The new depression


An unfinshed house from the boom days – three years ago.

What would a new depression look like?

No men atop boxcars. No work camps. No families sleeping in a ditch. Instead, an iron fist of despair in a velvet glove of modernity. Perhaps like in Lehigh Acres, outside of Fort Myers, Florida.

In this community of thirty thousand, houses are now selling for an 80% discount off their peak price of a couple of years ago. Crime is now a serious problem in a place that defined the middle class. Grow ops are constantly being shut down by the cops, and criminals regularly move into foreclosed homes. Enrollment at the schools is down, and there’s been a 400% increase in the number of people on food stamps.

In fact, hunger is a big problem, because so many people have lost their jobs, and there are none to replace them. Selling out is not much of an option either, since the only homes changing hands are those in the $45,000 range – a third of replacement cost, and down from a median price of $322,200 in December of 2005.

A local food bank has seen demand increase by 75%, while it’s expected home prices will continue to decline for about two more years. One day recently, 221 families lined up for free bread at a local Lutheran church.

By the way, Barack Obama is coming to the area on Tuesday.

This glimpse of a brewing depression, 2009-style, was contained in a New York Times article “In Florida, Despair and Foreclosures,” which this past weekend became one of the most emailed stories in newspaper history. The reason’s simple. So many of us now can understand the spiral that ensues when families are hit simultaneously with both job loss and falling home equity. After all, most households have scant savings, debt payments to make and mouths to feed. These days, few have gardens, family farms to retreat to or options of any kind.

When the income stream ends, when you can’t sell your home, what to do?

I received two notable emails Sunday. One guy directed me to research the latest jobless numbers, showing a shocking 129,000 people were put out of work in Canada last month. He reminded me they are ‘seasonally-adjusted,’ which means the actual number of new unemployed is under-reported in months when job loss is expected. The real number for January, he insists, is 410,000.

And Roger Sauve wrote me, the president of People Patterns Consulting, whose document, “The Current State of Family Finances 2008,” was published by the Vanier Institute a couple of weeks ago. “My latest report,” he said, “provides strong supporting evidence for the high level of indebtedness that you correctly highlight in your blogs and your latest book.”

And it does. This chart, for example, which shows Canadians are, on average, as cooked as those Americans we are always feeling superior to.


Of course, Mississauga, Bedford, Abbotsford or Lethbridge are not Lehigh Acres. Canadians are not Americans. Obama is not Harper. Bay Street is not Wall Street. We don’t have food stamps. Yet.

But a job is a job. Debt is debt. A house is a house.

Are you ready?


Today’s blog, “The perfect storm,” here


#1 Jason on 02.08.09 at 8:48 pm

Hey Garth, have you seen the Crash Course yet? It’s definately worth watching, and highlights many of the topics you discuss, as well as some even larger potential pitfalls that I haven’t seen you talk about (such as Peak Oil)

#2 Eduardo on 02.08.09 at 8:48 pm

Garth and all who fear deflation,

Have you guys seen or considered and

Jim Sinclair of JSMineset has been correct in the 70s and again calling this recession although he believes hyperinflation is on the horizon on or before Jan 14th, 2011.

Jim’s formula that he posted in Sept 2006 has been correct so far… it can be seen in this post


#3 Popeye the sailor man on 02.08.09 at 8:54 pm

I’m just reading the After the Crash that I got as a door prize in Surry that you signed, Thanks!

Anyway you new entry came up just as I’m reading page 34 about the plight of the suburbs. I Think I will still sell my house in Shawnigan lake where there is no real stores, but are rethinking the move to Spruce Grove west of Edmonton, so my Daughter can go to Broxton School to help her with her Autism. We may move but rent to see what happens there, the treeless streets of the many new areas are now looking scary.

#4 PW on 02.08.09 at 9:11 pm

Society seems to be intently focused on ‘getting’ (job, money, food…). It seems not many ‘give’. What would happen if all the jobless actually started volunteering food banks and homeless shelters?

#5 Marc on 02.08.09 at 9:16 pm

Your article on Lehigh Acres prompted me to do some
research. Look at this graph I found.

You’ve previously opinioned that the Canadian market
is trailing the US market by 2 years but following the same pattern. If this chart is any indication
of what’s to come in Canada we are in deep trouble.

#6 POL-CAN on 02.08.09 at 9:17 pm

Here is an interesting play with USA numbers:

IMO things could get much worse here in Canada, and a lot quicker then down south….

#7 Jonathan on 02.08.09 at 9:27 pm

Job losses were somewhere between 350,000 to 400,000.

As a colder, ‘seasonal’ country, Canada loses about 200,000-250,000 on an average January. These jobs are lost due to snow hampering mining and house building, cold weather slowing real estate and car sales, and the post-xmas drop in consumption. So the government deducts this amount from the total jobs losses to give you a seasonally adjusted rate.

250,000+129,000 = 389,000 jobs lossed (approx).

The big question on everyone’s minds is that this year is much different and most of those ‘seasonal’ jobs won’t be rebounding in spring like they usually do. This will result in very large ‘revisions’ to January’s job losses in four or five months time.

#8 Republic_of_Western_Canada on 02.08.09 at 9:35 pm

120K *manufacturing* jobs, me bucko. Only 9K resource-based ones.

We all don’t need much more manufactured stuff, just energy and [non-packaged] food in various forms. In 5 years, when the supertanker storage units get drawn down, we will have the same silly scramble for liquid hydrocarbons again that we had last year.

Just at double the price (in gold, or euros, or % of paycheque, or whatever). The farmers will start to do pretty good for a little while too, until fuel and fertilizer prices kick in.

Now would be a real good time to permanently halt transfer payments to Detroit North (Thunder Bay to Quebec more or less). If that causes some anxiety, never underestimate the benefits of zero birthrate.

Is it a full moon? — Garth

#9 nonplused on 02.08.09 at 10:33 pm

My brother-in-law said he read in the paper today that the total for Alberta was 44,000. Not sure if that was adjusted or what.

Everyone I talk to says the oil companies have pulled the plug on everything. They don’t have the money to drill anymore. Even farmer Ed is talking about an Alberta drilling stimulus program (how about reverse the royalty review, Ed?) I guess he thinks the solution to low gas prices is even lower gas prices through government subsidies.

It happened very fast, too, seems like over January.

And this is after the stock option retirement plan crises of last year. If you aren’t in a stock option heavy industry, maybe you might not have thought about it. But what’s happened in Alberta is that thousands, maybe 100’s of thousands of people who had based their retirement plans on their company’s long term incentive program have seen those plans washed away. They may still have a job, but their fortunes have changed.

Back in the late 90’s oil companies were having a hard time attracting staff, due to low revenues and competition from more glamorous tech industries. So they started including options at pretty much all levels of employment to add a sweetener to the low salaries. It seemed fool proof, as the stocks never really went anywhere anyway, even while Nortel was doubling every year.

Well some of those plans turned into million dollar swings for many employees. But nobody was selling because they didn’t want to be left out if there was more upside. But they did buy bigger houses and cars and defer other types of saving. So guess what now?

And now the jobs themselves are in peril.

#10 dd on 02.08.09 at 10:38 pm

Theres going to be places in the US, Europe, and Canada were it is a depression. Windor, Ont; Mackenzie Town, BC; Thunder Bay, Ont. We lived through the 80’s and early 90’s. When jobs do start coming back to, for example, people will have to get up and move like generations past.

For now keep the job you have, pay off debt, sell if you can and sit tight. The sun rises tomorrow.

#11 bob on 02.08.09 at 10:42 pm

Holy Crap! Thise is a scary news story.

#12 bob on 02.08.09 at 10:45 pm

The trouble now is that the insanity didn’t end with sub-primes. There were two other kinds of exotic mortgages that became popular, called “Alt-A” and “option ARM.” The option ARMs, in particular, lured borrowers in with low initial interest rates – so-called teaser rates – sometimes as low as one percent. But after two, three or five years those rates “reset.” They went up. And so did the monthly payment. A mortgage of $800 dollars a month could easily jump to $1,500.

Now the Alt-A and option ARM loans made back in the heyday are starting to reset, causing the mortgage payments to go up and homeowners to default.

“The defaults right now are incredibly high. At unprecedented levels. And there’s no evidence that the default rate is tapering off. Those defaults almost inevitably are leading to foreclosures, and homes being auctioned, and home prices continuing to fall,” Tilson explains.

“What you seem to be saying is that there is a very predictable time bomb effect here?” Pelley asks.

“Exactly. I mean, you can look back at what was written in ’05 and ’07. You can look at the reset dates. You can look at the current default rates, and it’s really very clear and predictable what’s gonna happen here,” Tilson says.

Just look at a projection from the investment bank of Credit Suisse: there are the billions of dollars in sub-prime mortgages that reset last year and this year. But what hasn’t hit yet are Alt-A and option ARM resets, when homeowners will pay higher interest rates in the next three years. We’re at the beginning of a second wave.

“How big is the potential damage from the Alt As compared to what we just saw in the sub-primes?” Pelley asks.

“Well, the sub-prime is, was approaching $1 trillion, the Alt-A is about $1 trillion. And then you have option ARMs on top of that. That’s probably another $500 billion to $600 billion on top of that,” Tilson says.

Asked how many of these option ARMs he imagines are going to fail, Tilson says, “Well north of 50 percent. My gut would be 70 percent of these option ARMs will default.”

“How do you know that?” Pelley asks.

“Well we know it based on current default rates. And this is before the reset. So people are defaulting even on the little three percent teaser interest-only rates they’re being asked to pay today,” Tilson says.

#13 subprimenow on 02.08.09 at 10:56 pm

Interesting that Florida is the retirement capital of the USA.

People in B.C. STILL believe we’ll be fine because its the retirement capital of Canada. In fact we have farther to drop than just about anywhere on earth. This is gonna hurt…

#14 kc on 02.08.09 at 11:02 pm

Refer to another comment here on the January jobs number. Unadjusted, it is well over 300,000. As for the Canadian savings rate, it is basically non-existent, as is that in the US – both hovering at 2%. Meanwhile consumers in both countries have debt loads exceeding their incomes. As for how this turns out, we’ll see. But I think you need a better defence than optimism. — Garth

Garth, I feel that maybe people have savings rates and house assets (investments) confused as being the same thing. Just as the spin, net worth (with mortgage of 350K) is investments, when really it is 350K debt and compounded interest.

OK, how many in here truely pay them selves first?

#15 CS on 02.08.09 at 11:09 pm

To #4 (PW): I’ll tell you exactly what would happen if the jobless started helping at foodbanks and homeless shelters – they’d become the clients instead of the volunteers in very short order. When you do not have a job, finding another one IS your job.

#16 squidly77 on 02.08.09 at 11:12 pm

410,000 is a solid number..i was atching BNN after the job losses were announced and an economist came on from (?) damned if i can remember and said 410,000 on air sometime around 9 AM MST

derrin your the example of the title of this blog..sheep
bank of nova scotia


royal bank


td canada trust

#17 squidly77 on 02.08.09 at 11:17 pm

perhaps you prefer this one..BBAAAAHHHHH


#18 kc on 02.08.09 at 11:20 pm

This is very scary, job loss graph for the US. posted by a member of the Gov.

check it out.

#19 Rural Rick on 02.08.09 at 11:21 pm

So whats next? This capitalism thing doesn’t seem to be working out so good. Could it be all the cheating going on is discrediting viable system of finance? Or is socialism going to be the next experiment.
Any bets?
I think my Dad nailed it when he said” You only need one law. No lying. If lying was a capital offense and we hung a few mothers for telling their kids about Santa Claus we would have a lot less problems”.

#20 The Tallyman on 02.08.09 at 11:51 pm

#9 Derrin said:
“our banks have actually been making moves lately.”

Ya night moves,
out of the watchful eye of the public with a slip of the padded envelope by big govt.

Just a matter of time before they run out of curtains to hide behind.

#21 Happy Renter in North Van on 02.09.09 at 12:02 am

Surrey is a lot like Lehigh Acres, except the RCMP there don’t bother busting grow ops anymore and they’re about 3 -4 years behind…

#22 Mini Garth on 02.09.09 at 12:13 am

Would someone pls answer me this:

If significant inflation is on the horizon and the value of the dollar erodes, what will happen to current mortgage debts?

Your $300,000 dollar debt might not mean so much (assuming your still have a job).

Won’t happen. This is a fantasy backed by no solid economic fact. — Garth

#23 Expat on 02.09.09 at 12:46 am

Looking at the unadjusted labor numbers unemployment increased by 260,000 last month. Employment dropped by 410,000. Unadjusted unemployment rate of 7.8% versus 7.2% adjusted.

source: January 2009 labour force survey at:

I assume the seasonal adjustment uses “typical” shutdowns for the winter. The question is if those lumber mills and parts factories start up again this spring. If not, the February or March adjusted stats may correct the opposite way, artificially increasing unemployment numbers.

Either way, there are a lot of unfortunate folks out of work from no fault of their own. I remember the early 1990’s recession very well, not with fond memories.

#24 Canadian on 02.09.09 at 1:26 am

We just came back from the area you describe in this post. It seems to be what you describe. That is, when you get out of the gated communities and drive many miles down empty avenues, with few services.

Canada and US have gone down the same path not because our financial institutions are the same or different, but because of the collective desire of our people to have what we want, instead of what we need.

Thank-you Garth.

#25 Mike (authentic) on 02.09.09 at 1:39 am

Bad (sad) news today:

Nissan to cut 20,000 jobs and post 2.3 billion dollar loss.

and for GM Chrysler, looks like it’s Bankruputcy…

GM, Chrysler May Be Put Into Bankruptcy to Protect U.S. Loans

Feb. 9 (Bloomberg) — General Motors Corp. and Chrysler LLC may have to be forced into bankruptcy by the U.S. government to assure repayment of $17.4 billion in federal bailout loans, a course of action the automakers claim would destroy them.

U.S. taxpayers currently take a backseat to prior creditors, including Citigroup Inc., JPMorgan Chase & Co. and Goldman Sachs Group Inc., according to loan agreements posted on the U.S. Treasury’s Web site.

January sales from automakers plunged 55 percent at Chrysler, 49 percent at GM and 40 percent at Ford Motor Co.

– How many jobs will be lost in US/Canada due to this? When you take in suppliers, part shippers, manufacturers, auto shops, auto parts supply stores, even the local Country Time Donut shop workers get their morning coffee at…


#26 Glenn on 02.09.09 at 1:46 am

Amazing, simply amazing. Let me ask you a question, Derrin. Remember Iceland? Strong economy, high standard of living, decent personal savings rate, and top of the UN list of places to be. I can imagine many Icelanders feeling much the way you do now, minus the inescapable Canadian superiority complex. Yet Iceland collapsed, its ruling gov’t stepped down, and riots are ongoing. Second, if you think any of this is uncharted territory, perhaps you should ask why we are calling this the SECOND Great Depression?

#27 Mike (authentic) on 02.09.09 at 1:54 am

Garth Turner said: One guy directed me to research the latest jobless numbers, showing a shocking 129,000 people were put out of work in Canada last month. He reminded me they are ‘seasonally-adjusted,’ which means the actual number of new unemployed is under-reported in months when job loss is expected. The real number for January, he insists, is 410,000.”

Hold the phone, 410,000 jobs last month? Whow, that’s a lot. Is that was ‘seasonally-adjusted’ means, I see the CREB use it for housing data before and wondered what that meant.

I talked to a friend in Calgary last night and he said Suncor just shut down their “firebag 3 and 4” projects and his friend just lost their job; and he said everyone was layed off by Suncor for firebag.

Also expect food prices to skyrocket this summer in Canada he said and I agree as I’ve heard and read the same stuff a few months ago. Why? Because fertilizer plants have only been working at 26% capacity. Why? Because farmers couldn’t get loans (and didn’t have cash on hand) to buy fertilizer. China didn’t even order fertilizer this year from them either (their biggest client).


#28 Gord In Vancouver on 02.09.09 at 2:21 am

Are you ready?

I am (knock on wood :)).

Unfortunately, many people around here aren’t as Vancouver’s media and politicians kept saying that we’re isolated, economically, from the rest of the world.

#29 Contrarian on 02.09.09 at 3:37 am

Maybe we will stop buying bigger Tvs, apps for our i phones and composite hockey sticks.
Is it me or did we get lost on the way? I grew up in a one income , 1800 square foot house with one tv, one phone, on car. It was paradise cause that was anybody had. We have an addiction to new and better, the next wave etc. Maybe this crisis will focus us on what is important-home, family, time with friends, kids , etc. Consumerism is what got us here-lets try something else as consumerism is not working.

#30 Zoronqueen on 02.09.09 at 3:46 am

Popeye the sailor man

IMO do not buy in Spruce Grove, my Brother in law along with some of his family have been real estate speculators for years. They bought 2 houses each in 2007 and 2 sit empty cause it cannot be rented out or sold and the other 1 was sold at a reduced rate and only 1 was rented out.

And IMO if you get a new mls and lower your asking price to 360K I’m sure you will get an offer close to asking price.

Upcomming depression is scary– Will it end up like the 90’s when nurses, social workers had to take a pay cut to keep their jobs? And benifits were reduced….

Who could afford their mortgage payments??

#31 David on 02.09.09 at 4:11 am

Folks here can read the original NY Times article on LeHigh Acres.

The saddest thing about communities like this is that the real estate industry was the ONLY local industry. When the housing bubble was no longer sustainable the collapse became inevitable.
I mentioned Garth’s blog and book the other day to a fellow I know at the coffee shop and he related his story to me about selling his dad’s home in 2007. He lists the place with a local real estate star who does absolutely no work. People who saw the for sale sign bang on the door and the fellow would run them through a tour rather than wait for the too busy realtor to do a showing.
The eventual qualified buyer turned out to be some mook with a $400 down payment.

#32 Rob in Onterrible on 02.09.09 at 5:47 am

Garth, there was someone that called the Panic of 08 and he’s now predicting the Collapse of 09 in the US. He’s Gerald Celente and makes some scary predictions:

#33 Jonathan on 02.09.09 at 7:15 am

“Now would be a real good time to permanently halt transfer payments to Detroit North”

Ok nice crack at Ontario there. Toronto is definitely not Detroit, so you must be referring to Windsor? Toronto’s diversity and financial power blows away anything you have in the west, even when it is down. It’s nice to see how the Dubha’s of the world feel so deserving of money when they don’t actually make anything. Look at all the recent billionaires in the world, leaching off the people’s resources, selfishly sucking it up as their own at any cost. Yet they add nothing to the system.

Then you see google, Honda, and Apple adding real value to people’s lives, and their profits look like chump change compared to commodity based companies. It is disgusting.

You haven’t seen job losses yet because the resource industry demand for labour from pre-crash days is still fresh in management’s minds. They are scared to let go of people and then if the economy rebounded in second half of 2009, they’d be understaffed. Don’t get too comfy, as soon as they have any evidence that this downturn is here for more than a year, they will be letting everyone go.

Let’s all remember that Ontario is still forking out 22 billion in discriminatory transfer payments to other provinces. And yes, Flaherty revised the entire transfer scheme months ago to keep Ontario pumping the money out instead of receiving their fair share of transfer payments. Afterall that would have cost the fed over 30 billion per year to make the system fair to Ontario.

#34 Dark Helmet on 02.09.09 at 7:21 am

P.W. said “Society seems to be intently focused on ‘getting’ (job, money, food…). It seems not many ‘give’. What would happen if all the jobless actually started volunteering food banks and homeless shelters?”

Well, volunteering doesn’t pay very well so you wouldn’t be able to buy food or pay your rent so you’d get pretty hungry and also cold from sleeping outside. However, you could eat the food bank donations and sleep at the shelter where you volunteer. Crisis averted!

#35 pbrasseur on 02.09.09 at 7:31 am

We are not in a depression, this is a recession, a severe one, comparable (but not yet as bad) as the ones in 1976, 1982 and 1990.

Poverty is not new, it existed before the recession and will still exist after.

You are right to say that Canada is still delusional about its own situation, this is even more true here in Quebec.

As for me yes I’m ready, I have no debt and enough dough to live a long long time. But my real plan is to keep on working until retirement which I might take out of this country inside which services (including medical) will keep on decaying while fees of all kinds will rise: now that’s the real future of the nany state, despite the current attemps by governments to save it using massive debt…

#36 Chris in England on 02.09.09 at 8:01 am

Rural Rick #20: “I think my Dad nailed it when he said” You only need one law. No lying. If lying was a capital offense and we hung a few mothers for telling their kids about Santa Claus we would have a lot less problems”.”

That’s me gone then.

#37 Grantmi on 02.09.09 at 8:31 am

Housing starts plunge by 11%

February 9, 2009 at 8:45 AM EST

Canada’s housing industry continues to decline, prompting economists to question the timing of a rebound.

Housing starts across the country fell in January by about 11 per cent, to 153,000 units from 172,200 units in December, on a seasonally adjusted annual rate basis, Canada Mortgage and Housing Corp. said Monday.

ouch! That’s going to leave a mark!!


#38 Grantmi on 02.09.09 at 8:45 am

News Story
Market carnage driving investors to residential real estate
By Peter Kovessy, Ottawa Business Journal Staff
Mon, Feb 9, 2009 12:00 AM EST

Paul Blacquiere and Joanne Beehler of Spirepoint Properties. (Etienne Ranger, OBJ)Low vacancy rates projected to drive up Ottawa rents

As investors watch their financial portfolios crumble, a growing number of residents are eyeing rental real estate properties to generate stable long-term returns, local observers say.

Last summer, Canadian Real Estate Magazine named Ottawa as one of the 10 best places to invest in Canada, highlighting an average rate of return of 6.3 per cent on city properties dating back to 1955.

The ranking coincided with membership numbers in the Ottawa Real Estate Investment Organization more than doubling in the last year and a half to roughly 250 people, as investors flee the recent stock market slide and look to rebuild their savings, says organization president Paul Blacquiere. He projects Ottawa’s tight rental market will increase the income opportunities for investors in the coming year.

“Rents will go up … With lower vacancy rates, we can command a higher rent,” says Mr. Blacquiere, who is also co-owner of Ottawa-based Spirepoint Properties.

Garth.. maybe I’ve missed your comments on RENTS! Where do you think they will be heading!

Personally! If all these homes are empty and people can’t sell them, and their retirement stashed funds in their homes is melting month to month.. wouldn’t people be opening up their homes to rent basement suites or second rooms going forward.

Are these Spirepoint coneheads on crack or not??

Only one direction for rents. Down. — Garth

#39 Bill-Muskoka (NAM) on 02.09.09 at 8:56 am


Talked with my son last night and he and his fiance are looking to buy a home for $130K in Western Pennsylvania. That is a reasonable price, albeit, not as good as it could be.

As to the pic you posted, well, that reminds me of developments I have seen a lot over the years.

Take Scottsdale, Arizona. There people have multi-million dollar mansions, but no furniture inside (other than IKEA), a Mercedes-Benz or BMW in the driveway, but no money for food. They are fools of the First Order.

To really grasp what poverty is like one should take a tour through Birmingham, Alabama back about 1965 and see the shacks the Blacks were forced to live in. We would not even let a building like that stand. Heck, just look at New Orleans after Katrina exposed it to the world.

Then go to Calcutta, India, or other poverty plagued areas in South America, Africa, etc..

The home you portray is primarily the result of idiot developers playing a Ponzi scheme with their creditors. Take a drive over to Bradford, Ontario and look at ‘Dreamfields.’ All the curbs and utilities are in, and hectares of graded land, but not one single house has been built in several years.

Fact is that the lenders have been in a feeding frenzy with loser developers for way too long. I think that is what has really caused the problem, not fools buying more house than they either need or can afford. There is no long range planning imposed by government because government has become corrupt and dysfunctional. No, not the people who work in government, but the politicians who are unprepared to even comprehend how things are interrelated. Too many lawyers and used car salemen, and hangerons that have failed in their previous assignments like Port Commissioner!

Here are other good examples of what I am saying when it comes to government hold either them or itself accountable.

$23.4 million fraud trial tab called ‘a scandal’: Ontario defends cost to get $3.5M judgment involving bid-rigging at province’s realty arm

Taxman pays millions to former staff in error: Canada Revenue issued $3 million in paycheques to people who no longer work there, audit reports

Yet we see both Harper and Ignatieff whining about the one person who is charged with holding them accountable and DOING THE JOB!

Parliamentary budget officer should be reined in, say Liberal and Tory MPs: Grit MP Carolyn Bennett says no other top public servant would be allowed to go public with office budget complaints.

These morons have been getting away with it for so long they are now unrehabitable. expecting them to remedy the situation is akin to expecting the inmates of the asylum to cure themselves.

#40 Bill-Muskoka (NAM) on 02.09.09 at 8:58 am

#37 Chris in England on 02.09.09 at 8:01 am

George Carlin reduced the Ten Commandments to TWO. He has it right on IMHO! LOL

#41 JO on 02.09.09 at 9:02 am

Anyone trying to state how our banks are this or that compared to US or European banks need to remember we are about 2 years behind in the RE cycle. If you want to make a more accurate assessment of our banks, come talk to me in mid 2010 onward.

This farce has quickly escalated from serious recession to deep recession. The way we are headed, thanks to government nonsense and central bank fraud, we will be in a multi-year period of deep recessions and a good chance of entering outright depression. Anyone who dismisses we can’t go into depression is missing the signs the market has given us. Listen, she is talking:
1) Largest decline ever for oil in 2008, and the strongest drop for most commodity indices from their peaks occured in the last year.
2) Record declines on inaguration day and worst January decline ever.
3) Highest Debt/GDP ratios ever. The greater the leverage, the greater the collapse.
4) Record unemployment filings on a monthly basis, and this is happening despite the statistical lies from gov’t. If you calculated unemployment properly, we are at least in a 14 % unemployment envrionment.

I can go on and on. It breaks my heart to see young families up to their eyeballs in mortgage debt and in one case (Toronto Star article on Sat or Sun) both parents have been let go.

The core issue remains extreme debt and reckless financial management by gov’t, central banks, and a large segment of the population who simply didn’t care about saving anything and became willing debt slaves in the high consumption, debt-fuelled, spending trap set by central banks and gov’t. Central banks are run mostly by, you guessed it, bankers !

Time to eliminate the Fed/BofC, and go back to old fashioned banking where all debt is backed by 100 % reserves and savings.


#42 Chris L on 02.09.09 at 9:26 am

Why I think hyperinflation wont be a problem.

The problem right now is that everyone overpaid for stuff (houses, investments, etc.). The government is in charge of printing money and the money supply. What they seemed to want to do is carefully increase the money supply and deliver it to the people so that they can more closely tie money to assets. Real estate has almost always been tied to inflation, as has most assets give or take. In the last few years it was a mistake to uncouple assets severely from inflation and money. By increasing the money supply and carefully increasing inflation, they can couple it back to create affordability once again and justify the price of an asset. This is why stimulus will come in fits and starts as inflation is monitored carefully. Hyperinflation and deflation are both bad outcomes. Right now the fight is onto deflation and after we beat that we’ll aim at increasing the money supply to justify asset prices. Once this is done, inflation will have to be adjusted upward to bring houses and other assets back to being affordable, then we’ll see a drop of stimulus or debt repayment (shrinking the money supply) to fight off inflation. Interest rates will trend upward, hopefully not overshooting benchmark values (such as 7%). The government is (and should) be(ing) careful about how much money they throw at the problem, so there is a good chance we wont see hyperinflation.

That’s my take, I’m no expert, but as I currently see it. There are some big risks in doing this, but with a prolonged recovery it would be possible to do it with care and avoid a catastrophy.

Any thoughts?

#43 smwhite on 02.09.09 at 9:39 am

#39 Grantmi

My rent in Ottawa hasn’t gone up in three years…

Once more and more people try to “get out” of their condo investments, you’ll see more property for sale or rent on the market.

There is oversupply everywhere.

The best investment anyone can make at this time is to take the time and listen to all sides of economic opinion because only one side is perpetually talked about.

“Market carnage driving investors to residential real estate”?

Bullshit it is… Ironic that it was real estate/mortgage products that brought the world to its knees and now is the time for the average investor to own multiple properties, again. Just run down to the bank with your “blank” in hand screaming I want to be a millionaire too!

Another article aimed and making you(the sheep) question your better judgment of staying the hell away out of the worst possible time to “invest” in residential real estate. The “worst” Jerry, the worst!

Buying an income property at this time is like dumping all your investment cash into big oil last summer. Right idea, bad timing…

#44 Backbacon Crusader on 02.09.09 at 9:53 am

#39: My ex here in Calgary just managed to get a freeze on her rent for 6 months. Just by asking.

In Calgary.

If you need any example of how bad things are, the fact that a major landlord is willing to freeze a rent adjustment in this city just on request, that’s it.

I called into the office this morning, and they are going to freeze mine for 6 months as well.

#45 Bruce on 02.09.09 at 10:27 am

I think there’s a strong lesson to be learned here. Greed, money, material possessions, and trying to keep up with the Joneses isn’t what life is supposed to be all about. I think back to 30-40 yrs ago, and how much simpler and easier the times were, and I just shake my head is astonishment. That it has come down to this should surprise no one. This credit crisis isn’t something that happened overnight. It’s been YEARS in the making. I sat at the kitchen table over dinner and said this day was coming as far back as 6 yrs ago. Nobody’s laughing now.

The Canada that I grew up with is NOT the same country anymore. I have slowly seen our unique heritage and traditions fade away into oblivion. I have watched how small towns and villages all across this nation ceased to exist. I have seen once prosperous farming communities utterly vanish overnight. I’ve witnessed how once close-knit families became scattered from east to west because Free Trade and Globalization destroyed their way of life. Hell, I watched an entire generation(x) grow up with nothing to look forward to except a future full of BS McJobs and a lifetime of massive debt. I’ve seen university graduates end up on social assistance because they couldn’t find work in their field of expertise. This, my friends, is the Canada that we’ve become. For shame!

This entire “economy” makes me sick. It’s a system that rewards the corrupt and the crooked, a system that caters to the wealthy few over the working many. It’s an economy that allows the incompetent and immoral to triumph over the honest and integral. I am no longer proud to call myself Canadian. Be it as it may, what exactly do we have to be proud of anymore? Everyone’s trying to stay in the rat-race, while we’re more in debt than any other time in history. Once mighty cities are quickly becoming barren wastelands, our net-worths have turned negative, and I personally have never seen such a dumbed-down society as the one we live in today. Incredible. We are graduating college students who are unable to read or spell one word correctly!

You are a voice of inspiration, Garth. A beacon of truth amidst all the chaos and confusion coming from everyone and everywhere. You’re one of the brave few who isn’t afraid to speak up and tell it like it is, whether people want to hear the truth or not. You were one of the dear souls who wasn’t fooled or deceived by the insane folly and wild bash of the last decade, where it literally was a non-stop credit orgy that we thought would last forever. Well folks, the party is OVER and it’s going to be one hell of a hangover. Enjoy the ride down.

#46 smwhite on 02.09.09 at 10:45 am

#43 Chris L

Agreed, there is a difference between fighting deflation and fighting over priced assets, the asset deflation fight won’t be won despite the best attempts of governments to try and prop up overvalued assets and create inflation.

These RE assets that everyone overpaid for must come down to historical normal levels, like for instance RE, 3 – 4 times average family income for a home, and they will.

At best government will be able to inflate the cost of our fixed supply of commodities we use everyday. That you can be guaranteed will happen with their attempt to “save” your home values and “buy” your votes.

Hyperinflation will not happen, government will raise interest rates to Volker levels when the first sign of mass-inflation comes to the surface. The one advantage fiat currency.

You have my gold stamp on that “prediction”.

So how long till the GoC decides that mortgage interest needs to be tax deductible, that’s one way to keep the bubble afloat through to another election, then again, that is similar to pulling the 40 year mortgage or of Flaherty’s ass…

When politicians start becoming “inventors” and engineering short term fixes with long term consequences, look out!

#47 Calgary37 on 02.09.09 at 10:53 am

Over the weekend, I have come across a variety of articles where people were using the “Depression” word, including the head of the IMF. However, when one of the Globalist Elites makes public comments, I have to discern if he is giving we commoners a truthful warning or if he is saying something that will help to further the cause of the Globalist Elites. Remember, they are soon going to offer us a Global Solution to solve our current problems that we cannot refuse.

While I am expecting some type of Greater Depression over the next year or two, I do not think that we are in one yet. Furthermore, calling the current situation a Severe Recession would also be premature.

I do not know what the criteria is for an official Depression, but two events to watch for could be a complete collapse of the banking system and many people being evicted from their homes.

Here is the clincher. If the Calgary City Council announces that they are going to set up some soup kitchens for the starving citizens of Calgary, then we will know for sure that we are in a real Depression!

The rumours are that the Obama White House solution for solving the Banking Crisis is not going to restore trust and confidence from the American public at large.

I am not the only person who thinks that the only way to do that is to start up a new banking system. All of the Wall Street High Flyers have to be terminated and a new group of bankers must be brought in that are conservative and staid. For example, a bank that pays 4% interest on deposits, and charges interest on loans in a range of 6-10% should restore trust and confidence. This would allow small businesses to obtain the short-term loans that they need to operate.

The following is from an earlier posting:

The only way to save the American Banking System is to Nationalize every bank that is technically insolvent. American taxpayer money should only be used to restructure some of the Commercial Banks into a Peoples Bank concept – a return to conservative and staid banking procedures – for a period of up to ten years. However, since many of the Insurance Companies are also in trouble due to toxic investments, they could be merged into the new banking system. These new banks will then be able to sell insurance and invest the money in a more safe manner than the insurance companies did.

All of the toxic derivatives and other problem investments should be sent over to a depository/clearing house/bad bank. Since JP Morgan has the highest amount of toxic paper, they could become this depository and clearing house bank. Most of this toxic paper should just be cancelled out. The remaining paper can be dealt with accordingly in order to return some funds back to the taxpayer.

In addition to this bad investment clearing house bank, one new Investment Bank could be used for American investments and one new Investment Bank could be used for International investments.

However, first, the privately-owned Federal Reserve should be abolished. A new Central Bank owned by the American people will issue a new currency backed by gold and other precious metals. The price of gold could be arbitrarily revalued up to $5000 per ounce for this purpose.

This could also be applied to the Canadian Banking System if necessary.

Power to the People. Let the Revolution Begin.

#48 sail1 on 02.09.09 at 11:04 am

Garth, do you disagree with any of Mr. Klump’s analysis?

Monday, February 9, 2009 at 11:01 EST
BNN talks with Gregory Klump, chief economist, Canadian Real Estate Association

Yes. — Garth

#49 sail1 on 02.09.09 at 11:18 am

Globe and Mail Update

February 9, 2009 at 11:16 AM EST

Stats of interest.

The sharpest drops in sales activity will be in Alberta, British Columbia and Ontario, where 19 per cent fewer housing units are expected to be sold this year.

#50 No Fool.... on 02.09.09 at 11:23 am

#28 Mike (authentic) ,
Could you please elaborate on the Suncor project shelvings. Are firebag 3/4 on permanent hold or are you just speculating. To my knowledge no one has lost their Job at Suncor. Maybe contractors WORKING for Suncor, but no one actually at Suncor. Please clear that up so we have the real facts. Thanks.

#51 Mike (authentic) on 02.09.09 at 11:26 am

On CNBC: Faber Report.

Mr Faber talked about how ALL the banks of the US are technically insolvent. That is, their current sum is not with the whole of it’s parts.

Insolvent banks in the US. Better watch out for that CDIC deposit insurance limits for Canada.


#52 sail1 on 02.09.09 at 11:33 am

Garth, do you disagree with any of Mr. Klump’s analysis?

Monday, February 9, 2009 at 11:01 EST
BNN talks with Gregory Klump, chief economist, Canadian Real Estate Association

Yes. — Garth

Garth, exactly which numbers or demographics do you disagree with?

He’s a pumper – always has been, and each previous forecast has been wrong. Nice guy, though. — Garth

#53 George on 02.09.09 at 11:38 am

Hi Garth,
what part of “severe inflation shreds debt” do you not understand? The other thing about hyperinflation is that it doesn’t have to go weimar to exist. Hyperinflation really is the loss of confidence in a currency wherever that point happens to arrive. Anytime I witness someone throwing their certainty around I have to wonder why? Are you truly the ruler and all being of space, time and dimension? Hyperinflation is a possibility in uncharted waters. Look at the many modern societies that have experienced it.

I understand it well. And it won’t happen for years and years, if at all. This is a vacant argument. — Garth

#54 Another Albertan on 02.09.09 at 11:42 am


Firebag 3 is skeleton for now, then full-stop by early March if not sooner.

Firebag 4 is delayed.

Firebag 5 and 6 are shelved.

The implication is cascaded onto Voyageur because it will not have adequate feed for the upgrader.

Overall, the implications to scheduling all the way through start-up are incredible.

#55 Two-thirds on 02.09.09 at 11:43 am

Home builders eye spring turnaround

Some “news” from the Edmonton front.

My wife and I have toured showhomes in South East Edmonton for the past 2 weekends. Yesterday afternoon there was some fair traffic in most of the places we visited (single detached and duplexes). I counted no less than 6 couples at the busiest showhome during our brief walkaround.

All of the builders have immediate availability and many units to be completed by the summer. Price-wise, they have come down from their list price, in many cases by 50K! (immediate possesions). Plus most seem to be offering extras with the homes (upgraded x, y, and z, “for free”).

I am no stranger to the hyperinflated claims and spin of the RE industry, having been a long-time reader of this blog as well as some other Alberta/Edmonton specific ones. However, it seems to me that there is some truth to the article above, even to a moderate RE bear such as myself.

My question to Garth and all those of you who are more knowledgeable about RE and RE in AB is: are new homes more or less susceptible to deflationary effects than their re-sale equivalents? Are new home prices stickier than lived-in ones?

Your thoughts would be appreciated, as it seems to me that new homes are seldom discussed specifically in this blog.

#56 Mike (authentic) on 02.09.09 at 11:56 am

Food bank volunteering…

I volunteered at the Calgary Food Bank in the summer and spent the day there sorting food on the line. I was in charge of the homeless food hampers all day.

Quite a bit of food was donated at the food bank, but the most interesting thing was they threw out anything that was dented, and believe me, it was a lot (like 1,000 lbs worth). Any dent larger than a quarter or any sized mark on the rim of a can. They made me throw out food that was good enough to buy in the reduced isle!

When I asked why, they said that the Calgary homeless were complaining about not being treated fairly and they didn’t want dented cans.

Free food not good enough, it’s got to be dent free too.

And here I am buying dented cans in the store to save a buck when the homeless wouldn’t even take it for free.

I hope that dent policy changed.

Also there was a throw away policy for any glass jar food (jams, peanut butter, pickles, etc); so don’t donate that stuff as it just gets thrown out.


#57 Greg W., Oakville on 02.09.09 at 11:59 am

Hi #1 Jason on 02.08.09 at 8:48 pm,

Thanks for the link.
I just watched the first 4 clips, so far.
From what he speak of, I’m sure the rest will be worth spending the time watching!

#58 ThumbsUp on 02.09.09 at 12:03 pm

looking for hyperinflation? look no further, look back 2004-2008! with oil $140, doubling RE, that was the worst inflation in North America history.

With all the job losses and global economy, wealth rebalance, the chance of hyperinflation in the next 3-5 years is very slim.

#59 Matt Stiles on 02.09.09 at 12:16 pm

If one has a real understanding of our financial system (credit based, US dollar reserve), we would see that there is absolutely zero chance of hyperinflation or a dollar collapse anytime soon.

I wrote about the subject on my blog today:

Beware the commodity hucksters trying to sell you on a looming hyperinflation. Hard assets will do better than some in a deflation, but they are by no means a get-rich-quick opportunity.

Agreed. The world is deflating, and the dangers of this are not well enough understood. Best prepare. — Garth

#60 Calgary37 on 02.09.09 at 12:18 pm

If you would like to read about some of the background info about the upcoming Global Food Shortage, then you could start with the following article.

Monday, February 9, 2009
*****Catastrophic Decline in 2009 Global Food Production*****
by Eric deCarbonnel

“After reading about the droughts in two major agricultural countries, China and Argentina, I decided to research the extent other food producing nations were also experiencing droughts. This project ended up taking a lot longer than I thought. 2009 looks to be a humanitarian disaster around much of the world

To understand the depth of the food Catastrophe that faces the world this year, consider the graphic below depicting countries by USD value of their agricultural output, as of 2006.”

Read the rest at:

Our food supply has been under attack for at least the last five years. The most recent example is that American peanut processing plant and their salmonella problem. That plant deserves to be razed to the ground and the owners and managers should be severely punished.

How many of us may have a granola bar stashed away that contains a trace of peanuts from this plant?

This is why it is so necessary to be in control of your own food supply.

Power to the People. Let the Revolution Begin.

#61 OttawaMike on 02.09.09 at 12:20 pm

#39 News article, Ottawa business journal.

I sent the Real Estate Co. in the article the following email:
Read your article in today’s journal. Could you elaborate on why you believe real estate is still on the upward trend for Ottawa when prices are collapsing in all other major Cnd. cities? In fact there are not any G8 nations where it is trending upward. Additionally more rentals are coming on as owners get stuck with properties they cannot sell so how can rents be increasing in this deflatonary cycle? Perhaps you can make a convincing argument to me? Looking forward to your reply.”

Bet I will never hear back from them…

#62 Bill-Muskoka (NAM) on 02.09.09 at 12:34 pm

Part of why this happned is due to the inappropriate terminology the investment and banking community has been using such as ‘product.’

No, this not a product. A product is a manufactured item (Well, I have to grant that this has certainly been ‘manufactured’) that has real tangible value. What their so-called product really is is PAPER DEBT and people buy these as though they are real investments.

Give your head a shake. You are GAMBLING and that is all it is. You are betting someone’s debt will be paid backed only by a faux market value that changes faster the wind. No one in their right mind would buy debt, it is a negative thing.

Now, those who have been writing such worthless paper want the Taxpayers to bail them out. NO! No more than I would bail out a gambling addict who believes in Luck. Well at least you got three out four letters correct.

The ones who created this ‘market’ should be the ones sacrificing their assets, not the taxpayers. Selling debt if as mindless as it gets. Buying it is even more brainless. Let’s call this what it is…Ponzi’s GAMBLING Scheme. It was made to appear real by the constant blowing of hot air which was termed ‘inflation.’ What a moronic economic theory that balloon has proven to be.

#63 613 Happy where I am on 02.09.09 at 12:47 pm

Here is another example of how the media is enabling realtors to drink the koolaid….

Can’t believe they would actually publish this… whatever happened to factual reporting????

#64 Eduardo on 02.09.09 at 12:47 pm

The true problem is OTC derivatives and once they are marked down to their true value then the market will resume as normal. If this means that all the US banks are insolvent, so be it. Nationalize them because the taxpayer is going to pay for it either in the short term or the long term and the only way to get this over with is to feel the pain.

#65 Carole AB on 02.09.09 at 12:53 pm

You know its bad when: I felt great to see these guys predict deep recession for Canada…for 3-5 yrs…rather than depression headed for US, UK, Iceland..10yrs

#66 Eduardo on 02.09.09 at 12:59 pm

Re: All the deflationists.

If the US govt and the rest of the world is injecting trillions of dollars into the system and increasing money supply at a previously unimaginable rate who is funding this?
The answer is they have to issue debt.

What happens when China refuses to buy more government debt?
The country has to turn inwards.

What happens when a government is buying its own debt with money it doesnt have?

Maybe, if you think that China has infinite sums of money to fund the rest of the world, then you are correct, this is a deflationary environment. Otherwise, there will be a loss of confidence in all currencies.

I agree that deflation is the short term concern but only because so many derivatives are based on real estate and job losses compound the problem by forcing sales.

Deflation should not be your primary concern provided that you have a job. If you have a job then your buying power is increasing for all your savings and cash flow.

#67 K on 02.09.09 at 1:02 pm

#47 Bruce, #30 Contrarian,
Great posts , I couldn’t have said better myself. Will people learn from this?…..NO…..Sad but true…Lets all try to remember this. There are no victims only volunteers

#68 pbrasseur on 02.09.09 at 1:03 pm

Garth and all,

As you surely know home loans in the United States are “non-recourse,” which means that if you default on a mortgage, it’s mostly the bank’s problem. In Canada, it’s yours. That alone can explain the very large number of foreclosures in the US. If you can’t (or don’t want to) pay you simply walk away and let the bank take the house, make sense if the house has lost a lot of value. Can’t do so in Canada, here the bank will take the house but also get after you till you pay up or go bankrupt.

Surely this must have some kind of impact on our RE and financial system, it should influence the way this crisis unfolds here which basically should be different than in the US. Any idea anyone?

For example I’d think this would diminish the number of foreclosure in Canada therefore diminish the downward pressure on the market. So basically we’d follow the US trend abeit more slowly and less radically.

So if you expect the same kind of meltdown in Canada as in the US you DO have to explain how the absence of “non recourse” loans would NOT affect the market.

We do not have foreclosures, rather powers of sale. This is not the main problem, however, but rather negative equity. This destroys middle class wealth and deepens the recession in precisely the same way US foreclosures do. Different roads. Same destination. — Garth

#69 pbrasseur on 02.09.09 at 1:37 pm

“We do not have foreclosures, rather powers of sale. This is not the main problem, however, but rather negative equity. This destroys middle class wealth and deepens the recession in precisely the same way US foreclosures do. Different roads. Same destination. — Garth”

Thanks for answering.

“Non-recourse” loans and the millions of foreclosure in the US do surely help counter the negative equity problem by allowing (abeit not without stress) people to get out of of debt and out of the negative equity situation.

In Canada people have less choice but to keep their house, their huge debt and the negative equity, for years to come.

If it is true that negative equity is the main problem then our situation which cannot correct as quickly could in the end be worse than the US.

This would be typical, the US economy is more prone to spectacular crisis, but also more dynamic and quicker to adapt and readjust. The land of the free…

Some things never change.

#70 MikeB on 02.09.09 at 1:45 pm

Trend upwards for personal and business bankruptcies are UP… big surprise. Ben Tal tags it as “second inning of” this bankruptcy trend. Number up 50%. SOHO small office Home Office means there is a personal bankruptcy as well as a business bankruptcy as well..
But as long as the realtors are busy that’s all that matters of course.

#71 Keith in Calgary on 02.09.09 at 1:53 pm

Speaking of what an economic collapse looks like up close and personal………I visited Melbourne Beach (an hour outside of Orlando, Florida) a few months ago on business……while driving down the main street in the back of a taxi on the way to my hotel, the landscape basically looked like this…….

-boarded up strip mall
-boarded up target store
-gentlemen’s club open for business
-vacant car dealership lot
-bail bonds storefront open for business
-liquor store open for business
-boarded up strip mall with gang bangers hangin’
-7/11 with gang bangers hangin’
-another gentlemens club open for business
-boarded up JC penney

We need a “concealed carry” law in Canada…….trust me on this one. You ain’t seen nothing yet.

#72 Dave on 02.09.09 at 1:57 pm

If one has a real understanding of our financial system (credit based, US dollar reserve), we would see that there is absolutely zero chance of hyperinflation or a dollar collapse anytime soon.

I wrote about the subject on my blog today:

Beware the commodity hucksters trying to sell you on a looming hyperinflation. Hard assets will do better than some in a deflation, but they are by no means a get-rich-quick opportunity.


maybe you’re looking at things with a short time horizon? Historically, hyperinflation followed deep deflations because of govn’t intervention trying to ‘fix’ or ‘stimulate’ the problem.

All economies have been propped up with loads of cash. Eventually lending will come back and so will public confidence- this will obviously take time. Its what happens when people start spending again that is the concern.

If you’re debating a commodity bull run, I don’t know where you think the next bull is. Historically, commodity bull markets have lasted at least 15 years and at the most 23 years. Its safe to say this commodity bull run started in 2000. Jim Rogers (whose net-worth is more than all of ours put together) agrees that the major major commodity bull will continue.

China is building infrastructure not buying Ipods and blackberries. If you believe in their economic growth, then the next bull run is obvious

#73 mcfly on 02.09.09 at 2:01 pm

It sounds to me like the chief economist for the Canadian Real Estate Association Gregory Klump really knows what he’s talking about. When asked what is the turning point for affordability he states that the “watershed moment is when consumers (except Newfoundland) have the confidence to come out of the bunkers”!! Is this guy for real??
In my world, when real estate prices drop to a level where people can afford to buy a home with a small down-payment and monthly payments of principal, interest and taxes, that do not exceed 30% of their gross income…only then, will be the turning point. By 2010, I doubt it.

#74 [email protected] on 02.09.09 at 2:08 pm

#70 Re: Recourse loans

You are correct that in the US the loans are non-recourse. Here is a scenerio:

Home Value WAS 300K
Seller walks away and the bank short sells for 200K
The 100K difference is marked as income on the sellers tax return, therefore the seller has to take a tax hit for the difference in the mortgage amount on the short sale. This is a one time tax hit.

In Canada the bank is entitled to the total mortgage amount. ie.
Seller can’t pay mortgage, bank forecloses
Mortgage of 300K
Bank sells house-power of sale for 200K
The buyer is on the hook for the 100K difference plus all legal/realtor costs.
The buyer does not have a home but still must pay the 100K difference, only option is bankcruptcy.

By law the bank must sell the house at fair market value, thats why power of sales are not really good deals, they often list at 20% above there real value.

Bankcruptcy is a death sentance for young couples. No credit for 7 years and extreme credit rates even after that. It is only done when there is no other choice.

Sorry for the length of this post, just wanted to clarify so that people understand the difference.

#75 David Bakody on 02.09.09 at 2:38 pm

I would like to know at what point the mighty US of A has it’s money devaluated ….. they now owe about #10.7 Trillion and will run a $1 Trillion deficit plus they are still spending multi billions per month in Iraq and Afghanistan ……AND there is talk the banks and other loan companies want more Billions …. AND, AND add more stimulus and more money for the Big Three ….. all couched in the largest generation of old tired and sick people ever …… oops forgot an increase in those very deadly and costly FIRE, WIND & FlOODS disasters so look for 20-25% unemployment and a fast return home of the National Guard to protect the rich and powerful …. and even that will cost more billions ….. and I far off here or what …. if so what do y’all think ? Happy Days or what?

Persanally I am still seeking the WHY? I do have some suspicions because “The Elete” of this world saw this all coming and did nothing …… that’s the Why? Think this one over.

In 1913, prior to the passage of the Federal Reserve Act President Wilson’s The New Freedom was published, in which he revealed:

“Since I entered politics, I have chiefly had men’s views confided to me privately. Some of the biggest men in the U. S., in the field of commerce and manufacturing, are afraid of somebody, are afraid of something. They know that there is a power somewhere so organized, so subtle, so watchful, so interlocked, so complete, so pervasive, that they had better not speak above their breath when they speak in condemnation of it.”

#76 Mike on 02.09.09 at 3:00 pm

Martin Wolf from the Financial Times has some sobering views on the world economy and of course on the US economy. Because so much is tied to the US, pretty much anybody that I know has a client who has a US parent of epic proportions, we all look to the US to be the benchmark by which we see how bad things are.
Wolf’s views are sobering because he refers to depression several times including how the IMF determines the world economy to be in its current state.'ll-Be-Lucky-If-Downturn-Only-as-Bad-as-Japan's-FT's-Wolf-Says;_ylt=Al_dAggmiC4089r_JnubAOS7YWsA?tickers=%5Edji,%5Egspc,EEM,SPY,DIA,XLF,TLT

Real Estate is but a small part of the economy and those who jump into it too quickly will need to stay in the game for a long time to make it profitable , ie a real investment.
Those of us who said just look at Japan for a glimpse of our future will have a rude awakening when you review this video. No chance we will be so lucky as to be another Japan. Have a look and take a stiff drink when you do. Hey, but as long as realtors are busy who cares. my new tagline.

#77 Mike on 02.09.09 at 3:20 pm

Comments on the Toronto Real Estate Market. From my perspective, there are still some massively greedy sellers out there. Saw one on the weekend that listed last JULY that is basically the same 800K price. Another one that even the agent who listed it last November said was overpriced is still on the market at 800K. These are not move in quality homes. Another other takes on the T.O. market??

#78 TheComingDepression on 02.09.09 at 3:43 pm

You guys may want to know what actually occurred in Sept. when the market crashed. Amazing 5 min video of Rep. Kanjorski explaining the sequences. Now they are begging for the PUBLIC to come up with ideas to save the economy because THEY DON’T KNOW WHERE IT WILL END!
(Garth I thought you may have liked that article about Real Estate in Fla.)

#79 TS on 02.09.09 at 3:50 pm

Here’s a web link re: the Canadian housing market is now in full national decline:

Remember, you all heard it hear on Garth’s blog 18-24 months ago…

#80 Keith in Calgary on 02.09.09 at 3:55 pm

Twinn007 said……….”Bankcruptcy is a death sentence for young couples.”

Are you kidding me ? It is the best thing that will ever happen to them. I’ve been BK, and trust me, that is the sole reason I am cash rich and debt free some 16 years later. 7 years of banishment to ‘credit purgatory” makes one wise and wealthy……once you learn to live on cash and budget monthly because you have absolutely NO OTHER CHOICE it is the turning point in your financial future.

#81 TS on 02.09.09 at 4:00 pm

I was watching Larry King live last week when he had Suze Orman on as a guest. Very interesting stuff… 19,000,000 vacant houses with many more to come. People in Tampa with $700,000 mortgages on homes now worth only $250,000….and walking away even though they still have jobs. Some streets with so many vacant homes that the remaining homeowners are cutting the grass on 20-25 area homes just to try and keep the neighbourhood looking decent.

Interesting times indeed…

#82 Dave99 on 02.09.09 at 4:06 pm

First, since there are too many Dave’s here I’ve changed mine to be Dave99.

Second, regarding who owns the US Federal Debt? It is not mostly owned by foreign countries, but rather is 50%owned by various domestic government programs such as Social Security. (otherwise known as “IntraGovernmental Debt”)

For those who predict a devaluing of the US dollar to “offload” their debt onto the world – well – the problem is that destroys their social security programs, as well as most american retirement savings/etc.

Interestingly, the proportion of Intragovernment ownership of US public debt has increased from 35% in 1999 to 48% (est) in 2009.

They truly are borrowing tomorrow’s money to pay today’s bills.

If they spend wisely, and receive a decent ROI from the deficit spending, then this may not be a bad thing.

Time will tell.

#83 Got A Watch on 02.09.09 at 4:38 pm

Deflation is here for years yet. Japan has
been in recession and in and out of deflation for 19 years now.

But “we aren’t Japan” the naysayers cry. Yes, that it true. Their economy was in much better shape.

The “radical” (that means he is not delusional) Australian economist Steve Keen of Debt Deflation Blog has this week laid out the case in detail why inflation has no hope in the near term of overcoming the powerful deflation now underway.

The discussion of this at Naked Capitalism (which despite the name is actually one of the most widely read and highly rated financial Blogs on the net) is highly illuminating. The Roving Cavaliers of Credit (or Why Ben’s Helicopter Will Fail) is very incisive.

This article and the concepts presented are vital to understanding of the progress of this crisis. The greatest Credit Bubble in history has burst, and there is no putting the hot air back in the bubble. Inflationistas need to read that and comprehend. Inflation will no doubt follow deflation, but it will not be anytime soon.

Mish’s Global Economic Trend Analysi has been documenting this situation for years. His Blog was recently rated #1 Economics Blog by ’24/7 Wall St’ and ‘Time’. He sees pervasive deflation as well, and has the logical arguments lined up to refute those who think inflation is looming soon. He has correctly called every step of this crisis so far, well in advance, I have been reading there since 2005.

Everyone has to choose what they want to believe. I like to base my decisions on the facts, the ‘it is what it is’ type of common sense, no delusions. I look at the track record of ‘predictions’ and how they pan out. If I thought inflation was a pressing problem, I would say so.

#84 Chris in England on 02.09.09 at 4:39 pm

I am amazed that the US allows its citizens to basically choose whether to pay their debts or not. So they choose to buy property which of course they hang onto for dear life when it goes up in value, but they “walk away” when the value goes down? This is completely wrong and they should be held responsible for their debts, not indulged like spoilt children who are tired of the game. No wonder so many went merrily into home ownership without a care – if there is no downside to it, why not!

#85 bermygoon on 02.09.09 at 4:40 pm

I anyone is out of work right now a great suggestion to get back to work is to find a job in the bankruptcy field. Study the whole process and find a job in the field that matches to your skill set.

If you can I would suggest calling a bunch of bankruptcy lawyer and asking if they have 15 minutes of their time to spare for a meeting. Use your time wisely and find a place where you can find a job.

Bankruptcy in Canada is going to be huge business in Canada for the next few years at least.

#86 Got A Watch on 02.09.09 at 4:44 pm

This is the global scene now: Bond market calls Feds bluff as world falls apart

“The yield on 10-year US Treasury bonds – the world’s benchmark cost of capital – has jumped from 2pc to 3pc since Christmas despite efforts to talk the rate down.

This level will asphyxiate the US economy if allowed to persist, as Fed chair Ben Bernanke must know. The US is already in deflation. Core prices – stripping out energy – fell at an annual rate of 2pc in the fourth quarter. Wages are following. IBM, Chrysler, General Motors, and YRC, have all begun to cut pay.

The “real” cost of capital is rising as the slump deepens. This is textbook debt deflation. It was not supposed to happen. The Bernanke doctrine assumes that the Fed can bring down the whole structure of interest costs, first by slashing the Fed Funds rate to zero, and then by making a “credible threat” to buy Treasuries outright with printed money.

Mr Bernanke has been repeating this threat since early December. But talk is cheap. As the Fed hesitates, real yields climb ever higher. Plainly, the markets do not regard Fed rhetoric as “credible” at all.

Who can blame bond vigilantes for going on strike? Nobody wants to be left holding the bag if and when the global monetary blitz succeeds in stoking inflation. Governments are borrowing frantically to fund their bail-outs and cover a collapse in tax revenue. The US Treasury alone needs to raise $2 trillion in 2009.

Where is the money to come from? China, the Pacific tigers and the commodity powers are no longer amassing foreign reserves ($7.6 trillion). Their exports have collapsed. Instead of buying a trillion dollars of extra bonds each year, they have become net sellers. In aggregate, they dumped $190bn over the last fifteen weeks. ”

Read the whole article at the link. Covers latest stats and developments around the globe. No comfort.

It’s not looking too good.

#87 Shawn on 02.09.09 at 4:55 pm

So what do we do? If the jobs aren’t coming back because we shipped them overseas to Asia. The G20 (most of it) has to stand up to what they let happen over the last 20+ years in oursourcing our jobs.

Globalism destroyed Capitalism, the inevitable cheaper labour rates, cheaper product quality for higher shareholder value. Now the rooster has come home, us/those shareholders reap what we sow.

#88 David Bakody on 02.09.09 at 5:00 pm

#82 Keith in Calgary on 02.09.09 at 3:55 pm

Good for you Keith, unfortunately it is not that easy for most and far to many fall back even deeper into the total breakdown of their family structure. It should be the last resort even then only with professional assistance.

#89 North Vancouver Citizen Jr. on 02.09.09 at 5:10 pm

“”So who is directly responsible for this mess?

That would be the 535 idiots in The Capitol Building, ladies and gentlemen.

Washington and Wall Street are still playing the blame game. But most financial experts agree that a cocktail of bad economic policies and lax government oversight led lenders, borrowers and investors to take huge risks.

Greed and recklessness trumped fear and reason, and they led banks to the brink.

Got it?

Banks don’t make economic policy or run government oversight.

Congress does.””

#90 Keith in Calgary on 02.09.09 at 5:21 pm

David Bakody….

Bah……..!! Which professional are you talking about ? A psychologist to hold their hand……..or the bankruptcy trustee who is also an accountant ?

You receive lots of beneficial financial counselling when you go BK, and you get none when you borrow money. The professional assistance you speak of is needed, but at the other end of the journey, where it shall never be delivered, for it runs counter to the desires of the money lenders.

There is absolutely no emotional, or life altering stigma, attached to going BK……..just a overwhelming sense of relief and getting on with ones life. Revenue Canada was after me for a re-assessed return and would not accept a short term monthly payment plan……so……they lost, I won.

#91 Bonnie N BC on 02.09.09 at 5:22 pm


I caught President Obama’s Town Hall this am and wonder if he can really herd those cats in Washington. It seems to me, Canada, is married to his spending “economic stimulus policies” for better or worse and we all hope he has the correct measures.

We need to have some confidence that we are not in a black hole but in a deep well. A few will come out fine but the great majority of the middle class here and there will never have the same life “After the Crash”.

Me, I just hope most of us can adjust. For the vast majority of the middle class, the idea that you scrimp and save to put a roof over your head and food on the table is a foreign concept. I think people need to understand that as the economy retracts our lifestyle must reflect that reality.

This is a monumental correction of fortune imagined by the middle class. What worries me is the breakdown of civility that could tear apart our communities as it unfolds further.

#92 Bill-Muskoka (NAM) on 02.09.09 at 5:23 pm

#73 Keith in Calgary on 02.09.09 at 1:53 pm

Are you implying Canada should allow the concealed carrying of firearms?

Oh yeah, that will solve all the social problems. Look at how successful it has been in the States, where I am FROM.

#93 Bill-Muskoka (NAM) on 02.09.09 at 5:32 pm

#86 Chris in England on 02.09.09 at 4:39 pm

The U.S. banned Debtor’s Prison way, way back. Do they still have that in England?

What the Walkaways are doing is simply saying ‘Here, you own it anyway. Sell it. It’s yours.’ Actually a smart and proper move to those who have milked the masses for decades with compounded interest. Yes, they give up any equity, but at least are free again from the Slave Masters.

Until the lenders rid the mortgage financing of compounded interest and replace it with simple interest, no one should care one damn bit about them. No one should have to re-pay 300% of the principle to make the Fat Cats FATTER!

#94 Eduardo on 02.09.09 at 5:53 pm

To everyone who says the past little bit has been the most inflationary period ever… that is completely false. Keep in mind these are government statistics though, not the pre-clinton era stats.

For people who say that most debt is owned within the government, this is fine provided their balance sheets can handle it. What happens when they need to buy X trillions more debt. It’s just not feasible.

Look at the agency debt itself… this is from December… People are purging it because they don’t trust the agency balance sheets but the net debt is increasing in a straightline fashion.

Here is additional data regarding US debt.

#95 Eduardo on 02.09.09 at 6:01 pm

This sure looks like people have confidence in the banks and currency in general…

#96 Keith in Calgary on 02.09.09 at 6:07 pm

Bill – Muskoka……

1-Gun owner


Choose one.

#97 Eduardo on 02.09.09 at 6:15 pm

I apologize but I meant to say that first chart up there is a PROXY of inflation. It’s the fed funds rate.

#98 Another Albertan on 02.09.09 at 6:21 pm

@87 – that advice is so far from being pragmatic that it isn’t even funny.

Bankruptcy and tax lawyers are the top of the food chain. They deal with the most complex cases alongside with the accountants – typically CAs – who will be tearing the numbers apart. At this level, you are talking about hundreds of dollars per hour in professional billables. Individuals of significant net-worth using these services aren’t really going bankrupt as much as they are restructuring their assets and liabilities.

The average person is not going to avail themselves of the most senior professionals unless they have screwed up most royally and the implications of going BK are going to cascade.

The average person needs to talk to a debt counsellor first in order to have the basics understood. You escalate from this point upward as needed.

I expect people at the top to have significant education and deep experience. I would also expect that 15 minute chat to cost at least $75.

So, as a result, someone out of work looking for retraining or someone looking to change careers shouldn’t be aspiring to talk to the top of the heap. It’s a nice thought but it’s wholly impractical unless you are already a lawyer or an accountant looking for a lateral move.

#99 North Vancouver Citizen Jr. on 02.09.09 at 6:30 pm

“”Every week there are stories involving workers voluntarily, or involuntarily involved in pay cuts

GM Plans Pay Cuts For Salaried Workers

Ohio Governor Asks For Across The Board Union Pay Cuts

San Diego is asking for cuts in pay and wages

Arizona State Faculty Announced Face 12% Pay Cut by June 30.

Contemporary Media employees take pay cut

Those salary cuts span many industries. We have not seen broad based wages cuts like this since the great depression. Expect to see a lot more in the weeks ahead. This is deflation in action.””

#100 David Bakody on 02.09.09 at 6:34 pm

#92 Keith in Calgary on 02.09.09 at 5:21 pm

Hold on to your britches Cowboy ….. steady …. I said good for you but do not put everyone in the same Chuck Wagon ….. speaking of which I have sadly watched horses killed on opening day even when those so called professionals running the show said it was safe. I have owned Quarter horses and my heart still bleeds with pain ….. I have known a few who lost eveything never to get their act together after BK …. as mentioned good for you and your family. As far as taxes and revenue ….. Canada is 5 1/2 times zones wide and it takes one heck of a lot of money to povide good services to all and soon it will be even harder. Not sure but I think this evening news said BK up 50% in Canada mostly in Alberta.

#101 jess on 02.09.09 at 6:41 pm

At 2 minutes, 20 seconds into this C-Span video clip, Rep. Paul Kanjorski of Pennsylvania explains how the Federal Reserve told Congress members about a “tremendous draw-down of money market accounts in the United States, to the tune of $550 billion dollars.” According to Kanjorski, this electronic transfer occured over the period of an hour or two.

#102 jess on 02.09.09 at 6:42 pm

Here is a transcript of what Kanjorski says More.. in the video:

“On Thursday Sept 15, 2008 at roughly 11 AM The Federal Reserve noticed a tremendous draw down of money market accounts in the USA to the tune of $550 Billion dollars in a matter of an hour or two.

#103 North Vancouver Citizen Jr. on 02.09.09 at 6:49 pm

Ever wonder why everyone is so hellbent and determined to find a way to do a “Bad Bank”?

It is about recognition of losses and who takes them.

Under the law The Fed’s profits and losses are Treasury’s…and The Fed wants it on Treasury’s book.

…take the cash flow for as long as you possibly can.

Bernanke has relied on his “exigent circumstance” clause to be able to lend not only to his member banks under ordinary monetary operations but also to damn near anyone and anything else so long as “unusual and exigent circumstances” exist.

If that clause ever becomes inoperative he will be forced to disgorge those “assets” back into the market.””

-The Real Issue With “Bad Assets” (Fed Part II)-

#104 Fisholm on 02.09.09 at 8:03 pm


One argument for Ottawa RE being a good investment is that if SHTF the goverment will form a National Capitol Region like the US or Australia. This is a matter of National security for the goverment to be able to operate. The NCR has been talked about for a long time.
But, Ottawa is very cold and too spread out. It relies very heavily on tourism for $$ and high tech is all but dead here. Other than goverment jobs Ottawa doesn’t have allot to fall back on. And we (Ottawans) are heading into this after a 2 month bus strike that has taken $400,000,000+ out of the local economy. Some house prices have doubled or more in six years which may not seem like much but, gov saleries have not been keeping up at all. Luckily Ottawa has lots of groundhogs and tree lined streets. Also, the bush is not far away.

#105 squidly77 on 02.09.09 at 8:16 pm

you should try to acknowledge the dangers of being overly optimistic..becoming unrealistic can wreck a company and/or your personal finances

#106 Mike B on 02.09.09 at 8:21 pm

OK people let’s get something straight… No one should give a rat’s about what ANY Canadian official thinks or wishes about the economy. What matters is what American’s and Brits have to say. Schiff thinks they are doomed, Wolf for FP is scared shxxtless, Obama talks about disasters . The US is at least 70% of our GDP. They go down … We go down It’s that simple. Carney??? He thought the first bailout was a great idea… Of course he worked for Goldmann Sachs years ago. Not too much a buddy buddy system is it now.
most americans are freaking… We should be too
Hey but as long as realtors are busy that’s all that matters.

#107 ThumbsUp on 02.09.09 at 8:23 pm

#107 Derrin
Yeah, once the debt machine is all greased up, I’ll be priced out forever.

#108 midas on 02.09.09 at 8:26 pm

Sold, am renting now. Last fall a 2000 SF townhouse rented in this neighborhood for $2200. I am paying $2300 for a 3100 SF house that would have easily fetched $3200 even 6 months ago. Rents are going down, way down. I looked at dozens of brand new luxury investment property homes that people have bought in this burb that they can’t sell now; and are desperate to rent. The desperation in some people’s voice and actions was obvious, stuck as they are with these shiny new homes that they can’t move nor rent. TO rents will see a substantial decline especially as more condo buildings are completed and made ready for occupancy later this year.

#109 dekethegeek on 02.09.09 at 8:35 pm

#56 – Another Albertan
Whats this whole Suncor “Firebag4,5,6 &7” about? Cancelled developement project for the tarsands?

#98 – Keith in Calgary
While I am not “anti gun”. And I have my Canadian Firearms License tucked away in my wallet. I do somewhat disagree with. . . .
Your comment to Muskoka Bill
“Gun Owner or Victim, your choice”
Sometimes they get to be both! With their own gun! Statistically speaking
a)the successful suicide rate amoung gun owners is higher than the national average because when they do attempt suicide they usually succeed.
b) Gun owners have a slightly better chance of being killed in a break and enter when they arrive home to find someone has already found their firearm and ammunition.
c)Gun owners can accidently shoot themselves.
Essentially gun owners ( like you and me) enjoy either hunting or target shooting. Gun ownership aint for everyone and if someone doesnt like having guns around . Thats cool.
The US population is 10 times Canada’s but the murder rate by firearm is horrendus.(sorry i dont know the stat off hand but it’s way more than 10 times Canada’s firearm murder rate. Although Vancouver seems to be trying to catch up these past few weeks.)
Just my 2 cents.

#110 Cendrine on 02.09.09 at 8:55 pm

Pertinent to the picture on top of this post – we have it in Canada, too!

#111 Bruce on 02.09.09 at 9:01 pm


I wouldn’t trust Carney to take out the trash, let alone give us any kind of insight as to the state of our economy. Of course Carney is going to be optimistic. That’s why he gets the big bucks. I would rather have David Dodge back at the the helm to see us through this mess, but I take he wanted out while the gettin’ was good. Can`t say that I entirely blame him. Take what Mark Carney says with a grain of salt. He’s a professional bullshitter, much like his federal counterparts.

#112 Another Albertan on 02.09.09 at 9:49 pm

Deke – The various Firebag stages are inputs into the Voyageur upgrader.

Planning and development occurs well in advance of formal engineering and waaay in advance of shovels going into the ground. We’re talking about a potential re-stacking of a decade+ worth of projects here.

#113 EW on VI on 02.09.09 at 9:56 pm

Bill NAM 95

Do you know how mortgage interest is calculated? In Canada it is compounded semi-anually, so a 6% mortgage is actually about 6.09%. Then the applicable payment frequency is taken (12 for monthly payments) and you get something like 0.4938% being effectively
charged and compounded monthly on the unpaid balance.
This should give you a payment of $640 on 100K over 25 years, blending interest and principal repayment. Total
payments about $192K.

Please show how you would apply your simple interest formula at the same rate of 6% over the 25 years (300 months) to see what the payment is and get back to me. Thanks.

#114 Coho on 02.09.09 at 10:10 pm

Jess wrote:
Here is a transcript of what Kanjorski says More.. in the video:

“On Thursday Sept 15, 2008 at roughly 11 AM The Federal Reserve noticed a tremendous draw down of money market accounts in the USA to the tune of $550 Billion dollars in a matter of an hour or two.

If what he is saying is true, then that may confirm the stance many have that this financial debacle has been orchestrated by TPTB (the Owners of the System).

Problem — Reaction — Solution.

Problem: Financial Crisis

Reaction: Loot the present and future wealth of the people for generations to come –destroy the middle class — make the problem worse with bailouts etc.

Solution: Problem becomes so bad that the “only” solution remaining is to nationalize and ultimately globalize the banking system under a New World Order.

It’ll be a NWO where the difference is that we’ll KNOW we’re slaves to the system, rather than thinking we’re free and masters of our own destiny as we have been deluded to believe.

#115 Keith in Calgary on 02.09.09 at 10:11 pm

#102 David Bakody…..

Just so we understand each other, the only horses I have ever ridden had 12 cylinders ;-)

If someone cannot come out of a BK with their head screwed on straight, then their probems are much greater and out of the scope of harm of something as simple as a bankruptcy. Ever watch the TV shows “Till Debt Do Us Part” or “Maxed Out” ? You’ll see that the stress if trying to deal with debt, is far worse for a family unit than a taking firm resolve to the issue. My two cents from someone who has been there.

#113 Derekthegeek….

Then by your logic we must immediately disarm all police as they are at great mortal danger by being armed.

I’ll take my chances thanks…..the only thing worse than someone trying to hurt me, is someone trying to protect me from myself.

#116 Bill-Muskoka (NAM) on 02.09.09 at 10:19 pm

#117 EW on VI on 02.09.09 at 9:56 pm

Use this

#117 MIKE on 02.09.09 at 10:19 pm

Only 3% of US Currency is printed on paper
and the others 97% are binary code in
computer memory and a large percent
of the 97% are becoming a memory .
no pun intended ….

#118 Dave on 02.09.09 at 11:43 pm

OK people let’s get something straight… No one should give a rat’s about what ANY Canadian official thinks or wishes about the economy. What matters is what American’s and Brits have to say. Schiff thinks they are doomed, Wolf for FP is scared shxxtless, Obama talks about disasters . The US is at least 70% of our GDP. They go down … We go down It’s that simple. Carney??? He thought the first bailout was a great idea… Of course he worked for Goldmann Sachs years ago. Not too much a buddy buddy system is it now.
most americans are freaking… We should be too
Hey but as long as realtors are busy that’s all that matters.

all this yet the DOW Jones is still at 8200 and isn’t reacting negatively to the overwelming news that you claim should doom us. The November lows haven’t been penetrated.

Are people freaking out even more than before or is it just you? Go eat your squirrels. Numbers don’t lie. The truest indicators are the averages that are available to us all. There is absolutely no better way to gauge what is going on. If all of this is going to ruin our very existence, then people should be selling their stocks!…The averages shouldn’t be rising if what you’re saying is right. But you’re wrong- for now. If the market is showing up, then its up. Don’t argue with it, don’t try to understand it, thats just how it is. Opinions are irrelevant in comparison to the numbers.

If you hear massive layoffs, watch to see how the market reacts! if the discounts are minimal, that should count for something. Inaction sometimes provides a more telling story than action. This is the stuff we’ve seen lately, yet people like yourself insist on arguing with the market

#119 Charles on 02.10.09 at 12:06 am

Find it hard to believe? Take a stroll down Lee Boulevard, Lehigh Acres, Florida for yourself…,+Florida&um=1&ie=UTF-8&split=0&gl=ca&ei=rA2RSbrPL5icNZfAvYQM&sa=X&oi=geocode_result&resnum=1&ct=title

#120 charliegosurf on 02.10.09 at 12:30 am

a DEPR session..

im almost laid off, the skiresort is goin bankcrupt&forsale, my wife resort Resto got bougth out, but still deadclientfull.

evrybody, hundreds are loosin it with a smile thinkin it’s just a mood. and this in B.c okaNagan finest. W A R are made of this stuff.

the mood and swingin is bout to change, im leavin the beachmount to hunkerin it down, Osama and Obama are saying alllllah(eh)?uhhhiah.


#121 Chris in England on 02.10.09 at 7:52 am

Bill-Muskoka (NAM) #95:

“The U.S. banned Debtor’s Prison way, way back. Do they still have that in England?

What the Walkaways are doing is simply saying ‘Here, you own it anyway. Sell it. It’s yours.’ Actually a smart and proper move to those who have milked the masses for decades with compounded interest. Yes, they give up any equity, but at least are free again from the Slave Masters.”

No, no debtors prisons (or hulks moored offshore) these days! Here I think we would probably have to go bankrupt if we were to do this, although I wouldn’t know as I haven’t done it. I’ve read enough times on here that Canadians will be pursued for the difference between what the bank eventually resells the property for, and the amount owed on the mortgage, and so it is here. That is what prevented me from biting off more than I could chew over the years and no doubt that holds true for Canadians (the ones that didn’t think houses would always go up).

While I don’t think I would advocate throwing people into debtors’ prisons, I also don’t think anyone should willingly take on something in the speculative hope it will increase in value, and then walk off leaving the mess when it doesn’t. Here I am referring to the post I was originally responding to where it said some of those walking away still had jobs.

Now there’s a pretty way to run things – grab it while it’s an asset and dump it when it isn’t. I’ve lived in my house for 15 years. It went up, it went down, but it’s my house and I continue to live in it. What would I do if I lost my job and couldn’t pay to keep it up? I would eventually be repossessed as a last resort, but I wouldn’t be throwing my toys out of the pram and toddling off in advance of that possibility – just because my speculative gamble didn’t pay off.

Just because fat cat bankers try and throw money at us doesn’t mean we are obliged to take it. Every week I receive credit cards, pre-approved cheques and invitations to take out loans in the post (they stopped for a while at the end of last year, but the loan invitations and cards have started coming again), but guess what? I just throw them away. I don’t say “Look! I can buy XYZ now” and rush off to do it without thinking of the conseqences.

Just think – if all those who said “yes please” to ridiculous mortgage debt in the first place had instead said “no thank you”, we might not be discussing this on here at all!

So, while I sympathise with the undoubted fact that the bankers will win and win (winning still with their bail-outs and here in the UK they are back to paying themselves bonuses with our money!) it doesn’t mean I condone people walking away from debts they willingly assumed in the first place in order to emulate the results of those bankers.

#122 bermygoon on 02.10.09 at 8:29 am

100 Another Albertan

I am a chartered accountant and there are many professionals out there that will spare 15 minutes to guide someone, you just have to ask. When I worked in a CA firm we had a bankruptcy department and I was loaned out to them to help out when needed. There always seem to be things that needed to be done.

Although you may be right that bankruptcy jobs are impractical for the average person. I would have thought there would be a lot of work needed to get someone though bankruptcy, maybe I am wrong.

One thing I do know is unless the Canadian government changes their policy and lets people walk away from their underwater houses, bankruptcy is going to boom!

#123 Bill-Muskoka (NAM) on 02.10.09 at 8:46 am

#126 charliegosurf on 02.10.09 at 12:30 am

Ah, you must be Charlie Can’t Surf’s brother, eh? Great view from their patio BTW.

#124 Bruce on 02.10.09 at 9:04 am


I most certainly did the article, twice actually. When you “read between the lines”, I see a man who is utterly terrified over the implications of what really might happen. I see an individual who is nothing short of a used car salesman, trying to pitch us a “sweet deal” that we simply can’t refuse. Mark my words. Come springtime, Carney will be singing a different tune, but I’m sure the big-money boys will see that he’s well taken care, no matter what happens. As I said before, we shall see if Mr. Carney’s crystal-ball forecasts come true.

#125 EW on VI on 02.10.09 at 9:41 am

Bill NAM 120

That is the mortgage calculation I have described – canadian standard. Your comment 95 said the bankers should replace the compound interest they charge with simple interest. I wanted you to try that to see how it
would work out in comparison.

My point is the real power is in knowing how payments are calculated. To lower the amount that is paid back, you
have to lower one of the three variables – principal
borrowed, interest rate, or amortization period.

#126 Another Albertan on 02.10.09 at 10:32 am


There will be a lot of additional work required to guide individuals and companies through “the system” as financial restructuring will be an inevitability for many. The rub is that the individuals and companies who are already doing the work are simply going to get additional work.

I am already seeing the implications of this in the engineering and consulting world. It’s all about planning and development now and working on “infrastructure”. Unfortunately, those of us who do that work are already full-up. Take a ticket and stand in line. We were already looking at upwards of 18 months of work in the pipeline BEFORE everyone jumped on the bandwagon to “look to the future”. In the last few months, it’s turned into “It’s going to be a challenge to get all of this work done”.

Sure, this sounds great and people say “oh, well that’s fantastic that your business will be able to expand”. Unfortunately, the answer is “no”, unless any prospective employees can hit the ground running. And by running I mean “at sustained race pace”.

Yes, the Stantecs and Lavalins and KPMGs and PwCs of the world will be able to pick up professionals laid off from other jobs and put them to work. Those who work in highly-specialized areas and offer what are essentially boutique services have a much harder time of it because it is much more difficult to find those specialists.

I’m not trying to be a jerk here, but when you were loaned to another department, you had the base credential of a Chartered Accountant! It’s not like you had just graduated with a certificate in bookkeeping. When people have critical issues on their plates – medical, financial, lifestyle – you want the most qualified person you can get your hands on. The road to hell is paved with good intentions by nice people.

Don’t get me wrong – there are great people who have very flexible skills and can probably do a myriad of examples of great work in a number of different capacities. I just don’t want to be their proving ground when it’s my “life” on the ropes.

Anyone who has ever had to negotiate the medical or legal system will likely have learned the degree to which you need to become your own very vocal advocate, lest you get processed like one of the herd by an overburden bureaucracy. We may be the edge of seeing what that is like in the financial world.

Everyone else’s mileage may vary.

#127 buy gold on 02.10.09 at 10:43 am

” Don’t talk to me about politics no one really knows what goes on behind the seen so you can’t have an opinion if you don’t really now what the real issues are”
For people to talk about politics is irrelevant its for people that need to express there anger towards society and there own personal issues that there fighting within themselves”

Author Unknown

#128 Bill-Muskoka (NAM) on 02.10.09 at 2:03 pm

#127 Chris in England on 02.10.09 at 7:52 am

You actually get credit cards in your mail? We get ‘offers’ for credit cards. Mostly from those banks in the U.S. wanting ‘buy’ our debt at a reduced rate for 6 to 10 months (Then WHAMMO, back up to the highest rate they can rape people with).

In the U.S. they used to send out the cards, but that stopped over a decade ago.

Here we use InterAct (Debit Card/Bank Client Card) which is in Europe as well, and it draws directly and instantly from our bank account. Visa takes about three days to even post payments or transactions. Amazing considering it is all on computerized systems, and the same bank’s as well.

We do all our banking and bill payments online. I always know to the penny what our balances are. That’s the way I like it.

A former friend of mine worked for a company that furnished forms to a large bank in the U.S. He told me they deliver a large truck load of NSF (Non-Sufficient Funds) forms every day because the bank goes through them so fast. Figure that is usually $25 per pop they are raking in. I have had one NSF charge in the past 16 years and that was do to a mistake by the bank which they gladly reversed. NSF charges are a major revnue source for banks and they LOVE THEM!

#129 Bill-Muskoka (NAM) on 02.10.09 at 2:07 pm

#131 EW on VI on 02.10.09 at 9:41 am

So you actually believe the interest only accumulates every six months on a Canadian mortgage, eh?

American banks charge compounded interest too, as do all the credit card companies.

I will put together a comparison between simple and compound interest and post it when I have more time. Remember that compound interest charges interest on the interest, whereas simple interest is only charged on the principle. That is my point.

#130 Bill-Muskoka (NAM) on 02.10.09 at 2:12 pm

#131 EW on VI on 02.10.09 at 9:41 am

Also, American lenders write a mortgage for the full term (usually 15 to 30 years), not five year intervals with renewals (Unless that has changed since I lived in the U.S.?). Therefore, with a fixed rate mortgage the only thing will change will be taxes and insurance payments. The P&I remain fixed unless one opts for variable rate mortgage.

#131 Robert on 02.11.09 at 4:01 pm

well if this is suppose to get bad
can someone tell me when it will get bad in canada

the neighbours are all taking their vacations
going to the dominican
and florida and cuba

they are still spending tons of money and buying
cars and trucks

well i would love to know when it will happen

i am fourty two and would like to find a woman
that wants to be loved and married for the next ten years
and grow our own food and care for one another

#132 Bill-Muskoka (NAM) on 02.12.09 at 8:11 am

#137 Robert on 02.11.09 at 4:01 pm

Ten years, eh? Gee, I bet the women are just rushing to find such a committed man?