Stocks bounce on news of Obama’s new money guy

Who is this genius?

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National Bank Financial Daily Bulletin, 17 November 2008

Analyst, Michael Smith


#1 Derrin on 11.20.08 at 9:48 pm

Here is another view. Not quite as drastic but still not a happy place( Calgary ).


#2 Another Albertan on 11.20.08 at 9:51 pm

“There are also indications that funds trading crude oil have switched from long-liquidation to short-accumulation. Last Friday’s COT data showed an addition to the fund net short position of 42,441 contracts. Further, outside of the last two sessions, open interest in oil has made gains over the past month totaling over 150,000 contracts.”

–MF Global Daily Energy Report, November 20, 2008.

This means that speculative money is placing bets on oil again…to the downside.

#3 dekethegeek on 11.20.08 at 9:54 pm

First Terranna, then Cowtown, and last but not least (me-thinks)Lotusland!
Reminds me of 1980-81 .Living in calgary and then vancouver the economy went for a crap but back then us heathens only had TV and Newspapers to spread that feeling of impending doom.
Now we have “speed of blog” internet to let us know that ” Markets in Asia are down due to the bad news in North America”
When are we gonna get off this “tit for tat” one downmanship in the markets?
I can’t wait for the Post Christmas sales numbers to drive a final spike in the staggering ,bloody economic corpse we call the “markets”
Think its bad now ? Wait til the New Year and GM or Chrysler (or both)tank and take hundreds of thousands of jobs with them.
Our “hurry up I want it fixed now ” modern day society aint quite ready for 12 to 24 MONTHS of Bad,bad news.

Garth. What does Kentucy fried curried squirrel jercky taste like any hoo?

#4 Another Albertan on 11.20.08 at 10:08 pm

— When are we gonna get off this “tit for tat” one downmanship in the markets? —

As a colleague says: “The healing can start when the lying stops.”

#5 timbo on 11.20.08 at 11:14 pm

interesting read garth


shaking my head….

#6 Derrin on 11.20.08 at 11:26 pm

These analysts predict the highs and the lows then blame it on the investors.

“Just as investors were overly exuberant when prices were climbing to $147 a barrel this spring, they appear to be excessively pessimistic in the current price slump, said Adam Sieminski, chief energy economist at Deutsche Bank AG”.

Why bother hiring these guys in the research depts.
These guys are like auctioneers. They keep calling out a price and the investors keeping chasing it.

“Kingdom of fear” Hunter S. Thompson

#7 Suhammy on 11.21.08 at 12:24 am

I live in Calgary, work downtown and have often wondered where all the tenants for these new office towers will come from?

There are a lot of cranes working here and it is estimated that the new towers will increase total office space by 25%.

Will the demand for space increase accordingly?

#8 JoJo on 11.21.08 at 1:17 am


Scenario A: The USEconomy suffers a strong recession. Many distribution lines are interrupted. Job losses continue into the millions. Many retail chains close down. These are already in progress. So imagine for the scenario that they all worsen. Commodity and material prices stabilize, and maybe rise. A big myth is out there, that claims commodity prices are down since the basic demand is down from a recession. That is only partly true. Prices are down predominantly since the USDollar has artificially enjoyed a prop from the financial markets, on liquidity of speculation and redemption of credit derivatives.As those processes slow, the USDollar will seek its proper value. That is much less, like 30% lower to start. Prices will then rise for things like food and gasoline and utility bills. Under this scenario, where the USEconomy suffers mightily, even becomes something of a wasteland, the USDollar might be replaced. Under this destruction scenario, with or without that replacement (forced in shame), gold will be a refuge of stored value, as industry falters and debt collapses further.

Scenario B: The vast Reflation Initiative succeeds. Somewhere the maestros and wizards succeed in engineering a revival of price inflation, as is their newfound goal. The destruction of the USEconomy is averted, except that hidden is the detrimental effect of price inflation. Wages might rise a little, but not enough. Asset prices like in the stock market improve, but not enough to keep pace with inflation. Corporations avert bankruptcy, but their profit margins are still damaged. The ultimate hedge against the systemic price inflation will be gold. This trend will continue, even as credit derivative accidents occur from higher rates, discussed in the upcoming Hat Trick Letter report. Massive price inflation will be the plan, the goal, the intention. INFLATE OR DIE will become the mantra on a global scale. The rise in the gold price, the longstanding time-honored inflation hedge, will be tolerated, as a system ill.

My forecast is that the USDollar will be replaced anyway, especially given the current meetings by major USTBond creditors. The G20 Meeting last weekend was an orchestrated sideshow. It opened Pandora’s Box however, as Germans in attendance have made firm formal rational demands. The movement is afoot to force profound change. A difficult, if not impossible, task comes for foreign bankers. They must separate themselves from the USDollar and USTreasury, its tradable vehicle. If they do not, then their economic and financial systems will be dragged down with the United States. The USFed executed on a gambit in recent weeks. They distributed hundreds of billion$ to foreign central banks. The hidden objective is to force foreigners to engage the great Reflation Initiative when the trigger is pulled, when the corner is turned, when the signal is given. Foreigners so far have taken that bait, but they might have an exit plan, if they are working closely with those who seem in charge: the Germans, Russians, Chinese, and Arabs.

Foreigners will soon realize that it is in the best interest of their nations to use their vast FOREX and USTBond reserves, to bring down their domestic currencies in exchange rate. They must enter the race of being among the initial group to use their USTBonds, to use their USAgency Mortgage Bonds, or suffer huge loss later. China has announced usage of US$-based bonds in a stimulus plan of gigantic proportions, the smart choice. Right now, the USTreasury Bill principal value is artificially high. Right now, the USDollar valuation is artificially high. THUS RECENT TREASURY AUCTIONS HAVE BEEN DISMAL FROM OVERPRICING. Foreigners can only expect their USTBond holdings to fall in value from here. The recent moves by the Saudis, the Iranians,Chinese and other nations to expand their gold holdings is another trend certain to gain ground.

#9 JoJo on 11.21.08 at 1:30 am


March 17/2008 – -1oz/Gold= US $ 1030= 975 CAD
Nov/ 21/2008 — 1oz/Gold= US $ 751 = 975 CAD

July 11/2008–1 barrel/Oil= US$ 147.27=147.27 CAD
Nov/ 21/2008–1 barrel/Oil= US$ 48.64 = 62.75 CAD

You can compare with other currencies as Euro,$ AU,
U.K. £, Swiss Frank, etc. Gold price is still about March value of $ US 1,000 .
But $ US is strong too much. Why?
We have big problem about Defflation??? in USA,and it’s clear that is FAKE and CRIME.
Have you ever seen defflation with 1% interest rates?
When was 1% interest rate in Great Depression,or 70’s, 80’s Defflatory-Recessions?
Do you know how much was interest rate in that time?
Yes, between 12% to 22%.
I agree with you that will be Depression, but in opposite way Hyper-Inflatory Depression.
Mr.Bernake is a proffesor about Great Depression and
even if he likes the same scenario he can’t do it.
Why, because of completely different situation from 1929-1933. That time $ US was valuated in Golden Standards and today is NOT.
Well still is a top secret that USA printing money like crazy but will see next December/2009.
Derivatives now up to $684 Trillion.
So Many Things to Correct… So Little Time.
“The only cure for a bubble is to prevent it from developing.”
In other words, you can’t cure a bubble by cutting interest rates, easing bank lending requirements, running bigger government deficits, sending out ‘rebate’ checks, buying up Wall Street’s stupid mistakes, or bailing out sinking businesses. You can’t cure a bubble by reflating it. You can’t cure a bubble at all. You have to let it pop… and then go about your business. Get it over with quickly; that’s the best you can do.
Think that will happen?
No, the feds are at work – with their patches, their rescues, their bamboozles and their swindles.
Saving America from free-market capitalism will become the Great National Project of the Obama years. Deficits will top $1 trillion… maybe $2 trillion. Brain dead businesses will be kept alive. Whole industries that should be allowed to go broke will be protected. Towns, states, and colleges that should go bust will be propped up. There will also be a huge building boom – in infrastructure. Bridges, trains, highways…
New free Healthcare system in USA and more education
grand’s and loans.
What about wars in Iraq and Afganistan?
*** If Olympic medals were given for consumer spending, Americans would have won the gold, silver and bronze every year for the last 20.
So do you see, dear Garth, how the new financial system will work? Is it Defflatory process?
The financial system the world’s economies run on has failed. It has broken down, and will continue breaking down, until citizens of the G8 nations identify the real, root causes of the catastrophe.
Dear Garth,game is over about power of $ US.
Soon,will see the biggest Crime and Fraud of the Century in the World.
Soon,New World Order from IMF and New Breton Woods
agreement or III-WW.





#10 Panicked in Fort McMurray on 11.21.08 at 2:24 am

Dear Garth,

I am hitting my head against the wall for not finding your site earlier. I was so desperate to know the truth about real estate but I could not find any website until I found this site in October.

Oil hit below $50 today and my Dad said there is 90% change of Canada going into a recession. In his life time my Dad had worked in mines at different parts of the world where he have seen the mining towns went into a big boom, then the metal price fell and everyone stop whatever they are doing and left town. The deserted town later turn into a jungle.

I always thought he was a pessimist, but now I am unable to sleep over the mortgage I owe to BMO. I bought a place here in Feb., 2007 because I got married and needed a place to live.

Our mortgage is $500 a week and we still have $300,000 left:((

I have been trying to find a little cabin (not for vacation, for hunting and fishing) in BC so that if this place falls apart, I can run there and hide.

I don’t need a generator if I live in lower mainland or on the island where winter temperature would be around -2C. Cut down the trees for firewood, fish in the inlet for crabs and trouts, hunt some dear and bear, plant some veggies and that should be sufficient for survival although I have no skills for such tasks, I’m sure I’ll have no problem adapting.

I have been seriously thinking, but it is hard to find a cabin and a little piece of land for around $100K since all the wealthy ones have taken over them for their summer vacation homes.

Since Obama is not wanting to buy our oil, I have no idea where Alberta is headed. I don’t have enough knowledge to figure out who else would buy our oil if US doesn’t? Maybe China? India? Last year I heard that Chinese were wanting a piece of CNRL in Fort Mac!

Panicked girl from Fort Mac.

#11 patriotz on 11.21.08 at 2:57 am

Ah, an oil and RE bust in Calgary with a Conservative PM from a Calgary riding. Who ya gonna blame this time folks?

I’m loving it.

#12 David on 11.21.08 at 3:15 am

A confluence of negative factors is usually a euphemism for getting financially whipsawed. A government collecting economic rent is called a royalty regime. Alberta had the one of the lowest “royalty regimes” on the planet until a few months back, an Equatorial Guinea with snow banks and hockey arenas so to speak.
The whipsawing will come from all the wild fluctuations in oil prices and the value of the Loonie relative to the US currency and how much the Alberta government collects in terms of economic rent.
At $30 a barrel for oil the oil sands would be below break-even.


#13 Bottoms_Up on 11.21.08 at 10:29 am

Taken from http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2008/11/index.html

5,250,000: The number of Canadian home owners with mortgages.

29%: The percentage of Canadian homeowners who got a new mortgage in the last 12 months.

86%: The percentage of people renewing or refinancing that stayed with their existing lender.

$136,000: The average mortgagor’s equity. This equity equals 51.7% of their home value on average.

22%: The percentage of mortgagors who took equity out of their homes in the past 12 months. People are spending more because last year it was 17%.

$41,000: The average equity that borrowers took out of their homes this year. That’s up 16% from last year. The most common reason for borrowing this equity? Debt consolidation.

50%: The ratio of new mortgages taken out in the last year with amortizations greater than 25 years.

5.41%: The average Canadian’s mortgage rate. Last year it was 5.56%.

0.40%: The average interest rate improvement realized by people who refinanced in the past year.

1.59%: The average discount off of bank-posted rates.

1.96: The average number of quotes people get when shopping for a mortgage.

0.28%: The percentage of Canadians who are 90 days or more past due on their mortgage. That’s up just slightly from last year.

10%: The approximate decline in mortgage approvals that CAAMP foresees in 2009.

36%: The percentage of Canadians who are aware that insured 40-year and 100% LTV mortgages have disappeared.

#14 squidly77 on 11.21.08 at 10:53 am

market predictions are impossible as the government have their fingers all over the supposed free market

when the government gets out
the traders will be back in
until then
cash is your friend..

#15 Downsized and Delighted on 11.21.08 at 11:16 am

#10 Panicked in Fort MacMurray: First of all, I’m a little curious how you managed to find this website for all the doom and gloom talk, but you couldn’t find any other information on Fort MacMurray real estate before you bought. I just googled “house price increases Fort MacMurray 2005-2008” and got a ton of information.

That being said, don’t panic. If you lose your job and you can’t pay your mortgage, you can always declare personal bankruptcy. This debt will not follow you around forever! So that’s the worst that could happen.
Although, if the alternative plan is to live in the woods and shoot bears, maybe that’s the worst!

#16 Downsized and Delighted on 11.21.08 at 11:25 am

I haven’t checked the market today (stocks), but I’d like to point out that much of the turmoil in the markets is due to those damned hedge funds forced selling. It will take at least till the end of the year for that pressure to subside, but once it does, think of all the hedge fund redemption money that will be waiting to invest again! And where is it going to go?? hmmmmmmm?

Could an investor resist the temptation to buy blue chip stocks paying 8% dividends? I don’t think so!!!!


On another subject, don’t be so sure that Babyboomers are looking to downsize if the real estate market goes bust.They will adapt to whatever situation they are in. If they can’t sell their house, they will make adjustments so that it suits them. One thing is for sure – they ARE NOT going to be selling at bargain basement rates to move into a small condo for the same price!

#17 The First Rick on 11.21.08 at 11:28 am

#11 patriotz on 11.21.08 at 2:57 am Ah, an oil and RE bust in Calgary with a Conservative PM from a Calgary riding. Who ya gonna blame this time folks?
Trudeau, again, of course.

#18 johm on 11.21.08 at 11:54 am

Banks are not lending like they did in the past .

deflation is happening ……. Octagonian

Money supply is slowing . Banks are not lending like they
did in the past 4 years.
No money down loans are history for now…

Deflation – Definition of Deflation on Investopedia – A general decline in prices, often caused by a reduction in the supply of money or credit

Deflation like you never seen before …..

#19 Dave on 11.21.08 at 12:45 pm

#16 8% Dividends?

Dividends from the past year, divided by present stock price, may indeed suggest 8% dividends…

But only if dividends continue at their previous rate.’

If an investor believes that is guaranteed, then yes they should buy.

But what happens if dividends are slashed? What happens to blue chip insurance companies that are now at risk of dropping below OSFI’s MCCSR floor? etc

#20 ambrocanada on 11.21.08 at 12:59 pm

Deflation with lower and lower interest rate … UFO

#21 Kash is King on 11.21.08 at 1:11 pm

USA housing market at swandive stage:

“S&P 500 Crashes Through Bear Market Low! Housing Heads South!
by Mike Larson 11-21-08” :


#22 James on 11.21.08 at 1:18 pm

Lots of beef jerkey eating weirdos here for sure. Relax most people will remain employed through this. Most people won’t lose their homes won’t go bankrupt etc. Yes it’s going to be a recession yes it will be tough.

#23 Bottoms_Up on 11.21.08 at 1:32 pm

The ‘D’ words are all over the news. (Deflation and depression)

Time to batton down the hatches….

#24 Panicked in Fort McMurray on 11.21.08 at 1:35 pm

To #15 Downsized and Delighted

Well, I never went and research for housing market before I bought. My Dad told me not to buy, but I didn’t listen to him (I do listen to him most of the time.)

I only started panicking when I heard stock crashes down south so I went and search for “Fort McMurray housing forecast” on Yahoo like a mad woman but there is no headline that would satisfy what I am really feeling in my gut until I found Garth’s. Since then I’ve been reading all his posts.

I wish I was here six months ago. Then I would have sold my house. Now I am stuck. I cannot stop thinking what if the oil prices fell further and if it does how am I going to survive in -40 below temperature.

Everything in this town is brought in by trucks and what happens when those trucks stop coming?????

So I need to act now. As soon as I can sell my house, I’ll be gone to BC. While I am there, I’ll rent out some cheap cabin and wait until spring to see where everything is headed. If things look promising, then I’ll come back. If not, I’ll have to buy the cabin I’m renting.

So far I haven’t been able to sell my place:((

I have really good credit score so I don’t really want to declare bankruptcy. However, there’s a saying I heard “if the sky fell, no one can hold on to it”

On the upside, I’ll have to pay at least $3500 if I am renting this place. If you don’t think about the mortgage, then it’s not so bad.

The truth is I feel as if my head is on fire!

In the mean time I’m going to keep reading Garth’s valuable posts:) Thank you Garth:) and everyone else here on this site.

I am hungry for knowledge and I found it here.

#25 The Tallyman on 11.21.08 at 1:36 pm

#10 Panicked in Fort McMurray

Look at cheap condo prices here:

Elkford real estate

Lowest is 73,000 but prices will be dropping as Fording
has 2 condo buildings in progress.
The existing RE inventory is high and sales are slow,
Fordings new units will only drive other prices around town down.
I expect those 73,000 units will drop to the 50,s
in the next while.

Luckily I bought in 2002 for an unbelievable $30,000
The town was created in early 1970’s and housing is modern.
Modern rec centre, swimming pool, library, schools.
I call it Banff without the yuppies.

My condo fee is 129. mth and electric baseboard heat costs around $15… not living there full time as yet.
located 3 hrs from calgary in South East corner of BC.

This my cabin! and safe haven for when Calgary crumbles into depression.

I’m not a realtor, just passing along a heads up that modern housing where you don’t have to rough it or freeze is still out there… at good prices.

Oh, and population is around 2500,
Crime is almost non existent,
Gardening sucks though….
leafy greens grow. Tomatoes no

Best of luck in your search.

#26 The Tallyman on 11.21.08 at 1:39 pm

#10 Panicked in Fort McMurray

Should read population 2,500

#27 The Tallyman on 11.21.08 at 1:45 pm

#22 James said:
“Most people won’t lose their homes won’t go bankrupt etc.”

If we do can we all come live with you?

#28 brazer on 11.21.08 at 2:05 pm

Biggest inflation rate fall since 1959 raises deflation concerns

OTTAWA – Consumer prices in Canada tumbled last month in their steepest one-month drop in nearly half a century, as falling energy prices chopped the annual inflation rate by almost a full point to 2.6 per cent from 3.4 per cent in September.

The dive – a full point on an unadjusted month-to-month basis – raised the spectre that Canada could be heading for a period of deflation, in which the economy shrinks and prices drop. “Canadian deflation fears mount,” Scotia Capital economist Karen Kordes headlined in her research note to clients Friday morning.


it’s coming…

#29 brazer on 11.21.08 at 2:27 pm

Bank stocks spur a TSX bloodbath

Investors punished TD’s shares after top executives conceded its often-lauded “strategic positioning” could no longer shield Canada’s No. 2 bank from an “unprecedented” global liquidity crisis. CEO Ed Clark sounded uncharacteristically sombre as he acknowledged that future losses are also possible.

“We believe we have the bulk of the losses behind us, but the markets have moved so rapidly in the last few months that it is impossible to say anything with complete confidence,” Clark said during a conference call.


you’ve run a tight ship Ed….but even TD can’t avoid what’s coming.

#30 bcgirl on 11.21.08 at 2:47 pm

I have a question related to gold.

It seems that some people feel very strongly that people should buy gold, and these people seem so emphatic about it…while others seem more relaxed about gold.

I have been thinking about buying gold within my RRSP in the form of a gold ETF, or should I forget the RRSP and just buy actual gold to put away?

Just looking for opinions from the people here who “get it” in terms of this economy…

#31 bcgirl on 11.21.08 at 2:53 pm

I forgot to ask also, we are seeing deflation – will gold also deflate in price?


#32 Ultraman on 11.21.08 at 3:07 pm

This cabin, shooting squirrels thing is dumb and completely irrational.

If you’re that concerned about the economy and where it’s going to lead you It would be much more realistic and smart to downsize.

Buy or rent an apartment in the city like The Tallyman suggested. That way you can ditch the second most expensive item on your budget, the car. You have access to all the necessities your need on foot or bike. There’s plenty of jobs around, as crappy as they might be, to tie you up for a while. Most condos in Vancouver have two source of energy, gas and electricity and really you can make it through the winter without any heat. Uncomfortable, yes but you won’t freeze to death.

Get real people. This survivalist thing is for the nut bars and religious freaks.

#33 The First Rick on 11.21.08 at 3:20 pm

It’s nice to be in BC living under the delluded leadership of Gordon Campbell. Next announcement? Unicorn ranching?


#34 Harper Lover on 11.21.08 at 3:44 pm

Buy Gold!

#35 nonplused on 11.21.08 at 3:59 pm

Hey, look at this gem just outside Calgary:


$775,000 assumable mortgage at 5% due Nov 08. Ha ha ha What were these people thinking???

The banks should not even be allowed to write a mortgage that big. If you have enough money to live in a million dollar house you shouldn’t need a mortgage at all. But an order of magnitude million dollar mortgage on a million dollar house? We deserve what’s coming I think.

#36 Mark on 11.21.08 at 4:34 pm

Here’s Eric Beauchesne, Canwest News Service again with this outlook on the market with the title…

“Bank calls slide in housing market overstated”


#37 JeffinTO on 11.21.08 at 4:44 pm

Funny enough, the financial institution I just did a mortgage with is still lending money like there’s no tomorrow.
They tried to offer me a massive line of credit, and some more credit cards.
The mortgage “specialist” indicated that they have seen mortgages resulting from sales tank in the last few months. They are now going to start aggressively targeting switches (i.e. getting new customers and loaning out even more money).

#38 crs on 11.21.08 at 5:05 pm

Question for Garth:

What has happened with the FDIC? “The FDIC will guarantee up to $1.4 trillion in U.S. banks’ debt for more than three years as part of the government’s financial rescue plan.” I thought their reserves were only around 50 billion? And wasn’t the FDIC created for individuals as a result of the great depression? If the FDIC now covers banks, and the banks fail, won’t the people get screwed in the end? Then the bank runs will start?

So, my question, in particular is, what is your take on the state of the FDIC. And is the CDIC participating in any similar shenanigans? Is our money safe?

#39 Downsized and Delighted on 11.21.08 at 5:14 pm

To Panicked in Fort MacMurray: First, let me tell you that I am probably your Dad’s age and I have accumulated a fair bit of wisdom about real estate and other investments over the years. Garth was joking about how bad things could get (Garth for God’s sake please tell people again it was a joke about eating squirrels etc.) or was using it as a way of introducing more serious steps to protect yourself from a failing real estate market.

Anyone and everyone over 50 (Garth’s age) predicted that this market would go bust. Garth is no real estate god. Most of us (including Garth) thought the market would go south long before now. Every market goes up and down with supply and demand.

What is your biggest fear about the real estate market cooling off? If you paid a little bit too much, that isn’t the end of the world and over time it won’t make that much difference. Hopefully, you aren’t mortgaged 100 percent, but since you have good credit I doubt that you would be that foolish.

You need to know that this blog is a very extreme opinion on the real estate market, and making decisions based on fear and extreme ideas usually ends up costing you money, not saving it!

Careful who you are not calling a deity. — Garth

#40 smwhite on 11.21.08 at 5:17 pm

Funny story, an acquaintance received a letter in the mail from TD bank with a “Good News” posted on it.

Ends up the good news is that they have changed his LOC to a minimal monthly payment of interest only, assuming because he’s paid off the majority of his mortgage.

Same games that were played with those with marginal credit are being waved in front of those that still have money in their pockets…

#41 nonplused on 11.21.08 at 5:41 pm

To Panicked in Fort Mac

Be wary of taking advice from any sage who tells you how smart he is and how not so smart other people are. Smart people don’t tell you they are smart. They don’t have to. You can tell.

The thing with dumb is that dumb doesn’t know it’s dumb, just like crazy doesn’t know it’s crazy. Dumb people know there is something different between themselves and a smart person, but they don’t know what it is. Just try imagining what made Einstein so smart for a minute and you’ll have an idea how they feel.

Also be wary of taking advice from baby boomers. They caused this mess and they don’t know how to fix it, only make it worse. They also don’t know what’s coming next any more than they knew what came so far, even though they all have 20/20 hindsight.

#42 jazzguy on 11.21.08 at 5:52 pm

I think something lost in all this discussion is the pending deficits that will appear in various cities and townships across our country. A new transit system here, a new rec centre there, it does add up when you make too many promises hinged on one particular economic scenario playing out.

Correct me if i’m wrong, but property taxes are tied into real estate prices. As R/E tanks, so too will revenues into city coffers.

Just google municipal deficit if need more proof.

#43 Kestral on 11.21.08 at 6:04 pm

To #10 Panicked in Fort McMurray:
“I bought a place here in Feb., 2007 because I got married and needed a place to live.”

Why wasn’t renting considered as an option?

#44 Kitchener1 on 11.21.08 at 6:08 pm

RE: #16 Downsized and Delighted

On another subject, don’t be so sure that Babyboomers are looking to downsize if the real estate market goes bust.They will adapt to whatever situation they are in.

Boomers are up to their eyes in debt as well. They brought into the whole RE always goes up paradim. The single fact that has accelerated the RE bust down south is that people were FORCED to sell. Many held on long as they could burying themselves into even more debt.
When that happens here (not a matter of if) thats when the we will see the 50% declines.

People are overleveraged and will sell, those boomers are going to be in a bad situation if they are underwater, its one thing to go bankcrupt at 30, a whole different story to do it at age 50 plus.

#45 john on 11.21.08 at 6:36 pm

39 Downsized and Delighted on 11.21.08 at 5:14 pm ——————- you amuse me :-)

#46 Ultraman on 11.21.08 at 6:42 pm

Jazzguy, property taxes are not tied to real estate value. Property taxes are tied to the municipal budget. The budget goes up, you pay more taxes. That simple.

It doesn’t matter if your property value drop in half, you will just be paying double rate per thousand dollars of value.

This misconception on how property taxes is calculated is rather common. I’m not too sure why.

#47 Downsized and Delighted on 11.21.08 at 6:43 pm

Be wary of taking advice from any sage who tells you how smart he is and how not so smart other people are. Smart people don’t tell you they are smart. They don’t have to. You can tell.

41 Nonplused: If you are aiming this remark at me because I said I had acquired “wisdom” over 35 years of real estate ventures, let me translate for you since your mastery of english is so limited. Wisdom: the accumulation of knowledge over time. No claims about being smarter than anyone else.

By the way, Garth is a baby boomer so I assume those remarks were directed at him.

#48 Shifty on 11.21.08 at 7:11 pm

Yes and no, the mill rate is adjusted to the financial needs of the Municipality therefor the price of your home could go up but property taxes could remain the same. Conversely the same happens if the value of your home depreciates. No relief in that area unfortunately.

#49 Jelly on 11.21.08 at 7:18 pm

I just could not resist posting this 2.5 million dollar
home in Calgary again.


The realtor thinks the home does not need any
reno’s and I gotta say, it is dated and not attractive.
I would have to spend half a mil to make it a nice
Would anyone pay for this heap in a over rated, cold city
like Calgary?
Check out houses in Georgia and Texas, even Cali
for comparison…outraaageous!

#50 The Tallyman on 11.21.08 at 7:43 pm

I’m a boomer too.

Don’t run with scissors.
This is the message I get from this blog.
It’s not about right or wrong,
and I believe each individuals truth is somewhere between squirrel and caviar.

The media spin is designed to keep people buying,
like a room full of people held captive until they hear the whole presentation at a cheezy investor seminar.
Buy consume buy… repeat as directed.
Just keep the damn game going.

The system & govt will let you run with all the scissors you want as long as you keep paying for the scissors.

Thanks Garth for a blog where people aren’t afraid to
watch out for each other.

#51 Rasputin on 11.21.08 at 8:35 pm

Check out this youtube gem. I nearly peed myself! It sums up the real estate problem in 4 minutes. Sorry if it’s a repeat.

#52 Bottoms_Up on 11.21.08 at 8:35 pm

“Funny story, an acquaintance received a letter in the mail from TD bank with a “Good News” posted on it.

Ends up the good news is that they have changed his LOC to a minimal monthly payment of interest only, assuming because he’s paid off the majority of his mortgage.

Same games that were played with those with marginal credit are being waved in front of those that still have money in their pockets…”
I got the same letter. I’m an unemployed renter that has managed to make the minimum payment on a LOC for 3 consecutive months. I think the banks may be doing this out of ‘good will’ (i.e. let’s give the consumers a little bit of a break in these hard times)…

#53 Bottoms_Up on 11.21.08 at 8:37 pm

RE: #49 Jelly “I just could not resist posting this 2.5 million dollar home in Calgary again.”
Sick. That home would be worth 20% of that price here in Ottawa, and 10% of that price in a smaller market.

#54 Herb on 11.21.08 at 8:47 pm

How many bounces can one get out of a really desperate dead cat?

#55 islander on 11.21.08 at 8:53 pm

patriotz, why would you be cheering for an oil price collapse? The only thing holding up this sad excuse for a country (and its currency) was the price of oil.

I don’t know what province you live in, but assuming it’s not Alberta there is a 7/9 chance you’re living off the welfare cheques Albertans mail to you.

If you’re in Alberta, you are cheering for a lower standard of living.

And all Canadians’ standard of living is lowered when the Loonie declines.

I understand people planning for the worst. Cheering for it is inexplicable.

#56 jazzguy on 11.21.08 at 9:16 pm

Shifty & Ultraman: so we could be seeing a scenario where cities have budget shortfalls requiring an increase in property taxes, alongside declining property values, thus the percentage and actual amount paid will have to be higher…

whereas in an appreciating market, the amount paid is higher despite no change in R/E value, same percentage but higher amount.

i figured there would be less pressure to raise the actual rate in an appreciating market, as the city would be getting more $$ without actually raising the tax (and thus could get away with greater spending)

#57 jazzguy on 11.21.08 at 9:17 pm

sorry i meant to say:

“whereas in an appreciating market, the amount paid is higher despite no change in percentage, its just a percentage of a higher assessed value…”

#58 novagardener on 11.21.08 at 9:44 pm

Glad I live down east where most of we baby boomers didn’t get caught up in the bigger is better hype. Sure there were some who did ‘flip this house’ but not to the extent, proportionately, that most of the rest of Canada did. We know how to get through hard times & will be better able to cope than most in Canada. We don’t need granite or marble countertops to define us.

#59 Just a Girl on 11.21.08 at 9:48 pm

#25 The Tallyman, re: Elkford being “Banff without the yuppies.”

Uh, Panicked in Fort Mac, before you pack your bag, you might want a second opinion. I’ve spent some time in Elkford (my family used to live there). If you’re not a hunter, you might want to bring a book ;)

#60 Just a Girl on 11.21.08 at 9:50 pm

#50 The Tallyman … on another note, this particular post of yours was brilliant. “Buy consume buy … repeat as directed.” Spot on, my friend.

#61 kc on 11.21.08 at 10:01 pm

#33, and Garth –

Garth, taken from this article – can you or anyone clarify “diversified our economy,”? What does this really mean? you were in Govt. what is it meant when you diversify? Is it that we have closed and tanked our industry, fishing, and manufaturing sectors, and now we have burger flipping, retail selling, and “bubble jobs” in construction-home improvements?

if this is diverisfing our economy, I feel we are in trouble for the “new” money is NON-EXSISTANT.

Premier Gordon Campbell said the province will continue to enjoy modest growth, while other economies reel.

“There isn’t a sector of the economy that won’t feel the impacts, but because we have diversified our economy, I think we won’t see nearly the impacts that we might have expected,” he said.

#62 Just a Girl on 11.21.08 at 10:04 pm

#32 Ultraman advised Panicked in Fort Mac: “If you’re that concerned about the economy and where it’s going to lead you. It would be much more realistic and smart to downsize.”

Oh my gosh, some common sense. Ultraman, will you marry me? (just kidding!)

I am a Boomer. I downsized early in 2008. I sold my house in the burbs, and moved 5 blocks from my office in the central part of town. I rent, walk, and barely use my car. I don’t have much, but I don’t have any more debt, and it feels GREAT to live within my means.

I didn’t make these decisions because of Garth’s book (which I haven’t read), or all the doom and gloomers (cause I just found blog site the other week), or because my retirement savings are bust. I made these decisions because of common sense, staying in touch with current events, knowing energy prices are going to rise (and heating my big ole suburban house was going to be an albatross in future), and ACTING on my beliefs and intuition. So many people talk, toss and turn at night, do nothing, and complain how their life doesn’t suit them. Well, nothing worthwhile was ever easy! Just a gentle reminder … “do more of the same, get more of the same.”

I’m not perfect, but I am accountable for all my decisions and choices. So, what else are people DOING? :)

Buy my book. I know where you live. — Garth

#63 FP on 11.21.08 at 10:06 pm

Hi Garth,

As I inquired in a comment to your last post, I am wondering why there is so much talk of deflation just because prices of consumer discretionary products have come down substantially? Prices of consumer staples are still rising rapidly as reported in the Statscan report that came out today:
“…Price increases for mortgage interest costs (+7.2%), natural gas (+11.1%) and fuel oil and other fuels (+30.1%) were the largest upward contributors to the increase in the shelter component.
Increasing property taxes also contributed to rising shelter costs in October.
Food prices continued to gain momentum, increasing 6.1% in October. This was the eighth consecutive month in which food prices accelerated.
Price increases for grain related products, mainly bakery (+14.2%) and cereal (+19.2%), continued to be the primary driver of rising costs for food purchased from stores. Other main contributors were price increases for dairy products (+5.4%) and fresh fruit (+13.7%) and fresh vegetables (+12.3%).”

Lower costs of discretionary goods have minimal impact in our household as we are not big consumers (just as the lowered GST had little to no impact on us because we buy most of our clothing, furniture, winter tires, etc. used from Craigslist or Goodwill). Inflating costs of staples DO however erode our purchasing power to a greater extent…as I mentioned, we have no debt and have diligently tried to save 50% of our household net income but this amount is slowly shrinking as the cost of living is starting to affect us even as we try to economize further.

As several readers have asked before, should we not be more concerned with hyperinflation? It seems that even as economists are calling for recession, deflation and depression, there is little light at the end of the tunnel for prices of essential items to drop in the way that real estate, cars, and oil and gas have dropped.

We are an average family with average income (in our 30s) who live way below our means and try to conserve whenever we can. We’ve worked really hard to save up for a house (which is still out of reach for us in Toronto) and we currently have about 50% of our savings in cash and 50% in equities. What we’re really worried about is that all our efforts will be for nothing if all our assets are eroded in both deflationary and/or hyperinflationary environments. As I’ve said, I do not have a sophisticated grasp of economics and have tried to learn from all the experts on this blog but with so many conflicting opinions (both here and on the web), it’s hard to figure out what we can do in PRACTICAL terms (without buying guns/ammo/land/cottage/generator/hunting squirrel) to protect our family.

Anyway, I appreciate all past and future insights/comments as to how we can weather this economic storm. Thanks for the site and all the resources you have provided thus far!

Prices are not rising rapidly, but rather inflation is rapidly falling – the sharperst decline in more than half a century in both the US and Canada. The inflation you witness with consumer goods is essentially meaningless in the scope of things – unless you are buying a car or a house, which are both down an average of 10% in a year. Meanwhile it’s the plunge in the C$ more than anything which ends up jacking many grocery items. Most profound are plunging wholesale prices, the dropping price of Chinese imports, plunging commodity prices and collapsing oil. With every lower price, someone’s profit is diminished and that ends up in fewer jobs, less purchasing power and even lower prices. Do not diminish this devil and, please, feel free to pay retail. — Garth

#64 Republic of Western Canada on 11.21.08 at 11:08 pm

#43 Kestral on 11.21.08 at 6:04 pm

To #10 Panicked in Fort McMurray:
“I bought a place here in Feb., 2007 because I got married and needed a place to live.”

Why wasn’t renting considered as an option?

Or more importantly, staying single?

The main driver for this house-buying insanity and its associated diseases was the retarded pathological fascination of present-day populations to get knocked up, wallow in domestic squalor, and tell everyone else on the planet to piss off.

It was primarily seen as a means to enable and legitimize anti-social suburbanite behaviour. For that reason, the majority of those labouring under a crushing mortgage deserve every bit of pain and more.

#65 The Tallyman on 11.21.08 at 11:47 pm

#58 Just a Girl said:
Elkford “If you’re not a hunter, you might want to bring a book ”

Right you are and for me … it’s worse I’m a vegan and don’t drive a pickup truck.
So I don’t get to play in the reindeer games. lol

But as a good little town that would pull together in hard times it has to rank high.

#66 CTA on 11.21.08 at 11:56 pm

#63 Republic of Western Canada

Agree…..sheepales who take the blue pill and choose to be slaves of the matrix.

#67 Ultraman on 11.22.08 at 12:02 am

jazzguy, you got it. As matter of fact if I remember correctly, last year or maybe it was the year before in Vancouver, the per mil rate went down because property value had increased so much. Nevertheless my property tax bill was higher to reflect to overall increase in the city budget. In other words you property value determine your share of the property taxes collected by the city. So unless only your house is dropping in value your share will remain constant.

Just a girl, I would like to marry you but my stash of canned beans is not enough for both of us and there’s not much squirrels around here. But I can tell you as a Financial Planner and a lender for a large Credit Union here in Vancouver, if people could live without their car they would be rich. Wasn’t it Jane Jacobs, famous urbanist, that said that cars were making people poor.

#68 British Leyland on 11.22.08 at 12:03 am

So if goverment bails the big 3 whose gonna be buying the product? There will be layoffs.

#69 patriotz on 11.22.08 at 12:24 am

patriotz, why would you be cheering for an oil price collapse? The only thing holding up this sad excuse for a country (and its currency) was the price of oil.

That’s ridiculous. Canada produced hardly any oil at all until after WWII. How did we manage? How about by producing other stuff that people need like food and manufactured goods?

The simple fact is that high oil prices are good for the people who produce it, and bad for the people who consume it, just like any other commodity. And the great majority of Canadians are oil consumers, not producers.

Canada’s economy did just fine in the 50’s and 60’s and 90’s when oil prices were low. In fact it has been during periods of high oil prices, like the 70’s and the current decade, when things have turned out badly.

Sounds to me your “sad excuse for a country” is really Alberta, not Canada.

#70 anonymous on 11.22.08 at 12:55 am


You may own up to 10% of your worth in gold. That’s the maximum.

I don’t think you should buy gold as we are in deflation cycle right now.

“Goldbugs” are the overly excited ones who own gold. But why do they push gold on other people? One reason, to push the price of gold up. That is their agenda. They are evil, immoral and hideous people who live underground feeding on children. Run away. Do not listen to their lies.

As I said, you may own up to 10%.

#71 jrochest on 11.22.08 at 4:22 am

#63: I agree it’s a tragedy that the foolish mass of humanity is interested in marriage, children and friends.

Fortunately, there are wise men like yourself, who recognize that isolation and misery are the true route to happiness.

Garth, I think this blog has jumped the shark.

#72 islander on 11.22.08 at 8:06 am

JoJo #8: excellent post.

#73 pjwlk on 11.22.08 at 10:58 am

#24 Panicked in Fort McMurray

Don’t feel bad, my daughter didn’t listen to me either when I begged them not to buy an over-priced townhome about a year ago and my brother didn’t listen to my dad back in ’89. He just recently admitted to me that it took 10 years for his house to come back up to the level he paid for it initially.

I almost got caught up in it as well but figured the ol’ boy must know something since he grew up during the depression and worked in Real Estate for many years. I wrestled with the decision for many months before capitulating. It’s the herding instinct that’s part of our human nature. Only a very small percentage of people think contrary to it, and it’s not easy to do when the majority of people are telling you to follow the herd.

#74 Panicked in Fort McMurray on 11.22.08 at 11:02 am

Dear Mr. Tallyman,
Would you show us around if we come to Elkfort? Just kidding☺ My family will drive down there when the road conditions are good which is probably in early spring.

To #39 Downsized and Delighted
You make me feel much better. Thank you. It does not hurt to seek knowledge from people like you and Garth. To me it’s valuable since I’ll be more informed than people around my age.

To #63 Republic of Western Canada
Renting is more costly than buying here in Fort Mac if you would do some research into it.

I always said to myself “I will never have children until I have a job, married in to stable relationship, have a house and a car. “ My husband and I own everything else and have no debt except for the house. As long as oil price stays up, we’ll have no problem paying off in 5 years or more like three years if we don’t take any trips. I was panicking because oil prices are dropping.

#75 The Coming Depression on 11.22.08 at 11:49 am

Peter Schiff is telling you where its all going, in case you missed A VERY IMPORTANT VIDEO it I reposted it HERE:

#76 Shifty on 11.22.08 at 4:01 pm

#55 jazzguy
No, Municipalities can’t run a deficit. They adjust the mill rate to the assessed value of the home across the spectrum to cover costs.

#77 Future Expatriate on 11.22.08 at 6:30 pm

#68 Patriotz… right on. Try making danish modern furniture and modern art… takes skill to make it, demand is high and still growing.

The future is going to be in making USEFUL STUFF. BUILD it and they will come.

#78 Kestral on 11.22.08 at 8:25 pm

To #63 Republic of Western Canada

Wow, your post was imo brilliant and spot on.

You put into words what I couldn’t and hit the nail on the head, especially the suburban attitude of “I got mine so f— everyone else” that plagued these SUV suburban couples. It went like this:

Step 1 – Get married (doesn’t matter who as long as he or she is breathing)
Step 2 – Buy a house in the burbs with low downpayment
Step 3 – Lease two SUVs
Step 4 – Max out the credit cards at Home Depot, Ikea, Starbucks, Best Buy
Step 5 – Pump out a kid
Step 6 – Max out the credit cards at Home Depot, Ikea, Starbucks, Best Buy

(Wash, Rince and Repeat Steps 5-6)

You know what, I never “got” these people, but I know I did not like their self-entitled selfish attitude.

I normally feel compassion for people in difficult situations but in this case, I’m enjoying the Schadenfreude.

#79 bcgirl on 11.22.08 at 8:30 pm

#69 Anonymous – Thanks for your input regarding my question about gold.

#80 Bottoms_Up on 11.23.08 at 12:12 pm

To #63 and #78: our world will be better off without your offspring anyway, so you’re doing us a favour by not pro-creating. Thanks!

#81 Kestral on 11.23.08 at 10:35 pm

To #80 Bottoms_Up

Your offspring will be serving mine.

#82 Just a Girl on 11.24.08 at 7:42 pm

#71 jrochest wrote (I think tongue in cheek): “I agree it’s a tragedy that the foolish mass of humanity is interested in marriage, children and friends.”

No, we can’t escape our biology, and humanity often makes decisions for reasons other than financial ones!