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jim1

Well, so much for that. Obama he ain’t.

As I tarred the 401 Tuesday night, getting out of Toronto as fast as possible, back to the safety of my bunker and beckoning squirrel stew, it was clear what comes next. The federal budget will keep the Conservatives in power, but it sure won’t be saving any jobs.

Expert commentary is all over the place, but this is my take: Our country blew a big chance to do something dramatic and restorative. Like drop income taxes for six months. Or build a smart electrical grid – renewable energy-ready. Or get the hell out of Afghanistan early. Or give a billion to that spunky little electric car company. Or declare a moratorium on home foreclosures for unemployed families. Or make the provinces set aside land transfer fees or property tax for a while, in return for fed funds.

The consequences of the budget seem clear. There will be no recovery in 2009, in fact, things will just get worse. Housing values will fall after listings jump higher in the next 90 days. Lots, lots, lots more people will be out of work – and five more weeks of pogey will hardly matter. Middle-class families will wisely pull in their horns, reduce spending and brace for a storm. That, as you might imagine, will further tank car sales and empty the malls. After all, when single-income families making $80,000 get a tax cut of just $207 a year, where’s the stimulus?

At this critical moment, a lot comes down to confidence. Confident people buy new minivans and bungalows, taking on new car loans and mortgages. It doesn’t matter how cheap the Bank of Canada makes money or how much credit the banks are willing to lend, if families fret over the future.

So, as the godless towers disappeared in my rear view mirror, I was weighing a question I’ve been asked in almost every media interview I do for my new book. What, I am asked, are the odds of this getting worse? Of a depression, however brief?

My answer to date has been 10% to 15%, but now I’d say we just jumped another five points.  This does not mean a deflationary spiral is going to happen, just that one’s no longer improbable or impossible. There will be no immediate consequences of this event in Ottawa. Economists will debate the thing for months – long after the details have been forgotten, except for those people who want save thirteen hundred bucks in taxes by building a $10,000 deck.

Since I`m not Jim Flaherty, I can tell you this with honesty: If you have been thinking about selling a house, do it now. Be aggressive and realistic. If you were planning on buying one, wait. If you have cash, hang on to it. If you’ve not made your RRSP contribution, do it. If you have debt, attack it. If your mortgage is due, go variable, go weekly. If you need something, buy it, but don’t finance it. If you have a job, love it. If you’re on strike, stuff it.

As I reached my cabin, locked the gun rack and smelled that aroma, I was also reminded of this: Be prepared. Take control.

141 comments ↓

#1 AJ on 01.27.09 at 11:17 pm

Garth-
Just saw you on George S. show. You were fantastic and also spot on. It is a pity that the message you are trying to get across is not getting more air time or media attention.
Windsor should make ZENN cars. We should be investing in new economies. Ottawa should pull its head out of the sand.

#2 The Tallyman on 01.27.09 at 11:28 pm

Flaherty= to hell in a hand basket (of ca$h)

Not one positive step toward the future.
Just more jerry rigging to get the dead horse to limp 5 more miles.

On the positive side if that pic of old Flaherty if displayed
in a prominent area near your door… should at least keep the Jehovahs away.

#3 Keith in Calgary on 01.27.09 at 11:29 pm

Looking forward to watching you tonight Garth……..

On “the budget” what the heck was that anyways ?

I am a former commercial banker and have takenpost graduate courses in multi-national business finance, so “Economics 101” is not above me, yet I do not profess to know everything either.

This clown, Flaherty, is a joke !!! What a wasted opportunity is 100% correct.

It is all about consumer confidence, for without it, economies crumble. And consumer confidence is rapidly disappearing from our landscape, yet this “budget” did nothing to improve it. Window dressing could not be a more apt term.

They could have had personal income tax cuts of between 5-10% across the board, given people a tax deduction of 10% of the purchase price of a new or used car (once per every 24 months) made mortgage interest deductible…etc…etc…etc…..man, the list goes on.

But by doing so, those sacred liberal cows such as the arts, the civil service, the homeless, the environment, and Quebec, et al (and others) would be without funding, and by darn, we can’t turnoff the taps to the trough of entitlement now, can we ?

They should have done an aggressive budget and dared the leftists in this country to topple them……gone out and said, “if you don’t like it, hold an election and let the people decide”. I’d bet you’d see a conservative majority landslide this time if they did that………because they’d be powerless to do the coalition thing due to public opinion.

#4 Investx on 01.27.09 at 11:31 pm

Just saw the show as well. Suprisingly, Garth was not as outspoken as he is on the blog… as I’m used to. The interview was too short! In any case, it was great watching.

#5 squidly77 on 01.27.09 at 11:39 pm

obamas another bag of wind
harper been brow beaten by the pathetic leyton tool
he runs like a scared cat

and then this
This is what happens after bankers and realtors on commission get hold of an economy.

“The world is not going back to normal after the magnitude of what they have done.”

never ever ever..

#6 Harper increases chance of deflationary spiral on 01.27.09 at 11:43 pm

The Canadian budget makes you think that we have a +5% chance of going into a deflationary spiral?!

Nothing we do up here will stop or cause deflation. Our future rests with what they do in the U.S.

#7 nonplused on 01.28.09 at 12:08 am

Garth,

I think you vex a bit too anxious about the budget. It’s the conservatives’ original budget redesigned to bring Idiotiff on board. The fact is, there isn’t anything the government can do about things at this point. The time to act was before the debt orgy got out of hand with regulation and higher interest rates. Now only debt deflation or strong inflation can make any difference, and those are going to be mostly public events but somewhat influenced by the BoC.

I like Peter Schiff’s summary of the US plans: “They are just throwing money down the drain! And not in terms of building new sewers”.

The right answer is probably for the government to stand pat and do nothing that isn’t long term in thinking. They might do some mass transit and long term energy stuff but they should be doing that anyway. $1B for renewables? Should have been the whole stimulus plan, with a focus on building the manufacturing capacity here in Canada. Even if it isn’t cost effective right now at least we would have the infrastructure (rail lines, wind generators, plants that make solar panels) when we need it down the line. Gold plating the highway system is yesterday’s thinking.

And the new Ford concept truck proves the auto industry is caput. What are they smoking? It ain’t a Backwoods. A truck 50% larger than an F350 that runs on ethanol? Give me a break. Nice oak flooring though. And the 2 drop down tv screens in the executive class rear seats are nifty! I guess they think only the uber rich will be buying cars in the future. No room in the oak floored box for a 5th wheel though, and the truck is too high anyway. I hope the vehicle is at least bullet proof.

The fact is people (and corporations) have to repair their own balance sheets and adjust their own lifestyles to reality. Having the government “bail out” companies and individuals through stimulus is only going to improve one balance sheet (personal) while wrecking the other (government). And ultimately, for the collective taxpayer, the two are one long term.

It’s like hurricane Katrina taught us all. If you want to be saved, save yourself before it happens. The government isn’t very good at saving you after. But the weather service isn’t bad. The people knew they should leave days in advance. In the case of this economic calamity, the warnings are there. But nobody is evacuating!

#8 The Tallyman on 01.28.09 at 12:11 am

They are using every $ in the country to fuel a warm fuzzy bogus campfire that will only last a half hour.
Just enough time to get your weenie roasted!

They are intentionally giving away every dollar so that when the real crap hits the fan the cupboard will be bare and desperate hungry citizens will be more than compliant in singing from the New World Order hymn book.

This depression is intentional.
Beware the wolf.

#9 kabloona on 01.28.09 at 12:28 am

As some wag has already noted, this budget wasn’t about saving Canadian jobs – it was about saving Harper’s. :-\

#10 $froma$ia on 01.28.09 at 12:35 am

I am hoping the leader of the Liberals rejects the budget tomorrow.

Bloc and NDP reject…just one more.

#11 $froma$ia on 01.28.09 at 12:36 am

Maybe Garth has a chance to run for his old seat again!!!

#12 double mike on 01.28.09 at 12:56 am

Oh folks, not ZENN, please. After EEStor broke their “deadline” third time (or was it forth time?) I finally admitted for myself that I got suckered again. Shame on me. I din’t invest of course, but I believed that bunch of crocks. Considering wealth of information all over the Internet I should’ve known better. Of course I wanted very much to believe in a silver bullet and free-for-all riches in form of almost free energy. But I shoud’ve known better nevertheless.

Sounds familiar, eh? ;)

#13 TUT on 01.28.09 at 12:56 am

Garth

Did you really expected the guys in Ottawa “to do something dramatic and restorative” or were you simply being ironic?

The individuals that obtain some amount of power may have demonstrated a successful “personal intelligence” but this does not preclude his ability to be a total failure in “public intelligence”, which is a totally different animal.

In a society based on sheer individualism our politicians are simply the ones with the highest score but not essentially different than ourselves.

May be we need some change in attitude to stop pretending that “we” are better than “them” (whatever these terms may refer to), and begin to think in the collective task that is just in front of us, all of us, to solve.

#14 Third Chimp on 01.28.09 at 12:59 am

The people “in charge”, from the top and for several layers down, made their way into that echelon in very different times from what we are entering. There is still no room at that table for people like Garth, who dare to say heretical things like – real estate is going down. If things get bad enough (I hope not), they won’t even be able to pretend to know what’s going on (as they are doing now). Garth is right – its time to rely on your own resources – and by this I mean your neighbours, your family and your community. Find your tribe and hug them, because that is what your ancestors did to get through much worse than a little ole money problem thingy. Oh, and start your leek seeds early – anytime time now if you live above the 49th.

#15 supersocco on 01.28.09 at 1:19 am

I love my job, I love my job, I love my job. :)

#16 Steve outside Canada on 01.28.09 at 2:00 am

Garth, you should take control. The Conservatives didn’t like you because you were upfront, delivering the truth. Beside, there is nothing in the criminal code stipulating it is against the law to run a blog. Take control of the governement and get Harper out of there. Start a party, here is a name for you: “The Canadian Coalition”.

During a televised debate, you would win by destroying Harper and his lies. And what about Ignatieff, a guy nobody knows. Do you really think people would vote for him??? Jack is Jack and people are scared about the way he thinks. Gilles Duceppe would be the greatest leader Canada needs, he has the image and the will, but Quebec is at his foreplan.

So, who do we have left…… Our National Garth!!!

Garth, you know politics and you owe Canadians the thruth. Lots and lots of people will support you, especially books and blog readers. As I stated earlier, The biggest slam dunk will be the televised party. You can easily destroy Stephen. It would be fun to watch.

Sorry for saying you should run for PM, but we NOW is the time we need an experienced leader that tells the thruth.

Steve

#17 Van MD on 01.28.09 at 2:21 am

I was about to take notes from your talk at the show, all of a sudden time’s up! This topic deserves a much longer air time!

#18 Happy Renter in North Van on 01.28.09 at 3:00 am

AAAHHH! Flaherty looks like a monster! How did you make him look so horrible?

#19 PKS on 01.28.09 at 3:02 am

Wow, what could a company like Tesla Motors, for example, do with a billion dollars in loan guarantees?

We could’ve used the need for an economic stimulus plan to start de-carbonizing our economy, get ahead of the curve, get in on the ground floor in the zero-emissions energy tech that’ll be in high demand in the next decade.

Oh, yeah, I forgot. Harper doesn’t _really_ believe in global warming anyway…

#20 OntarioHouse on 01.28.09 at 7:36 am

Great interview last night Garth! You did a good job.
I also enjoyed the part when they showed your bio.

#21 john on 01.28.09 at 8:05 am

Great Post Garth i couldn’t agree more! I watched the budget yesterday and listened to the commentaries after and all i could think was–these people really don’t get it! In my opinion the future never looked more dismal.Thanks Garth for saying it like it is and God help the people that swallow this latest “snow job”.

#22 TS on 01.28.09 at 8:17 am

What a terrible loss of opportunity! The Harper Conservatives have had almost 4 months and they come up with this piece of crap for a budget. Not only that, but by making the income tax cut permanent they have now created the conditions for a permanant structural deficit.

Nothing creative. Nothing meaningful to address the environment. Nothing of substanstance to help the most disadvantaged in the country. Nothing to encourage increased fuel efficiency and wean us off fossil fuels.

The Liberals will support it because they’re broke and scared of the Govenor General agreeing to another election.

#23 McSteve on 01.28.09 at 8:37 am

Great shot: Maybe the next Batman movie should star Flaherty as the Penguin.

Garth et al.: I’ve been interested in the concept of precious metals as a store of wealth for the last two years. A lot of attention has been paid to gold, but little anymore to silver. This, in part, is because silver has evolved a bit from a “precious” metal to having a dual mantle of an “industrial” metal.

Is silver still considered a reasonable store of wealth and a hedge against inflation? The basis for my question is this: In the same manner that it is far more practical in an emergency (prolonged or otherwise) to have 200 five dollar bills than a single thousand dollar bill, wouldn’t it be better to have 50-60 1oz silver coins than a single once of gold? Or is the answer that in an inflationary time, the gold/silver ratio of 1:75 would deteriorate in favour of gold with only a slight uptick in silver (or, perhaps, the other way around – silver is more common and could likely to be a basis for common currency that the far more rare gold).

Just curious if anyone has ideas about silver the other shiny metal.

#24 AM on 01.28.09 at 8:39 am

Garth wrote:
“Middle-class families will wisely pull in their horns, reduce spending and brace for a storm. That, as you might imagine, will further tank car sales and empty the malls. After all, when single-income families making $80,000 get a tax cut of just $207 a year, where’s the stimulus?”

This is so true. I am one of these middle class you speak of. My $207 is going straight to my LOC payment. That should about cover one months interest. I am certain that there are a lot of Canadians in the same position.

What is it with these CONservatives. It’s all friggin ear candy with Flaherty. As a result of this budget, the poor will remain poor, the middle class will get coffee at Tims for the next six months, and the wealthier, who are already planning the new wing on their McMansion, will get a $1,350 discount on their renovation. These “tax credits” will not stimulate the economy to the extent that we need.

#25 john on 01.28.09 at 8:40 am

#18 Happy Renter in North Van on 01.28.09 at 3:00 am AAAHHH! Flaherty looks like a monster! How did you make him look so horrible?
>>>> im pretty sure it is an actual photograph (taken afer the sun goes down) :-)

#26 canuck on 01.28.09 at 8:42 am

Possibly, worrisome that Flaherty in the budget asked for additional authority.

Could someone explain how CMHC could be abused by the government trading toxic mortgage debts from the banks in return for cash given to them?

Flaherty requested, “For that reason, our government proposes to give the Minister of Finance the authority required to act quickly to protect the country’s financial system, should it ever come under significant additional pressure.

This will include the authority to provide loans and lines of credit, and the provision and payment of guarantees to the Minister of Finance.

And it will enable the government to inject capital directly into federal financial institutions, should such a measure ever be necessary. ”

Is Flaherty asking for the authority to insist from the chartered banks that in return for the cash traded for high-risk mortgages, that he’s able to impose guarantees from the banks?

#27 Shawn on 01.28.09 at 8:47 am

Garth great job last night on Strombo …you have to take him up on a second show though to peel another layer off of the onion, and really get a truthful independant mesaage across.

If you think Garth has bad news check out his USA counterpart Harry Dent
http://www.hsdent.com/free-downloads/

Great newsletters down there a bit technical but really noteworthy. His publication the ‘The Next Great Bubble Boom’, was a worthy read it is inline with this blog for sure.

‘The Great Depression Ahead’ I will pick up after Garth’s ‘After the Crash’ to get a fully blown North American perspective on what is likely to be our reality 2010-2020.

#28 North Vancouver Citizen on 01.28.09 at 8:53 am

House of Cards

The Washington Independent notes that Analysts Fear $1 Trillion Credit Card Market Could Be Next Crash.

What we are seeing is the unwinding of extremely favorable banking regulations towards much tighter lending restrictions. Loose regulations that bankers asked for and received under Bush are now backfiring big time. Such is the nature of the Fed, Congress, and the credit cycle. The solution is not regulation, but sound monetary policy and the elimination of fractional reserve lending.

In an ironic twist of fate, extremely poor credit risks may be getting a better shake than prime borrowers as card companies step up efforts to recoup what they can from members as noted in Credit Squeezed

Notice how that only now regulations will sharply curtail lending. Here is an easy prediction. Lending will eventually get to be as ridiculously tight at the bottom as it was ridiculously easy at the top.
http://globaleconomicanalysis.blogspot.com/

#29 Rhino on 01.28.09 at 8:54 am

#8 The Tallyman on 01.28.09 at 12:11 am

Good point. I put this budget more in the old Xmas story of the match seller girl. On a cold winter’s night, she burned one match after the other; enjoying the temporary heat. They found her dead next morning surrounded by burnt matches.

The budget is one of the worst ever seen. Totally lacking in direction – never mind “vision”, is is a pure political ploy to stay in power.

Unfortunately, I doubt the Liberals will vote it down. They really should, as what this country need is some sense of direction, and preparing for future technologies which are largely “green”. I still think the CONCEPT in their “green shift” was spot on, but it sank under paranoia and misinformation.

The future is in new technologies, and manufacturing them. Canada must reduce dependence on commodities, and return to a knowledge based economy that supports innovative manufacturing. We need to lead; not follow. Too much dependence on a single countries spending habits means voluntary slavery to their wishes and whims.

The southern neighbour’s leadership senses the new directions their economy must take to PROSPER in the new millenium. Up here in the Great White North, our government wants to return to colonial times, support last century’s technologies, and maintain a false sense of security.

Look around you; the countries that are doing well are looking forward. Why not Canada?

This budget should be dumped.

But… will the sheeple understand that if it is defeated, and vote for something else? Or, will they just vote like Harper tells them to? I think it is easier to do what you are told than think about what you are doing, so that is what they will do.

Baaaa Baaaa Baaaa….. humbug!

#30 David Bakody on 01.28.09 at 8:59 am

Geprge is a hoot and what a smart move to prime him on your blog Garth ……

Word from Tim’s this morning even from some Harper moderates ………… The Harper/Flaherty Budget is a waste of paper …. not one person could name one thing that would benefit them ….. Tax cuts … hello the Provinces will tax them back, like they did last time ….. no person on pension is making 85K, no where near it ….. home improvements will not pay for heat, food or higher gas prices plus the contractors will raise their prices 15% plus! …. nothing on EI for family and friends and their children ….. no word on pension guarantee’s …. hello no word on strict conditions on the $75 Billion put on table for the banks …( look south to see what happened there) …. and the list goes on ….

NO ACCOUNTABILITY OR TRANSPARENCY ….. which leads to the same ode underhandedness en route!

We the taxpayers and our children and grandchildren deserve more!

#31 Rhino on 01.28.09 at 9:01 am

Hi Garth

Good spot on The Hour last night. Happy to see you were called-out on the girlie bike thing! Great exchange!!

It amused me to see George bring up the GST thing… You did not have to follow my suggestion!

Yah.. lots of “!!!” Just tryin’ to share my enthusiasm!!!!

#32 Bill-Muskoka (N.A.M.) on 01.28.09 at 9:02 am

I broke out my Quija Board and devised a better budget than Dim Jim has. But unless I am given $1,000,000, I ain’t telling!

#33 Bill-Muskoka (N.A.M.) on 01.28.09 at 9:06 am

BTW, the budget should accept the reality that inflation got us here, and only fiscal management of a truly conservative and realistic nature will stabilize the immediate and far future.

They still are adherents to the well proven failed economic theory that brought this fiasco about. Might as well try to get the Pope to convert to Wicca.

Borrowing to pay for the ‘solution’ is akin to giving an alcoholic another drink, a junkie another fix, or any other ‘pleasant remedy’ for a critical situation.

Will Oddawahaha listen? Not likely, they have friends to protect while we take it up our collective arse…as usual!

#34 Rhino on 01.28.09 at 9:07 am

#23 McSteve on 01.28.09 at 8:37 am

(smile)

Funny you should mention silver.

My wife has been consistently buying pieces to complete her inherited silver from her Grandmother.

I told her I support her efforts: when things get bad, we can always sell it for the metal!!!

Meanwhile we can eat off it and impress visitors with Sterling place settings to match the antique china also inherited.

She was not amused….

BTW, the china seems to be appreciating faster.

#35 Bulls eye on 01.28.09 at 9:09 am

Good News: Longer honeymoon to plan for.

Bad News: Harder Crash.

We are all aware that better decision could have been made. In the end it’s up to us to adapt and find opportunities and innovation.

#36 David W. on 01.28.09 at 9:16 am

Saw you with Strombo last night… Nicely Done!

What does it say about our government and their confidence in their own plans when they can’t find someone to appear on a show that reaches an audience this government rarely reaches and who they desperately need on their side.

Is Strombo that scary? What will they do now that Duffy is no longer around to lob them soft questions?

A budget with a national scheme to address green technologies and jobs of the future… don’t ever expect to see such a thing from this crew. They don’t believe in national programs and quite frankly have little national vision apart from trying to secure a majority.

This budget has a lot of interesting little measures that might help.. but little if any leadership.

No surprise to those who read Garth’s blogs.

#37 Apocalypse Now on 01.28.09 at 9:27 am

Squidly 77 wrote: “The world is not going back to normal after the magnitude of what they have done.”

never ever ever..

I totally agree!

Garth, saw you last night and CBC like CNN did another whitewash job; make a couple of jokes, ask not too heavy questions and give the general impression that things will be OK soon, just take your pill and go back to sleep. And you were wrong in even implying that this thing is a mere two year problem. The problem began last spring in Canada, so we are already one year into this thing and it will last a minimum of 5-7 years. You were also wrong in suggesting that a stimulus in necessary. You do not serve more drinks to an alcoholic to make him stop drinking nor more heroin to a junkie to make them stop. What is needed right now is accountability. Put all those darn bankers in jail and find out where the heck did all of these trillions go and who ended up with them? If money is owed, then it stands to reason that someone is collecting the debts. If the whole planet all of a sudden has credit a crisis, and is in debt at the same time, who is collecting all these debts? What we need is a clear accounting of our financial institutions beginning with central banks and then a clear set of rules as to the basis on which government creates money. If we do not gut our banking systems beginning with central banks, they will surely gut us as they pretty have already done so. When was the last time the Bank of Canada audited? If it truly belongs to the people of Canada (which it does not), then do we not have a right to check its books with a fine tooth comb? Why do you not go to the root of the problem instead of supporting asinine ideas like stimulus packages that only promote cronyism, fraud and end up costing the nation 10 times more than any benefit that is derived from them? Start a movement to have the Bank of Canada audited and see how far you will get.
Mainstream media will get the message out that we are in a depression but only when middle class people start eating out of garbage bins as they do in Argentina!

#38 Tears on 01.28.09 at 9:29 am

Garth,

Thank you for the blog and all the info. I came late to this blog & I am scared.

I have tears in my eyes. I am loosing my hard earned money, for which I had to kiss boss’s ass so many times & swallow humiliation so many times at work.

I paid $ 258,000 for the house in 2004 in Toronto east E01, plus closing costs to total of around $265,000.

I have almost paid off my mortgage, only $6,000 left, which would finish by April 09.

I did renovations around $10,000 so my total cost is $ 275,000.

I have paid around $ 25,000 interest on my mortgage in total.

So final cost $ 300,000.

Even if I sold my house in 2007, max I could have sold it was for around $ 300,000 only. Take out RE commission, I am left with $285,000 only.

So I was in red even when the market peaked.

I regret buying the house, but I am stuck with it now.

Should I sell it now, realistically, around $275,000 & take loss or should I live in it till the market recovers?

I am willing to sell it & move to rent.

Thank you for the advice.

#39 young & foolish on 01.28.09 at 9:37 am

people seem to always get the government they deserve … no? many people elected these guys years ago in Ontario, with poor results….
it’s the same ideology, the same old values …..

Garth is right …. no Obama here

but are people really going to change their outlook over night? from spenders to savers?

#40 Herb on 01.28.09 at 9:41 am

Harper has bribed everyone with a bit of their own money and offered every region and particular interest a bit of federal largesse. The budget will save the government, but is too diffuse and too slow for the immediate impact we need to save or create other jobs.

Of course it will pass. As Walter Robinson points out,

For Ignatieff, given his age and the party’s present position (no money, no policy and no star candidates in the wings), he has one shot to become a majority Liberal prime minister. Defeating this budget to go to the polls or join a coalition with the NDP and Bloc is not that shot.

http://www.ottawasun.com/Comment/2009/01/28/8170206-sun.html

Who’s looking after the national interest?

#41 Herb on 01.28.09 at 10:01 am

Putting a fine point on another view –

The Liberals are shooting themselves in both feet.”

Norm Spector, http://www.theglobeandmail.com/servlet/story/RTGAM.20090128.WBSpector20090128064924/WBStory/WBSpector

#42 Bay Street Lawyer on 01.28.09 at 10:01 am

Garth:

Interesting article on the “do nothing” approach that stands against a large, gov’t funded stimulus:

http://www.politico.com/news/stories/0109/18068.html

I just don’t think we can withstand the kinds of job losses that would come with a “do nothing” approach, even if Canada (or the USA) were to emerge stronger for having gone through a painful economic retraction.

That said, if the root cause of all this pain was over-borrowing and over-spending, isn’t a budget tailored to encourage more spending a little like an alcoholic taking a drink in the morning to stave off a headache?

Also, I think much of the “savings” people will realize from this budget (if they do realize a savings) will be used to pay down existing debts and save for future needs, which is great for personal finances going forward (and may allow a return to consumer spending once people have enough of their OWN money to spend), but ultimately doesn’t help “stimulate” the economy right now… not with the national savings rate at zero.

I’m just finding it really hard to pick a side on this debate. So many smart people on both sides with good arguments for and against.

#43 Signal Loss on 01.28.09 at 10:05 am

I saw your segment with George Stropopoussylessness (sp?) – you mangaged to make some points about the legacy of debt to be borne by thirtysomethings and younger, and to warn people to look to their own defences with respect to savings, etc. I thought he could have plugged your new Xurbia site when you spoke about over-dependency on governments, etc, but i guess it was more about the new book. I came away feeling that the spot would’ve been better handled by a Steve Paikin (sp again, sorry) or Allan Gregg. Kind of reminded me why i don’t watch The Hour.

#44 smwhite on 01.28.09 at 10:08 am

#8 The Tallyman

Intentional? I’m starting to wonder, if I heard correctly Canada’s obligation to the other G8 nations was 50 billion for that NWO camp fire. :) So as much as I love getting a dig in on Flaherty and the odd poke at Harps, they are committed to tow the line of the developed west.

See, this is what happens when you hang out with older kids(USA, UK) that get up to no good… Mom was right.

———————————————————

Is it just me or do you see fear in the eyes of Steve and Jim? Although this is a huge change of direction from where the party is supposed to stand, I didn’t see anything that said, this budget will change consumer confidence and help those that are down and out aka unemployed, underemployed. I also think more money could have been dumped into our commodity based industries such as farming, mining and energy, we had a chance to help make the oil sands and these industries greener; I guess that the fear of listening to Layton go off kept these kinds of future investments off the table, shame, because we’re(along with opposite Canada, Australia) going to be the major player in commodities over the next decade.

Not to mention with all the talk of limits to interest from credit card companies no help to regulate and to put limits on our already exploding debt.

I’m not sure about anyone else but the income tax breaks will go to savings(TFSA or RRSP) for those less effected and not go to me buying another iPod. Those in tight will buy “green peppers” instead of the red.

So maybe there is a silver lining if more of the wealthye decide to sock money into the TSX and save for a rainy day…

Your second last para Garth is filled with pearls.

——————————————————-

Heard also talk of pulling the lads out of Afghanistan as a cost savings measure, I think its silly to think that, when the Canadian Armed forces will be one of the biggest employers over the next 5 years…

Gotta build that army for the “big one” that’s going to pull UK and USA out of their big sham economies.

Bombs away…

#45 Cara on 01.28.09 at 10:22 am

#38 – There’s no need to cry. If you have only $6000 left on your mortgage, and you still have a job, what are you crying about exactly? If you sold, you’d “lose”money, and then you’d go and rent somewhere and kiss at least $1000 a month in rent goodbye. What in the world makes any sense to you in that scenario?
Keep your house, live in it. That is what a house is FOR. Living. Only in the last ten years did we turn them into a veritable ATM. Just get back to basics. You’re better set up to ride through this economic downturn, even if it gets to as bad is it could be, because you have a roof over your head and four walls around you.

Don’t panic. People do stupid things when they panic.

#46 Bill-Muskoka (N.A.M.) on 01.28.09 at 10:42 am

Let me play Cost Accountant here. Okay, so any business person with a clue knows that forecasting a budget must, read this clearly, MUST, take into account the overall picture based on reality,not Pie-in the-Sky wishful thinking (Unless you are EnRon, NorTel, Bre-X, Bear-Stearns, Lehman Brothers, GM, Chrysler, Ford, etc.).

So, what we have is a worldwide ‘correction; due solely to a ‘Pie in the Sky’ economic theory. Companies are laying off people (A nicer PC term for ‘You’re FIRED’ so we can continue to enjoy our executive lifestyle), not expanding (albeit a few new comers are who are innovative).

Every employee laid off puts another sabot into the economy engine because they will be unable to repay the debts they accumulated based on blind faith in a faulty economic theory. Think RICOCHET EFFECT! It is like Chaos Theory where a butterfly flaps its wings in Bejing and it rains in New York. Everything is interconnected.

This is, also, the effect brilliant thinkers like John Ralston Saul saw coming, and warned us of in ‘The Collapse of Globalism and The reinvention of The World’. He was not alone, but the MSM, whores to the ‘Movers and Shakers’ set, kept right on with the positive propaganda. Then came the Piper demanding to be paid. Jared Diamond discusses such reality in his Best Seller ‘Collapse: How Societies Choose To Fail or Succeed’. Note it is a CHOICE! It is not destiny, magick, or the planet moving through the aether.

Now, when a business person plans growth they wisely do so based on reality and conservative expectancies, with a modicum of pessimisim based on knowing human beings, and experience. They borrow money only after carefully considering the total cost including interest which is compounded and quickly escalates to equal 300% or more of the principle in the long term.

They know they must make decisions based on borrowing as a last resort, and prefer to use earnings for growth, rather than create a long term liability which endangers the future growth of the company. Intel would be a good example of how to run a company properly. They built new factories and expanded for the past almost three decades using earned profits, not borrowed money.

The current philosphy is borrow and acquire, or use paper wealth (not tangible) to grow. That is solely for the benefit of the executives and stockholders. The real Stakeholders (the employees) are not consider more than expendable assets.

So, should everyone demand a contract like the executives do? DAMN RIGHT! You are in business for yourself and family. If you are worth the flesh you are made of you bring the means by which companies make profits…productivity and thoughtful insights. But do you believe that yourself, or are you merely thankful for a paycheque and the illusion of security?

If you are tired of being Sheeple and want to become People then assess your value as amarketable commodity, and treat it with more respect than the vapourous ability to buy things today.

That is how a real business person must think. They look way down the road and plan alternatives based on worst case scenarios, hoping (Hope we can believe in) that things will be stable. They compare the costs of business to the potential profits to be made, and maximize both profits and growth potential based on the ‘Bird in the Hand’, not the ‘Bird in the Bush’ principle.

The power of positive thinking is a delicate balance between reality and perception. All the positive thinking in the world will not save your arse when reality says NYET! NON! NO!

It is your choice, but Choose Wisely!

#47 Bill-Muskoka (N.A.M.) on 01.28.09 at 10:56 am

#44 smwhite on 01.28.09 at 10:08 am

Speaking of wars. Here is a recent bit of history to consider in counting the costs.

*** Declaration of War ***

President George Bush was in the Oval Office wondering which country to invade next, when his telephone rang.

“Hallo, President Bush” a heavily accented voice said. “This is Archie, up ‘ere at the Harp Seal Pub in Badger’s Cove, Newfoundland, Canada ey? I am callin’ to tell ya dat we are officially declaring war on you ”

“Well Archie,” George replied, “This is indeed important news! How big is your army?”

“Right now,” said Archie, after a moments calculation “there is myself, me cousin Harold, me next-door-neighbor Mick, and the whole dart team from the pub. That makes eight!”

George paused. “I must tell you Archie, that I have one million men in my army waiting to move on my command.”

“Holy jeez,” said Archie. “I’ll have ta call ya back!”

Sure enough, the next day, Archie called again. “Mr. Bush, the war is still on! We have managed to acquire some infantry equipment!”

“And what equipment would that be Archie?”, George asked.

“Well sir, we have two combines, a bulldozer, and Harry’s farm tractor.”

President Bush sighed. “I must tell you Archie, that I have 16,000 tanks and 14,000 armored personnel carriers. Also I’ve increased my army to one and a half million since we last spoke.”

“Lard T’underin’ Jaysus, bye”, said Archie, “I’ll be getting back to ya.”

Sure enough, Archie rang again the next day. “President Bush, the war is still on! We have managed to git ourselves airborne! We up an’ modified Harrigan’s ultra-light wit a couple of shotguns in the cockpit, and four byes from the Legion have joined us as well!”

George was silent for a minute then cleared his throat. “I must tell you Archie that I have 10,000 bombers and 20,000 fighter planes. My military complex is surrounded by laser-guided, surface-to-air missile sites. And since we last spoke, I’ve increased my army to TWO MILLION!”

“Jeysus, Mary and Joseph,” said Archie, “I’ll have ta call youse back.”

Sure enough, Archie called again the next day. “President Bush! I am sorry to have to tell you dat we have had to call off dis ‘ere war.”

“I’m sorry to hear that” said George. “Why the sudden change of heart?”

“Well, sir,” said Archie, “we’ve all sat ourselves down and had a long chat over a bunch of pints, and come to realize dat dere’s no way we can feed two million prisoners.”

Like the WOPR Computer said ‘The only winning move is not to play!’

#48 Gold Bug on 01.28.09 at 10:56 am

#37 Apocalypse Now,

I agree with you, but we are too far gone. There is a follow up to your idea – let the bad assets die, merge financial institutions if need be, train people to produce goods that can be sold worldwide. This would be a monumental shift back from service economy, and since all the thinking is short-term by the people in power, it won’t happen.
That budget was toothless, maybe the deflation will die laughing.
2 options: We may follow Japan’s trajectory from a couple of decades ago, or we have a bad stagnation. Either will be followed by a bad inflation, since we are not savers as Japanese.

#49 Gold Bug on 01.28.09 at 11:03 am

#23 McSteve,

Gold can be mined directly, silver is usually by-product of mining lead, zinc, nickel. Silver is used much more in the industry, so it has both a monetary and industrial use/value. It is becoming more rare than gold, because of mines closing and because a lot of the above-ground stock has been consumed.
Depending on where (in the world and history) you look, gold/silver ratio was as low as 1:12 to 1:16. However, I wouldn’t base the value of silver based on current price of gold through a ratio. Silver is more of an industrial supply/demand play and insurance against uncertainty, whereas gold is almost exclusively insurance against uncertainty. I think both will go up if we continue experiencing this increased uncertainty.

#50 canuck on 01.28.09 at 11:06 am

Garth,

Have never been an activist, but am really pissed. How do I got about organizing myself to protest governments’, albeit Liberal, Conservative or Coalition, lack of transparency?

In this digital age, there’s no excuse for governments not providing the electorate with detailed budgets instead of getting my information second hand from reporters. I desperately need to see government books–both expenditures and revenues and so should my fellow Canadians make those reasonable demands. Governments must start being more transparent or the electorate chooses not to vote (which is currently the case!)

Do I need to arm myself with a pitchfork, pencils and paper?

#51 Bill-Muskoka (N.A.M.) on 01.28.09 at 11:12 am

Instead of trying to earn money sitting on our asses investing, they should try the old fashioned method WORKING, saving, economizing, and being realistic! We have too many people pretending to be wealthy, when all they’re are gamblers.

You do not need millions to have a Happy Life…you just need LIFE to do that!

#52 US Housing Worse than Reported on 01.28.09 at 11:17 am

According to RealtyTrac & National Assn of Realtors, banks have only listed approx 1/3 of foreclosed homes. They are slow to release these foreclosed homes, as they would flood the market and further drive down the price of homes.

So it seems the housing backlog is even larger than MLS listings would show… which would push back the end of the housing crisis.

http://money.cnn.com/2009/01/21/real_estate/ghost_inventory/index.htm?cnn=yes

#53 WTF? on 01.28.09 at 11:23 am

Let me get this straight. Spend $10K on your home and get back $1,350 when people are losing their jobs and the economy is tanking. It’s just as dumb as telling a fat kid to eat more cake to lose weight.

#54 Jelly on 01.28.09 at 11:26 am

Garth,

I saw you on The Hour last night, you were on for such a short time, I wanted to listen to what you had to say on each topic for a longer amount of time. I would love
to come across you or Schiff at a party, I would talk your guys’ ears off. Call me a pessimist, life of the party, whatever…
It was very important what was said about the budget and how Harper is going to screw things up even more.
At least George will get the message out to some people, convenient that these things are downplayed and glossed over in media for obvious reasons. Harper is just going to screw things up even more.
Nice one, Stevo!

It is great to have a Canadian figure stand up and say, all this spending and consumption is not good, look where we are headed! Everything is not going to be all right due to our entitlement culture. You said it best in your book that 1 billion of us have our needs met, 2 billion more are trying to become like us, and 2 billion are just trying to live, that is such a powerful statement and puts it all in perspective. Things can certainly change in our quality of living in North America.
Many of the rich are moving to China as they anticipate social and financial issues in the US for obvious reasons.

You and Schiff were persecuted and soon people will be saying, “They were right, I should have listened”

On a side note,
I always meant to ask you why you said not to open up an online stock trading account. Once another crash happens in stocks, I wanted to get in there with ones I feel very confident about (with research) and leave them for 20 years or so. I am certainly not experienced with stocks but I do not see how I could lose if I am in there long term and do not sell at losses but only at highs. Any comments on this is appreciated Garth.

BTW, I would not be suprised if I see you on the news more as many more people find out who you are and are tired of burying their faces in the sand…

#55 PTDBD on 01.28.09 at 11:43 am

not to worry, there are “and they lived happily forever after” solutions being worked on…

– all toxic financial stuff on the Bank’s books will we rolled into a “Bad Bank”. Presto, poof! Problem is gone. Banks go up 20% in a day.

– yet another 1 Trillion stimulus will be injected (to the cries of “it’s just not enough”. Presto,poof! (Flat screens and Hummers all around.)

– all unemployed will be placed into a “Bad Jobs Bank”, and then do their share to climb their way out of this. Presto, poof! (don’t ask me how it works..it’s magic.)

(Note: only one of the above is made up and totally ridiculous and unrealistic, currently.)

#56 Jimster on 01.28.09 at 11:49 am

Lead, the other precious metal;

http://www.remington.com/products/firearms/shotguns/model_11-87/model_11-87_SPS_camo.asp

#57 Patrice on 01.28.09 at 11:58 am

hey garth,

I would be curious to know what is your take on this.

the government pay 1.5 million dollar for each new street cars!

Think about it; just a train wagon with an electric engine; nothing fancy. Should have been maximum $100 000 each; and even at 100k it would have been pushing it.

Now i know Bombardier is highly subsidized; but this is far more than subsidies; it is plain and obvious corruption to a length that is incredible!

I don’t know how some people can sleep at night!

Please comment, I would love if this issue would be raised publicly and some spotlights would be directed to these corrupt mofo’s!!

#58 Keith in Calgary on 01.28.09 at 12:03 pm

Like a radio host said today, he is wondering where he is going to spend his “free dinner and bottel of wine”.

You cannot stimulate an economy that was already operating at it’s maximum “artifical” financial capacity.

People cannot, and will not, borrow more money (because they are either out of equity and/or credit worthiness, or have finally waken up), which was what fueled the boom of the last 4 years…..and people’s incomes are not going to double, which is what the net effect of all the borrowing was really like.

Reality is headed our way…….thankfully.

#59 Drummer on 01.28.09 at 12:07 pm

“They are intentionally giving away every dollar so that when the real crap hits the fan the cupboard will be bare and desperate hungry citizens will be more than compliant in singing from the New World Order hymn book.”

“This depression is intentional.
Beware the wolf.”

Paranoid much? Don’t do drugs, dude!

#60 POL-CAN on 01.28.09 at 12:10 pm

Hmmm…. Lets get back to housing for a few minutes k?

Is this a sign? Or simply a desparate seller?

Nov 27: $1,195,000
Jan 13: $1,130,000
Jan 15: $1,099,000
Jan 28: $999,000

Will the 17 % price reduction do the trick?

IMO that property has another 33 % off peak to go before it is worth it simply do to the location….
Maybe I am too optimistic?

http://www.realtor.ca/PropertyDetails.aspx?PropertyID=7778969

#61 Observer on 01.28.09 at 12:21 pm

Garth,
I find your opinions and mine have always been closely aligned. For the first time I’d question one of your suggestions. In your commentary you suggested we “declare a moratorium on home foreclosures for unemployed families”. At the risk of sounding insensitive (which is not my intention), I’m not in agreement with this without some metrics attached. If a family has made poor decisions in getting over their head then we should be bailing them out, as harsh as that sounds. However, if there were restrictions to the idea, for example a household would have to have at least xx% equity in the property to be eligible then yes. But we know the number of people who have made very poor decisions with little or no down, these should not qualify. Hey, I believe there’s a really good book out that speaks to the number of folks in this soup.

Cheers and thanks Garth

#62 Observer on 01.28.09 at 12:23 pm

sorry, should read:
If a family has made poor decisions in getting over their head then we should not be bailing them out, as harsh as that sounds.

#63 Mike on 01.28.09 at 12:25 pm

I do not like this budget, but it is better than any budget any of the three parties would support.

I generally like and agree with Garth’s comments, however he should understand the power of the free markets better than anyone.

Government cannot create wealth. It can only transfer wealth from productive means to unproductive means. Some of these “transfers” are necessary to maintain a social safety net. That said, it is NOT the government’s role to decide which industries and companies to save.

Every problem we face today can be traced to government. Flawed monetary policy (decided upon by unelected officials) and the CMHC (a government programs to insure mortgages) allowed those that ought not afford to buy houses do just that. It created a phony construction boom but did nothing to improve our productive capacity.

We need less government spending, more saving and more investment in productive assets. This budget, though more responsible that Garth’s Liberals would propose, is not a cure for the disease. It may mask the symptoms for a period, but will only make things worse when we ultimately succumb to it.

#64 Mike on 01.28.09 at 12:32 pm

Keith couldn’t be more right. Excess spending, borrowing and consumption got us in this mess….and the government, backed by it’s economists who helped create this mess, want to get us out of this by more borrowing and consumption. NOBODY GETS IT.

I agree with Garth. The odds of a depression increased but not because Flaherty didn’t invest $1B in Electric cars.

There is no such thing as a free lunch and now it is time to pay up for the mistakes we have made. He should have cut taxes and spending and embrace the deep recession. The sun will rise tomorrow.

Government is NOT the solution….Government is the problem. Unfortunately, people have become accustomed to something-for-nothing…and we’ll veer towards socialism before everything breaks down.

Squirrel away.

#65 BM on 01.28.09 at 12:40 pm

Hi Garth,
Just loved your take on the budget. I am sure you will go into depth further.One question to ask on your statement below

“If your mortgage is due, go variable, go weekly. ”

Are suggesting this eventhough there is no Prime minus , All variables are Prime + 1% and 90% of them are 5 year closed.Open variables are hard to find.For the next 2 years maybe prime is low , but once Inflation kicks in 2 or 3 years what will happen to prime.

Your Advice on go weekly is great

#66 JO on 01.28.09 at 12:45 pm

The budget was nothing special. It will be lucky to slow the decline in the economy just a little, nothing more. He should have increased EI benefits and extened them, and cut the low income tax bracket a lot more as well as small business/corp income tax levels.

The key point for me is that in the end, despite very different paths, the end result for average people will be ugly. Here is what I am thinking:
1) Deflation is and will continue to be the primary trend until at least late 2010/2011. The amount of debt being paid off/defaulted on is far in excess of the amount of new debt being issued and the amount of printing being done (last count on printing was roughly 1.2 T but probably higher as of today). Add in the loss of wealth from housing and stocks and the mood of a large segment of the public toward saving and frugality, and the end result is deflation. The amount of debt is extreme and you are correct in saying that one way or another, savings will need to increase. Monetary velocity is also decreasing, which further neutralizes printing. There simply are not enough potential creditworthy borrowers who are able and willing to request credit, and banks will continue to cut back on lending in an environment of increasing unemployment and dropping collateral values. The amount of reserves in the banking system, most of which appear to be sitting in treasuries, is staggering. Banks are not willing and able to lend enough, and consumers are not willing nor able to take on new debt in sufficient numbers to transition to hyper inflation yet. At some point, the deflation, with its pervasive and devastating collapse on tax revenues and the resulting massive deficits assumed by governments, will put the credit profile of many gov’ts in question. The CDS spreads on many governments have exploded in the last 12 months. This brings us to the end game of a sudden, shocking collapse in long term government bonds with exploding rates. Imaging what that will do to the economy. This would usher in a horrific deflationary depression as collapsing treasuries are the destruction of capital and governments will be forced to cut spending in a big way. For now, this scenario remains a possibility.

2) Hyperinflation/high inflation: This is less likely in the near term, but likely in the final hours of this crisis. Of course, no one knows when that is, but the guess here is 2011-2013. Home prices would likely have stopped falling hard and maybe even stabilized, an enormous amount of debt would have already been destroyed, and the amount of printing now exceeds the amount of bad debt in the system. In addition, you will need to have banks able and willing to lend out or otherwise spend their reserves on assets or issuing loans, and a sufficient number of consumers will need to be able/willing to take on debt and use it to buy big ticket items. Velocity will pick up and look out. Although the Fed has said they will take away the excess liquidity, this is BS as they are always behind the eight ball. In this case, the currency collapses rapidly and long term gov’t bonds collapse in a very similar fashion as # 1. Anarchy ensues as martial law is declared, and people desperately try to hide gold/silver coins and keep enough food on hand. Bottles of Smirnoff or whiskey and cigarettes may be used as money in some places. These last points will apply in # 1 as well.

So either way, the extreme leverage calls for some sort of ugly ending, regardless of any temporary, weak recoveries in between – some of which can last 6-12 months. There is essentially a noose on the economy, and the only question is which of the two gallows, high/hyper inflation or deflation, does it fall into. We will survive this but boy, it is going to be one hell of a ride.
JO

#67 RS on 01.28.09 at 1:01 pm

Garth, My husband and put 10,000 in RRSPs in 2008 which we were going to use as part of a down payment to buy our 1st house. Stupildy we should have just put it in the bank cause now it’s 7,100! What should we do now? Just leave it in there and hope that it will regain?

RRSPs are just vehicles for investments, not investments themseles. What assets did you buy with this money? — Garth

#68 Alex Curylo on 01.28.09 at 1:05 pm

@Jimster:

Pffft to the autoloaders. Heavier and more fragile for no particular benefit. Here’s my choice for a baseline goose gun.

http://www.remington.com/products/firearms/shotguns/model_870/model_870_express_synthetic.asp

#69 cms on 01.28.09 at 1:07 pm

Why do I feel like it’s amateur hour with the Government of Canada? I’m deeply disappointed that my future is being whored out by Harper in order to keep his job. This budget is way too heavy on the short-term and disgustingly emaciated in the long-term. I feel betrayed by my government.

Would someone please explain to me: What are the societal benefits of the construction of Flaherty’s new deck at his cottage in Muskoka? How will this return offset the investment in deficit spending and debt servicing? Or how about increasing square footage of slaughterhouses? Will this make us healthier? Will it boost our productivity? Will it educate us? Will it give us an advantage over other nations?

The answer seems to be a big fat NO.

#70 go green on 01.28.09 at 1:21 pm

Hi Garth – Just spoke to Scotia Bank re Maple Leaf coins. On the ScotiaMocatto site gold is just under US $900 an oz. today. Seems their commission is 2.5% if under $5K and .125% if over $5K plus they charge $10. shipping for each coin. No sales tax here. Forgot to ask, but assume min coin size is 1 oz. Am I correct?

Can anyone recommend a good site re investing in gold pros/cons?

#71 john on 01.28.09 at 1:26 pm

Well Garth this was a liberal budget. Weren’t you a liberal?

#72 Bill-Muskoka (N.A.M.) on 01.28.09 at 1:30 pm

I think Iggy’s approach may have some validity in forcing Harper to actually report on the status of the budget proposals? Maybe???? Harper’s track record on ‘open and accountable’ is so filled with stench only an addict would believe anything he says.

Jack Smack, of course, wants an election because he can’t grasp the costs. Typical of the NDP I am sorry to say.

As to the budget, I am still trusting my Quija Board over anything Dim Jim proposes. Nothing has really changed in Oddawahaha. No surprise. Same Old ‘I want more power!’ politics. F— ’em!

#73 go green on 01.28.09 at 1:49 pm

#53 WTF? on 01.28.09 at 11:23 am

Let me get this straight. Spend $10K on your home and get back $1,350 when people are losing their jobs and the economy is tanking. It’s just as dumb as telling a fat kid to eat more cake to lose weight.

If the cons had limited this incentive to energy efficiency renos I could applaud this iniative. As it stands, you can redo a driveway & get a tax rebate. We’ll be taking advantage of this. Have bought almost all fixtures, etc. for a 2 bath reno, not high end, (badly needed) & had started to create a list of specs. for contractor quotes. Husband will do part of work. Wish he would have been involved. But, yes, a wasteful pgm as it stands.

Very disappointed with EI non-pgm. Just learned last eve. my sis is 12 hours short to claim EI. She’s 59, paid into it approx. 36 years & has never rec’d a cheque. In her line of work & where she lives she’d have to clean houses to earn a living. Thanks stevo and I’d also say Ignatieff. He should have pushed for better EI pgm. in his amendments.

#74 Roial1 on 01.28.09 at 1:55 pm

Wanna get really pissed off????

read this.

http://english.aljazeera.net/focus/2009/2009/2009/2009/01/200912894241738393.html

#75 Vankover on 01.28.09 at 2:32 pm

This government makes no sense…we’re going to stimulate the forestry sector (espec in BC) with our tax break on home renos….anyone ever heard of the environment? Why aren’t we putting money into legit green products not just green painting – why are we still harvesting forests…it looks like a rehash of the same old ideas that got GM et al into the soup…keep making cars that burn too much fuel without looking for alternatives…keep harvesting forests without developing the technology to go green. Old stevie boy..king of the whopper. OH and for those people who are flipping houses….good luck…logically if someone has the $$ to actually buy a place that they can renovate because they can afford it don’t think they’re going to go looking for your place if there is a mediocre tax break…even though the tax break isn’t much…it’s still more than you can offer!

#76 jess on 01.28.09 at 2:41 pm

55 PTDBD -hilarious

zombie banks = produce zombie people

so how is that plastic card coming along (the royal bank in partnership with the Alberta government) that enables gov. credits on it for the Dispossessed?

Is the reason cheques are Conplicated and too expensive.

So if the cashless society goes forward what replaces negative seigniorage?

#77 dekethegeek on 01.28.09 at 3:03 pm

#30 David Bakody
” George is a hoot…”
Were you watching the same show as me? the guy’s monologue was painful to watch. Even the poor unfortunates that were sitting in the audience could barely chuckle. If Mr. Strombopolous(sp?) was on ANY other tv network he wouldnt last 2 weeks. The guy is an arrogant , pompous, smirking twit who couldn’t tell a funny joke if a gun was held to his swelled head. But of course CBC (aka “The Corpse”)has to live by the antiquated CRTC “canadian content rules”.
The only joke is the fact that the Canadian taxpayer is stuck funding this drivel.
If the Conservative Govt. wants to get my vote. Nuke and Pave the CBC TV. Nobody will notice for at least a month(til after the election.)
Go for it Harper ! Kill the CBC and save 3 billion a year.

#78 squidly77 on 01.28.09 at 3:03 pm

an update to *Sorry Cowtown*
well not really an update but they are holding to there pie in sky $699,999 price tag for there condo
http://www.justinhavre.com/idx/residential/C3353797/details.html

#79 Bill-Muskoka (N.A.M.) on 01.28.09 at 3:05 pm

#73 Roial1 on 01.28.09 at 1:55 pm

Thank you. As is usual, Al Jazeera reports the news the North American MSM refuses to present to ‘We The People’.

Al Jazeera has become one of the most honest and reputable news agencies on this planet, alas, to the great angst of the WASP Power Brokers. They would be the bastards playing on our dime at DAVOS!

#80 Mark on 01.28.09 at 3:09 pm

During the depression people didn’t actually know it was the depression until after the fact. This is going to be clearly the case….

We will see the TSE hit 4000 in the next 2 years, S&P will reach low levels.

Too give you an idea stocks usually trade 2×3 times P/E however in the west we’ve somehow managed to make 20-40 times the norm.

So with deflating income from corporate companies and stocks going out of favour it’s very likely to see a catastrophic event in the financial markets. I’m not talking about a 50% reduction but more like 80-90% off current levels.

#81 Charles Oxley on 01.28.09 at 3:11 pm

For #23 McSteve on 01.28.09 at 8:37 am and #70 go green on 01.28.09 at 1:21 pm

G’day to all. First link scroll down a little, and see that investors are getting out of paper and returning to gold, which drives the price up.

Second is out-takes from yesterday’s dailyreckoning.com, but both have the same story — gold is slowly going up, deflation is almost, if not already here, and things are happening mighty quick thruout the world.

http://www.moneyandmarkets.com/secret-stock-bargains-in-vancouver-29487

“The real action is happening in the gold market…the woe in this global meltdown is most acute on the periphery…

“*** Everybody’s got an opinion…you don’t need bankers or capitalists to allocate capital…

“*** Gold is up 15% in the last two weeks…Bernie Madoff bears a striking resemblance to a Founding Father…”

#82 Charles Oxley on 01.28.09 at 3:15 pm

G’day to y’all.

For #23 McSteve on 01.28.09 at 8:37 am and #70 go green on 01.28.09 at 1:21 pm

First link scroll down a little, and see that investors are getting out of paper and returning to gold, which drives the price up.

Second is out-takes from yesterday’s dailyreckoning.com, but both have the same story — gold is slowly going up, deflation is almost, if not already here, and things are happening mighty quick thruout the world.

http://www.moneyandmarkets.com/secret-stock-bargains-in-vancouver-29487

“The real action is happening in the gold market…the woe in this global meltdown is most acute on the periphery…

“*** Everybody’s got an opinion…you don’t need bankers or capitalists to allocate capital…

“*** Gold is up 15% in the last two weeks…Bernie Madoff bears a striking resemblance to a Founding Father…”

#83 Bill-Muskoka (N.A.M.) on 01.28.09 at 3:18 pm

#69 cms on 01.28.09 at 1:07 pm

Because it is, and has been, Amateur Hour in Oddawahaha for years. Especially the last three! These morons couldn’t manage a Pay Toilet operation, much less our country.

And what was with the standing applause and cheers for Dim Jim yesterday? Is this a government or a High School Cheerleader tryout?

Maybe when President Obama comes to the Funny Farm we call the HoC on February 19th Harper will finally get to look into the eyes of a REAL LEADER. Will Harper get a clue? Probably not because he is NOT A LEADER!

I do imagine, however, that President Obama and the Governor General will have most interesting and productive discussion.

Harper will try his usual schmooz tactics and President Obama will not buy them for one second. I can hardly wait for President Obama’s speech regarding his visit. perhaps he will set the record straight about reality like he did Bush?

God,where did Canada find these worthless morons? Are we that destitute of qualified people? Answer: YES!

This budget is a FARCE and should be cancelled like Air Farce was.

A mish-mash of proposals – not all sensible

Mike McCracken, of the economic forecasting firm Informetrica, calculates that even after some $35 billion in fiscal stimulus over the next two years, (and yes, the proper figure is $35 billion not $52 billion as the government insists) the national unemployment rate will continue to creep up.

Indeed, the most important element of the budget will probably receive the least attention. That’s a two-page section – first laid out in Finance Minister Jim Flaherty’s aborted November economic update – that gives the government carte blanche to bail out any financial institution facing difficulty.

Based on that alone Ignatieff must bring it down as a Vote of No Confidence. We have had more than enough Voodoo Economics and LIEING by Harper and his entourage of mindless caucus members.

Fool me once shame on you. Try to fool me twice and the shame will be felt by you.

#84 squidly77 on 01.28.09 at 3:18 pm

a chart illustrating calgarys looming crash
a seahorse with a broken neck..

#85 JO on 01.28.09 at 3:22 pm

# 70 go green – Check out Kitco / goldmoney.com / Mish’s Global (google for exact site). I would be cautious about buying coins right now as i hear premiums are ridiculous compared to content..also, gold seems likely to go up to do a re-test of the 2008 high of 1033 after the mild correction taking place now..if deflation remains prominent (likely IMO) I think gold can come back down 30-40 % after this run up in the next couple of months. Point is to be cautious with gold…i suggest you research gtu.un and the central gold trust which are closed end funds on TSX.
good luck
JO

#86 Bill-Muskoka (N.A.M.) on 01.28.09 at 3:32 pm

#76 dekethegeek on 01.28.09 at 3:03 pm

Excepting Peter Mansbridge, I have come to agree with you. They can dump the politico Talking Heads as well, and especially the worthless Canadian version of the WWE called the NHL.

We have hundreds of stations to choose from on satellite, and the CBC is rarely one of them anymore.

As for George…I tried watching him a few times and it was like watching someone on Salvia trying to act like a teen. He is definitely not George Stephanopolis (sp?) on ABC.

We need Canadian version of CNN with Mansbridge as the Head Talking Head. No Wolf Blitzer, Situation Room, or Magick TV Screens, or 8 hours of coverage over a two minute MAX news item Thank you very much.

We already have Faux News North with CTV. BTW, what is Lloyd Robertson, a nightly ad for a mortuary?

#87 POL-CAN on 01.28.09 at 3:55 pm

From todays TAE

http://theautomaticearth.blogspot.com

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.
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It is about the Obama bailout… simply change the amount and it applies here….

And that’s where I disagree. We are not spending $850 billion to save people, we are spending $850 billion to save a system. But that system is fraudulent, and saving that system is wrong. We need to help people struggle through difficult times, and then we need to reinvent ourselves. Spending to save the system does nothing to create a new, sustainable, viable system.

So then, what’s the alternative? I believe that the federal government and the states should stop trying to save the banks and other financial institutions, should stop providing trillions in taxpayer dollars to institutions that are already bankrupt and who do not in any way serve the public interest, and should instead use any federal monies to subsidize social support programs during this economic depression. I think that the federal government should admit that the perpetuation of a system of globalization based upon usury is neither moral nor in the public’s best interest. In its place the federal government should provide support and training and funding for projects that recognize the following realities: (1) That the age of growth is over. We have entered the age of sustainability. (2) That saving the system of ‘money-as-debt’ only serves to further incarcerate the people, not liberate them. (3) That the banks and other institutions who have used deception and duplicity and Ponzi schemes to make billions in profits should be held to account.
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#88 Dawn in Calgary on 01.28.09 at 4:02 pm

I have a great view of new condo development from my office — going up about a level a week. I wonder who is going to/who has bought them. It’s a lot more properties for an already saturated market to absorb.

http://www.nueraliving.ca/

My book arrived, day after I left on a business trip, so I’m catching up. Thanks Garth.

#89 kc on 01.28.09 at 4:05 pm

Mark #79

“So with deflating income from corporate companies and stocks going out of favour it’s very likely to see a catastrophic event in the financial markets. I’m not talking about a 50% reduction but more like 80-90% off current levels.”

Intersting take. Did you know that on the DJI there are 4 companies that would have been dropped from the exchange? these are 1:ALCOA INC 2:BK OF AMERICA CP 3: CITIGROUP INC 4: GEN MOTORS

Do you know why they should be dropped?
The share price has dropped below $10. gen motors blue chip dropping to penny market status…. who would have thunk it??

#90 Bill-Muskoka (N.A.M.) on 01.28.09 at 4:17 pm

#88 kc on 01.28.09 at 4:05 pm

DJI now equals ‘Dow-Jones Insolvents!

#91 Don Bool on 01.28.09 at 4:19 pm

62 Observer on 01.28.09 at 12:23 pm

sorry, should read:
If a family has made poor decisions in getting over their head then we should not be bailing them out, as harsh as that sounds.

————————————————————————————————–

Unfortunately, home owners got in over their heads and were manipulated into this mess by unscrupulous and greedy financial institutions who cooked up this O down and 40 years to pay con job to ignorant citizens looking to get that house before the market got out of reach for them. It was some selling job these institutions did. These are victims of bad policy.

The financial crisis started with the real estate crisis and in my opinion won,t end untill this problem is dealt with. Maybe re-negotiating the mortgage contracts with distressed home owners so they can stay in their homes instead of throwing money at the criminals that created this scenario, would finally establish a bottom in the market. Untill this real estate problem is dealt with i don,t see anything changing. In fact i see it as getting worse. Deal with the problem that got us into this mess and then we,ll be able to establish a starting point.

———————————————————————————————————————————————————————-

#76 dekethegeek on 01.28.09 at 3:03 pm

Go for it Harper ! Kill the CBC and save 3 billion a year.

——————————————————-

I would think the Aspers of Globe Media are getting nuked by their partisan support of Harper .CanWest Global Communications(CGS-T)=share price-.50 cents.

#92 David Bakody on 01.28.09 at 4:22 pm

#76 dekethegeek on 01.28.09 at 3:03 pm

Attack my beloved CBC eh…. not to mind …… the CBC employs Canadians ….. Canadian men women and children from Coast to Coast to Coast ….. many young Canadians perhaps even some of your friends family or relatives have got their start in some CBC production from Tommy Hunter to HNIC and have provided many many hours of informative shows both on radio and TV that been beneficial even to point of saving lives… CBC has for years supported our troops overseas and continue to do so to-day ….. America base shows are what they are …. most of their better shows and news stations have many Canadians working for them who got their start on the CBC …… and it is cheap at half the price or even twice the price for that matter. Excuse me sir/madame but years ago someone questioned why the CAF trained fighter pilots who joined just to move to head of the Air Canada line up…. to which I said “Because they are Canadian Children”

#93 Just a Girl on 01.28.09 at 4:25 pm

#72 go green wrote: “Just learned last eve. my sis is 12 hours short to claim EI. She’s 59, paid into it approx. 36 years & has never rec’d a cheque.”

This is so wrong. No factor for contributions or ‘claims history’ … just honest hard-working folks supporting a system they cannot access when genuinely needed.

#94 john on 01.28.09 at 4:28 pm

The more i think about the budget the more amazed i am at how some people are swallowing this as a good move for Canada?—Lets consider a few points in the budget–#1–20 billion in tax cuts (-a single person earning $40,000 will save $115, A one income family with two children will save $148 what a joke! ). $20 billion dollars invested in the technologies Garth stated would create a lot of jobs,be good for the environment and most importantly a Future! (every country in the world is going to be looking for an alternative to cut the high costs of living—a market practically untouched! Imagine if solar panels were mass produced how cost efficient they would become (just an example).$148 in tax savings doesn’t create a future for anyone or a job!——–#2–Seniors age credit increased by $1,000 =a total savings of $150 a year (pathetic).——#3 INFRASTRUCTURE—-now this is a biggy $12 billion and i read that Flaherty stated this would create 190,000 jobs(is he stupid or does he think we are? ).My conclusions–materials will eat up over half of this leaving $6 billion (most likely a lot less since the government is buying them ).Planning etc will eat up at least $1billion (engineers,blueprints etc).Leaving us with about $5 billion in wages for the working man ………..well for example 190,000 workers making an average of $1,000 a week ==$190 million a week in wages (probably more) .Well that eats up that $5 billion at the rate $900 million every 5 weeks .So roughly 25 weeks and thats gone hmmmm what then? And how many people lost their jobs in the last 2 months?? <<<<<<<<<< my opinion about the future! Thoughts?……..p.s. i wonder how much more money this will result in debt or how many half finished infrastructure projects will be rusting in the breezes as the real depression hits hmmmmm?

#95 dotava on 01.28.09 at 4:37 pm

Garth – as said on you political blog – Iggy is just bit more intelligent than Harpo but he is coming from same stream. I was sick and tired of Harpo’s Cons but now Iggy’s Liberals are not much different. What a shame – Canada = banana country. :-(

#96 Dave on 01.28.09 at 4:54 pm

I don’t think the various bailout/deficit moneys are intended to solve the problem or save the system.

It’s a bit naive to think that the bloggers of the world (ie us!) are so smart, and the world’s central bankers, corporate and political leaders are all buffoons.

Rather I think the intent of the bailout is to buy time, and to spread out the pain over a longer and more manageable period.

It allows smart people (which presumably includes most of us ;-) the time to restructure and prepare for the changes in the world’s economy.

#97 john on 01.28.09 at 4:57 pm

Wed Jan 28, 1:12 PM

VANCOUVER, Canada (AFP) – Canada’s national “Debt Clock” started ticking again Tuesday for the first time in 11 years, with each passing” minute” showing national debt growing by some 64,000 Canadian dollars (52,000 dollars US). >>>>>>>>>>>>>>>> HERE WE GO! But by 2013 it will be turned off again right Flaherty—-…………………..

#98 coll in SW Ont on 01.28.09 at 5:02 pm

Garth,
Excuse my financial illiteracy, and maybe this is in your latest book but I haven’t got to that part yet…

why would I give over any cash I may have to RRSP now?

Because the government will give you 50% of it back, and yet you get to keep 100% of the investment. If you have money, why would you not do this? — Garth

#99 Dave on 01.28.09 at 5:17 pm

DJI now equals ‘Dow-Jones Insolvents!

———————————————————–

yet its november lows still hold. Not sure what dream chart you’re watching

#100 North Vancouver Citizen on 01.28.09 at 5:19 pm

Like Garth…my being a forward and outside the box thinker, I predict that the U.S. will be toast within a year or two.

…The U.S. will be unable to bail out $1 trillion worth of upcoming credit card debt, let alone it’s Medicare and Social Security debts that no one even talks about yet.

Something has to give.

I predict the U.S. will conquer Cuba…that should be worth $1 trillion of new assets.

…and the U.S. will contemplate conquering Canada…but I say, if they agree to assume Quebec’s and the Atlantic Provinces proportianate Federal Canadian debt then the U.S. can have’em for free.

thoughts?

#101 Dave on 01.28.09 at 5:20 pm

Because the government will give you 50% of it back, and yet you get to keep 100% of the investment. If you have money, why would you not do this? — Garth

—————————————————

now this i don’t get at all. Where do i find more info. about the above. Excuse my ignorance

#102 North Vancouver Citizen on 01.28.09 at 5:24 pm

#2

In lieu of having grotesque numbers of English speaking bloodshed and throwing away hundreds of billions of$$$ defending a lost cause.

…and after it happens, NO, Quebec cannot still use the Loonie.

#103 jess on 01.28.09 at 5:27 pm

Canadians seem to be robbing peter to pay paul as house is the atm machine?

A recent survey by the Canadian Association of Accredited Mortgage Professionals, which represents Canada’s $900 billion mortgage industry, shows about one in five borrowers took out an increased amount of cash from their mortgages when refinancing.

The November survey showed the average draw rose 20 per cent to $41,000 compared with a year earlier.

Of those surveyed who took out larger mortgages, 56 per cent said they used the money – which totals $18.5 billion nationally – for debt consolidation and repayment. About 30 per cent of these funds went towards home repair and renovation.

Meantime, statistics kept by the Canadian Bankers Association show the number of mortgages in arrears has grown to 0.31 per cent in November, or 12,048 mortgages, from a total of 3.9 million mortgages nationwide.

That’s a 22 per cent increase in the number of arrears compared with 0.26 per cent or 9,862 in November, 2007, when there were about 3.81 million mortgages in Canada.

The rise in mortgage levels and arrears comes as Ottawa announced plans in its federal budget Tuesday extending the Insured Mortgage Purchase Program by an extra $50 billion to $125 billion.

The move is meant to encourage banks to increase mortgage lending, especially after Finance Minister Jim Flaherty and Bank of Canada Gov. Mark Carney began urging the banks to increase money available for loans to consumers and companies.

http://www.cbc.ca/cp/business/090128/b0128128A.html

#104 David on 01.28.09 at 5:33 pm

That Flaherty picture is reminiscent of late Soviet style agitprop art during the last years before the collapse. There is nothing quite like stern and stoic leaders bravely facing the future of real existing capitalism.
The interview on The Hour was just too short, but in the world of fast paced political and investment infotainment, I thought Garth did a great job. George completely skipped the cooking segment. The market demographic that watches the show probably do not own homes or are not facing involuntary retirement with a shaky pension plan as a backup. Strombo would probably be playing out of his league when it comes to discussing finance and public policy issues, but at least the ideas are out there now for broader dissemination.
This is one budget that actually managed to please no one, it smacks of desperation and a lack of priorities.

#105 kc on 01.28.09 at 6:07 pm

Found this lengthy essay a great read. Explains a good oversight to what history has done to Japan, and what the USA might be headed into.

U.S. Heading for Japan Style Two Decade Economic Depression

http://www.marketoracle.co.uk/Article8541.html

#106 Bonnie N BC on 01.28.09 at 6:11 pm

Garth

Well let us put it this way – you may have lost your seat but your integrity is intact.

If M. Dion had used the “probation” terminology there would have been snickers from the MSM and a glee of not a leader back bencher talk.

I know the scary parts of Psycho Libs – Liberals hide behind curtains and support a budget they know will not help and lead us into Xurbia.

Did they have a choice? I think so, if they submitted an amendment to fight for a revision to EI.

The unholy coalition fell apart as expected but some tepid threat of detention makes Iggy’s first walk in the snow look like he noticed it was chilly and decided to stay by the fire.

The budget is a menu not to solve our economic woes but a way to pick and choose winners and losers at a crowded fund raiser.

Winners like the oil patch and that Canadian bank that is in trouble.

Losers – Canadian workers that do not qualify for EI although they have paid into the fund all those years.

I am still waiting for my first and last Liberal membership card so I can send it back.

And the house listed next to me has dropped 100K since this time last year. If he listed it for that last year he may have actually sold it.

#107 Kettle...Pot Calling on 01.28.09 at 6:37 pm

Judging from a few of the comments above, there seems to be a gross misunderstanding of RRSP accounts.

An RRSP account is just that…an account. What you choose to invest your money in is up to you. It’s not clear to me why people equate RRSP’s with investing only in stocks. I get that that’s what most people allocate their funds to, but you have many more choices.

For example – a year ago I maxed out my RRSP contribution room to take advantage of the Home Buyers Plan. I put 30K into money market funds (including a spousal account), I get about 14K back on my taxes (netted with everything else of course) this spring and when I get around to buying a house, I’ll just withdraw that cash. It would have been assinine enough to stick the cash into an equity fund – I’m not greedy enough to gamble with the down payment money (especially on the cusp of a global financial meltdown). The returns in the money market fund suck…but they ain’t negative.

#108 Nibbly on 01.28.09 at 6:40 pm

#79 Mark
“Too give you an idea stocks usually trade 2×3 times P/E however in the west we’ve somehow managed to make 20-40 times the norm.”

You have no idea what you’re talking about. No broad stock index as an aggregate has EVER traded at 2-3 times earnings….not even during the depths of the Great Depression. Do your homework before you post that sort of nonsense.

Just google ‘historic p/e charts’ under google images if you don’t believe me.
Actually…I’ll save you the work.

http://www.generationaldynamics.com/ww2010/g070818c.gif

#109 $froma$ia on 01.28.09 at 6:42 pm

Ok guys, Liberal leader sides with Conservatives but warns of calling an election…. Uh you idiot Liberals, you had them by the balls. You look to push your wait around, now the legs of the coalition you stand on are now falling out from under you. [email protected]#ing ITIOTS!

#110 dd on 01.28.09 at 6:44 pm

#99 North Vancouver Citizen

“I predict that the U.S. will be toast within a year or two.”

“I predict the U.S. will conquer Cuba … and the U.S. will contemplate conquering Canada”

So is the US toast or not? So you predict the US will go to war?

#111 CinToronto on 01.28.09 at 7:17 pm

Looks like we’re in luck folks! A very funny article in the UK Guardian, with a surprise at the end for all of us Canadians. Maybe, Garth, you could put this in your next posting so that as many people as possible will have a chance to read it. Cheers and enjoy!

http://tinyurl.com/bp2lmj

#112 North Vancouver Citizen on 01.28.09 at 7:36 pm

#109 dd

My friend dd…you simply cannot keep up with Garth and myself.

The U.S. will be toast as we know it today.

…it’s guaranteed to occur, whether covert or not, Cuba will be invaded…

#110

Good article on there being “few nuclear plants in Canada”…gives Vancouver, a nuclear free zone, another feather in its cap for becoming the next Financial/Trade/Leisure Capital of the North America.

You heard it here first.

#113 dekethegeek on 01.28.09 at 8:11 pm

#91 David Bakody
I used to watch CBC wwhen i was a kid and there were 2 choices. The Corpse or CTV. Now neither is relevent, ( as is most Prime Time tv these days.
Employment? Is that why we have CBC TV? Is that why CBC has spent 100 Million on their new vancouver studio for the Olympics(ever though they arent the official media sponser).
Take a walk through the CBC Vancouver headquarters and all you will here is French being spoken as the “unemployable in their own province of Quebec” bilingual staff use the Rest of Canada CBC offices to get senority to eventually work in La Belle Province CBC.
Surely there must be cheaper ways to employ Quebecers.
CBC Radio is excellent. CBC TV is an embarrassment. For example: The Hour. It should be called “The 55 Minutes” as we here in Vancouver sit through 5 whole MINUTES of Late Night News at 11pm. Wow ! 5 minutes to cover all the news in BC, and the Yukon ! The CBC TV is a mere shadow of its former self and eventually it will die a quiet death and then , maybe then, we will realize that the taxpayer was on the hook for CBC, CBC French, and CBC Newsworld ! All on different channels reporting the same news to esentially the same audience. A ridiculous waste of money. Enjoy your tax assessment because the worthless dolts at the CBC are sucking the teat of all of us.

#114 Steve on 01.28.09 at 8:17 pm

Can someone please post The Hour interview on YouTube or something?

#115 john on 01.28.09 at 8:18 pm

Fed infrastructure money requires provincial spending
Last Updated: Wednesday, January 28, 2009 | 3:56 PM CBC News
The federal government promised nearly $12 billion for infrastructure in the 2009 budget tabled Tuesday, but there’s a catch: the government is expecting other parties to come up with $11.8 billion more before it loosens the purse strings.***

The requirement that provinces, territories and municipalities find matching funds has some of the potential recipients worried, although others are confident they can find the money to tap into the federal cash.***
“Strict cost-sharing requirements would be a roadblock to getting work started on many worthwhile projects, particularly now that municipalities have approved their 2009 capital budgets,” said Jean Perrault, president of the Federation of Canadian Municipalities.
Some jurisdictions that need infrastructure money are worried that the federal government’s red tape means the funds will dribble out slowly. That has been the experience with the Conservative’s 2007 infrastruture plan, Building Canada, they say.
Opposition Leader Michael Ignatieff said Wednesday the Liberals will support the budget, but the government has to make the money flow. “We’ve put down a very clear marker; this government has to get the money out the door,” he said.
The budget said the government will streamline federal approvals so projects can start in the upcoming construction season.
Ontario Premier Dalton McGuinty said he liked the infrastructure plans, even though he’ll have to come up with billions in matching funds.****
The budget said that among the infrastructure proposals:
The $4-billion Infrastructure Stimulus Fund to rehabilitate provincial, territorial and municipal infrastructure rehabilitation requires other governments to cover at least half the costs. ****
The $2 billion to pay for maintenance and repair projects at universities and colleges requires “other partners” to fund at least half the costs. **
Projects under the speeded up Building Canada base payments to provinces and territories, up to $1 billion, will be cost-shared.
The $500 million for new community recreational facilities and upgrades to existing facilities will require provincial and municipal governments, community organizations and the private sector to come up with at least half the money. ***
Costs under projects done through the $500 million accelerated spending under the communities component of the Building Canada fund will be cost shared.
The five-year, $1 billion Green Infrastructure Fund, will be cost-shared.
For the single biggest new spending proposal, the $4-billion Infrastructure Stimulus Fund, the federal government made it clear that the provinces must use it or lose it. *****************
“Should agreements not be reached expeditiously with a province or territory, funding may be used to support the rehabilitation of federal or other infrastructure,” the budget said. ********

………..sure sounds like a recipe for disaster to this reader! FederaL Government assuming a huge debt load requires every province in Canada to assume an equal debt load…….sure drag down every cash strapped province also (brilliant and so helpful) hmmm should we thank our saviours?? (Alberta’s premier likes it :-) ). Something else to think about…if these projects ever get off the ground—anyone ever seen any government project that came in within budget or even remotely close to budget==== more money,more debt!……………………………

#116 Steve on 01.28.09 at 8:21 pm

Re: Video of Garth on The Hour. Here is the link to entire episode. Starts around the 13:50 mark.

#117 hmm.. on 01.28.09 at 8:30 pm

#54 Jelly

dont bring Shiff into discussion at all, he was more (much more) wrong then wright. and people who invested with him are down 40 – 70 %.

#118 EW on VI on 01.28.09 at 8:32 pm

38 tears. Havent checked for other responses to your query, and I may not agree with garth but here’s my thoughts.

Why did you buy? If you bought to be your primary residence, and your job is reasonably secure, and mortgage near zero, why sell at all? Sounds like you may be violating the rule “Dont speculate with the family house”. As it is, you have a paid off house and peace of
mind – “Priceless”.

If house prices plummet, even tank, you can still sell and buy a comparable property, or even “move up” at lower
but proportionate additonal cost.

If you’re willing to gamble that you can buy it all back at a much cheaper price later, well maybe you can sell and stick a bunch of money in your pocket. Ive always said buying/selling should be a personal decision based on
your needs and means, not necessarily on what prices may or may not do.

Good luck.

#119 Jonathan on 01.28.09 at 8:36 pm

Look. I am happy that the government decided not to blow my money on ‘stimulus’.

Stimulus benefits those who want to bloat the lathargic and beauracratic government. Consider the government a leach and as stimulus as blood. The more blood you give it, the more leaching it will do in the future. By making ‘economic’ choices on behalf of the capitalist system, their interference will damage growth and any chance at a rebound.

Look guys the only thing the government can do to stimulate the economy is to just get out of the way of it. Cut its payroll, reduce wages and benefits in line with private sector wages, and reduce income taxes. Stop thinking that government, in any shape or form, is positive for the economy. Governments caused this worldwide mess by allowing Chinese banks to dump 2 trillion dollars in to the American economy every year. Now most of them believe they are the answer. Give me a break.

We have to decide if we are capitalists or communists. You can’t do a little of both, it doesn’t work that way.

#120 dotava on 01.28.09 at 8:38 pm

#93 john on 01.28.09 at 4:28 pm

Good point.
Just using the same math (what is close enough to reality) what will happened if we start that before last election and before “we” give away $75B to the “pure” bankers?!?
Most likely we will be in a “bit” better position.

#121 North Vancouver Citizen on 01.28.09 at 8:46 pm

#112 Deke the geek

Too too funny…

“”Take a walk through the CBC Vancouver headquarters and all you will here is French being spoken as the “unemployable in their own province of Quebec” bilingual staff use the Rest of Canada CBC offices to get senority to eventually work in La Belle Province CBC.
Surely there must be cheaper ways to employ Quebecers.””

#122 dotava on 01.28.09 at 9:01 pm

#105 Bonnie N BC on 01.28.09 at 6:11 pm
“Garth
Well let us put it this way – you may have lost your seat but your integrity is intact.”
We are approaching the days when integrity will mean something.
“I know the scary parts of Psycho Libs – Liberals hide behind curtains and support a budget they know will not help and lead us into Xurbia.
Did they have a choice? I think so, if they submitted an amendment to fight for a revision to EI.”
Right on – Iggy – as stated before is just bit smarter harpo – but still caring only for party (paid by corps) not for Canada and there citizens. We are becoming like US (Rep/Dem – black & white) country. As Mr. Bin said in “Rat Race” – “We are screwed”.
“The budget is a menu not to solve our economic woes but a way to pick and choose winners and losers at a crowded fund raiser. Winners like the oil patch and that Canadian bank that is in trouble. Losers – Canadian workers that do not qualify for EI although they have paid into the fund all those years.”
Related to prior comment.
TNX Bonnie – just that you know – there are Canadians that support Garth’s free thinking – not “Duffy” senators (what a shame).

#123 hmm.. on 01.28.09 at 9:05 pm

#66 JO number of analysts are suggesting this, and it seems to make most sense. However i would add, that, last number of years big chunk of economy were the banks running their scams on rest of the world and that has ended. There is not much manufacturing industry left anymore, so how are we going to get out of this slump is anybody’s guess.

Hey, we could be worst off if someone ‘madeoff ‘ with our money!!

#124 EW on VI on 01.28.09 at 9:05 pm

Keith 3 and 58. Please to make your blogging aquaitance. I feel You have some contradiction between your posts.

In 3 you suggest making mortgage interest tax deductible. In 58 you say too much debt got us in trouble. I think the tax deduction is a bad idea as it can
encourage mortgage debt, or maybe more correctly, not discourage paying it down. Long term effects include
increase in amount of income lenders will attribute to housing costs and also inflate house prices. Also rewards people who have over-extended vs we who have paid
down debt.

And tax credit for car purchase? Partially offset by subtle increase in car prices (also beware the new home reno tax credit) but also prolonging inevitable downfall of inefficient car makers. Better to provide incentives for companies to develop new technologies, and to early adopter purchases of new products.

Keep smilin’.

#125 EW on VI on 01.28.09 at 9:08 pm

oops should read just “discourage paying it down” and not “not discourage etc”.

#126 Jonathan on 01.28.09 at 9:09 pm

The best stimulus for the economy would be if the government stop controlling interest rates. Let the capitalist system control them.

Interest rates would rise. This would reduce inflation, reward savers and increase the cost of debt. You can’t run a capitalist society where debt is rewarded and savers are punished. Keeping interest below inflation will only serve to damage the economy further. Yes it would cause a severe recession, but unfortunately a severe recession would be better for the economy in the long run than fixing interest at unsustainably low rates.

The credit bubble caused by low interest rates is the largest bubble in the history of mankind – and it hasn’t popped yet. After the Asian Financial Crisis, the emerging economies in Asia felt that to protect their economies they must build up their reserves (in US dollars). Beginning in 2001, countries like Vietnam started to save astronomical amounts of greenbacks and they have enough reserves to pay for 3 months of imports!

Furthermore, countries like China dump the Yuan on the market in exchange for greenbacks (US dollars). This drives down the price of the Yuan and increases the price of the greenback.

Emerging economy citizens like to save. They don’t qualify for car or student loans and so families must save to get these things. Banks in emerging economies, such as in China, are controlled by the governing party (communist party). The Communist Party gives the saver a bond. The party then buys US Treasuries and holds on to them. The citizens don’t have a choice about this. What matters here is the America is flushed with cash and that the greenback is overvalued.

So this gives the US cheap credit. The only catch is they have to lie about inflation. The North American barely has access to analyze inflation rates, let alone the Chinese. While inflation rates by most analysts have been reported at around 10% in the US, the fed says it’s at 2%. For one they exclude energy and food. Then they play with the numbers until their team can get them as low as possible. Even the US Senate doesn’t have access to how much money has been printed in any given year. It’s all a mystery. But rest assured it is much higher than what they report. But it’s enough to fool those in emerging economies that they should buy a bond, and be repaid in American cash in thirty years time, all with a 3.5% coupon. Doesn’t make sense does it – considering the Yuan is the most undervalued currency in the world and the greenback the most overvalued. You’d think you’d demand a higher premium given the risk. But the savers flock to them.

China hasn’t bailed on this plan. For one, they don’t want the US dollar to fall. That would make it extremely difficult to depreciate the Yuan. It would also make them near broke trying to replace their reserves with the EU. Every trillion of greenbacks they try to sell on the market would mean that the next trillion of greenbacks will fetch that much less – or nothing.

You may have at this point discovered the bubble and why it is not sustainable. In the event that the US dollar starts to depreciate, as it should, given that the US has increased the number of greenbacks in distribution by 70% since October, then it will set off a massive chain reaction. Smaller countries will sell their reserves first, fearing that larger ones would follow. The US dollar is incredibly over value. It could literally lose 90% of its value overnight. Even China would be broke. And imagine how its peasants would feel knowing their savings would be worthless. The US dollar fire sale would deflate in days.

This would turn it into an inflationary depression in the USA, and a deflationary depression in Canada, China and for most of the world.

#127 coll in SW Ont on 01.28.09 at 9:14 pm

#97. coll in SW Ont

Garth,
Excuse my financial illiteracy, and maybe this is in your latest book but I haven’t got to that part yet…

why would I give over any cash I may have to RRSP now?
—————————————————–

Because the government will give you 50% of it back, and yet you get to keep 100% of the investment. If you have money, why would you not do this? — Garth
____________________________________________

Because, as you stated in your blog “If you have cash, hang on to it” and “If you need something, buy it, but don’t finance it”.

So, is RRSP in same category as cash if it’s placed in proper investment?

I thought if there are possible bank failures…possibility of insurance not being enough to cover these failures, (and even if insurance does cover we don’t know when we can get our money),…need for having money safe and accessible- ie: in a personal safe, … need for some money in form of precious metals possibly…need for preparation via self-sufficiency measures
(ie. Xurbia.ca) then I should be directing any cash towards these endeavours.

Or, yes, do all these things first, and if I have any cash left put it in RRSP, and hope that, just like if I had money in savings and I get wind of the bank possibly denying access to our money, I can hopefully get it out, pay the taxes,…(and by then I may be in a much lower tax bracket if all ‘heck’ breaks loose) ?

#128 dotava on 01.28.09 at 9:14 pm

#112 dekethegeek on 01.28.09 at 8:11 pm

Things didn’t change much in thousands of years – Caesar said something like: “give them a bread and games”, but hope is that we finally passing that point.

#129 EW on VI on 01.28.09 at 9:17 pm

70 green – try “the goldwatcher” from chapters-indigo. Just started it. Claims to be objective.

#130 EW on VI on 01.28.09 at 9:34 pm

74 Vankover. I see harvesting forests as green, if done in a responsible manner. It is a renewable resource. Is there another building product that can produce habitat and recreational opportunities befroe during after?

90 Don. I’m more with the original poster on this one. Keep in mind the0/40 homeowners are out nothing except “rent” for a couple of years. Perhaps a diminished
ongoing rent for a time (say a year?) is a compromise,
along with gurantee to keep up home in meantime. And a
clean credit swipe if hardship can be demonstrated. Who knows, maybe new owner will let them continue rent?

#131 Dave on 01.28.09 at 9:44 pm

dont bring Shiff into discussion at all, he was more (much more) wrong then wright. and people who invested with him are down 40 – 70 %.
———————————————————

your views are short-term. Where he’s leading people for the long-term is bang on. You sound like the people 2 years ago that insisted real estate was the only way to go

#132 ALLY ALLY OXYCONTIN FREE on 01.28.09 at 11:02 pm

A System on the Brink—How to Fix the Banks

PETER MORICI—Counterpunch—January 22, 2009

http://www.counterpunch.org/morici01222009.html

The Second Stage

Another Real Estate Crisis is About to Hit

PAUL CRAIG ROBERTS—January 22, 2009

http://www.counterpunch.org/roberts01222009.html

IMF sees world economy at near standstill in 2009

World economy may lose 51 million jobs

http://uk.reuters.com/article/businessNews/idUKTRE50R3Z520090129?sp=true

#133 RM on 01.28.09 at 11:19 pm

#100 Dave

When you do your income taxes, you can deduct the amount you contribute to an RRSP from your taxable income. If you’re in the top tax bracket, your refund will be about 50% of your original investment. You’ll get a receipt from the financial institution you took out your account with and you include that with your return.

Hope that helps.

#134 Blacksheep on 01.29.09 at 12:09 am

From todays Nat. Post, shortened,

Some of the world’s least affordable cities are on the West Coast, according to a survey of cities worldwide released Wednesday.

According to the fifth annual Demographia International Housing Affordability Survey, Vancouver sits fourth on the list of least affordable cities in the world, with a median house price at 8.4 times the median income. That means it costs 8.4 years’ average income to purchase a house. The average median in Canada was 3.5.

The New York-based Demographia report, released in Canada by the Frontier Centre for Public Policy, looked at third-quarter 2008 data in 265 metropolitan markets, including Australia, Canada, the Republic of Ireland, New Zealand, the United Kingdom and the United States and defines affordable home prices as three times a city’s median income or less.

Vancouver fell behind Gold Coast in Australia at No. 3, Honolulu in Hawaii at No. 2, and Australia’s Sunshine Coast, which is in top spot on the least affordable list.

All of Canada’s “severely unaffordable” cities are in British Columbia, including Victoria at seven, Kelowna at 19 and ABBOTSFORD at 25.

The survey uses existing house sales data to rate housing affordability in 265 global markets. There are 87 “affordable” markets, 74 “moderately unaffordable” markets, 49 that are “seriously unaffordable” markets and 64 are “severely unaffordable.”

All of the 87 “affordable markets” are in Canada and the United States, while most markets in Australia, Ireland, New Zealand and the United Kingdom are rated as “severely unaffordable.”

There are 77 affordable markets in the United States and 10 affordable markets in Canada.

“Housing prices are arguably more important than any other item for purchase — home ownership anchors people into the community, which they value more when they own a part of it. House prices are also a big lever on the world economy, as recent events south of the border have brutally proven. When prices are high for any reason, they have further to fall and they create losses that are harder for people to recover from.

Societies with affordable housing offer community, opportunity, and economic stability. When affordability is lost, many people end up poorer, socially marginalized, and in less stable economies,” the centre added.

My take,

Even at a 50% RE price reduction, Abbotsford is still over priced.

take care
BS

#135 Leasa on 01.29.09 at 7:30 am

Hey Garth, the ONLY reason the liberals did not bring the government down is the fact that the LPOC is broke. The ONLY reason. They did consider the (snicker) coalition, well, at least Iggy did, but he had to ponder the reality that he would be sharing power and essentially with the signed documents, be powerless. Oh the dread. So, Iggy and his loyal followers will spend the next few months trying to gather some cash for the party and that will be the LP priority. As a former liberal MP and faithful member, will you be dusting off the old tux to attend a few $1000. a plate dinners?? Don’t forget your lobster bib. ;) Leasa

You sund like a political hack on this blog. Move on. — Garth

#136 Bill-Muskoka (N.A.M.) on 01.29.09 at 8:46 am

Jon Stewart has the best idea yet. Let the government give the money to the people to pay off their debt to the banks. That would literally reset the economy.

In fact under Levitical Law every fifty years there is a Jubilee in which all debt is forgiven. We certainly need a Jubilee NOW!

Afterall, whose money is it to begin with?

#137 Judy on 01.29.09 at 12:57 pm

Leasa: The only reason Harper presented Canadians with a truly Liberal budget is that he was fearful of losing his job…rumblings from his so-called ‘faithful’ scared the bejeebers out of him and he caved to Brison and McCallum’s demands…..so sad for a Prime Minister to have such little faith in his convictions that he would crumble before the Liberals.

#138 Mel Eager on 01.29.09 at 2:53 pm

#97

Also, another reason to invest now is mutual fund units for equities are at the cheapest they have been in years. Stocks are on sale!

Buy with the intention to hold until there is a recovery.

Mel

#139 ready to buy on 01.29.09 at 9:02 pm

“If you were planning on buying one, wait”

A nice waterfront chunk of crown land came on the block recently, that I’ve been watching and waiting for. It’s nowhere, perfect and all one can hear are the wolves and maybe a far distant logging truck on a clear night. Summer’s listing was 230 and there it remains! No road, no poles. Think crown will drop or will they hold Garth?
Itching to jump but no fool

#140 Zebedee on 01.29.09 at 9:25 pm

#38 Tears:

I believe you should keep the house. You have nearly paid it off and you are ahead of the game. Do not fall into the trap of thinking you have to start all over again. If you hold this house for your children, they will see the benefit. If you don’t want to live in it anymore, then rent it out and rent something you do want to live in. When house prices fall to rock bottom you might purchase ANOTHER house if you feel like you want to, and you can still rent out the property you OWN. I think you’ve done well, and you shouldn’t feel in any way bad about this.

#141 John on 01.30.09 at 7:05 am

#38 and #139

Zebedee is right. This would only apply to you if you purchased this as an investment home for 700k+ and it was a “fixer-upper” in an “up and coming area” and of course, you had to pay off the loans for two hummers. You’ve done well and you should just hold on. Everyone is hurting right now, especially those in denial… The key in hard times is to live within your means and it sounds like you’re doing just that. If only more people in this world could do just that.