The tipping point

wind1

Fresh off our orgy of realtor-bashing, let’s move on. Bigger stuff to worry about.

As you know, Bay Street swallowed another 300 points Thursday. Sure, new numbers showed pre-Christmas retail sales were in the crapper. Yes, the smart guys in charge of RIM are being ripped apart by the stock cops for allegedly diddling with options. Yeah, oil’s crashed. Meanwhile, Microsoft and Sony are shedding jobs. US housing starts are at the lowest point since ever. It’s ugly.

Even an unexpected and non-credible Bank of Canada forecast that everything will be okay by 2010 didn’t impress the market much. Because we have bigger stuff to worry about.

It’s now official. Ottawa will spend $64 billion (at least) more than it takes in over the next two years. In the next five years analysts figure we will add $100 billion to the national debt – more than was paid back with all that money collected in GST and saved in government cuts. On a per capital basis, that’s the equivalent of the US adding $1 trillion to its debt – which it will be doing this year.

Amazingly, we’ll have gone from a $12 billion surplus to a $32 billion deficit in three years. Needless to say, this hasn’t happened before.

Sure, I know government stimulus is needed, but here’s why this is so dire:

* First, it shows how close we are to the tipping point. Barack Obama may be a spend-happy kinda guy, but Stephen Harper is not, and neither was George Bush. The fact these less-government types are rushing to embrace Depression-era spending  is because, well, we’re close to one. Far closer than the average person believes, or has been told.

Evidence of that has come in the quiet little $75 billion bank bailout now taking place in Canada, in plunging consumer spending, the loss of almost 150,000 full-time jobs in the last 60 days, the crash in commodity prices, collapsing corporate profits, the bankruptcy of Nortel, diving home equity and a deterioration of national finances which is without precedent.

* Second, deficits today mean taxes tomorrow. After the temporary tax cuts in next Tuesday’s budget, you can kiss goodbye the idea of paying less, for a generation. Capital gains taxes will never come down, nor property taxes or provincial surtaxes. So if you’re not planning to aggressively mine every remaining tax shelter, make your mortgage tax-deductible or shield wealth, you lose.

* Third, more debt today means way more inflation later. The government over the next few years will be winding the clock right back to the late 1990s, when the need to pump out bonds to help service the debt fuelled both inflation and rates. Once this mess is over – recession or depression – you can look forward to the carrying costs of your mortgage doubling.

As I said, desperate times require desperate measures. And governments in both Canada and the US which allowed lax mortgages, radically increased spending, saved nothing and sat on their thumbs until the financial storm was ripping off the roof, now have little choice. This is crisis, and we must burn the artwork to keep warm.

So, watch the government well. Do the opposite. Your family comes first.

140 comments ↓

#1 Midas on 01.22.09 at 10:13 pm

Whether you believe in conspiracies or not, the only logical explanation for what’s transpiring worldwide today is that it’s being done by design with the express intent of wiping out the middle class which has been an anamoly in recent history. The ruling class prefers not to share the wealth; they prefer serfs over equals. Again whether you believe it or not this will be the end result.

A major percentage of the middle class in the richest country in the world has been beggared and their brethren in the rest of the world must follow suit.

To cover their nefarious activities a few hundred million or a couple of billion will be sacrified on the altars of mammon that the ultra wealthy worship at. WWIII is around the corner, Israel / Gaza conflict might actually have been the start. It will begin no later than 2010.

And all done by design!

“In politics if it happens that way, you can bet it was planned to happen that way”. This is a paraphrase of a quote by FDR; I suppose he knew what he was talking about. But hey the Superbowl is next weekend! Don’t worry – be happy!

#2 Nebbio on 01.22.09 at 10:15 pm

With all due respects Garth, despite his small government rhetoric, our buddy George B. was certainly no spendthrift. He just preferred to use public funds to line the pockets of Halliburton and big oil and big pharma, rather than to build bridges or schools or anything else productive.

#3 Keith in Calgary on 01.22.09 at 10:17 pm

Spurious government financial intervention in the marketplace in times such as these, is overwhelmingly useless in the vast majority of cases, and will be the direct cause of a prolonged and painful economic downturn the likes of which my generation (I am 48) and perhaps even that of my 83 year old father, have never seen in our lifetimes.

Unfortunately, conservative, liberal, or libertarian governments would all be involved to some extent regardless of their actual stated ideological positions, because whoever is in power at the time ,has to make a show of doing something in order to maintain one’s chances of being re-elected.

#4 $froma$ia on 01.22.09 at 10:18 pm

Garth,

The bailout is to keep people paying these inflated mortgages so that Flaherty can save face and not admit and apologize that he’s an idiot for introducing 40 year ammorts and zero down.

#5 $froma$ia on 01.22.09 at 10:20 pm

BTW Garth will you be speaking about the same things in Victoria as you will be in Vancouver’s seminar?

Just wondering if you recommend going to both?

One is enough of me. — Garth

#6 Alberta Ed on 01.22.09 at 10:22 pm

Keep your ammo dry. (Enjoyed today’s CBC Radio interview, BTW.)

#7 Darryl on 01.22.09 at 10:26 pm

Scary times we are in. At this point it’s almost reassuring that housing prices are about to crash… it may ruin the unfortunate minority that bought in the last few years, but it’s going to greatly improve the cost of living for the majority.

Found this this afternoon, and comparison of the Canadian HPI and Case-Shiller… we’re nearing the cliff…

http://tinyurl.com/aehoup

#8 Midas on 01.22.09 at 10:27 pm

http://theinternationalforecaster.com/International_Forecaster_Weekly/Just_The_Early_Stages_of_Economic_and_Financial_Collapse

Follow up to previous post.

#9 TheFirstRick on 01.22.09 at 10:30 pm

“Fresh off our orgy of realtor-bashing, let’s move on. Bigger stuff to worry about.”

You are right Garth, what a waste of energy. I won’t even use my offensive term anymore, just Realtor if necessary and hope I don’t get sued for copyright infringement. Anyway, thanks for the heads up.

#10 Investx on 01.22.09 at 10:40 pm

#1 Midas: “Whether you believe in conspiracies or not, the only logical explanation for what’s transpiring worldwide today is that it’s being done by design …”

False. It’s also possible that it wasn’t orchestrated. $hit happens. You’re giving the people in power too much credit.

#11 kw on 01.22.09 at 10:41 pm

make your mortgage tax-deductible ?
please advise how make tax-deductible.

Thanks

#12 Bill-Muskoka (N.A.M.) on 01.22.09 at 10:50 pm

So, watch the government well. Do the opposite. Your family comes first.

Always have! Always WILL! I saw Wizard of Oz and their theme song should be ‘If I Only Had A Brain! (and a heart, and courage)’

#13 North Vancouver Citizen on 01.22.09 at 10:51 pm

I have a solution to Canada’s budget deficit….Canada should sell off “Quebec” and the “Atlantic Provinces” to the European Union.

…Who needs’em anyways?

#14 Mike B on 01.22.09 at 10:53 pm

Just so we’re clear, Mark Carney knows bupkis. His prediction holds zero credibility … An ex Goldman Sachs butthead. Chances for a global depression are well over 60%. Unemployment rates are deceptively low because of the way it is now calculated. It took the second world war to shake the world from the depression. They spent tons of cash on roads/bridges but only ww2 did the trick. In the 30s the US had little debt. Today INSOLVENT as is their banks. Even with the aggregate bank concept all does not become rosy overnight.

#15 Harry S on 01.22.09 at 11:10 pm

Garth … what do think about an inheritance tax? The Baby Boomers apparently control the greatest accumulated amount of wealth of any generation in the history of mankind .. so why not impose an inheritance tax so that the government can dip it’s beak into that pot of money?

#16 ThumbsUp on 01.22.09 at 11:11 pm

A Gamble of $64Billion borrowed from taxpayer

The government is just another big neighbour of ours, financially they’re no more than another corporate in the business world, while everybody, every business is losing money, what led them believe they’re better than anyone else, with all billions of dollars borrowed from their neighbours throwing around – bailing out what?

The US has been bailing out themselves for 10 years. Look what they’re in today.

Stop throwing good money at the losses, it will only damage the moral and trust in the market, it’s time to cut the loss.

Maybe they’re right, cuz some economists figured –Let the gamble get started!

#17 Dr. Doom on 01.22.09 at 11:13 pm

Garth Said: “Sure, I know government stimulus is needed, but here’s why this is so dire:

* First, it shows how close we are to the tipping point. Barack Obama may be a spend-happy kinda guy, but Stephen Harper is not, and neither was George Bush. The fact these less-government types are rushing to embrace Depression-era spending is because, well, we’re close to one. Far closer than the average person believes, or has been told.”

I think up until that quote, I’ve agreed with most of what you’ve said on this blog.

Bush wasn’t spend happy? 1 Trillion dollars in bailouts over the last year isn’t considered spend happy?

Stephen Harper is only tight with money when it comes to actually putting it to good use. He’s more than willing to piss on the constitution to prorogue parliament in the face of defeat, and then quietly pass an auto bailout/bank bailout to the tune of $3B.

Might want to think about your statement a bit Garth. You were a bit off on that one.

#18 dd on 01.22.09 at 11:20 pm

Garth,

Another great write up.

#19 Deaninkelowna on 01.22.09 at 11:20 pm

Midas, I totally agree. just look at the fed. This is a huge conspiracy. They control deflationary and inflationary swings for their own advantage. The fed is not owned or controlled by the government. It is a private corporation that has been given the power to create money when ever they will. Can you imagine?

The design you are referring to is a masonic design. Freemasons control, for the most part, the leaders and political parties. Almost every U.S. president and most politicians are masons. It would be great if Garth could comment on the extent of masons in Canadian parliament. Maybe he is one. If we are correct then he probably would not be able to say fully what goes on behind the scenes. My great grand father was a mason and I believe most of them at the ground level are there more for social and business reasons. One day I’m sure all will be exposed, wether in this life or the next.

All secret societies should be banned. The Popes in the past have always condemned them. Maybe one day we’ll learn.

And yes, I do plan enjoying the Superbowl!

#20 an f-ing joke on 01.22.09 at 11:21 pm

#1 Midas-
You are right that it is done by design.
You are wrong the Gaza war is the start of WW3. That is a smoke screen by the USA to take attention away from the troubles at home. Classic move by the US.

Also, it is not the start of WW3 because there is not a military anywhere on the planet that can come close to matching the Power of the US military. It would be suicide.

However, you can expect terrorism to INCREASE at home and abroad, as this is what happens when things world wide take a downturn, and there are many un edcucated men, looking for something to “do”.

As the USA fades from power over the next decade or two, expect WW3 to start after the Depression is TRULY over in around 2015-2020, much how WW2 started shortly after the last ( it was not the first ) great depression. It will likely be fought over resources between China and India, perhaps the USA will get in there, hopefully it will not come to Canada. Be assured another decade, the armies of China and India will be formidable.

#21 George Popovic on 01.22.09 at 11:24 pm

At least Obama has the decency to tell the folks south of the border that there is a real problem that will be difficult to fix and will take time. Our Bank of Canada Governor Mark Carney on the other hand joyfully declares that this will be a short recession and everything will be just dandy in the second half of 2009. Wheteher this is incompetence or deceit there ought to be some consequences for this sort of behaviour from people in position of power.

#22 dd on 01.22.09 at 11:25 pm

From the globe:

“In the oil sands alone, capital spending plans for this year have now declined to about $13-billion from an expected $20-billion … Across the industry, capital projections in 2009 have dropped by $10-billion to $40-billion as companies race to hoard cash in the face of basement oil prices…. impact on the economy: every dollar spent on big oil projects stokes nearly $2.50 in further spending in Alberta, plus another roughly $2.50 in the rest of Canada. In other words, a $10-billion decrease in energy spending translates into about $60-billion in lost economic activity across the country.”

If oil comes back so does Canada. So the Bank of Canada must be predicting oil to come back sometime in late 2009.

Who really knows.

#23 rural route on 01.22.09 at 11:25 pm

Hey Garth! I heard you on CBC radio Edmonton today. I wondered what the tone of the callers would be. Interesting to note, they all just wanted advice. To me the callers were mostly pretty serious. The host (notably very conservative for a CBC employee) was the most skeptical, which didn’t surprise me, I’ve had to listen to her right leaning sensibilities so much that sometimes I just have to turn her off.

I had wondered if you’d be met with denial and bravado from your Alberta callers. But no.

In our prairie town, one of our local papers on Tuesday had a weird front page. At first I thought it was a big ad. But no, it was a so called article. It was a picture of a half finished condo, with an upbeat article quoting a Century 21 real estate agent. It began with the sentence “What slowdown?” Typically for our town, the reporter obviously did no research at all. We were assured “conditions are actually ideal for prospective buyers”… blah blah blah.

Today’s local paper (a different paper, but basically they are both completely lacking in substance and editorial, and are merely vessels for a thick wad of advertising) was full of real estate ads. Interestingly, I counted 16 homes with new notations of “reduced price” or “taking offers” or “new price”.

Only two days ago, I saw none of these notations! Strangely enough, the Century 21 two page ad had no such notices. I guess they’re sticking to their story.

One other thing I noticed. I know it’s January, and traditionally it’s slow in retail. But there sure are a lot of empty shelves here. I was looking for some clothes, and a few different things, and there was hardly any new stock. Just old stock picked over from Christmas, and even racks with nothing on them. The local Peavey Mart had rows of empty shelves. I don’t think I’ve ever seen it that bare. When I asked different staff why the shelves were empty they just said it was supposed to be coming. Zellers had two cashiers for the whole store, and it’s a fairly big store! One was the cashier for the half empty restaurant. It seems pretty dead out here, normally it’s 24/7 consumption!

And as for what the future holds? I’d be less worried if we had a government that was honest and had integrity. In the agriculture sector we’ve had to endure Steven Harper and Gerry Ritz as they undermined our industry with their ideological and single minded attack on the Canadian Wheat Board. Farmer’s organizations had to take the federal government to court twice regarding the CWB. We actually won both times, but the damage was done. Sadly, we know all about how these people operate, and the rest of Canada is going to get a good dose of their nasty politics eventually. They just can’t seem to do the right thing. THAT’S what scares me. Not the world economy, the thought of those idiots running the show.

Keep up the good work, Canadians need to hear a broader story than what we’re being fed. Most people don’t have the time or energy (or interest) to research even a little, let alone endlessly. You’re providing a service to people you don’t even know, even just opening their eyes so that hopefully they will read and listen more and not just take the pablum they’re spoon fed by the media.

#24 an f-ing joke on 01.22.09 at 11:27 pm

Garth-
Does the gov not have like $50 Billion sitting around in the E.I. fund? Is it going to get wiped out by all these layoffs? If not, we (they/them/us) should do something more productive with that. You could use it to create jobs, instead of having people sit on their ass and collect it and waste it. You could make a lot of hockey sticks for $50 billion, for example.

#25 an f-ing joke on 01.22.09 at 11:31 pm

hmm something wierd happened to my post….
anyway, i was saying… what about the $50 billion or so in the E.I. fund? How about using that to create jobs instead of giving it out and watching it disappear. Garth, do you think it will be all used up after all this? And what has the gov been spending the interest that that would have been earning on?

#26 Anon on 01.22.09 at 11:39 pm

You are assuming that tomorrow will be like yesterday, just with more debt. While government debt might be a factor, there could also be other factors making this debt issue not so relevant.

#27 HJD on 01.22.09 at 11:39 pm

And this is nothing compared to what will hit us when global warming clobbers the world.

#28 TUT on 01.22.09 at 11:56 pm

Sadly, you may be only half right. It may be worse.

#29 john on 01.23.09 at 12:17 am

Very scary future and i believe the crash is inevitable,there is absolutely nothing that will change the direction we are headed now in my opinion. I can not even express the anger and disappointment the actions of the Harper government have caused leading up to the situation we are now in. Thanks for your honesty Garth,we certainly haven’t had any from the Harper government.Your reality has brought calm and preparation into my life.

#30 EW on VI on 01.23.09 at 12:33 am

Garth – can you give us any figures as to how much of this deficit is due to increased spending vs. decreased revenue? One would hope that when the economy turns around the revenue would increase, shrinking the deficits.

Also, one of the sources quoting the expected increase to the total debt also noted Canada would STILL be the best positioned country in the G8 with total debt less than 30% of GDP after everything was totalled. Comments?

#31 Dave on 01.23.09 at 12:34 am

all this doom and gloom yet the DOW november lows haven’t been penetrated. Until that point, assume we’re in an uptrend or get left behind as most sheep do.

The herd was purchasing real estate two years ago. It seems the herd is now turning to bulletts and firewood. Premature actions if you ask me…

#32 Observer on 01.23.09 at 12:39 am

Well, it was reported today in Vancouver that the Construction Companies are starting to go after (legally) the purchasers who are walking away. Apparently there are numerous cases of the sellers suing the ex-buyers for damages.

#33 Roial1 on 01.23.09 at 12:42 am

Just one question. Just who are we borrowing all these mega bucks from?????
As I understand it every country in the world is in the soup.

So, who the hell has these billions to lend us?

See you in Parksville on Feb. 2. Garth.

#34 supersocco on 01.23.09 at 12:51 am

Most of my co-workers and friends just say “Oh it’s the media blowing things out of proportion again.” I wonder when the tipping point will happen and reality slaps them in across the face.

#35 Eduardo on 01.23.09 at 12:56 am

Hey Garth,

Today I heard some stories about layoffs in the service sector and people who do things like surveying and geotech work.

#36 Poor_ol_Gitmo on 01.23.09 at 1:03 am

#1 Midas – one word; ‘decaf’.

No one wants to totally screw around the middle class, because that’s what generates consumption and provides servitude that actually does and creates things for the upper class. It enables the established class to continue to build wealth, as well as maintain their position.

Maybe there’s a de-facto contest going on between one part of the upper establishment and other parts to squeeze as much out of the middle class as possible before it croaks. But there’s no conspiracy to smother it just ‘because’.

A wise king always takes just enough care of his peasants that they can continue to serve him.

#37 nonplused on 01.23.09 at 1:32 am

#1 Midas…

What middle class? We haven’t had one of those since the 70’s.

Somewhere along the line being middle class went from a certain income compared to the average to a certain ability to borrow compared to the average. None of those people have any money when their assets are not constantly rising in value!

I also don’t like conspiracy theories where a certain small smart group is out to ruin a larger certain other group. It’s too complicated. Let’s apply Occam ’s razor when simple human limitations (stupidity) by both groups could easily explain it. The government would like nothing better than a robust middle class paying lots of taxes (they pay way more due to their numbers than the relatively small ranks of the rich do) so the government can fund it’s programs and armies. They don’t want to kill them, just control them. We have TV and internet porn of all sorts from financial porn, soap opera porn (hint, ladies, this stuff is designed to affect you), violent story plots, and romance porn to satisfy that now, so mission accomplished! And for the most base of people they have the real porn now free in unlimited amounts. The middle class is concurred, and needs to be nurtured and taxed.

All…

I suggest we refer to Zimbabwe Economics for short as Z-E from now on to save time. We’ll need it.

Side note…

Just watched “Dark Knight” for the first time with the family. (I don’t do the $100 outing to the movies when the DVD is only $20 bucks and my wife is quite good at generating the popcorn). I think it was a 3 hour propaganda film with the aim of resurrecting the “Bush Legacy”. What are some of the highlights of the film?

– Batman builds a high tech but illegal device that turns all cell phones into spying devices. His faithful servant is trusted with the device to catch the bad guys so long as they agree it will be destroyed once it served its purpose. (wire tapping program)
– Batman ruthlessly beats the Joker while he is in custody to obtain information. The information provided doesn’t help as much as planned but it’s all fate. We are supposed to cheer for Batman while he beats Joker in a jail cell. (Guantanamo and other atrocities)
– The Joker doesn’t want money like most good Americans, even the criminals, but just wants to wreak havoc, destroy the system and “send a message”. (Terrorists)
– Batman has to engage in criminal activity to save Gotham from the criminals.
– Batman colludes with trusted members of police in criminal activity to get the Joker. (Faking one’s death.)
– Everyone is corruptible or corrupt, only the degree varies.
– Terrible statement as to the morality of the average American citizen when confronted with danger (although maybe they got this point right).
– Collusion with the police to assign blame to the wrong individual in order to protect a social version of the “hero” for the people to believe in. (Plame Gate)
– Many off camera atrocities.
– A strong message that the only difference between a criminal and a hero is the objective of the character, not the means. (Department of Homeland Security)
– A strong message that we are all crazy, even those that are trying to act for the common good. (This may be true as well but I see it as a redundant and irrelevant point, and it doesn’t make all the crazies criminals).
– Also a strong message with “two face” that even the most earnest of us are but one tragedy away from becoming irreconcilably evil.

They have lowered the bar again. A truly disappointing film, that removes all heroism from the hero, and replaces it with a “my side – your side, a rich guy will save us, there are no moral attitude) I am ashamed I let my kids watch it. I understand it was a big seller, so we will have much more of this crap going forward.

#38 Calgary 2009 on 01.23.09 at 1:34 am

Some past statements by the Bank of Canada on the recession and expected recovery:

Jan. 22, 2009

Bank of Canada governor Mark Carney:

“We expect that this recession won’t be as long as former recessions, for instance the recession in the 1990s.”

Jan. 20, 2009

The Bank of Canada reversed previous forecast of 0.6 per cent growth for 2009 to a 1.2 per cent retreat:

“The outlook for the global economy has deteriorated since the bank’s December interest rate announcement, with the intensifying financial crisis spilling over into real economic activity. Heightened uncertainty is undermining business and household confidence worldwide and further eroding domestic demand.”

Dec. 17, 2008

Carney:

“Issues of financial stability that were once the obsession of a pessimistic few are now the daily concern of many … Businesses are already beginning to postpone large investments and households hesitate over major purchases. Partly as a consequence of financial instability, next year will be a trying one for many Canadians.”

Dec. 9, 2008

Bank of Canada:

“The outlook for the world economy has deteriorated significantly and the global recession will be broader and deeper than previously anticipated … While Canada’s economy evolved largely as expected during the summer and early autumn, it is now entering a recession. The recent declines in terms of trade, real income growth, and confidence are prompting more cautious behaviour by households and businesses.”

Nov. 19, 2008

Carney said in London that the Canadian economy has deteriorated more quickly than he had anticipated even only a month ago:

“Starting from flat growth in the first quarter of 2009 and the second quarter of 2009 … recession is a possibility for Canada.”

Oct. 23, 2008

Bank of Canada’s new forecast – a sharp downgrade from July – has the economy shrinking by 0.4 per cent annualized in the October-December quarter and at no growth in the first quarter of 2009.

But Carney said Canada is better off than most industrialized countries and there is no cause to panic: “The sky is not falling, the sky is still there, the sun is still coming up every single day and the Canadian economy is still functioning.”

Sept. 3, 2008

The Bank of Canada:

“In Canada, domestic demand has slowed modestly but remains strong … Overall, the level of economic activity is slightly lower than expected in July but still close to the economy’s production capacity.”

July 18, 2008

Carney:

“The Canadian economy remains robust. … The Canadian (banking) system is very strong.”

He talked about how energy wealth is being spread across the country, adding strength to other sectors. “And that puts us, in the industrialized countries, in very rare company.”

June 20, 2008

Carney on the need to focus on inflation:

“We are experiencing a commodity super cycle … In the face of one of the largest commodity-price shocks in our lifetimes, we cannot be complacent. … The current boom is also unusual in that it began earlier in the global economic cycle.”

May 1, 2008

Carney said average annual growth for the Canadian economy over the past 15 years has been 3.3 per cent and there will be growth again this year, but at a slower pace:

“We’re talking about a slowing rate of growth in the first half of the year (2008) and then a recovering rate of growth. There have been big shocks, but there’s a lot of strength in the Canadian economy.”

Fiscal stimulus, easing credit conditions to restart economy, says Bank of Canada

#39 nonplused on 01.23.09 at 1:42 am

Also a strong message sent several times that the reason crime was rising was because the police were trying to stop it. Truly an awful movie.

#40 Rob in Onterrible on 01.23.09 at 2:32 am

This new budget is a real problem. What if these massive injections of cash don’t do a thing to stimulate the economy? The US has been pumping in cash for months and still the dead cat refuses to bounce. This is very worrisome because it means much higher taxes in the future which will stiffle job creation.

Rob

P.S. Thanks for answering my 3 questions in London.

#41 Jonathan on 01.23.09 at 7:06 am

Manulife, RBC and the rest of the banks are hitting 52 week lows every day now. Share prices are much less than what they were during the turmoil that hit in October. And today is a time after the 75 billion swap of high ratio mortgages for cash was provided. I can understand them being low, but falling as rapidly as they are, they are just one step away from a free fall.

#42 pbrasseur on 01.23.09 at 7:29 am

Garth you got some facts wrong.

George Bush not a spender? Bush a less government guy?

Who are you kidding here? W was the one of the biggest spender ever. He may talk “less government” but he did just the opposit, big time. As a promoter of small government and individual liberty myself I tell you: GWB was a fraud. (I actually hope Obama does just the opposit: talk big gov but actually reduce it)

Please beware of being to sure of yourself when it comes to macro-economics and large scale economic predictions, it may burn you, as it may burn the many gold bugs on this blog and elsewhere.

For example, yes bigger government debt may mean higher taxes later, but you should also be aware that lowering taxes has (by freeing the economy) been followed by rises in government incomes… The late Chrétien/Martin governments were growing surplusses AND lowering taxes.

#43 a renter on 01.23.09 at 8:02 am

To #11 KW “make your mortgage tax deductible please advise?”

Much has been written on this in the last few years. For one description, check out this link…

http://www.milliondollarjourney.com/the-smith-manoeuvre-a-wealth-strategy-part-1.htm

I would not recommend that strategy in times such as these. — Garth

#44 Da Hk Kid on 01.23.09 at 8:17 am

US vs. China will top the battle I fear! If the wheels fall off this then we are all in trouble. The US is broke, consumer spending toast, outgoing costs to fund domestic and external conflicts to reach 3+ Trillion this year, unemployment to hit double digits, treasury bubble, second round of mortgage defaults, commercial realestate death spiral, jobs only available in the US Military (needed for martial law).

China will not put up with the future deflation of the USD on top of reduced exports and pressure to move the Yuan higher. China owns about 1.5+ Trillion in Debt to USA and if China senses any move away from payment of that debt they will call on it!

My fellow Canucks, the writing is on the wall for the US. If Harper buys in to the US side things will get VERY MESSY!

Garth, good review above for our nation to note. I’m banking on the Asian reversal and all other countries indebted to the US to enter into potential protectionism and let the addict alone.

#45 Gonzo on 01.23.09 at 8:46 am

This 100B$ is also based on the governments unrealistic expectations for the economy over that time frame… the real number could be much higher.
To give some comfort, though, the U.S. debt by the time’s our is 600B$ will likely be close to 12-14T$. That’s double ours on a per capita basis. The U.S. is FUBAR’ed. I take some solace in that we are somewhat less FU’ed.

#46 North Vancouver Citizen on 01.23.09 at 8:47 am

“”Jim Rogers, former partner of George Soros and one of the world’s most successful investors, is forthright. “Move to China; learn Chinese.” In an interview with The Independent, Mr Rogers warns that Britain will go bankrupt if the Government continues to follow its present policy of attempting to save the banks through subsidy and nationalisation.

A colourful figure, Mr Rogers was born in Alabama and educated at Yale and Oxford. He has made it into Guinness World Records for some of his epic motorcycle journeys. He began collaborating with George Soros in the Seventies and more recently has specialised in commodities. In 2007, at the age of 63, he drew some attention for his decision to move from New York to Singapore, declaring that “moving to Asia now is like moving to New York City in 1907″”.

…Did I ever mention Vancouver will become the next Financial, Trade & Leisure Capital of North America?

…London falls, followed by New York City, leaving…….you guessed it….just a matter of time.

http://www.independent.co.uk/news/business/news/now-its-time-to-emigrate-says-investment-guru-1488629.html

#47 North Vancouver Citizen on 01.23.09 at 8:59 am

Canada is the safest G7 country, both economic and lifestyle….Canadians, consider yourselves truly fortunate… and Western Canadians are the most fortunate.

….I, N V C aka R E E had already predicted many of the other people’s above postings.

Wars will break out…it is inevitable…bankrupt and starving nations do that.

India/Pakistan

North/South Korea

South America

Russia/China war over Siberia

Europe and its Emerging Economic countries.

….Tis a great way to cull the world population from 5.5 Billion people down to 500 million people….a 90% cull.

and Vancouver becomes the next Financial, Trade and Leisure Capital of North America.

just my two cents

#48 Bill-Muskoka (N.A.M.) on 01.23.09 at 9:14 am

#19 Deaninkelowna on 01.22.09 at 11:20 pm

Nice slam job against the Masons. Now, please tell us your source of knowledge?

I am sure many want to know about this secret society that rules the world.

Odd, however, that they have Lodges everywhere, clearly marked, and visible. They also have online websites with names addresses, phone, emails, officers, meeting times, etc.

And please clarify which Masonic organization you so knowingly refer to?

They are not very secret it would seem?

Perhaps you should investigate the Kinsmen Club, Lions, Girl Guides, Scouts, Rotary, societies also. I am sure there must be a conspiracy somewhere? Perhaps the real conspiracy is the willful ignorance of the masses who are led by ill-informed nutbars who start such witch hunts without a clue what they speak of?

Like Max Dimont said about the Dark Ages ‘The wealthy and poor shared three things in common. They were equally ignorant, illiterate, and superstitous.’

How about the fact that people choose to be gullible, selfish, opportunistic, unethical, and foolish as the real reason we have, again, an economic meltdown? If you are looking for a Scapegoat I suggest the nearest mirror.

#49 smwhite on 01.23.09 at 9:58 am

Anybody know how Harper’s mom’s “investments” are doing lately? :)

I’m wondering just how anti government bureaucracy Bush is when he made the biggest and most useless government organization in US history, homeland security.

Harper(Like all politicians) is living for this moment of “tragedy”, we’ve got a problem and I’m sure he and his counterparts “believe” they got the answer to fix it. If the Candian taxpayer doesn’t want to spend, western governments will spend for you.

I’m already hearing attack adds from the CPC while we have the likes of the majority of Canadian Premiers, licking their lips at the potential windfall of federal handouts, especially from BC and Alberta.

Garth(or any of our readers that are born pre-70’s), can you give some of us “younger folk” a little history lesson on Paul Volker, because one day, governments are going to have to turn the tap out and pay the price. Its very apparent that Harper isn’t going to be that guy. Or is this a generational issue where the boomers that are the majority of government power are only looking ahead at their time on the beach?

Regardless my fellow Canadians, right, left or center, welcome to the wonderful world of finance with Jim Flaherty! He’s proved he can put Ontario in the hole, and he’s not about to disappoint Canadians.

For Canada to stabilize American has to pump inflation to the point oil is at least $60 a barrel to get Canada out of the rears, but do we really need to devalue our currency so we can stand shoulder to shoulder with USA? Ottawa is way to eager to spend away our future, Canada actually has one despite the terror and fear out there. Commodities will be our savior over the next 10 years regardless and I agree that Carney is being way too optimistic, to the point its unrealistic.

Garth, I got your book in the mail this week, I’m in the middle of another but had to give the first chapter a look-see. I must say, it seems to flow better then the “Greater Fool”, and it wasn’t just the Schiff quote that made me smile.

#50 David on 01.23.09 at 9:59 am

The real deficit will probably grow a whole lot bigger than Ottawa is willing admit. People losing their jobs pay less in taxes. Companies with falling earnings pay less in taxes. A few years from now when interest rates inevitably rise, the government debt will expand due to rising debt servicing costs. When the US dollar becomes too weak interest rates will rise and Canada will have to follow suit to keep the Loonie within a normal trading range.
The $75 billion bank bailout was bad enough, but there is likely more to come, as exposure to toxic debt is revealed. I still maintain, that there are a lot more of these bailout cheques forthcoming.

#51 George on 01.23.09 at 10:08 am

Garth, I agree that taxes will have to be raised in the future to pay for all the stimulus.

So that would mean that RRSP’s are even worse than I thought. It may even mean there is no advantage for a RRSP.

There always is an advantage to RRSPs, either because your tax profile is lower in retirement or you simply use a leverage loan to take money out tax-free. In either case, you get to use them to reduce taxable income during your working years. — Garth

#52 Bill-Muskoka (N.A.M.) on 01.23.09 at 10:10 am

AHA! Mysterious Rumble Vexes Sequoyah County

Residents from Tenkiller Lake to Roland have described hearing a mysterious blasting sound followed by a slight vibration everyday at noon.

They also said the vibration is causing the windows and pictures to shake.

Okay, let’s take a SWAG at the source?

1. Osama Bin Laden?

2. A giant mole?

3. The Chinese made it to the other side?

4. Bush trying to hide from the impending arrest warrants?

5. The Earth is going to fart?

6. Illegal Mexicans way past the border?

7. Godzilla or Mothra?

8. The reverberation from Wall Street, Chicago Mechantile Exchange, and TSX as the investment brokers bang their heads on the ground at lunch time?

9. Satan coming after the Funnymentalist Bible Thumpers?

10. Halliburton looking for more oil?

11. Hell has frozen over and the ice is expanding when the sun is at its meridian?

12. Some damn teenager home for lunch with his iPod cranked up on the Home Theater System?

#53 PTDBD on 01.23.09 at 10:18 am

The chutzpah of economic “experts”

The constant parade of Bozos, economic “experts”, and government financial mavens constantly parade their blinking noses and blaring horns before us each and every day feeding our media channels.

<B.They had no clue as to this crisis. No anticipation, no knowledge and totally inaccurate forecasts. Why are they parading again flogging the lemming march to deficits? Why do we allow this? They are clowns in tights and makeup. Know-nothing, multi-appendaged, two-faced predictors of the future.

As you listen to Flaherty’s call to a gigantic deficit, please remember his 2008 statement…
“We cannot ask Canadians to tighten their belts during tougher times without looking in the mirror.”
Looking in the mirror, they then expanded their Cabinet and introduced 18 more Senators. Chutzpah!

Drastic actions for drastic times.
Drastic action involves not reaching the tipping point and following the lemming line off the cliff. Going even more into debt does not solve a credit crisis.

It’s only common sense.

#54 Jimster on 01.23.09 at 10:19 am

Garth,

Can you tell us where these billions of dollars will come from? Will it be created by BOC, borrowed from private banks at interest, or does Ottawa have this kind of money just lieing around?

Bonds. Unlike men, they mature. — Garth

#55 smwhite on 01.23.09 at 10:22 am

#22 dd

I concur, I think its probably a safe bet to move a little cash into some good dividend paying oil trusts; also Barrick and Newport mining are going for a ride, gold is up $20 today, already!

How about the term “stimu-flation”?

Over supply in housing, over supply in automotive… We need nothing more then time to fix the system, not stimulus…

#56 RJAG2034 on 01.23.09 at 10:24 am

Getting a bit concerned about the opinions that are really “out there” I mean come on folks, Masonic plots, upper class plots etc. Jeez I better go put on my tinfoil hat. Give me a break.

Posts like these are on the borderline of making a legitimate forum that some decision makers may respect to a laughing stock. Perhaps you need a moderator.

The world overextended and now its retracting. The ‘leaders’ dont know what to do so they are throwing everything at it. Plain and simple. No plots or cabals, no WMD or Elvis.

#57 Shawn on 01.23.09 at 10:25 am

I have a solution to Canada’s budget deficit….Canada should sell off “Quebec” and the “Atlantic Provinces” to the European Union.

…Who needs’em anyways?

—————-
“North Vancouver Citizen” please that is such utter rabble it hardly deserves the credit of a rebuttal, but here is one anyways. I have lived 1/3 or my life in 3 cities St John’s,NL St Catharine’s, ON and Vancouver, BC… each for over 10 years. First… hats off to you the many Vancouverites believe the east coast of Canada is Ontario, and would struggle to find the Atlantic provinces on a Canadian map.

Secondly it is Newfoundland that is currently a “have” province and not a “have not” sure its been a long time coming, and also may be short lived depending on oil prices, however, the grass is not always greener in BC.

Perhaps the moss on the north side of your home is reducing your ability to put forth a reasonable argument.

Have you been to Quebec or the Atlantic provinces?
Quebec, particularly Quebec City may be one of the most spectacular cities in our country rich in culture, architecture, and heritage.

The Atlantic region though less populated and under-represented in our government is holding its own and contributes to our economy in primary resources, mining, logging, fishing, and dare I say energy have you learned about Churchill Falls or are you too captivated by Shannon Falls?

I recently exited Vancouver after a long stint and it is not always the rose it personifies itself to be. There are serious traffic, drug, crime, congestion and real estate issues in the GVA..

Just try and be more considerate in future postings

#58 dekethegeek on 01.23.09 at 10:25 am

#13 and #47
Vancouver will become the Financial Center of the Universe when the Winter Olympic Debt is paid off( and dont forget it took Montreal what, 35 years to pay off a billion while their infrastructure fell apart)

Front page of the Vancouver Sun Friday Mornings Edition.

” Olympics To Cost $6 Billion”

You heard it here first

#59 smwhite on 01.23.09 at 10:27 am

Sorry kids, meant Newmont (NEM:NYSE)…

#60 Meo on 01.23.09 at 10:29 am

To #13 North Vancouver citizen who wrote:

“I have a solution to Canada’s budget deficit….Canada should sell off “Quebec” and the “Atlantic Provinces” to the European Union.

…Who needs’em anyways?”

Maybe we should sell B.C. to China?

#61 smwhite on 01.23.09 at 10:30 am

Sorry, #53 should be Newmont Mining (NEM:NYSE)

#62 Signal Loss on 01.23.09 at 10:31 am

“Barack Obama may be a spend-happy kinda guy, but Stephen Harper is not, and neither was George Bush.”

Bush ’43 was a major spender, wasn’t he? US debt ballooned during his admin. Military adventures coupled with four rounds of tax cuts pushed the US national debt to historic proportions just in time for the boomers to begin tapping into social security and medicaid = timebomb. The real struggle will be to recover from the recovery.

#63 colette on 01.23.09 at 10:32 am

Love this quote from today’s Globe and Mail:

Gil McGowan, president of the Alberta Federation of Labour.

“We’re currently in what I would describe as the afterglow of the boom. The boom itself is over, but the day of reckoning hasn’t arrived yet.”

#64 dekethegeek on 01.23.09 at 10:37 am

I Totally Agree with Muskoka Bill.
As soon as any of you nutbars MENTION the word conspiracy i skip to the next comment. BORING.
Put some tinfoil on your heads so they can’t know what your thinking. Learn the Navaho language( it fooled the Japanese in WWII) so “they” wont know what your speaking.
Burn your drivers license, credit cards, S.I.N. card(hey! why is it called SIN anyway, another conspiracy tangent, go for it), smash your telephone, blackberry, your digital watch,tv, radio. (basically everything)Move to Afghanistan and live in a cave. It must be nice there because Bin Ladin is a multi millionaire and he’s lappin it up.

#65 George on 01.23.09 at 10:38 am

Jim Roger’s is a clown in a pink bow tie. Yeah he’s a very wealthy clown but his commodity funds have taken some big hits lately. The financial talking heads and money honeys have been roasting him lately fun to watch him do his back pedal and juggling act for his investment choices.
One question for anyone out there. How over the top foolish is it to buy a piece of property sight unseen if you have a business to unwind and rigging for very stormy weather is eating all your time?
-hopefully not another clown

#66 Bill-Muskoka (N.A.M.) on 01.23.09 at 10:52 am

#61 colette on 01.23.09 at 10:32 am

Love this quote from today’s Globe and Mail:

Gil McGowan, president of the Alberta Federation of Labour.

“We’re currently in what I would describe as the afterglow of the boom. The boom itself is over, but the day of reckoning hasn’t arrived yet.”

Confirming that we have just been screwed. The ‘afterglow’ is so pleasant and then comes the pregnancy!

#67 Bill-Muskoka (N.A.M.) on 01.23.09 at 11:01 am

#56 RJAG2034 on 01.23.09 at 10:24 am

Oh, the WMD’s (Words of Mass Deception) are still alive and well. You can find them reading about any of the self-serving financial articles, listening to the heads of banks, realtors, etc.

Let us never forget the awesome power of people like Goebbels and the illustrious former venerable Iraqi Information Minister Muhammed Saeed al-Sahaf (M.S.S.)

#68 PTDBD on 01.23.09 at 11:01 am

“Bonds. Unlike men, they mature. “ says Garth in his usual, dismissive, manner. Instead of tackling the problem, he chooses the easy opportunity of a snide attack.

Bonds… aren’t those the ties that bind? Who willl keep buying them when they pay no interest? They are promises of payment for tomorrow for some money lend today.

Isn’t that the road that we went down to bring us to this precipice? ;-) going forward ;-)

Garth fess up, c’mon, who pays? When money is created ad infinitum what happens to its value?

Who is the lender of last resort? The bottomless wallet? The bootlicker of warlords? The doormat of the elite?
Isn’t it the taxpayer? The voter. The epople that voted for a party that promised “no deficit”?

There will, of course, be an endless appetite for new government of Canada bonds. That’s simply a fact. — Grath

#69 Herb on 01.23.09 at 11:02 am

Here is the advice Paul Krugman has offered Obama in a published open letter:

http://www.rollingstone.com/politics/story/25456948/what_obama_must_do

What’s wrong with it?

#70 Bill-Muskoka (N.A.M.) on 01.23.09 at 11:02 am

And I quote a quote (Which I meant to quote but did not)

“In an age of spin, al-Sahaf offers feeling and authenticity. His message is consistent — unshakeable, in fact, no matter the evidence — but he commands daily attention by his on-the-spot, invective-rich variations on the theme. His lunatic counterfactual art is more appealing than the banal awfulness of the Reliable Sources. He is a Method actor in a production that will close in a couple of days. He stands superior to truth.”

— Jean-Pierre McGarrigle

#71 Bill-Muskoka (N.A.M.) on 01.23.09 at 11:07 am

I also should mention that he is again gainfully employed by Guess Who? (Hint: S.H. are the Emperor’s initials)

#72 Anon on 01.23.09 at 11:10 am

To #13:

You are a dumb a$$.

My Canada includes Quebec and the Atlantic Provinces. (Would you suggest dumping have-not provinces like Ontario? Can we keep Newfoundland now that they can afford the cover charge?)

I would assume you to be a (dumb) Canadian citizen. Your passport doesnt list ‘British Columbian’ as your nationality, does it? If you dont appreciate Canada in its entirety, we don’t need you anyway.

#73 young & foolish on 01.23.09 at 11:13 am

um…. does not oncoming inflation also mean the value of your real estate will go up?

In a number of years, yeah. From the lows yet to be reached. — Garth

#74 squidly77 on 01.23.09 at 11:14 am

Meo on 01.23.09 at 10:29 am To #13 North Vancouver citizen who wrote:

“I have a solution to Canada’s budget deficit….Canada should sell off “Quebec” and the “Atlantic Provinces” to the European Union.

…Who needs’em anyways?”

Maybe we should sell B.C. to China?

meo is a failed calgary realtor who would cut off his left arm for money..he hates everyone and everything and should be ignored and banished back to his own censored blog

#75 Bill-Muskoka (N.A.M.) on 01.23.09 at 11:16 am

Relax, because we have witnessed there is continuity.

#76 peter on 01.23.09 at 11:20 am

#1 Midas
With all due respect to your opinion, I would not agree it is conspiracy. Humans tend to personalize their beliefs and fears. A people who could conscious and purposely orchestrate all that crap all world is in, they would have to have super brains… super enough, for example, to turn back climate warming or invent meds to extend human life to 500 years or so. It is likely not the case.
I believe, all what has been happening is outcome of collision of economical interests. And carriers of the interests are different groups of people with curtain wealth and power, mostly not organized in secret managed unions. All we have is like dynamic sum result of directed differently interests&power vectors.

#77 PTDBD on 01.23.09 at 11:33 am

Check this out…we would have run a 10 to 20 Billion budget deficit even without the stimulus according to Reuter’s five facts about the budget. WTF?
http://www.reuters.com/article/bondsNews/idUSN2319965720090123

The lemming march seems to be a nice cover for previous overspending.

_____________________________________________
A Fowl Tail of Too Many Feathers and Not Enough Chicken

The fox promises the hens, never to harm even one of the flock, failing to reveal that he has already feasted on a delicious portion of them and hidden the bones under Flaherty’s skirt. The fox is then elected as the guardian of the hen house.

Liberalchickenhead peeks out from the henhouse, sees Chickenlittle running around and screaming that the sky is falling in every other coop. Academic , swollen, Liberalchickenhead then demands of the fox that some chickens must be sacrificed so that the coop can prosper…. for that’s what the other chickenheads are advocating.

Fox just smiles, and willingly follows their orders. He decimates the stupid cluckers, as they cheer him on.

#78 Bill-Muskoka (N.A.M.) on 01.23.09 at 11:42 am

I had a vision last night, and perhaps it will explain the economic policies that brought this fiasco about.

Think about the terminology that is used? Think hard! The rhetoric of the financial industry is that of a balloon.

Now, let us examine what is a balloon.

1. A balloon is nothing more than a thick bubble, made not of surface tension, but of stretchable material made of thin rubber or latex.

2. It is a fragile thing that will burst coming into contact with a sharp , rough, or hot object.

3. Its size can be made larger by inflation with a gas or liquid.

4. While it appears to have increased in size, the reality is that the balloon’s substance has merely been stretched, making it thinner and weaker.

5. The laws of physics demand that its skin strength not exceed the pressure inflating it, lest it BURST!

6. The value of the balloon does not change with size. It still costs the very same as when deflated, but an illusion of greatness makes it seem to be better than its original form.

7. The only increase is in the amount of pressure inside, created by someone purposely doing so. Therefore, the apparent value is man made, and nothing more than perception.

This is what people have been following as their economic security. I bunch of vulerable hot air that has no real value and is subject to destruction by the most inate object.

That is why the terms ‘inflation’, ‘bubble’, ‘pump up the economy’, ‘deflation’, etc. are used to describe this economic fiasco.

#79 Bill-Muskoka (N.A.M.) on 01.23.09 at 11:50 am

#76 peter on 01.23.09 at 11:20 am

A better example would be ‘How could anyone get all those people to even work together?’ We can’t even find 308 people that will work together in Oddawahaha, and we are paying them to do so. Even less in the UN.

No, the cause is the collective result of people being mindless, greedy, impatient, and plain foolish. Like the old saying goes ‘A sucker is born every minute’ and there will be many Flim Flam artists waiting to get them.

The MSM is the perveyor of such foolishness, and people, who used to trust others, now wisely review any offerings.

Just look at how many are still sending money to the Nigerian letter scam, playing the Lotto, going to casinos, and doing generally foolish things that could get them killed physically!

#80 smwhite on 01.23.09 at 11:52 am

#57 Shawn

Nova Scotia isn’t looking that bad off with Sable Island either… I’m ecstatic that Atlantic Canada finally has something to be proud of again since the almost end to the fishery.

#47 North Vancouver Citizen aka TROLL

Get back on your meds…

You’ve missed a few doses of your daily dose of Geritol gramps, check your blood, I don’t think your getting the required amount of healthy blood to your brain.

And why don’t you please keep it to one alias(ymaxx or real estate expert), its hard for us from the east coast to keep your asinine ramblings in check.

If there was a serious move to cull the world’s population, those in the position of power wouldn’t allow oil to drop to the level it has. But I’m all for you starting the process, no go away, and that doesn’t mean another alias.

The worlds population grew faster then any other time in history during the late 90’s, when commodities hit bottom, oil at $20 a barrel… Government needs(and wants) spenders at this stage…

The only thing being “culled” today is the replenishment of common sense and reality inside your thick skull.

Vancouver, the next financial capital of the world, about the same time it falls into the Pacific Ocean.

No get lost troll, Garth, your going to have to start blocking people making multiple posts under different names from the same IP…

#72 Anon

Bravo, some of the “western seperatists” forget to realize that ALL Canadians have the right to set up shop ANYWHERE in Canada.

#81 Andrew toronto on 01.23.09 at 11:55 am

As I said, desperate times require desperate measures. And governments in both Canada and the US which allowed lax mortgages, radically increased spending, saved nothing and sat on their thumbs until the financial storm was ripping off the roof, now have little choice. This is crisis, and we must burn the artwork to keep warm.

Garth just about finished reading your book , does the above statement and todays post ..indicate to you that we are in the probable senario you mentioned in you book or tipping towards the worst case senario.. thanks in advance .. just trying to prepare has much has I can

#82 Bill-Muskoka (N.A.M.) on 01.23.09 at 11:59 am

Correction my #77

This is what people have been following as their economic security. It is just a bunch of vulnerable hot air that has no real value and is subject to destruction by the most inanimate object.

#83 an f-ing joke on 01.23.09 at 12:14 pm

#47 NVC

Do you really think there will be a financial system or financial anything if the world went from 5.5 billion to 500 million? That was just stupid.

#84 Jelly on 01.23.09 at 12:23 pm

Midas,

Sometimes I wish I were as dumb as a North Carolina beauty pageant contestant and have candy floss going around my brain without a clue of what actually goes on around the world. Ignorance is bliss in a way.
It is so crazy what the young of today think about, totally useless drivel that focuses on weight loss, plastic surgery, and overpriced fashion. It is pretty obvious our governments (US and Canada) want the citizens to be ignorant and shackled in debt.
These kinds of people do not cause trouble when they are pissed off by their politicians, they are distracted and vacant.
Sign of the times, certainly, you better believe the elites in power have always controlled things behind the curtain to their advantage and always will.
It’s a sad state of affairs…
It makes you wonder what news is actually true, as everything is spun to hide the truth.

#85 Jelly on 01.23.09 at 12:24 pm

peter,

ha ha, you are so completely NAIVE!

#86 No Fool.... on 01.23.09 at 12:27 pm

The BOC is a big MasterCraft Tool for stating we’ll be out of this mess by 2010. They seem to think that Canada is this little island of potential unaffected by the plight of our trading partners. Frankly, we’ll go where the EU and, more importantly, the US goes….it doesn’t matter what Canada’s efforts are.

Fiscal stimulus is great and all, but we still need people to buy our stuff. We’re supposed to be a net exporter. If we become a net importer, especially with the weaker dollar, which is inevitable, well then we’re all screwed.

Do we have to really tell the BOC that Canada’s not an island? Seriously?

#87 RJAG2034 on 01.23.09 at 12:35 pm

http://www.demographia.com/dhi.pdf
Interesting article about housing affordability markets in the US, Canada, UK, Australia etc.

Kelowna (13th), Vancouver (15th) and Victoria (22nd) are ranked as some of the most severely unafordable markets out there. The blame is laid partially at the feet of government due to regulation and infrastructure charges.

#88 TheWhiteKnight on 01.23.09 at 12:47 pm

You should be careful in trying to time the market. I’ve not met anyone who can time anything perfectly. Also, beware those who are constantly touting deflation.

Sure, we are in a deflationary period at the moment but my friends, there is a tsunami of inflation on the horizon never before witnessed in history. Trillions upon trillions of dollars are being pumped into the system and it will not be without consequence.

You need to prepare yourself for >that< event.

Far away. — Garth

#89 Ginger on 01.23.09 at 1:01 pm

Garth – what bank is quietly failing?

#90 dd on 01.23.09 at 1:09 pm

#73 young & foolish … the value of your real estate will go up?

“In a number of years, yeah. From the lows yet to be reached. — Garth”

Garth … just a crystal ball question: So do you think that real estate at some point might be a good investment in the future? Given that interest rate will more than likely be a lot higher in 10 years and that we might be facing an energy crunch?

#91 whiterock on 01.23.09 at 1:25 pm

We are constantly assured by our politicians that our banks are solid and did not engage in risky practices.
Does the chart below and the accompanying comment represent our future too?

http://1.bp.blogspot.com/_nSTO-vZpSgc/SXjgPkD0FnI/AAAAAAAAFeM/f1nISsEdfmE/s1600-h/bank+market+caps.png

“Bear in mind that fallout from Alt-A, prime home equity, credit cards, small business, and commercial real estate are still on the way.”

#92 Sober second thought on 01.23.09 at 1:29 pm

I can’t believe Canadians will let Mr. Harper blow the budget like this. Garth is right, this overdone deficit will result in higher taxes for the rest of my life.

I think that the feds should just take a pill.

#93 Matthew on 01.23.09 at 2:10 pm

#13 – NVC

Gee, I wonder where the idea of snobby west coaster comes from? The Atlantic provinces have everything you love about the west coast: water, nature, variety, culture, great seafood!

The things Atlantic Canada has that Vancouver doesn’t:
1. A lack of self absorbed individuals too high on their own “fabulousness”
2. Winter (take it or leave it…)
3. Awesome fall foliage
4. Property that a normal family can afford without having to devote 75% of their income to.

#94 Marc on 01.23.09 at 2:15 pm

The new Conservative ads are amusing to say the least. Important financial bills are before the house, the ad claims, write your M.P. and tell them to pass it. If they were so important, should they have not taken care of these, before locking the House? If it is regarding the budget coming out on Tues. are they not putting the cart before the donkey? Why should we do the pushing, when the donkies can do the pulling I would have to ask?

#95 David on 01.23.09 at 2:39 pm

Bond holders will not be safe when interest rates start to rise and prices are adjusted and capital losses are priced into the value. I did fine in the late 80’s when I bought into bond funds and interest rates started to slowly decline. When interest rates start to climb in a few years, people who held onto their bonds will have pretty long faces. Security of payment does not mean a decent return on capital. People who hold long term Government of Canada bonds today will have risk free investments, but will be losing money a few years from now.

Rates will not rise for years. Plenty of time to invest in bonds. — Garth

#96 David Halfkenny on 01.23.09 at 3:05 pm

One bright spot for the economy is businesses have stated they will not lay off workers. They will tighten their belts.

The whole process of Government and Unions is a joke !!

Here we have a faltering economy and we have strikes going on around the country demanding more money. Then as soon as the economy gets in trouble they come hat in hand looking for a handout to save the company.

#97 McSteve on 01.23.09 at 3:16 pm

My father is a retired car dealer. As a consequence, I had many jobs in car dealerships (both his and other lots) in my younger years, usually maintaining the lot, making sure cars were clean, shuffling inventory around so it looked like cars were moving, removing snow, etc.

I was at the local Chrysler dealer picking up some parts to do a minor repair on my aging (but fully functional) Jeep Cherokee. I went for a walk through the showroom while the parts guy was searching the warehouse for my part. It was interesting to note that at this high volume dealer in an affluent Toronto suburb, there wasn’t a single sales person in the showroom that I could see. More alarmingly, of the 150 -200 units on the lot, only a dozen or so had last weekend’s snow removed from them and the others were sitting under 20cm snowdrifts – a no-no in the car industry and something I’ve never seen before (first job is ALWAYS to clean off the merchandise and make it appealing).

You have to wonder when the dealer is going to throw his keys at the bank…

SS

#98 David Bakody on 01.23.09 at 3:23 pm

With all the smart solutions on how to solve the problem ….. Here is the winner ….. As of midnight on the 31st January 2009 forgive all debt world wide, then everyone, every country startes over based on plain simple interest for all, banks world wide. Hello we have all the homes and buildings we need. Secure credit to 75% only Hell if the world goes broke it will happen anyway, those smart people who have savings in any form will be converted to plain simple savings …… who needs or wants Wall Street (s) as they live on greed and will do it all over again given a chance. Let big business deal with one bank only which will hold them responsible not we the taxpayers…… yea it’s silly but what the hell selling any province without the true owners approval (Great Spirit) who really owns everything makes about as much sense. Have a good one ladies and gentlemen ….. seriously pay down debt and protect your pennies in a manner that allows you to sleep tight …. ensuring the bed bugs will not bite.

#99 Jonathan on 01.23.09 at 3:38 pm

On December 15, 2008 60 minutes published this video:

http://www.cbsnews.com/stories/2008/12/12/60minutes/main4666112.shtml

Does anyone have any other sources that can back up 60 minutes story, or can anyone dispute it? Can America afford another 1 trillion in defaults for these other exotic mortgages that are about to reset between mid-2009-2010?

This on top of all the other:

– Corporate Bailouts (500 billion – 1 trillion)
– Stimulus plans (800 billion)
– Sructural deficits (1.3 trillion)

Contrasted against a shrinking economy:

– Increased savings rates (costing up to 1.6 trillion per year in lost consumption)
– Lost income from 5 million jobs lost by end of year (cost of 250 billion plus per year)
– Negative investment income (30 trillion worldwide, so for America say 10-15 trillion in 2008)
– Baby boomers past peak spending (500 billion?)
– Negative household worth from declining home values (1.5 trillion per year)

Please feel free to add to this list or adjust figures…. let’s get an estimate of what the US economy is in for here.

#100 Shifty on 01.23.09 at 3:47 pm

BC spends 6 billion on 2010 winter games.

http://www.timescolonist.com/Sports/Olympics+bill+tops+billion/1207886/story.html

#101 Xanadu on 01.23.09 at 3:50 pm

The downturn going to be short lived according to Banck of Canada – how likely ?

[email protected]

Buzz off. This is not a commercial site (except for me, of course). — Garth

#102 Meo on 01.23.09 at 4:25 pm

I just love winners such as

DELETED. You are now history. — Garth

#103 Charles Oxley on 01.23.09 at 4:29 pm

Want to add more fuel to the fire? From today’s http://www.dailyreckoning.com/ . . .

“Property development in Europe is a disaster…

“$592 Trillion Phantom Economy Blows as Latest Demon Derivative Unwinds

“The worst demon derivative to date is about to whip down Wall Street…leveling what little is left! Over 700 banks (with trillions of dollars in assets) will come crashing to the ground. Hundreds of hedge funds will collapse. Corporate bankruptcies will soar. And another $20 trillion will be wiped off global stock markets.

“But this one bombed-out investment will soar two to ten-fold as the world comes undone. . . . the investment group who eerily predicted the current crisis “to a T . . .”

“The banks are broke. And the people who work in the financial sector are taking big pay cuts. First, their bonuses – which depend on the profitability of the industry – are cut automatically. Then, their salaries will come down too.

“It was not a coincidence that New York City went broke in the ’70s, says the report. Speculators were few, credit was low, and the financial industry was in a slump. Coming soon: lower property prices in Manhattan and London.”

Therein lies the rub. As NYC, Detroit and many others are going broke (again), they bounce back again. For each ‘down’, there has to be an ‘up’ to balance itself out.

No doubt it is a helluva lot different this time, though. As said before, this is a world-wide take-down, and there is nothing anyone can do about it.

So the elite, ultra super-wealthy, wealthy, middle-class, and poor will eveentually be in the same boat — HMS Good Ship Nothing, as that is what will be left when this all plays out.

WW3 is already being readied to run it’s cycle, just as WW2 ended GD1. Now GD2 will take place shortly.

#104 Dave on 01.23.09 at 4:53 pm

Jim Roger’s is a clown in a pink bow tie. Yeah he’s a very wealthy clown but his commodity funds have taken some big hits lately. The financial talking heads and money honeys have been roasting him lately fun to watch him do his back pedal and juggling act for his investment choices.

————————————————————

maybe you have a small mind or are a little impatient. You’re tying to make a quick buck while Jim Rogers tells it like it is and makes actual sense. Everything’s been dragged through the dirt. What Jim Rogers says makes total sense. Maybe thats why historically he’s always done so well. Look at things in a broader view…take a step back for a bit of clarity

#105 David on 01.23.09 at 5:09 pm

Bonds are a tough play. I agree with Garth on the next 3 years. So that is lots of timing in the investment cycle. In the market timing is everything.
People in Alberta who bought US dollars in Nov/07 when Loonie Was $1.10 over US Greenback have made over 30% on their money this year. The best correction for minimal savings will come when the bank deposit yields approximate dividend yields. Banks can not lend currently because the savings rate is so low.

#106 mod monkey on 01.23.09 at 5:10 pm

#7 Darryl

Scary times we are in. At this point it’s almost reassuring that housing prices are about to crash… it may ruin the unfortunate minority that bought in the last few years, but it’s going to greatly improve the cost of living for the majority.

………………………………………………………..
Darryl,
have you noticed how much development has gone on in the last 10 or so years? By the looks of suburban sprawl, and the tremendous changes in our landscape I would say that it was a bit more than just the ‘minority’ of the population who bought homes|condos.

As far as greatly improving the cost of living for the majority, houses may come down in price but as Garth states, once inflation hits, those interests rates will double your carrying cost, so either way it balances itself out.

What is important is that people put substantial down payments when buying and keep in mind the possibility of interest rates rising, and leave enough of a buffer {savings} to get them throught tough times.

I bought a house in the city of Toronto with my husband in May 2007 {with a nice down payment}, which some now say was the peak. Luckily, our jobs are quite secure in today’s economy. We have no debt {except for a small school loan which we hope to have paid off in the next 2 years}. No credit card debt, no car payments, and we rent out part of our house which covers our entire mortgage. We are trying to bank as much money as we can at this point so that we have a good buffer and can make some sound investments….perhaps some more real estate when the market tanks!?!?!

So, as nice as it would have been to buy a house for less, we prepared ourself financially prior to jumping into the market. We are happy that we bought and hope to have our mortgage paid off in the next 15 years {no 40 year mortgage here!} Despite bad times ahead I feel pretty secure and happy to have a home to call my own and do as I please with it. One must be prepare before diving in deep in any venture.

#107 john on 01.23.09 at 5:33 pm

Snapshot: Alberta’s economy
Last updated: January 12, 2009

Alberta lost nearly 16,000 full time jobs in December, 2008 — the largest decline in the number of full time jobs nationally,
Im sorry for the workers but i do enjoy watching the greedy oil companies (who i might add dealt the final blow in the destruction of our economy with their blind greed in fuel costs). Time to eat some humble pie !

#108 Alex on 01.23.09 at 5:43 pm

To #19 Deaninkelowna and #1 Midas

You guys are absolutely right – The Fed is a private bank owned by the wealthiest people on earth.
And guess what they are invested in? GOLD!

#109 Sail1 on 01.23.09 at 6:14 pm

#56 RJAG2034

Getting a bit concerned about the opinions that are really “out there” I mean come on folks, Masonic plots, upper class plots etc. Jeez I better go put on my tinfoil hat. Give me a break.

Posts like these are on the borderline of making a legitimate forum that some decision makers may respect to a laughing stock. Perhaps you need a moderator.

Posts like these are on the borderline of making a legitimate forum that some decision makers may respect to a laughing stock. Perhaps you need a
moderator.

Very well stated, in total agreement.

#110 john on 01.23.09 at 6:29 pm

In my opinion anyone who sees big bucks in investments of any kind at this time would be wise to control their enthusiasm.I think we are in for years of bad times and we haven’t even seen anything yet. The banks with their entrapments and the oil companies with their greed have been allowed to run roughshod over the population squeezing every dime they could while our governments have turned a blind eye. Now obviously they have gone to far–they took too much! Curiously enough our governments have sunk trillions into banks worldwide to help them out–“a reasonable comparison would be for the courts to give bank robbers keys to the vault :-) ). I read the other day that “harper” stated the first priority would be to help out the oil companies–if it wasn’t so pathetic it would actually be funny. Perhaps we should be asking them for contributions since they stole the pie and brought hardships to every household and business?. Personally i think the country with the least debt will be the first to recover after the bottom—if that is true it gives a pretty good indication (with our governments spending) of how long that will be………………. im pretty much convinced i will be “ashes to ashes and dust to dust” before this ride is over :-)

#111 JET on 01.23.09 at 6:31 pm

FYI – I just updated a couple of charts.

The days of sellers expecting unconditional offers are over, but if you look at these charts, it would appear that some buyers in the GTA were still willing to put in offers without conditions! Also, look at the break down of powers of sale by major bank in the GTA (second post).

http://thenumberstheydontpublish.blogspot.com

Have a great weekend!

#112 dekethegeek on 01.23.09 at 6:37 pm

i held my nose and voted “conservative for the last two elections because( and ONLY because !) those wankers either balanced the budget of accumulated a surplus.
I will NOT vote for ANY government that is proposing to wipeout all the gains Canadians have made on reducing the Federal Debt over the past 10 years.
Count me out of the election that is sure to come later this year>
and as R.E.E. aka N.V.C. says to an annoying degree
YOU HEARD IT HERE FIRST.

#113 Da Hk Kid on 01.23.09 at 6:41 pm

Hello All, it will come down to how well your government will handle this downturn. Take Singapore, where good Ol’ Jim Rogers lives right now. A population of 4M and surpluses over $230 B to draw on:

The Package has five components which covers all levels of persons living in SING. Note a good friend who runs a $150M company gets a corporate tax cut of $1.5+ M back right away. He then receives training $$ for his staff, their families receive further $$, plus I understand the banks were told to immediately free up cash, to be documented and further reviewed.

1)Jobs for Singaporeans
The Government will spend $5.1 billion to help Singaporeans stay employed so they can continue to support their families by introducing a Jobs Credit Scheme, Enhancing SPUR, (Skills Programme for Upgrading and Resilience) providing a WIS Special Payment and expanding recruitment across the public sector.

2)Stimulating Bank Lending
The Government will extend $5.8 billion of government capital to stimulate bank lending through enhancing existing schemes and a new Special Risk-Sharing Initiative (SRI). The SRI comprises a new Bridging Loan Programme (BLP) and new risk-sharing schemes for trade financing.

3)Enhancing Business Cash-flow and Competitiveness
The Government will implement various tax concessions and measures costing $2.6 billion to ease business cash-flow and sharpen Singapore’s competitiveness.

4)Supporting Families
The Government will spend $2.6 billion on direct assistance to Singaporean households, increased targeted help for vulnerable groups and additional support for Charitable Giving and the Community. These measures will be in addition to the help that the households will derive from the Jobs initiatives (mentioned above).

5)Building A Home for the Future
The Government will spend $4.4 billion to continue to develop Singapore as a global city and the best home for Singaporeans by bringing forward $1.3 billion worth of infrastructure projects, $1 billion worth of sustainable development programmes, public housing estate rejuvenation and the upgrading education and health infrastructure.

The unprecedented severity of the global financial and economic crisis justifies a draw from Singapore’s past reserves. The President has given in-principle approval for the Government to draw $4.9 billion from past reserves to fund the Jobs Credit Scheme and Special Risk-Sharing Initiative.

The revised Overall Budget Balance for FY2009 is a deficit of $8.7 billion (3.5% of GDP). The Basic Balance, which excludes the transfers to endowment funds as well as the contributions from Net Investment Returns, is a deficit of $14.9 billion (6.0% of GDP) imparting a large fiscal boost to the economy this year.

#114 prairiegopher on 01.23.09 at 7:01 pm

I am currently in Arizona. Oh my God! The best business in town is the sign maker for real estate “For Sale signs. If this is what we are in for, hang on folks. Buy all the paint, stencils and plywood you can find and start making signs!!!!

#115 brazer on 01.23.09 at 7:03 pm

got an interesting letter from TD in the mail today telling me that:

1) my line of credit interest rate will be increased to prime +3.25% in march.

2) as of april, if i don’t start using my line of credit, they are going to start charging me an “inactivity fee” of $35.

this is what a person “gets” for having a good savings account, an rrsp account, a non-registered account, a great credit score, and NO debt whatsoever.

oh, the irony.

here’s a memorable quote to chew on from their letter:

“Going forward, you can avoid the fee by either closing your Line of Credit or using it.”

since I have no intention of putting myself into debt; I will be cancelling this account….keep in mind that I have been a customer of theirs for 20 years with sterling credit.

#116 Cal on 01.23.09 at 7:14 pm

mod monkey said “I bought a house in the city of Toronto with my husband in May 2007 {with a nice down payment}, which some now say was the peak. Luckily, our jobs are quite secure in today’s economy. We have no debt {except for a small school loan which we hope to have paid off in the next 2 years}. No credit card debt, no car payments, and we rent out part of our house which covers our entire mortgage.”

I think you are a liar. How could you put a” {with a nice down payment}, ” on a house yet you have student loans? Also there is no way you can rent a whole house for cash flow positive as prices are inflated yet you do so renting just a part of your home?I think you are fooling yourself. The bubble has popped and the crash is here and now. Hope things work out but don’t kid yourself of reality.

#117 smwhite on 01.23.09 at 7:15 pm

Don’t worry kids, you can always eat that big screen tv!

“Food prices rose 7.3 per cent in December from a year, compared with a 7.4 per cent annual increase in November. ”

http://www.calgaryherald.com/Business/Inflation+rate+falls+cent/1210351/story.html

“Inflation is at a two-year low but that’s not the way it feels for those of us shopping for groceries. As talk of generalized deflation is surfacing, prematurely in our view, food prices continue to trend higher, with the depreciating loonie boosting prices for fresh fruits, vegetables and other imports,” wrote Krishen Rangasamy from CIBC World Markets.

http://www.economicnews.ca/cepnews/wire/article/216431

Somebody at CIBC World Markets finally getting the picture. Gold finally gave paper a little bitch slap today.

http://www.goldprice.org/

More to come…

PS Your getting more media play for ruining the party Garth.

http://www.economicnews.ca/cepnews/wire/article/1/216854

#118 smwhite on 01.23.09 at 7:24 pm

#107 Alex

Now is that “conspiracy” type thinking or just common sense?

I guess you just can’t come out and say, “We’re going to devalue the money you put in 40 hours every week for”. Easy to call it stimulus…

Get ready to bend over Canada and receive your stimuli!

We even got a sneak peak today, I have to chuckle because what a little SNAFU we got going on, Tuesday will be quiet the circus. Karl Rove’s campaign ideology is working some magic in the great white north.

Have a great weekend y’all.

#119 Dawn in Calgary on 01.23.09 at 7:29 pm

http://www.cbc.ca/canada/calgary/story/2009/01/23/cgy-condo-real-estate.html?ref=rss

Executive condo owners in Calgary scrambling for renters

Many furnished condos in Calgary are sitting empty, partly because there are fewer oil and gas professionals in the city.

Real estate agent Sam Cheng said the jobs and high salaries are drying up.

“There were lots of contractors coming from other provinces,” he said. “But now, the contracts are being terminated. They have to move out. They have no income at all.”

#120 Waco on 01.23.09 at 7:45 pm

why more deficit should mean more taxes …wait a minute why the public service in this country is not doing its part by downsizing and instigating more efficiency in to the system..That should save few billions that are direly needed by the economy. first, stop financing agencies and offices that basically produce nothing tangible and essential. There are plenty a government can scrap…

#121 North Vancouver Citizen on 01.23.09 at 8:19 pm

“A total world population of 250-300 million people, a 95% decline from present levels, would be ideal.”
Ted Turner, in an interview with Audubon magazine.

…Shawn, DeketheGeek, Meo, George, Anon, Smwhite…

What?…you think I make up this stuff?

“”After the abysmal failure of AIDS to cull the human population, (a Henry Kissinger idea), the new final solution is to fan the flames of the middle east conflict into World War III. The agenda is for the culling of the human population to 500 million people, an amount of people the power elite believe the planet can support. 5.5 billion people must be eliminated.””

http://files.filefront.com/ENDGAME+320×180+250kmov/;8889221;/fileinfo.html

…It is about a New World Order…The Bilderberg Group…

http://en.wikipedia.org/wiki/Bilderberg_Group

Now you know why Vancouver will become North America’s next Financial/Trade and Leisure Capital.

…..more later…..

#122 dd on 01.23.09 at 8:37 pm

#119 North Vancouver Citizen

“Now you know why Vancouver will become North America’s next Financial/Trade and Leisure Capital.”

“”After the abysmal failure of AIDS to cull the human population, (a Henry Kissinger idea), the new final solution”

What do these two subjects have in common?

Don’t tell me this is “real estate expect”

#123 canuck on 01.23.09 at 8:41 pm

I fear that our southern neighbours that infected with the world with its greedy speculators will bring down world economies that bought their supposed securities.

As evidence, read New York University Professor Nouriel Roubini, who predicted last year’s economic crisis that the banking system is insolvent.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aS0yBnMR3USk&refer=home

From the link, “Stocks in Europe, Canada and Brazil dropped yesterday on speculation government efforts to shore up the financial industry will fail to stem the deepening global recession.”

Canadians along with their governments are screwed whatever they do and should not be throwing good money in a futile attempt to recover.

Populations once the crash occurs will desperately need funding. If the funds are spent now, the cupboard will be bare when it’s most needed.

The years ahead will be hard times until recovery begins which most likely would start until 2010.

#124 ThumbsUp on 01.23.09 at 8:43 pm

#113 brazer “since I have no intention of putting myself into debt; I will be cancelling this account….keep in mind that I have been a customer of theirs for 20 years with sterling credit.”

Yes, as Garth put, do the opposit.

mine (Non-secured) was cancelled in Nov. 08 by TD after 5 years of zero balance, never used it, guess they were in panic then that I could go borrow and won’t repay. hehe…

#125 Herb on 01.23.09 at 9:35 pm

Aaron Wherry has posted this link to-day as a timely reminder of the mendacity of this government:

http://www.thestar.com/FederalElection/article/516804

Two money quotes:

1. “… my government has weatherproofed the Canadian economy against the gathering international economic storm.”

2. “We’ll never go back into deficit.”

Note the date: October 14, 2009. The 15th was another day.

#126 Gord In Vancouver on 01.23.09 at 9:36 pm

#119 North Vancouver Citizen

“A total world population of 250-300 million people, a 95% decline from present levels, would be ideal.”
Ted Turner, in an interview with Audubon magazine.

…Shawn, DeketheGeek, Meo, George, Anon, Smwhite…

What?…you think I make up this stuff?

Vancouver’s grossly overpopulated when you take its job market, medical system lineups, transit system, and population density into consideration. If you weren’t a real estate bull, I’m sure you’d share my sentiment.

#127 mod monkey on 01.23.09 at 9:50 pm

#114 Cal-

Cal, I sense bitterness in your undertone. Why I would have to post a lie here is beyond me, but I suppose that you are the type of person who is naïve and in denial that some people could actually be wise with their money, not matter the state of the economy. We did not rush to buy a house emotionally, but found something suitable after a 3 year search. We also feel that with the extra time we were able to find a house that we can live in for the next 20 or more years, and not just something that you grow out of!

What I also failed to mention is that my current tenants pay my entire mortgage payment, and the remainder of the rent goes to my $200 monthly school load; which I choose to keep at this point as I get to deduct my interest paid at the end of the year! And my tenants also pay 50% of the utilities on top of the rent. We are in a good position right now, and even if our tenants were to leave we can comfortably manage our mortgage payments {and continue to save, albeit less}.

I am well aware of the current state of the economy, and unlike some people loosing they job, or living far beyond their means, we don’t have any intention of selling our house. We are quite happy living and working in the city. I don’t live my life trying to be the envy of others; I am just trying to live a simple life in a fast city.

Oh, let me know if you’d like my tenants contact information to confirm the above stated facts!

Cheers!

#128 GrandePrairiegirl on 01.23.09 at 10:11 pm

Britain could be the next Iceland,

http://www.telegraph.co.uk/comment/columnists/iainmartin/4295219/Gordon-Brown-brings-Britain-to-the-edge-of-bankruptcy.html

Finished the book last night, some helpful ideas in there. Didn’t sleep so well though – dang.

#129 smwhite on 01.23.09 at 10:56 pm

#119 North Vancouver Citizen

Guy, lots of folk on here have talked about “Esoteric Agenda” or “Zeitgeist” but the Georgia Guidestones were probably raised by crazy Ted Turner himself.

http://en.wikipedia.org/wiki/Georgia_Guidestones

http://www.zeitgeistmovie.com/

But are you missing the point of this type of medium. I’ve bought and paid for Daniel Estulin’s book and take portions with a grain of salt.

The objective is no different then Mr. Turner’s, and yes I’ll speak for Garth on this one, its to get the herd engaged. If you watch Esoteric agenda and think the world is over then you totally missed the point.

Your projections have just as much value as any and I like many have had fun with your Van Fin Cap crap, but try to keep the geographical sucker punches to a minimal.

#120 dd

How’d you solve the riddle? LMAO

#130 islander on 01.23.09 at 11:58 pm

Brazer, a buddy of mine at Wood Gundy predicts the banks are going to start ratcheting down credit card limits, the same way they just unilaterally raised them every so often in the easy-credit days.

#131 John on 01.24.09 at 1:45 am

Garth, right on with your comments. Every article I have read in US newspapers suggest that the US and indeed the entire world is heading for the Great Depression. Hell, there are some economist in US and Britain saying the world is heading for the Greatest Depression. I for one do believe we are heading for the next Great Depression.

Americans and Canadians have lived beyond their means and now is payback for our dirty habits. The day of reckoning has arrived and yet nobody wants to hear the big “D” word because they fear loosing all of their wealth built up in their homes.

In the coming months, I expect to see awful stats from the US and around the world which will confirm the arrival of the next Great Depression.

Like one person had commented on this site, the only thing that ended the 1929 Depression was a world war. God forbid this would ever happen, but I always say history does repeat itself.

BTW, in the Credit Default Swap market, investors are pricing in a debt default for the US and Britain along with other countries. If this happens, may god help us all. In witch case, we will see the mother of all Depression in our lifetime.

#132 ted on 01.24.09 at 2:33 am

mod monkey can you give us some numbers and more specifics like what neighbourhood you live in. Unless you live in the maritimes I doubt there are many neighborhoods in the rest of the country where prices waranted cash positive investments in the last two years.

#133 TomOfMilton on 01.24.09 at 7:21 am

#113 Brazer
“got an interesting letter from TD in the mail today telling me that…”

OMG. That is the type of behaviour that created such anger in me towards banks. But TD bank has a special monopoly on that kind of policy. They, of all banks I once resided in, have special talent for finding ways of scooping your money in disagreeable ways. {sigh} I use to enjoy good customer service and fair banking practices at Canada Trust…but you all know who they merged with.

Just one concern though…I realize that we are suppose to avoid debt but I’m wondering if it is wise to not have some “line of credit” available to you…something to give you access to what equity you may have in your house…in case of job loss and such?

I have another question…can you beat their “inactivity” clause by doing a couple dollars in transactions on your line of credit. Damn that would make it actual fun for me…just so all they are getting is interest on a few dollars and they can’t do the charge because there is activity. Chances are though, With TD bank, they will get there $34 by hook or by crook. I’ve just found with them…Crook is their preferred method.

Did I mention I’ve got a real hate on for banks?

#134 Torquemada on 01.24.09 at 12:34 pm

“I have another question…can you beat their “inactivity” clause by doing a couple dollars in transactions on your line of credit.”

Here’s what I do. I use my line of credit like a chequing account. I overpay it and then attach the LOC to my debit card. Voila, no banking fees (other than to use other bank ATMs). And if I ever choose to go in debt on the LOC I pay it off with a transfer from my chequing account. The few dollars you may pay in interest is much less than standard bank account fees (about $25 a month).

#135 brazer on 01.24.09 at 5:36 pm

#129 TomOfMilton

I have access to other credit; so it’s not a crucial line; but i did rethink; and am going to keep it active by borrowing ONE dollar :)

#130 Torquemada

They have a clause which stipulates that both “zero and credit balances” are considered inactive.

By the way, this story has hit the media:

http://www.canada.com/calgaryherald/news/story.html?id=89aca503-9012-44d6-b823-221469b5ff2f

#136 mod monkey on 01.25.09 at 11:10 am

Ted,

I live in the city of Toronto [district C02]. Realtors {when trying to sell a property} may call this neighbourhood Dovercourt Park or West Annex. My home is situated close to the Bloor subway station and steps from bust transit. Prices in Toronto and the GTA have increased over the last number of years, but not as substantially as Calgary and Vancouver. Even if prices continue to drop in Toronto we will stick it out as we have no intentions on selling our house. It may however make us consider dropping more of our savings into the principal of our mortgage amount, in the case that interest rates will increase in the future.

The house is about 90 years old and was last updated sometime in the 80’s, so it is by no standard renovated. However, the house is clean and well maintained and many people look for that.

We plan on eventually taking over the entire space, and renting out only our basement suite. We did not purchase this house as an investment property as so many people who bought houses did. We did keep in mind that a buying a house with a proper basement would be beneficial to keeping our mortgage payments quite low. At this time, we are simply renting out part of the house as we do not need all the space until we begin to expand our family.

Cheers!

#137 Accremonium on 01.25.09 at 1:04 pm

* Second, deficits today mean taxes tomorrow. After the temporary tax cuts in next Tuesday’s budget, you can kiss goodbye the idea of paying less, for a generation. Capital gains taxes will never come down, nor property taxes or provincial surtaxes. So if you’re not planning to aggressively mine every remaining tax shelter, make your mortgage tax-deductible or shield wealth, you lose.

So, Harper’s comment that the proposed tax cuts must be permanent, is his latest prevarication! He will run Canada into total utter bankruptcy, and financial collapse. So much for transparency and accountability by the jerk that brought you “grease spot political adverts” or is that perverts?

The best thing that Obama can do to bring some reality to Ottawahaha is rendition Omar Kadhr on the same flight and tell Pinocchio Nose to his face, “he is yours, you deal with him!”

#138 Republic of Western Canada on 01.25.09 at 1:56 pm

#119 North Vancouver Citizen – AMEN !

The root cause of the present financial meltdown was the greedy ‘entitlement’ mentality of too many anti-social, self-centered, married breeders.

(Note this only has to do with social irresponsibility, not any sort of sexual orientation).

Somehow common societies became infected with the attitude that massive debt and over-consumption of resources in suburbia was somehow justified, in a sick contest to get knocked up and squeeze out more pups quicker than their neighbors. That is the same undisciplined phenomenon of running out on the spur of the moment to buy shiploads of made-in-China junk, without really having a survival-based need for it. Then, when they’re unable to afford it and they start choking on overpopulation, they run whining to the ‘gubmit’ for tax breaks, subsidies for bigger houses, more roads, services etc – all paid for by the next guy, of course.

Both David Suzuki and now Ted Turner are right on the money, when they point out that the core of the world’s problems are due to massive overpopulation.

#139 Skeptic on 01.26.09 at 9:22 am

Garth,
I know you like to bash the conservatives, but as far as I remember, it was the liberal government that introduced the 40-year amortization and 0% downpayment. All that at a time when it was completely unnecessary and they also kept the interest rates artificially low when the economy was BOOMING!

The provision to allow those was contained in the 2006 Jim Flaherty budget. I was on the Finance Committee and demanded hearings into the possible consequences after raising concerns. This was 100% a Conservative initiative. Grow a set. — Garth

#140 Skeptic on 01.26.09 at 11:18 am

My mistake, I somehow thought that those things took place in 2005 while they actually happened in 2006. Garth, no need for the derogatory “grow a set”, I don’t think we are in junior high anymore ;)
On another note – when do you guys think buyers will actually realize that it’s not “coming back” any time soon and won’t expect asking price anymore (or asking – 1%)? Because the politicians know it, the realtors know it (although some of them are probably honestly deluding themselves that it’s OK), most of the buyers know it – how long can the sellers resist the inevitable? 3 months, 6 months, 1 year? I’m talking about GTA.