70% or more !

http://www.globalfirepower.com/list_gold_reserves.asp

http://www.leap2020.eu/GEAB-N-28-is-available!-Global-systemic-crisis-Alert-Summer-2009-The-US-government-defaults-on-its-debt_a2250.html

#97 Octagonian on 11.13.08 at 5:48 am

Everybody:

First off, lay off Garth. He is only human. He is not an economist, simply a former newspaper man and politician. Yes, he was bang on, and early, about Canada’s impending real estate correction/crash. He should be commended for this. But his nature is very small-c calvinist, gloomy and bearish. Even the most bearish gloom and doom ECONOMISTS (with near flawless track records, as opposed to Garth’s more human track record) say this will be somewhere between an early 80s recession and a Japanese depression. US real estate will bottom next year. The DOW, shortly after housing touches bottom in late 2009, will find its bottom near 5,500. Big time inflation, bordering on hyperinflation will begin to kick in later 2010. Real estate will not recover. Gold — a barbarous relic to Garth — will soar. Commodities, including oil, will reach ridiculous heights again beginning 2011-ish, according to the bearish economists I now subscribe to. Unemplyment may well peak around 12%.
Garth has a great blog — but he is just a man.
Hope you still print this Garth, cuz I am indeed a fan.

#98 Jimster on 11.13.08 at 7:21 am

Why Canada’s Banks Don’t Need Help

http://www.time.com/time/business/article/0,8599,1855317,00.html

What a difference a few days make , eh?

#99 Helmut on 11.13.08 at 7:49 am

#41 Apocalypse rider…As far as I am concerned Garth is one of a few independent commentators. I remember his dead on comments way back when he wrote for a Toronto Newspaper :).

I’m crushed. Don’t let the door hit your butt on the way out of my (free) blog. — Garth. LOL..way to go Garth.

#100 brazer on 11.13.08 at 7:59 am

BT to cut 10,000 jobs this year as Q2 profits fall
http://ca.news.finance.yahoo.com/s/13112008/2/biz-finance-bt-cut-10-000-jobs-year-q2-profits.html

LONDON – BT Group PLC, Britain’s largest phone company, is cutting 10,000 jobs this year to boost profitability after revealing a double-digit fall in second quarter earnings.

The company says the majority of cuts will hit workers employed through outside agencies, contractors and offshore workers.

BT employs around 160,000 people globally and is based in London.

#101 Mike B on 11.13.08 at 9:06 am

David 72 is spot on. All the crap the a-hole conservatives have been shovelling is just to calm down all the canadian sheep. The posts about our being one tenth the size of US so our bailout is actually bigger than the yanks are all accurate. Gotta love the sheep like mentality of canadians. No one even so much as makes a petition. Paulson is also a big sheister, with blank cheque in hand, does whatever is best for his bank buddies. Next year will be the mother of all financial downturns, mini depression for sure. Obama has been handed a live grenade. Harper will swim in his own bs.
keep the great posts coming David and Pol-Can. Such a delight to read your stuff.

#102 brazer on 11.13.08 at 9:24 am

Their debts are already out of control; now they face a 24.75% Visa rate
http://www.thestar.com/Business/article/536028

Laurie Campbell, executive director of non-profit credit counselling service Credit Canada, said consumer debt loads are out of control.

“We’re seeing lines of credit, mortgages, payday loans, credit cards, absolutely, lots of credit cards. And really people that perhaps got into the housing market that really shouldn’t have gotten into the housing market and then have relied on credit to makes ends meet,” Campbell said. Some people are simply “living on the edge.”

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

ya don’t say…

#103 brazer on 11.13.08 at 9:25 am

Foreclosure rates up 25 percent year-over-year
http://biz.yahoo.com/ap/081113/foreclosure_rates.html

More than 279,500 U.S. homes received at least one foreclosure-related notice in October, an increase of 5 percent over September, according to RealtyTrac Inc. One in every 452 housing units received a foreclosure filing, such as a default notice, auction sale notice or bank repossession.

More than 84,000 properties were repossessed in October, RealtyTrac said.

#104 brazer on 11.13.08 at 9:27 am

Las Vegas Sands to fire up to 11,000 Macau workers
http://biz.yahoo.com/ap/081113/as_macau_las_vegas_sands.html

MACAU (AP) — Struggling casino operator Las Vegas Sands Corp. will lay off as many as 11,000 workers after a cash crunch forced the company to halt construction on multibillion dollar projects in the Chinese gambling city, a top executive said Thursday.

====

even the sin biz is in trouble….

#105 Crikey on 11.13.08 at 11:15 am

Let’s all send our condolances to our dear friend Larry.

http://tinyurl.com/54pujx

West Vancouver. Twelve days. Zero sales.

#106 Crikey on 11.13.08 at 11:29 am

Correction:

The link above is referring to the west side of Vancouver, not West Vancouver. My bad.

Sorry, Larry.

#107 Outlaw on 11.13.08 at 12:03 pm

Hey All

Just an article supporting Garth’s doomsday scenarios presented by a renowned trends forecaster, definitely worth a read
http://www.prisonplanet.com/celente-predicts-revolution-food-riots-tax-rebellions-by-2012.html

#108 Rob on 11.13.08 at 12:33 pm

Reference the 75 billion for mortage buyouts. Does anyone know how much of this is for mortages insured by Genworth. If there were to be substantial defaults on high ratio mortages insured by Genworth, how robust are their reserves? Perhaps this is a factor in this bailout.

#109 Downsized and Delighted on 11.13.08 at 12:39 pm

I feel compelled to even out the discussion – many are saying that anyone who buys a house now is a fool. This is simply not true. It implies that all of the houses on the market right now are overpriced. This isn’t the case. Some vendors have to sell and they are reducing their prices to make that sale. There are in fact homes “underpriced” for their neighborhoods.

When nobody is buying, it’s the kind of market that is open to “low offers”.

I think the fools are the ones who put themselves in the position of “having” to sell in this market!

#110 Bottoms_Up on 11.13.08 at 1:11 pm

Garth doesn’t answer questions because if he did, everyone would expect him to answer theirs.

Why are we bailing out Canadian banks now that the US is no longer bailing out theirs?

Also, I believe our banks have been prudent in their lending, but not many organizations can hide from a global depression. Face it, it’s going to get a lot worse before it gets better.

#111 GenXinSask on 11.13.08 at 1:43 pm

$fromA$ia,
Guys, your choices for investment.

1) Real Estate
2)GIC
3)Stock Market
4)Gold

Can everybody gues which one is the winner to come?

Can Garth?

———————————————————
The best answer is 2) GIC. Everything else is a guaranteed loser. Actually, I’d just stick with the cash and forget about the GIC.

Please don’t say “gold”. Eventually someone with gold will be begging someone else to give them cash for it. Gold is pretty well useless. If there is a monetary collapse gold won’t save you. You’ll be trying to sell a few chips of it for a bowl of squirrel-stew.

#112 POL-CAN on 11.13.08 at 1:48 pm

All….

This is a a comment from one of the posters on Mish’s site… He has an excellent track record with calling market swings from studing patterns…. Probably one of the most interesting and trusted posters Mish has….

Take from it what you will…..

Gaudia Ray wrote:

A copy of the email letter sent to a dear friend, today.

The DSI patterns I study and know are announcing that we again are at a precipice market decline from the 8200 level to the 6000 level. Expect most stocks to lose again 20-40% of their current, low value in the next few months, no later than Feb/March.

Your family will experience another major equity loss. If they don’t dump their house, that too will decline. The company won’t buy this property yet because in 3 months it will be much lower in price. There will be a time when the public stops buying, but for the rich, and they may start to wait as well.

The drop to 3 times annual income will impact the very rich the least, but prices will drop for them as well. I expect RE in this valley to drop by as much as 50% because it has been slow to decline. This is an avalanche, pushing more homeowners over the breakeven cliff.

Capitulation will arrive sooner rather than later. The sellers will be prostrate and for good reason. Mercy for many who are crooks, now being supported by the Paulson Fed and the eunich Monkey “leadership”, as well as by the game being played internationally…Palin’s worldwide-ilk, CBankers, the “print, print, print” crowd, think they can control or influence the current desire to lemmingly run off the financial cliff. Nodda chance.

So, if you want to avoid the next round of misery, even greater than the one now (and around this valley, the Range Rovers are still on the road, driven by trophy wives, and the living is still easy), it’s time to step up, plead your last case, or first, as you’ve chosen to be circumspect rather than insistent because of your own disbelief that anyone could foresee outcome (sorry, but this is my feather which, fascinating be it may, has compelled you out of equities 1 year ago, into bonds, and there you remain), yet the consequences, imo, will be brutal not only for them, but for you, who claims a relationship with these folks who’ve gambled all, albeit as they will all later say, unwittingly.

In other words, get off your ass, step out of the shadow, and speak now, or, forever experience, thank heaven above, as an insulated observer, the wreck of your sibling’s Hesperus.

#113 Marcus Aurelius on 11.13.08 at 2:13 pm

TO Girl (#88) enunicates the prototypical nightmare of every Toronto retread real estate agent: a prospective buyer who (finally) refused to get suckered when it’s more than plain that the bubble is bursting magnificently in the Toronto market.

Remember “Don’t bet against the US consumer”?

Remember “We’re resource-based and the Chinese are going to buy our resources forever”?

Remember “Buy and Hold – stocks only go up over the long term” [i.e., longer than 75 years, or the average life span of the Canadian Yuppie]

Remember “Oil prices will only go up – God only made so much of it” ? (or was that ‘land’?)

Remember “Service sector urban areas like Toronto are stable – no layoffs will ever happen here!”

Finally, the best one of all: your favourite cute 30-year-old Iranian or Russian 90-day wonder Real Estate Agent (and Builder’s GF, of course): “Real Estate Only Goes Up!”

– maybe in Lower Colon, Iran, honey, but not here.

#114 squidly77 on 11.13.08 at 2:48 pm

someone ask how genworth is doing..well have a look and judge for yourself
http://ctvdb.globeinvestor.com/invest/investSQL/ctvx.show_chart?pl_comp_id=226783&pl_errmsg=&iaction=Chart&pl_primary_listing=GNW-N&iaction=Chart&pl_additional_listing=0&pl_period=60M&pl_chart_type=+&pl_sh_movement=0&pl_long_movement=0
all sub-lenders are on life support

whats gives me a good chuckle are the posters who are still in denial..i have news for you
its all ready baked into the cake

#115 Bill-Muskoka (Not Anymore) on 11.13.08 at 2:57 pm

Garth,

IMHO Canadian real estate is horribly OVERPRICED compared to American (And I am not referring to insane markets like NYC, but regular America).

One would think we are part of the Royal Family with the prices people pay.

Things must change abck to a realistic price structure, otheriwse the true value is reduced to one only supporting hyperinflation.

Likwise, Parliament and the Bank of Canada are going to have to deal with eliminating Compounded Interest, which is the real inflation Pig of modern economics.

Oh, and why is TD Canada Trust believing that further penalizing credit card debtors with increased interest going to ‘solve’ their over-extended debt load? That is like making another incision on a patient who is already bleeding to death. IDIOTS!

There is Change I Believe In!

#116 Kitchener1 on 11.13.08 at 3:03 pm

Great post POL CAN
The people calling the bottom are way to early. All of the MSM is still calling for optimism. Stocks have a long way to fall as do housing prices. Look at the charts, their is no fundamental reason stocks cannot fall to the 6000 level, P/E ratios are still out of whack.

The flipside of the coin regarding RRSP and RE in Canada is that many people had hoped to borrow their downpayment from their RRSP. Now that the stock markets are tanking, so are their RRSP’s along with potential downpayments-more downward pressure on RE in Canada

First their will be deflation that will last 12-18 months maybe longer, then hyperinflation.

First rule of stock markets is that they can follow trends longer then you can stay liquid. The markets went up for years, even assuming that the downturn is shorter in duration, we are still looking at two years out for a bottom and recovery.

#117 tounguestump on 11.13.08 at 3:10 pm

Hi Garth,
Little education here for you on that early deflation call you’re probably very proud of. Inflation hasn’t dissappeared. Watch for inflation in unemployment, inflation in pan handling, inflation in household occupancy, line ups, public transit,lies prostitution. Lincoln said most men can handle adversity the true test of a man’s character is how he handles power. Keep it going dude.

#118 dd on 11.13.08 at 3:39 pm

#89 Calgary_rip_off,

So the houses are overpriced. What is the big deal? You are renting. Most on this sight are renting.

Make your money and move onto the next investment.

#119 Iain on 11.13.08 at 3:43 pm

Check out this video – http://www.youtube.com/watch?v=2I0QN-FYkpw. It really illuminates how so-called “experts” can get things so wrong.

#120 POL-CAN on 11.13.08 at 3:59 pm

So far, Washington is on the hook for $5 trillion
$700 billion bailout is just one part of the effort to prop up financial system

http://www.msnbc.msn.com/id/27686586/

Make our 75 billion look like peanuts eh?

#121 POL-CAN on 11.13.08 at 4:01 pm

Deflation is official in the UK

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/3448664/Abandon-all-hope-once-you-enter-deflation.html

How long before we really see it in Canada? Hmmmm….

#122 john on 11.13.08 at 4:27 pm

Garth,

These giant swings in the stock market make me suspicious the US gov’t and Cdn gov’t have given instructions to prop up sudden drops. Look at today at one point it looked like the markets were going to freefall and then suddenly for no reason up it went. Can you help make sense of this?

#123 Calgary Rip off on 11.13.08 at 5:20 pm

DD: “So the houses are overpriced. What is the big deal? You are renting. Most on this sight are renting.

Make your money and move onto the next investment”

I wouldnt buy a house as an investment. Its a place TO LIVE IN.

It is a big deal when there are many people wanting to buy a home not just as an investment and get pushed out by investors. That’s life is what some would say. I say it makes Earth Satan’s playground.

So yes, when it impacts my ability to buy a decent home at a decent price in a decent area for my family it is a BIG DEAL. Especially since as a “renter” my rent is far in excess of many who have mortgages and are “owners”.

Again, the delusion in Calgary that homes are worth $400K that really to anyone who has been outside ANYWHERE outside Calgary those same houses are for the labor and materials costing around $200K.

It’s a very big deal when sellers and realtors conveniently dismiss irrational pricing as the “market”.

Perhaps realtors and sellers should opt for “donkey punches” and “cleveland steamers” 24/7, they certainly deserve it.

#124 smwhite on 11.13.08 at 5:50 pm

What are peoples thoughts on the possibility of China’s bailout package being funded with the US treasuries they currently hold?

#119 Iain,

Check out Schiff’s newest book, BULL MOVES in BEAR MARKETS…

#125 smwhite on 11.13.08 at 5:55 pm

#119 Iain,

Just a note, Art Laffer has just come out with a new book, BASED ON THE COLLAPSE of the USA economy!

My oh my how our opinions swing change, then again Arthur claims you can only project the economy 9 months in advance… What an ass hole.

And no, he hasn’t paid his penny to Peter, the good news is Mike Norman’s over-tanned ass hasn’t been seen on FOX business news since the spring…

http://www.youtube.com/watch?v=z3WjgKUf-kA

#126 TO Boy on 11.13.08 at 5:56 pm

Calgary Rip Off.

We get it…we know you think Calgary prices are double what they are worth. You say the exact same thing in every damn post. All of us here agree that prices are too high, but come on, try saying something new for once. Have a little patience….housing cycles occur over years, not weeks and months.

#127 Bill-Muskoka (Not Anymore) on 11.13.08 at 6:06 pm

Garth,

As I sit reflecting on the last ‘major adjustment’ of 1980-1982 when the U.S. Government passed the 1980 Credit Control Act, I cannot help but ponder ‘What really has caused this?’

Was it really the sub-prime mortgage idiocy? The unlimited waste of money fighting Bush’s war on terror? Perhaps, the MSM has been sucker-punched senseless by those who have profited the most?

Granted that human nature is to have a knee-jerk reaction to ‘news’ but this is far beyond that. This has all the symptomology of a very well planned, long term effort to take profits that were never there, but once the money has been transferred and converted into real wealth, we see, once again, that the smell doesn’t match the reality.

There is something more to this entire ‘economic disaster’ than mere ‘adjustments.’ I sense a prolonged plan which we have seen before, but few will acknowledge.

Let us not forget that the investment computers were hacked, and that the programming was set to ‘sell’ when stocks hit a certain level. From that point on it was automatic that the markets would decline.

I still recall Tom Clancy’s disclosure of a scenario in ‘Executive Orders’ wherein a terrorist brought down the world economy, beginning with the U.S. Wall Street markets, simply by hacking the systems, triggering the automated levels, and watching the entire thing collapse under computer control.

This raises one key thought…What is the MSM NOT telling us, and are they even capable of thinking to such levels?

Where is Karl Heinz Schrieber nowadays BTW? Is he still the real Brown (Envelope Meister that is)?

Your thoughts please?

#128 Stuff on 11.13.08 at 7:02 pm

Hey,

I was wondering. Does anyone here know of anyway to find out how many days homes are on market in Toronto without having to go through a realtor? I find it annoying that I have to always ask a realtor to send me the email where DOM is displayed.

#129 dd on 11.13.08 at 7:05 pm

#122 john,

Investors are looking for the bottom. Sometime a piece of good news will send it up. Some investors think this is going to be a short recession … that is why there is a lift. But some investors think that this is going to be a long recession … that is why there is a drop.

#130 Nick on 11.13.08 at 7:20 pm

JoJo, it’s hard to take your predictions seriously when you can’t even spell hyperinflation…

#131 Shawn on 11.13.08 at 7:34 pm

Dennis above is right.

The Mortages Canada is buying are already CMHC insured. There is no added risk. none. zero.

They are being bought at around market value.

It’s not correct to call this a bailout.

Banks get $75 billion and give $75 billion in mortages receivable on which the governement can collect the $75 billion plus interest. To the extent homeowners don’t pay, CMHC would have had to reimburse the banks anyhow.

Previously the banks sold such securitized mortages to investors but that market is a little spooked right now.

Canada can’t really lose on this they buy the bonds at say 4.5% and then they finance by selling governement bonds at say 3.5%. Net cash cost to goverment = zero. The cash ultimately comes from investors who buy treasury bonds but who right now are afraid to buy mortage bonds directly, even insured mortage bonds.

Too bad CMHC and the finance department are not able to explain this in simple term. No bailout here.

Garth’s other points on falling house prices make a lot of sense to me. But let’s not jump all over the CMHC program calling it a bailout.

#132 $fromA$ia on 11.13.08 at 7:59 pm

Funny #122, I just about bought 10 ounces of gold today but held off.

#133 brazer on 11.13.08 at 8:10 pm

U.S. Steel lays off 677 workers in Canada and United States because of lower demand
http://ca.news.finance.yahoo.com/s/13112008/2/biz-finance-u-s-steel-lays-677-workers-canada-united.html

United States Steel Corp. spokesman John Armstrong said Thursday the layoffs are effective immediately for 500 employees in the United States and 175 in Canada, where the company has 3,500 employees.

The layoffs will impact workers at the Pittsburgh-based company’s Hamilton and Erie plants in southern Ontario.

#134 brazer on 11.13.08 at 8:11 pm

U.S. jobless claims hit 25-year high
http://www.thestar.com/Business/article/536243

WASHINGTON – The number of U.S. workers drawing jobless benefits hit a 25-year high this month and imports suffered a record fall in September, according to reports today that underscored a rapid drop-off in the U.S. economy.

The number of workers filing new claims for jobless benefits rose by an unexpectedly steep 32,000 last week to 516,000, the highest since the weeks following the Sept. 11, 2001 attacks on the United States, the Labor Department said.

#135 brazer on 11.13.08 at 8:12 pm

Nortel bankruptcy possible: Analyst
http://www.thestar.com/Business/article/536205

“Considering the worsening macro environment, Nortel’s challenged industry position, and concerns related to liquidity while the capital markets are basically closed, we think bankruptcy is a distinct possibility down the road,” RBC Capital Markets analyst Mark Sue wrote in a note.

#136 brazer on 11.13.08 at 8:14 pm

Worst effects of fading commodities yet to come: BMO
http://www.reportonbusiness.com/servlet/story/RTGAM.20081113.wcomods1113/BNStory/Business/home

The record plunge in commodity prices over the past four months has already flayed Canada’s dollar and equity markets, and now the “hammer” is about to fall on the so far largely unscathed “real” economy, BMO Nesbitt Burns Inc. warned Thursday.

“We have been calling for a Canadian recession since early October and would note that many Canadian results are still being flattered by the vapours of the first-half rocket ride in resource prices,” Douglas Porter, the firm’s deputy chief economist, said in a weekly commentary for clients.

“In fact, much of Canada’s relatively robust performance on a wide variety of fronts so far this year can be traced back to the commodity boom.

“With the boom quickly turning to bust, look for Canada’s outperformance to rust.”

Government revenues, corporate profits, business investment, employment and trade all stand to be pounded as the underlying impact of the 48 per cent drop in the Commodity Research Bureau or CRB Index, starts to reverberate through the Canadian economy, he said.

Indeed, Mr. Porter forecast that the federal government is headed for a budget deficit of between $6-billion and $7-billion in its 2009-1010 fiscal year “even if they do nothing new to stimulate the economy.”

#137 brazer on 11.13.08 at 8:16 pm

Pan American Silver cuts 500 jobs
http://www.theglobeandmail.com/servlet/story/RTGAM.20081113.wpanamsilver1113/BNStory/energy/home

VANCOUVER — Pan American Silver Corp. is cutting 500 jobs, rolling back executive salaries by 10 per cent and reducing exploration and capital spending to deal with weaker finances and a drop in prices of silver and zinc, its key metals.

The Vancouver company said Thursday the streamlining was required to cope with weaker metals prices, a 10 per cent drop in revenues and sharply lower profits in the latest quarter.

#138 brazer on 11.13.08 at 8:22 pm

Ontario economy on brink
http://www.thestar.com/Business/article/536103

The Conference Board of Canada predicts the global financial turmoil will bring Ontario to the brink of recession this year and into 2009.

In its autumn provincial outlook, the board says Ontario will see growth of just 0.2 per cent this year and 0.8 per cent next year.

The board adds that Ontario will also post its first trade deficit in 2009 since the province began keeping records almost 30 years ago.

#139 Valerie on 11.14.08 at 12:06 am

#97 Octagonian

… the economists you subscribe to, can you name names?

#140 smwhite on 11.14.08 at 12:31 pm

#131 Shawn,

– The Mortages Canada is buying are already CMHC insured. –

Insured by whom? These are Canadian tax dollars that are used to insure these CMHC mortgages, regardless…

Whether Mr. Flaherty demands a minimal return or not, that taxpayer money is put at risk, additional or not, and has been at serious risk since the creation of the 40 year mortgage.

That money is supposed to go to banks to cover mortgages in the advent of defaults. What are the odds that my insurer would send me a cheque to cover the costs of my automobile machine, if they had insight that tomorrow I was going to drive it off a bridge?

#39 Dennis Forbes,

You seem to think that pumping the system with credit in 2006 via the 40 year mortgage was a good thing because it allowed us to transform a sustainable economy into a frothy bubble for a couple extra years, and you expect me to pat Harps and Flats on the back for it?

Ontairo’s problem, is about an auto industry that is overweight and managed without any foresight, not a dollar on par, the big three would be in the same position even if we hadn’t had a wacky petro dollar in Canada. Honda and Toyota seem to have a grasp of the future of auto mobiles, why not GM?

There is no demand for inferior products, that’s Ontario’s problem.

#141 Fred on 11.16.08 at 12:24 am

I’m sure I could look and find my answer but I’m lazy and so hopefully someone here will address my question. The CDN Gov bailout of the banks is this not the purchasing of the ABCP that was designed to bundle debt in the USA. These instruments effectively have become worthless due to the meltdown in the housing market south of us. These mortgages (both sub prime and high ratio) were sold bundled around the world. Is this bailout in Canada then the Government here covering the losses of the big banks for poor decisions?