This just in…

post1

The last post was heretical, some say. Not to praise Obama is apparently to diss him, which I’d say shows what a serious pickle we’re all in.

The worst thing consumers, investors, homeowners and confused citizens can do at this time is wait for government to fix the problems. They cannot. Get used to it. This gets worse.

Of course, Barack Obama, Stephen Harper, Gordon Brown, Sarkozy the swinger, that Medvedev dude and the cabal running China can all help mitigate the economic and financial disaster and hasten the time of recovery. Or not. The jury is still out on whether unbridled spending, dropping interest rates to nothing and encouraging people to borrow and spend again is brilliance or utter insanity.

But to await government action at the expense of taking your own action is a recipe for disaster. As I said in ‘After the Crash,’ and in every talk I give around the country, doing nothing is no longer an option. If you do not take out some personal insurance against future events, you’re nuts – a gambler. The odds of a deflationary spiral may be just 15% or 20%, but that’s enough risk to justify immediate and sustained action of the kind I wrote the book about. There are more than 200 strategies in there. I’d strongly suggest you start now, because Messiah Obama will not be doing it for you.

* For example, if you work for Canwest or Global TV or the National Post, you might want to think about being unemployed. The parent company, drowning in debt and starving for ad dollars, is nearing the end of the road. Its stock lost up to a fifth of its value on Friday, and is now in penny territory as bankruptcy looms. I mean, face it: Your employer owes $4 billion, can’t find any buyers for its TV stations and needs hundreds of millions in the next 30 days just to survive.

This is a harbinger, of course. Last year Canadian television network revenues fell by 90%. The Globe and Mail has lost three-quarters of its ad revenue. When marketing dollars die, you know where the economy’s headed.

* Do you work for an auto company? Or a parts manufacturer? Or live in a town in the Ontario rust belt where cars have been the reason life goes on? On Tuesday GM and Chrysler said they need billions more from Washington and will still shed 50,000 more jobs. On Friday the Canadian divisions had the same message – more bailouts and more layoffs. The sad thing is governments will cave without even debate. The sadder thing is this won’t save any of them.

By the way, Saab filed for bankruptcy on Friday. I hear Hummer is next. And Pontiac is now Built for Creditors. BTW, General Motors shares closed in New York today at the same price as in 1938.

* Do you have a house? Have you noticed all the media stories now about reality washing over Alberta and BC, where “nobody saw this coming”? Well, this is but the debut.

Once again, we can see the future by looking south. Friday’s numbers show while inflation in Canada is at 1%, in the States it’s zero, as that economy slides inexorably towards deflation. As mentioned here earlier, there are 13 million homeowners already under water, owing more in mortgages than they own in equity. This is a number set to march higher as the year goes on, as negative equity becomes the big story in Canada.

Having learned absolutely nothing from the Americans about over-inflating real estate and then dumping mortgage borrowing standards, we’re now condemned to living out a version of what the US middle class is choking on.

Nobody wanted these things to be so on this February Friday, but welcome to the meltdown.

We can hope for Hope. Yes we can. Hallelujah.

Or, we can prepare.

xurbia-banner16

For today’s blog, ‘No grid, no problem’, go here

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130 comments ↓

#1 JO on 02.20.09 at 4:03 pm

The problem Garyh is that for many people, they look to blame others for bad decisions and then expect the government ..errr.fellow taxpayers to step in and bail them out.

As I said yesterday, Obama is headed toward a taxpayer revolution. I have a large part of my family in the US and I told them to vote for him as McCain horrified me. I have to say, Obama’s last two weeks with the mortgage and bank whatever you call it (plan is not a good word for it) have confirmed to me is he not in control. He is a puppet. I hope he puts his charisma and elevated intelligence to use in reforming health care and social programs, as his steps on the economy (most critical element) have been absolute disaster.

There is a rapidly escalating anger in the US, and I have to say, so far I see empirical evidence that many who are losing it are the very same people who voted for Obama. He will not succeed in turning the US into a socialist paradise. That would be a catastrophe.

I pray we get a massive bubble in personal responsibility and accountability. That would be the best bubble ever.

By the way, I will be emailing McGuinty and expressing my total outrage at the GM/Chrysler “bailouts” and the quiet attempt to have taxpayers cover the pension shortfalls for GM..a second stealth bailout at taxpayer expense. To hell with that.

JO

#2 squidly77 on 02.20.09 at 4:13 pm

the following charts were sent to me this morning and
many will be horrified after looking at this chart
http://e-wavecharts.com/dowlt_index.gif

and many more after viewing this chart
http://www.nyse.tv/s-and-p-500-index-history-chart.htm

remember folks the stock market works both ways
theres as much if not more to be made on the way down as there is on the way up
its not bottom feeding..its business
how about those canadian banks eh!
http://ctvdb.globeinvestor.com/invest/investSQL/ctvx.show_chart?pl_comp_id=167552&pl_errmsg=&iaction=Chart&pl_primary_listing=TD-T&iaction=Chart&pl_additional_listing=0&pl_period=60W&pl_chart_type=+&pl_sh_movement=0&pl_long_movement=0
they all look the same

#3 ralph on 02.20.09 at 4:18 pm

Well…….Obama did his touch and go in Ottawa yesterday. At least I feel better now knowing he loves us all.

As for Harper, he looked like rigor mortis is about to set in.

#4 suhammy on 02.20.09 at 4:23 pm

I agree nobody in the media “saw it coming” but you did and I agreed.

#5 squidly77 on 02.20.09 at 4:23 pm

damn that touchy send button..and IMO
the dow will eventually settle out at around 2000
and the s&p somewhere around 210

some have suggested that these bubbles were caused by modernization of computers and their software programing that basically turned the worlds stock markets into virtual giant casinos
the time line would support that suggestion

and more of my opinion only..
many will go broke attempting to prevent the unpreventable

all prices everywhere and always on everything return to their long term median as they have to
to say other wise would indicate that we have yet to learn from history

is it any coincidence that this crash is occurring exactly one full life time (77 years) since the last great stock market crash and just maybe the old buggars new what we were in for

#6 Thankful inVictoria on 02.20.09 at 4:25 pm

Just finished reading my autographed copy of ‘After The Crash’ last night at 2:30am thanks to my party all the time neighbors. I can’t wait for all this to come to a close, or at least a somewhat stable bottom so I can buy a condo made of concrete and steel and snare seagulls for dinner from my 18th floor ocean view balcony.

After reading your book I have to say I think you have about 15% of your brother living in you. You are a slight nutter but a prepare for the worst scenario is always the best approach so again I thank you for spreading your message and making me laugh while reading some pretty heavy potential scenarios. Just like all my riding buddies say (sport bike guys), dress for the crash and if you don’t at least you looked cool.

Thanks for the books, the knowledge and the autographs, Garth!

Cheers

#7 Skye on 02.20.09 at 4:25 pm

@JO: While you may wish to see these banks and home owners go belly up, you may find staring at dead bellies is not as fun as you think. When you are staring into a bottomless pit, it is not the time for preaching “moral hazard” and cutting off your nose to spite your face. Back in November when Paulson and Bernake asked for a billion dollars to unfreeze the credit market, they were not kidding around. Paulson was a lifelong believer in the free market and capitalism, which is why he let Lehman fail. When that happened, the worldwide banking system essentially collapsed for about 2 days.

If you think it’s worth going into a second Great Depression to teach people a lesson, well good for you. I’m not one of them. First Obama needs to stabilize the situation, then go after the culprits. I don’t see you offering a plan, just complaining. This bubble started with Reagan and Greenspan and is going to take more than either platitudes or anger to fix, if it is even possible to fix.

I recommend you watch the PBS doc “Inside the Meltdown” on pbs.org

Like it or not, we sink or swim together. Pinch your nose and eat the sandwich.

#8 Dan in Victoria on 02.20.09 at 4:30 pm

Just read this about Latvias government,http://www.iht.com/articles/2009/02/20/europe/latvia.php I’m tired of talking to my friends and family telling them to make some descions,the info is all around us just dig it up.Like my grandfather told me when I was very young and had done something stupid,”boy use your own brain,you do have one don’t you”as he cuffed me on the back of the head.Dan

#9 squidly77 on 02.20.09 at 4:32 pm

michael bryant (economic some damn thing minister) is looking stressed and hes sweating on BNN
who can blame him as hes trying to put credence into a
6 billion dollar GM bailout plan

someone should check into the GM retirement plan and just how much GM workers pay into it
i would hate to hear that my tax dollars are supporting 48 year old fully retired on 100% of wages retired GM workers

#10 john m on 02.20.09 at 4:33 pm

Great post Garth….its reality!.”The worst thing consumers, investors, homeowners and confused citizens can do at this time is wait for government to fix the problems. They cannot. Get used to it. This gets worse.”………i seen on the news last night that GM was 4.7 billion behind in their pension commitments in 2007!–wonder how much further they are behind now? Are we going to bail them out on that also? The only thing i read anymore that makes any sense are your posts Garth. When the fear of the future turns to anger over the misuse of our tax dollars (and it will i think)…God help us all.

#11 Skye on 02.20.09 at 4:47 pm

@squidly77: That chart is meaningless, it is not adjusted for inflation or anything else. Here is a much better chart:

http://bigpicture.typepad.com/comments/2005/08/dow_jones_chart.html

I would certainly hope the market would rise considering the number of innovations in the last oh 100 years like the transistor and assembly lines.

#12 nonplused on 02.20.09 at 4:48 pm

Rumours on the blogosphere that Citi or BOA might go down this weekend. They even mentioned it on ROB, if only to diss it.

#2 squidly77

The TD chart scares me because it looks a lot like either Citi or BOA. In both cases the straight down line didn’t stop going straight down until investors were pretty well.

http://ca.finance.yahoo.com/q/bc?s=BAC&t=5y&l=off&z=m&q=l&c=

http://ca.finance.yahoo.com/q/bc?s=C&t=5y&l=off&z=m&q=l&c=

#13 nonplused on 02.20.09 at 4:50 pm

Also, the thing I don’t like about indexes like the DOW or S&P is that they over state actual market performance. This is because they dump the loosers and replace them with stronger stocks. They are currently dumping financials from the index, once something like 30% of the value.

#14 squidly77 on 02.20.09 at 5:09 pm

#11 skye
your chart stops 5 years ago back in 2004..have hope brother as it maybe all you have

bank of no have scotia
http://ctvdb.globeinvestor.com/invest/investSQL/ctvx.show_chart?pl_comp_id=181455&pl_errmsg=&iaction=Chart&pl_primary_listing=BNS-T&iaction=Chart&pl_additional_listing=0&pl_period=60W&pl_chart_type=+&pl_sh_movement=0&pl_long_movement=0

loyal (bail me out) bank
http://ctvdb.globeinvestor.com/invest/investSQL/ctvx.show_chart?pl_comp_id=0&pl_errmsg=Symbol+rb-t+not+found.+For+reference%2C+press+Symbol+Lookup&iaction=Chart&pl_primary_listing=ry-t&iaction=Chart&pl_additional_listing=0&pl_period=60W&pl_sh_movement=0&pl_long_movement=0

they are all the same

and as you watch your favorite evening news tonight keep in mind as the blog author suggests..they are gone !
http://ctvdb.globeinvestor.com/invest/investSQL/ctvx.show_chart?pl_comp_id=157135&pl_errmsg=&iaction=Chart&pl_primary_listing=CGS-T&iaction=Chart&pl_additional_listing=0&pl_period=60W&pl_chart_type=+&pl_sh_movement=0&pl_long_movement=0

you cant come back from this stuff folks..

#15 Bill-Muskoka (NAM) on 02.20.09 at 5:13 pm

#5 squidly77 on 02.20.09 at 4:23 pm

Re: Computers and the Meltdown. Yes, they have definitely played a HUGE part in all this with billions in Global microsecond transactions.

Tom Clancy wrote about this long ago in ‘Executive Orders’ where a Japanese terrorist takes over the instant trade on the NYSE and wreaks havoc.

This ACTUALLY happened last fall and they had to literally shut the NYSE down to prevent an even worse catastrophe.

Also let us not forget that the computers for the WTC were buried deep in the bowels of the building and they also served as the Federal Reserve’s backup systems. They are still BURIED there! That together with the millions of pieces of paper denoting contracts, deals, etc., were all LOST!

Was this possibly all engineered? Well, as my dad said back with Tricky Dick Nixon ‘No, they lawyered it!’

Regardless, computers have contributed a HUGE amount to the speed and depth of this financial fiasco. But, behind it all has been GREED and IRRESPONSIBILITY!

#16 squidly77 on 02.20.09 at 5:15 pm

skye
are you suggesting that there was no inflation between 1920-1988 http://e-wavecharts.com/dowlt_index.gif
have you ever heard of dividends

we will all be fine after the crash
but its gonna be bloody in between time

#17 Bay Street Lawyer on 02.20.09 at 5:23 pm

Garth:

I’m a proud owner of your last two books. I visit this site daily (sometimes hourly, to see if you have responded to some of the comments). I’m factoring your advice into my financial planning decisions and I’m doing my best to convince my friends to heed the warning signs. I’ll continue to do so.

But I do have one request of you. Every day I read critiques from the left and right about how a government’s latest proposal won’t work. Rarely are alternatives given.

As you can tell from my name, my background is in law. I’m often told by lawyers more experienced than myself that in a battle of experts, it is never good enough just to criticize. To win the case, you have to (a) criticize, (b) explain the correct way to do it and (c) show how if the correct way were followed from the beginning, the result would be different.

Can you tackle (b) and (c) in an upcoming post? I think you have sufficiently covered the criticism part.

I’m a huge fan of your advice to individuals to “be prepared”, but I’m wondering, from an administrative standpoint, if you can see a potential path through this mess while all others are throwing money at the problem? I’m hoping you can because I look and I can’t find it.

And I’m not looking for a way back to 2005… I just want better days than these.

#18 squidly77 on 02.20.09 at 5:24 pm

of course sky theres always hope just check out
give me life (dear taxpayer) finacial a canadian giant
http://ctvdb.globeinvestor.com/invest/investSQL/ctvx.show_chart?pl_comp_id=194467&pl_errmsg=&iaction=Chart&pl_primary_listing=MFC-T&iaction=Chart&pl_additional_listing=0&pl_period=60W&pl_chart_type=+&pl_sh_movement=0&pl_long_movement=0

#19 nonplused on 02.20.09 at 5:41 pm

Here is another good scary chart:

http://dshort.com/charts/bears/four-bears-extended-large.gif

I think it’s interesting that the 70’s bear was due to “oil prices”, early 2000’s was “tech-bubble”, and 1929 was just “the great depression”. Does that mean there still isn’t a consensus on what caused the depression?

#20 Flounder Digest on 02.20.09 at 6:01 pm

“But to await government action at the expense of taking your own action is a recipe for disaster.”

What, exactly, does it mean, “taking your own action”?

Sorry folks, but if anything, IMO, we are headed well beyond Garth’s “Worst Case Scenario (After the Crash: 211).” And there are those with a much broader knowledge base than I who share this opinion.

So what do I think Garth means when he urges the reader about “taking your own action?” Well here, IMO, is the coming context for future action in North America:
http://cluborlov.blogspot.com/2009/02/social-collapse-best-practices.html
That’s the only viable working hypothesis that sits well in my mind and gut.
The well-documented graphs and stats from the St. Louis Federal Reserve bank etc. though convincing, are at this point strictly academic for most of us. However, if we master well these academic matters, we may be able to persuade a few little piggies to “build (perhaps “rent” would be more appropriate for the times) houses of brick” before the big bad economic wolf arrives to huff and puff and blow us away like dust in the wind.

Finally I leave you with a thought that I found among the comments following the above link. I’ve made a hard copy in red ink and fancy font and placed it on the wall facing my computer.

“Wai Yip said…
Bravo! Thanks for opening our eyes to the social collapse scenario. Born and raised in an era of prosperity and stability, we are just too oblivious to the risk of decline and collapse that has happened regularly in history.
May I also suggest Buddhism to be a remedy of the pain in such world? Buddhism teaches us that earthly possessions are only delusion and we should dissociate ourselves from such desire. Looking at our stock holdings and equities and all those hedge fund frauds, it seems this 2000-year-old wisdom is as true as ever (Italics mine).”

#21 North Vancouver Citizen Jr. on 02.20.09 at 6:07 pm

Yesterday, North Van Citizen Jr. predicted the possibility of a U.S. Taxpayer revolt against paying their personal income taxes.

…Garth is Canada Prime Minister potential…..and NVC jr is federal finance minister potential.

I humbly accept.

In leu of salary, I will accept $1 per year…but please throw in the future rights to Carl Brewer.

#22 David Bakody on 02.20.09 at 6:14 pm

#1 JO on 02.20.09 at 4:03 pm

Hey JO ….. T. Clement was just on CBC and said this is not a bail out ….”It’s a loan” no one journalist asked .. what kind of a loan, what is the interest rate and amortization period? …. sick em!

To say there no body saw this coming is wrong, dead wrong, …. little ode me said many times watching real estate rise and family cars skyrocket said something is going to break and break soon. The Winds of War were costing billions, and America’s debt was rising close to 90% of their GDP and CEO wages/bonus were way out of line ….. So if little ode me knew ….. then so did the Rich and Powerful. And when these few know what is going on and do nothing, we know they have a plan for something.

To-day it was mentioned China is buying, buying world energy and waiting and we know big banks have big interests in China….. there is change coming and it just might be coming faster than most are prepared for.

#23 Flounder Digest on 02.20.09 at 6:31 pm

Squidly77,
Not only do you master relevant facts! You are a master of gallows humour!

#24 Jeff Smith on 02.20.09 at 6:32 pm

I think we are getting screwed in many ways. Even though we are on course for deflation, things are not looking good in the near-term time frame. I think prices are going up everywhere. Take for example Dollarama, yep, that local dollar stores that I once in a while would drop in to buy some office supplies. Used to be a $1 for everything. Not anymore, just hte other day I see prices at $2 and $1.25. So its not dollarama anymore, its dollarplusrama. Its not looking too good.

#25 T.O. Girl on 02.20.09 at 6:39 pm

Can anyone post any resent activity with realestate in the mid to north toronto area? are people still buying because I have seen some sold signs, I would have thought things would be worse but I don’t think they are yet!! If we can get more posts on areas in toronto and what is really going on there??

#26 Observer on 02.20.09 at 6:39 pm

Someone brought up an interesting point somewhere, is the automaker bail out helping to shore up their ability to keep paying those ridiculous pensions? Our tax money that we’re still working to pay into our 60s so they can retire at 50? Hmmmmmm?

Garth,

It’s time to carry the wounded and shoot the deserters.

#27 squidly77 on 02.20.09 at 6:44 pm

now this is just wrong

needs taxpayer help to pay for such legacy costs as pensions and health care for retirees
The auto maker did not put a dollar figure on the amount of assistance it needs from the federal and Ontario governments in a restructuring plan submitted, but said it needs support from taxpayers

i have been a union member all my life but never would i support begging the government for help to pay benifits that 95% of other canadians dont get..make noise people
http://ctv2.theglobeandmail.com/servlet/story/RTGAM.20090220.wplan0220/business/Business/businessBN/ctv-business

#28 Vankover on 02.20.09 at 6:48 pm

This whole scenario is the government being the permissive parent….now we’ve got children who are overly needy and have a sense of entitlement. Fantastic.

#29 flota on 02.20.09 at 7:34 pm

squidly77

Those charts that were send to you this morning were probably courtesy of some shorts. Regardless the 70 year chart is meaningless and saying that everything goes back to the median is just silly. There is no empirical evidence that actually happens.

#30 MSC on 02.20.09 at 7:35 pm

I think I can safely say this is damn depressing stuff for Canwest employees of which I am one.
This would have been a tough year for newspapers without a recession. The only bright spot at present is automotive advertising.
So unless we have a bird flu or other plague to expand our obituaries I think we’ve had it.
We can survive online though. But since I’m not involved in online it’s hard to get to excited about that prospect.

#31 TAK on 02.20.09 at 7:38 pm

Anyone in Ontario who wants to contact premier McGuinty click on this site:

http://www.premier.gov.on.ca/feedback/default.asp

You should ask him how he will replace all the jobs lost.

#32 john m on 02.20.09 at 7:52 pm

Our Representatives are our MP’s are they getting up and speaking for the people in their ridings?Well not that i have seen! Our politicians were elected to represent the people from all ridings and all walks of life.Every single one should have a say in every penny handed out to private enterprise and voice the opinions of the people they represent.Partisanship excluded they should all have to stand and state the opinions of the people they represent (even Harper’s muzzled MPs).The one man show is not working nor is the steadfast “follow the US policy”.The Government was not elected to tell us how it should be done …they were elected to voice and follow the wishes of the population.Im sure our forefathers (some who gave their lives for our way of life) would be rolling in their graves to watch people dying because of underfunded health care while the government spends billions to assist private enterprise.To say nothing of the billions being spent in far away lands fighting a war which will never be won.

#33 EW on VI on 02.20.09 at 8:01 pm

“……owing more in mortgages than they own in equity”

Thats not underwater. Garth??

#34 Rural Rick on 02.20.09 at 8:02 pm

GM cut Saab loose. The Swedish government will not bail Saab out. Any bets on who is first to toe the line and start turning a profit.
My money is on Saab.
Oh wait a minute I don’t have any money.

#35 confused and a little crazed on 02.20.09 at 8:03 pm

Hi Guys,

I don’t how how CMHC gets their #s but they predict a sligt increase in prices for 2010
ave 2009 price $287K approx $ 289K in 2010
ave 2009 sales 289K approv 304k IN 2010

HOW DO THEY GET THEY #S? what justification that the economy will bounce back next year to a point that housing will increase when its just the beginning of 2009.

didn’t they predict an modest increase of 4.8% 2008 and the result was -8.9% .

huh…i don’t get it. We are getting worst news now in 2009 than 2007 and now they expect an increase?

#36 john m on 02.20.09 at 8:16 pm

#27 squidly77 on 02.20.09 at 6:44 pm …..great post..talk about a culture of entitlement..our hospitals are closing emergency services due to lack of funding and our government is expected to pay for extended benefits for auto workers——in what way does this ease the burden of a recession (depression) or create jobs for the average canadian taxpayer??

#37 Zoronqueen on 02.20.09 at 8:26 pm

Bloggers,

thanks for all your comments. Our home inEdmonton is our 2nd home and yes, all the calculators indicate to sell at 273K vs renting out at $1550 per month. The only issue with selling at 273K is that currently the market says that our house is work at least 310K and even with Garth predictions at 15% below peak at 2008 prices should be about 335K.

However saying that we were a greater fool and bought in Sept 08 a home for 517K that is worth only 460K. We were counting on our home being sold at 320K . Alas, should have found this web site earlier….

Right now Edmonton market is declining at a fast rate. Even the home builders have reduced their price to below 300K so come spring price crashes will be drastic.

The more I read, the more I am convinced that the economy is not going to rebound and houses will deflate once the boomers decide to unload.

Government is not going to bail us out. IMO deflation is the only way the central bankers are going to recoup their money back. The poor get poorer and the middle class become the poor…That is only way to ensure that we continue to pay taxes and be slaves to the bank….

There’s even talk among the religious that this mess is geared towards the return of the antichrist
http://www.returnamerica.com/ramnewsletter/2008/is10antichrist.htm

#38 Alberta Ed on 02.20.09 at 8:30 pm

It looks like Bank of America and Citigroup are about to be nationalized… anyone care to speculate on what this means north of the border?

#39 squidly77 on 02.20.09 at 8:30 pm

squidly77
Those charts that were send to you this morning were probably courtesy of some shorts. Regardless the 70 year chart is meaningless and saying that everything goes back to the median is just silly.

o.k.

#40 john m on 02.20.09 at 8:42 pm

GM Canada seeks C$6 bln-C$7 billion from governments
Fri Feb 20, 5:35 PM

TORONTO (Reuters) – General Motors Corp is seeking between C$6 billion ($4.8 billion) and C$7 billion from Canadian governments as part of its restructuring plan, the country’s industry minister said on Friday.—————–UNBELIEVABLE!!!—this is to save 7000 jobs THATS A MILLION DOLLARS A JOB!!—– the thought of our governments even considering this is totally beyond my comprehension……………

#41 TheFirstRick on 02.20.09 at 9:07 pm

#30 MSC on 02.20.09 at 7:35 pm I think I can safely say this is damn depressing stuff for Canwest employees of which I am one.
This would have been a tough year for newspapers without a recession. The only bright spot at present is automotive advertising.
So unless we have a bird flu or other plague to expand our obituaries I think we’ve had it.
We can survive online though. But since I’m not involved in online it’s hard to get to excited about that prospect.
======
I am truly sorry if you and your colleages loose your jobs, but in a large perspective, the thought of the CanWest Global Propaganda machine tanking excites me.

#42 squidly77 on 02.20.09 at 9:14 pm

all prices everywhere and always on everything return to their long term median as they have to
to say other wise would indicate that we have yet to learn from history
http://ctvdb.globeinvestor.com/invest/investSQL/ctvx.show_chart?pl_comp_id=&pl_errmsg=&iaction=Chart&pl_primary_listing=TSX-I&iaction=Chart&pl_additional_listing=0&pl_period=60W&pl_chart_type=+&pl_sh_movement=0&pl_long_movement=0

if you believe in what you say
now is the time that you should walk the walk and go all in

#43 alex on 02.20.09 at 9:46 pm

Great animation explaining the credit crisis.

http://www.crisisofcredit.com/

#44 wayupnorth on 02.20.09 at 9:53 pm

I agree Garth that waiting for the government to do something is folly but in the very near future we are going to find out just how hopeless our government is. Most U.S. states are only months or weeks away from not being able to pay teachers and might have to close schools and other institutions as they go bankrupt one by one. Our world wide just on time production system that relies on credit until delivery is unravelling daily yet no government yet has the backbone to nationalize their economy, sort out the debts and smash up all companies into small local businesses and create real competition and a free market system again where the strong survive without help.

The tipping point that should force our useless leaders into action will be the day cedit and debit cards become useless when no-one trusts the companies backing them and won’t accept them. You are right when you point out the role computers are playing in this mess.

In 1929 The automobile, typewriter and telephone put millions around the world out of work as they started replacing the horse, handwriting and mail that had been the norm up till then. Today the computer has replaced millions of jobs directly or as robots as well as sped up the whole pace of life as much again.

It amazes me when I read how someone can’t understand how things are going bad so fast. In 1929 a telephone call replaced waiting weeks for a letter to arrive which changed the pace of life especially finance where stocks could be bought and sold so much faster. The computer has sped things up the same amount by allowing up to the second knowlege of the world as well as instant trading wthout the difficulty of phoning your broker. It also makes it difficult to trace the billions of transaction occuring all the time and masks the criminal trading of useless assets that are underpinning our current free fall.

On the other hand knowing this should provide governments with the real answers to the problem if they bother to look.

#45 squidly77 on 02.20.09 at 9:57 pm

john m
for every 50 tax payers we will have the privilege of having one GM worker amongst us..whats the problem

#46 Da HK Kid on 02.20.09 at 10:06 pm

Bang On Garth and it’s going to get worse with this new bailout plan! Sure, affordable housing may eventually return but very few will be healthy enough to buy due to:

1. Low Net Worth
2. Loss of Job
3. Cannot Qualify for Mortgage

These are the responsible ones. I have posted before that even if those of us sitting carefully on the sidelines find the housing bottom, with the minuscule uptake for a few years after buying & slow uptake potential for at least a 5 years after, we are likely for once to view other investments 10-100x better than RE.

A home is a home again, somewhere you live, with community in tact. Houses are for investors!

Everyone take a look at this clip, even CNBC is fighting back with heavyweights Kudlow and Santelli.

Santelli is not afraid to go to Washington!

http://www.cnbc.com/id/15840232?video=1041856849&play=1

#47 Anon on 02.20.09 at 10:06 pm

#25 T.O. Girl:

If you go to the TREB site and scroll all the way to the very bottom, you will find the monthly market reports listed on the right. So in the right hand ‘banner’ under “Market Watch back Issues in PDF format.”

http://www.torontorealestateboard.com/consumer_info/market_news/index.htm

From there, you can look and compare what the sales have been, average and median prices, etc. It is broken down by geographic district and then further broken down by type of dwelling, etc. Lots of info there if you know what you are looking for. So it is possible to see what specific areas are doing month by month.

(If anyone knows where this info is available in a spreadsheet or something similar so as to better graph or work with the numbers/data, I would love to know. I was going to tinker but I cant copy the data from the pdf files.)

#48 BCWally on 02.20.09 at 11:01 pm

I’d like to invite everyone to review the comments made by Marriner S. Eccles, Franklin D. Roosevelt’s Chairman of the Federal Reserve during the great depression. The comments were made in his memoirs after the depression ended. They can be found at http://en.wikipedia.org/wiki/Great_Depression and are under the section “Inequality of Wealth and Income” . I find his assessment eerily similar to the present economic situation here in North America.
Thanks for the book Garth, I have found it very helpful and I am taking several steps you put forward to protect my family.

#49 David on 02.20.09 at 11:20 pm

From your earlier post

Your comment: “We should listen to a guy who spends $13.00 on advice for his portfolio”. Garth

The information that I paid for was authored by Mr Gordon Pape. I believe his contribution to the financial world is well known. He has written several books and is still in the business of providing advice to Canadians through newsletters and updates.

This information sure beats eating squirrels.

#50 POL-CAN on 02.20.09 at 11:29 pm

TREB numbers are out for the first 2 weeks of the month.

Dead cat bounce?

#51 Mitchell Cardno on 02.20.09 at 11:45 pm

Foreclosures up in Calgary:

http://www2.canada.com/calgaryherald/iphone/news/calgary/story.html?id=1279897

(Bit old info – by a week, but just found it now)

#52 Increasing that 1% on 02.21.09 at 1:43 am

#25. T.O. Girl

West of T.O., 1hr from downtown, Cambridge/Guelph border, area of houses (with normal amount of listings)have many recent sold signs, (prices down @ 7% from peak).

Not sure if it has anything to do with RE agents in area guaranteeing to buy their listings’ house if not sold in 90 days, if buyer purchases other house in area agent services…freeing up buyers from other areas and vice versa

#53 nonplused on 02.21.09 at 3:05 am

#11 Skye

Your suggested chart only goes to 2004. I think the last 4 years are important to consider.

It’s also logarithmic, which understates visually the magnitude of the run up and subsequent crash. It’s making a 50% move look like it’s only a little bit but that tiny wedge at the top is 5000 points wide.

#29 flota

Are you suggesting that if a short puts a chart together using publicly available data from a web site that it is erroneous? Or that the data is incorrect? Assuming the numbers are correct they are what they are. But on the other hand when Skye suggests we look at charts that end in 2004 and use a logarithmic scale to minimize the visual affect of the numbers, I’d say the longs are the ones with the agenda.

Not even a tree can grow to the sky. And when they fall over they usually hit the ground.

Don’t get me wrong, I like log charts for commodities. But commodity markets are generally assumed to be logarithmic in nature (cannot go below zero, mean is below the average, but upside is rather extreme. See Oil.)

There is a strong case to be made however that stocks are normally distributed, even though they are usually modeled lognormally. Enterprise value can and often does go well below zero. See Banks, Auto manufacturers, Media conglomerates, Retailers.

Maybe that’s why all those CDS’s are in trouble. They were using log normal models and assumed no company could actually go bankrupt!

#38 Zoronqueen

Your house is only worth what somebody will pay for it. Don’t get stuck on manufactured numbers that came at the peak of the bubble.

You have to decide if selling at $160,000 2 years from now is worth the risk.

Also, Christ himself taught his disciples to expect his return in their lifetimes. The church has been expecting an imminent return ever since. Anybody remember Hal Lindsey’s book “The Late Great Planet Earth”? I believe it was published in 1984. The world will probably end someday but I wouldn’t use it as a financial strategy. Even if global warming gets us your mortgage will come due first. Nukes on the other hand are quite the wild card. But I would rather face a foreclosure crises.

#43 squidly77

If all prices eventually return to the median then the dollar should eventually return to the median price of fiat currency, which is not quite, but close to zero. My understanding is that some countries, not all of them bastions of financial success mind you, are already preparing for it. Russia, several European countries, some Middle Eastern countries including Saudi Arabia, and recently China, are forming a “just in case” barter system. My understanding is it works like this: Russia sells China so many tons of oil. China sends Russia so many units of manufactured products. They then handle the currency side of it internally. The idea is to take currency and default risk out of the equation. The deal still works no matter what the value of the dollar. It would be clunky, but the international opinion of the “bailout mania” in the US is that it’s going to end badly, so they are doing what they can.

#54 gold bug on 02.21.09 at 4:35 am

Skye wrote: “When you are staring into a bottomless pit, it is not the time for preaching “moral hazard.”… This bubble started with Reagan and Greenspan and is going to take more than either platitudes or anger to fix. I recommend you watch the PBS doc “Inside the Meltdown” on pbs.org. Like it or not, we sink or swim together.”

HAHAHAHAHAHAHAHHA (gulp air) AHAHAHAHAHAHA.

This is EXACTLY the time to be discussing moral hazard. If you disregard the concept now, it’s meaningless for all times.

You need to step away from the St. Obama Shrine and dust off some textbooks. This bubble started with FDR when he stole Americans’ gold and re-pegged its price, thereby devaluing the dollar. Those massive entitlements and fascist economic plans didn’t pay for themselves.

I watched that PBS show. Informative if you get your news from the 6 o’clock ditz. There was nothing there any reasonably diligent internet citizen didn’t know the same day or, at worst, the same week every single one of those events happened.

We don’t sink or swim together. That’s for you and your socialist pals. You’re on your own. That’s not just me talking. The politicians you think are going to save your hide don’t care about you, either.

This is the time for anger. This is the time for slogans. And it’s the time for guillotines.

#55 Mike (authentic) on 02.21.09 at 6:07 am

Economy running on Emergency Battery Power

squidly77 chart: http://e-wavecharts.com/dowlt_index.gif raises quite the question of not if but when the economy CANNOT support us all. Sure, you and many companies have wads of cash stored up, but with negative profits and negative growth your effectively on reserve battery power. Your money and their money is slowly getting drained away like a battery. Even a good strong battery will run out of juice, eventually.

With company and personal bankruptcies, massive 619k job losses each month, record high housing foreclosures, wage freezes and a crashing stock market you have to start to question how long the economic battery will last.

How long before those layed off get a job? How long before there is demand for them again? How long before bankrupted companies are replaced? These things do not happen over night.

Taxes (see California tax increase) will come to a city near you, property tax, sales tax, income tax, gas tax, utility costs, maintenance costs and mortgage rates MUST rise to re-charge that low gov’t battery.

…and that means your battery will be put in-line and drained further.

Mike

#56 Peter on 02.21.09 at 6:10 am

New USA dollar:

“In Obama we trust”

#57 Peter on 02.21.09 at 6:12 am

The new USA money:

one obama

#58 Mike (authentic) on 02.21.09 at 6:26 am

“Countries and citizens run to pawn shops, banks and stores to sell gold coins, watches, bars, jewellery as gold nears $999oz to cash out while gold value is artificially inflated. Demand for gold is now squarely on investors as gold demand in manufacturing slows to record levels”

So it’s started, those buying gold are avalanched by those wanting to get rid of it. With supply now exceeding demand future price rise in gold is unsure. Greater fools may still be 60% right holding it as they face a 40% risk in their investment. Historic gold prices trend line indicate gold should only be $583 which is almost 1/2 the price it is today.

Gold bugs should read this: http://archive.independent-investor.com/stories/price_action_in_gold_236.aspx

“The risk of a terminal blow-off

What is a terminal blow-off? A terminal blow-off occurs following an extended bull or bear market when all or nearly all the advance (or decline) takes place between parallel trend-lines. In a final excess of emotion (do I hear cries of ‘going to $900 an ounce?’), the market concerned succeeds in breaking out of its long-term trend channel, but the move proves short-lived, and in fact signals a reversal of the long-term trend.

What is more, the reversal usually happens in a straight line. The most famous blow-off of all-time, which was – guess what – in gold. It took place between Q4 1971 and Q4 1979. At end-December 1979 gold was approximately $590 when the upper line was hit.

Three weeks later, on the afternoon of 21st January 1980 the highest ever PM fix was made at $850. Some gold ‘experts’ were forecasting $1,700. Six weeks later gold had fallen to $550. And four weeks after that it was $490. All the figures are correct: only the ‘experts’ were wrong. ”

Move aside people, no bubble here. Gold is different, they are not making more gold, buy gold before it goes up to $5000oz and be priced out forever…

Mike

#59 Mike (authentic) on 02.21.09 at 6:34 am

#11 Skye on 02.20.09 at 4:47 pm @squidly77: That chart is meaningless, it is not adjusted for inflation or anything else.”

As far as I am aware, the current DOW numbers are NOT adjusted for inflation. Currently the DOW is at a 11 year low of 7365.67. The 11 year old DOW close number is not adjusted for inflation, thus squidly77’s chart is accurate.

Mike

#60 Sail1 on 02.21.09 at 7:15 am

#17 Bay Street Lawyer

But I do have one request of you. Every day I read critiques from the left and right about how a government’s latest proposal won’t work. Rarely are alternatives given.

You have come to the wrong place for alternatives, here we only criticize.

Speak for yourself, sailor. — Garth

#61 john m on 02.21.09 at 7:55 am

#46 squidly77 on 02.20.09 at 9:57 pm john m
for every 50 tax payers we will have the privilege of having one GM worker amongst us..whats the problem
………..actually i just read there are approximately 22 million taxpayers in Canada which works out to about –one “million dollar GM worker” for every 3142 taxpayers—-over 100,000 workers in Canada lost their jobs in Nov and Dec 2008 and the numbers are growing at an alarming rate>>>our Government can not afford to set this kind of a precident,its not only grossly unfair its ridiculous. Wonder how Obama and Harper see any light at the end of this tunnel?

#62 Canned Goods and Buckshot on 02.21.09 at 8:08 am

#45 Wayupnorth states “On the other hand knowing this should provide governments with the real answers to the problem if they bother to look.”

Don’t leave us hanging like that! Please, illuminate us.

#63 Mike B on 02.21.09 at 8:16 am

A couple of comments.. The picture of our governor general laughing like some baffoon is truly embarassing.
As others have pointed out. Obama is but a man whose plan is receiving less than warm reception by the folks around the world. We should get rid of any attachment to monarchy and certainly remove this whole porogue of parliament option, certainly no need to contact someone like the GG who has no elected status whatsoever. Obama should be commended for trying but the folks on his team are basically the same folks who have been in the White House for years. Geithner has been there for eons. Hardly a new team.
Kudos to DA HK kid for the info from CNBC and people revolting against the mortgage plan. Remember we should keep our eyes on the BIG DOG and pretty much ignore what is happening here. We will just mimic what happens down south. In case some people haven’t noticed, gold hit record levels and the stock markets tanked big time on Friday. Why… because no one believes that any of these plans will work out.
On the TORONTO RE numbers .. The January numbers were down 50% or so. February numbers are down from 2700 homes sold to 2000 so about 30% down from a year ago. Trenders will say that things are picking up. Indeed I have noticed a few Sold Conditional on properties that are in prime areas and priced well (relatively speaking) These are all sub 1 million . My take… fools rush in… suckers rally.
Again. I look to the US for guidance and a glimpse of the future, as does Garth, rightly so. Do I think RE in Toronto will collapse. NO.. Needs much more of a correction though. say another 20% .
The numbers provided by previous bloggers also shows a massive drop in commercial real estate rentals. Great indicator of where the economy is going.
“In January, TREB Commercial Members reported 336,029 square feet of space leased through the TorontoMLS system, down 60 per cent from the 842,475 square feet traded in January of 2008”

POL Can…would love your take on the market and this slight up tick from previous months. Weather? Dumb buyers? Maybe realtors are buying?

#64 David on 02.21.09 at 8:29 am

Things are not looking too rosy in Wild Rose Country these days. Alberta is looking at having its first deficit in 15 years, estimated run at $1 billion, but probably much higher. Like one of my friends commented Ed Stelmack will now actually need to govern. With a high US Greenback and low commodity prices Alberta, can anticipate some real rough times ahead.
It is hard to imagine the company that made Izzy Asper a media mogul is on death watch. The company has been carrying a huge debt load for years and it looks like CanWest creditors will euthanise the company.

#65 Jack the Lad on 02.21.09 at 8:32 am

All this gold talk reminds me so much of the same type of hype you heard when real estate was reaching its peak.

The language is basically the same. When you hear the gold bulls talk, there’s almost an element of mania in their voices.

That aside, anyone care to speculate what the next great bubble is?

#66 BOB on 02.21.09 at 9:07 am

What does one do to protect our money? I guess gold is the obvious choice. How about buying land? If the system was to collapse is it not better to be holding land than paper money?

#67 David Bakody on 02.21.09 at 9:10 am

#64 Mike B on 02.21.09 at 8:16 am

Once any country throws it’s history out the widow it is gone forever …. then what? A bunch of years ago Dalton Camp (PC) was tasked to come up with 10 Top Canadians who’s picture would be replace the Queen on our currency …………. you know who at that time was rated #1 …. Brain Mulroney! so go figure …. and to boot he could not compete the list only getting to about five people Canadians deemed worthy of such respect.

Me I kinda like not having hero’s the Yanks have a new one ever day and it works fine with them because their media makes money slamming them around as they fall from grace ….. the truth is America really has no history and now the money pit is running dry so what would be left ….. The Washing Monument? Wow how much is that worth on the world stage?

Now if the coldest country in the world (?) can find a way to become self efficient one home at a time and take it’s dependence off mass production and the misuse of energy that sir/madame would be something and xurbia just might be one small patch of green grass in new pasture of life.

#68 lgre on 02.21.09 at 9:12 am

Vancouver Condo Market Collapsing

http://finance.sympatico.msn.ca/SavingsDebt/KerryGold/Article.aspx?cp-documentid=17985631

“market will turn around in 6 months says Panzar”

this guy should be a comic not a lawyer.

#69 donny on 02.21.09 at 9:30 am

Okay, I’m pissed. Toronto Star this morning says GM is asking for six billion from Canada. That’s twice what they’ve asked for, per capita, in the States. They’re holding us to ransom. Sweden’s got the answer–let them go bankrupt. And if they just leave the country, I say we do the patriotic thing and buy Japanese cars. (Or Ford.)

#70 Toronto C9 Renter on 02.21.09 at 9:47 am

to #25 TO Girl & #51 POL-CAN:

For Toronto C9m Which is pretty much all I’m watching, here’s an observation from the last couple of weeks…

While several nice detached homes in the 1M+ range continue to sit since last summer despite numerous price reductions, there was finally one sale this week.

However, it was a small detached with driveway, just barely on the fringe of Moore Park. Listing price was $779k (dont know yet what it sold for).

It sold within a week. One sale doesnt make a trend but seems to suggest there are buyers out there, but only at the low end

#71 TS on 02.21.09 at 10:25 am

The reality of the MSM is that by the time the players in it actually report the “news”… especially economic trends, it is as stale as rock hard bread.

The main stream media in Canada has been slashing its employment to the bone over the past couple of decades and there is a woeful lack of investigative journalism in Canada…or even proactive journalism for that matter. What used to be news has now been replaced with tripe about entertainment, sports and other trivialities. The reality is that we have nothing more than ‘talking head’ reporters who really do not understand the fundamentals on which they are reporting.

The result of course is an uninformed, sound bite oriented public who have no real idea of the issues facing the country and planet – and simply respond like lemmings to what they hear.

There was an interesting article in the Saturday Star this morning about a couple who is filing a law suit against their financial planner for putting too much of their money in stocks and having their retirement funding slashed by the markets.

There are two sides to this story… one is less-than-ethical financial planners who are more interested in doing trades and making commissions rather than doing what is responsible for their clients. The second are clients who sign and authorize trades that they do not understand nor agree with. Who is responsible? Both sides.

Any time we allow others to do our thinking for us we diminish control of our lives and put ourselves at risk. This applies to all aspects of our lives. Critical thought is the root of understanding.

One of the things I really appreciate about Garth’s postings is his willingness to state facts, back them up with sources, and encourage dialogue and debate. This is how we learn from each other and begin to better understand the world around us.

I’d like to thank the many bloggers who make substantive, well researched postings and help us all become better educated.

#72 RG on 02.21.09 at 10:26 am

While the government continues throwing our money at the banks and automakers and their pension plans, the rest of us working stiffs will be left kicking horse turds down the road.

#73 TS on 02.21.09 at 10:30 am

65 David on 02.21.09 at 8:29 am

Well put David. The voters in Alberta should also be asking tough questions of their provincial government. Things like why their health care is still suffering during times when the province was flooded with cash. Why their infrastructure is not first class. Why they have allowed the environmental catastophe called the Tar Sands to happen in their backyard.

Their has been no real leadership and no real vision in the province of Alberta for decades. All there has been is a series of talking heads who have been slaves to Big Oil. Unfortunately the public ends up paying the price for weak, ineffectual leadership.

#74 Calgary37 on 02.21.09 at 10:35 am

How did we get here?

Many readers and posters have wondered how our distressed economy and financial system came about. For a start, you could read George Ure’s Saturday column at:
http://www.urbansurvival.com/week.htm

I believe that Global Warming is part of a natural Climate Change Cycle. Some researchers have discovered that there also appears to be a natural Business Cycle.

We are currently nearing a bottom in this Business Cycle. However, The Powers That Be have decided to make use of this by piling on a Very Heavy Weight onto the back of this Cycle. Instead of hitting the bottom gently, this Cycle will hit Hard with a Big Splat.

Everything that is happening is due to man-made manipulation by TPTB. This began in the 1990s when key items in the Glass-Stegall Act were repealed. This allowed Wall Street to begin doing everything that they are now being castigated for doing. Instead of doing what has to be done to lessen the Big Splat, it appears that the Obama Team is going to let the Wall Street Villains continue their operations using Taxpayer Funds. This will only ensure that the Big Splat will occur in the next few months.

The only way to lessen the Big Splat is to Nationalize the American and British Banking System. However, this should be done by a group of experts and citizens who have no connection to Government or to TPTB and their Elite henchmen. A lot of experts agree with me, including Professor Peter Morici.

Power to the People. Let the Revolution Begin.

#75 TS on 02.21.09 at 10:50 am

If online polls are to be believed the majority of Canadians do not believe that government money should be used to bail out the Big 3 automakers.

As a Canadian it is important to realize that buying a Toyota made in Ontario is just as ‘patriotic’ as buying any other brand made here.

In my view GM, Ford and Chrysler should be allowed to fail and go into bankruptcy protection. Restructuring can then occur and the companies will emerge smaller and hopefully more viable and sustainable for the long term. Throwing money at these woefully mismanaged companies is a waste of tax payer dollars.

As an example, Saab just went into bankruptcy protection on Friday. So far the Swedish government is refusing to bail out GM on their mismanagement of this brand. It appears that the company will likely be allowed to fail since GM is only prepared to put up $400 million of the $1 billion needed to keep it running. The brand and company will not disappear as its assets will probably be purchased by a Chinese based auto maker or a European competitor.

Rather than throwing away billions on companies like GM, we should be investing those billions in Zenn, AirCar and other manufacturers of future generation automobiles, and encourage development and manufacturing of these kinds of products in Canada. But, this takes vision and a national industrial strategy. Something that no Federal government in this country has had, or is likely to have under Harper.

The McGinty government in Ontario is reported to be announcing major changes in policy to encourage green energy generation in Ontario. This is supposed to happen on Monday. If what has been reported thus far is true, these will be welcome changes that will help to stimulate renewable energy generation in the province. We need more leadership like this in Canada…. nice to see McGinty finally showing some signs of vison and leadership.

It will be interesting to see what the Stelmach government does in Alberta since the vast majority of politicians in that province are limited to mono-syllable words like ‘oil’. Their Neaderthal view of the world is in jeopardy… hmmm…. wonder if their health care system can at least treat badly scraped knuckles.

#76 TS on 02.21.09 at 10:53 am

#67 BOB on 02.21.09 at 9:07 am

What does one do to protect our money? I guess gold is the obvious choice. How about buying land? If the system was to collapse is it not better to be holding land than paper money?

A good working farm is something to consider. Something that has the potential to generate the food, shelter and energy needs of your family, and (hopefully) generate at least a small profit.

#77 dodgedabullit in Alberta on 02.21.09 at 11:13 am

Greetings: Did anyone else pick up on this from the link in thread 69: Riaz Kassam bought a 1.5 million condo, is facing lawsuit, and is sitting in STARBUCKS!!! I guess for the rest of us, Tim Hortons will have to do. I already have gone through a box of kleenex weeping for him.

#78 MSC on 02.21.09 at 11:22 am

For a bubble in precious metals to occur many more participants are needed. When most of the people one knows are at least interested in the subject maybe that’s a bubble. It’s also in very short supply right now unlike real estate and tech stocks.

#79 Rhino on 02.21.09 at 11:25 am

My sympathies to Canwest employees…

HOWEVER!!!

I have been very concerned about the concentration of our media under single ownership. It has become obvious, that controlling interests have altered the objectivity in the Press. There is more editorializing rather than just reporting. It seems the media is being used to promote the owners’ interests, and push specific political agendas.

What ever happened to the good ol’ pioneer press concept. Seems more than one western movie was focused on a newspaper owner who went head-to-head with “The Boss” of the town.

Perhaps this may end up being a plus, and we will see more independent thought and reporting. Perhaps we will see a reduced ability of one group controlling “The Message”.

BTW, here in Quebec, we are also seeing a huge melt down of Transcontinental Media, another conglomerate of once independent local papers controlled by one group.

#80 Reg on 02.21.09 at 11:57 am

#27 squidly77…

Be careful what you wish for. If the big 3, or any of them, go under, do you realize how much income tax will be lost. There is going to be a ton of it lost now, simply due to the plants closing and people being let go.

I think the gov’t realizes this and that is why they are trying to help out as best they can. One way or the other, it is our money that will pay for this. Either through loans to the auto co.’s or through higher taxes.

#81 Might As Well Be Concerned on 02.21.09 at 12:05 pm

To me the latest request by GM is quite ridiculous and for some reason the public nor press has caught on.
If GM underfunded the pensions they owe then doesn’t that mean that they overstated their financial position in prior years? Even if they didn’t overstate it, and auditors allowed this gross underfunding, then where are the auditors now?
Furthermore, this underfunding would then mean that all the dividends, salary increases, wage increases benefits etc. were too generous and the recipients of prior “gifts” are now suffering. It’s a GM problem if the workers wnated too much and the management gave too much. The precedent is that every large company now will be allowed to underfund and have the public pay for the difference, better yet, promise everything so that even with a concession, the benefits are still much better than the average Joe will ever have.

If there is anyone who says to go ahead and support GM, then they should step up to the plate, and purchase a few autos from GM RIGHT NOW. Show your support with your own pocket. Right now, I don’t need the next guy telling me to be charitable to some people who are better off than I am. I have to exist in capitalistic state. They had the good old days, let them come down to my reality. When they are on the welfare line, then we’ll talk. But if they are enjoying a private room at the hospital and I can’t give that to my own parents, I am not chipping in.

Where am I wrong in this?

#82 john on 02.21.09 at 12:06 pm

The Truth about Mortgage Debt

There is no motivation for most to pay off Mortgage debt for the following reason:

Life Insurance
Mortgage Insurance.

The common attitude I hear is, “Why rush to pay this off when if one should die it’ll get paid off.”

Their focus then shifts on meeting monthly payments and living life to the fullest in their younger years (30-45) rather than later (55+). While I personally haven’t adopted this principle I could see their point.

#83 john on 02.21.09 at 12:09 pm

Hi Garth,

It seems I am unable to post. I have tried twice unsuccessfully. I hope I haven’t been banned from the forum in error as there are many “john”. Pls advise.

It must have been a higher authority banning you. I did not. — Garth

#84 Gord In Vancouver on 02.21.09 at 12:10 pm

#69 lgre

Vancouver Condo Market Collapsing

http://finance.sympatico.msn.ca/SavingsDebt/KerryGold/Article.aspx?cp-documentid=17985631

“market will turn around in 6 months says Panzar”

this guy should be a comic not a lawyer.

If this is the case, then why one earth did he say that purchasers should unite and fight back? If things will be rosey, then you wait until prices go up again and sell to minimize or recoup your losses.

#85 Bill-Muskoka (NAM) on 02.21.09 at 12:29 pm

#9 squidly77 on 02.20.09 at 4:32 pm

My brother, dead now at 78, worked 38 years for GM. He was’asked’ to retire at 62 years ago and had medical and pension benefits he PAID into all those long years.

In December, 2007, his son, seeing the writing on the wall, withdrew all the funds and put them into a safe banking account. He paid the U.S. taxes on that money, but got it out just in time. GM then anmounced they were cancelling most of the benfits.

That is what GM Mangelment did to their own employees. The manglement should be subject to the taking of all their personal assets to make the pension plans solid.

I, too, worked for GM back in the late ’60’s for a year. I quickly perceived they were LIARS and left for other opportunities. I got the full course of criticism from my family for doing so.

Well, today,I would be either newly retired, or being forced into retirement from GM, and what would I have ZILCH, Nada, Nyet! I am so glad I followed my inner guide those many years ago, because now I would be in dire straits financially had I not.

I strove out on my own as a self-employed businessman. I have been a millionaire and a pauper, but I hold my own helm and have had a good life, albeit not always secure, nor stable, nor joyful, but I am a Free Man.

A neighbor of mine, Polish BTW, taught me a simple principle at age 12 when he said ‘We may not have the best house or furniture on the street, nor the latest car in our driveway, but whenever you come here you will find food in the refrigerator and are always welcome to share with us!’ He and his wife were also gourmet cooks an taught me many cooking skills as well. That is what life is really about to me. Family, friends, food, shelter, and clothes on my back.

I could die today and would only regretting that I leave behind a loving wife family, and dear friends. For I undertand that ‘Life is but a vapour’, a passing thing that has no guaranteed expiry date. As Solomon wisely discerned after having it all ‘Vanity, all is vanity. The sole duty of man is love God and honour his commandments (meaning wisdom).’

Maybe now many are coming to understand the wisdom of ‘Place not your faith in things that rust and become corrupt’?

The people of New Orleans learned how it really works. they pulled together and are rebuilding their city and homes. I hope that is not the required experience for all of mankind to find out the real meaning of life?

BTW, I love sailing because it is when I feel one with the forces of nature. I can take the energy for free, and although I must change course by tacking to maintain achieving the goal, I still arrive there as planned.

I guess that is the difference between power boaters and sailors? The power boaters are rushing full speed and miss the beauty of the journey. Yes, they may get there faster, but what then? They rush back to do it all over again. Steady as she goes is the best approach to a happy life. Know the waters and the hazards and be patient. Like gas, it will pass! LOL

#86 poorguy on 02.21.09 at 12:37 pm

“Greetings: Did anyone else pick up on this from the link in thread 69: Riaz Kassam bought a 1.5 million condo, is facing lawsuit, and is sitting in STARBUCKS!!! I guess for the rest of us, Tim Hortons will have to do. I already have gone through a box of kleenex weeping for him.”

I think this guy deserves what he is getting.How can
a software programmer afford 1.5 m condo? Unless ,he is Google/You tube programmer

#87 Bottoms_Up on 02.21.09 at 12:45 pm

http://www.teranet.ca/services/realestate.html

Teranet–unbiased information on the future of real estate in Canada. See the most recent Maclean’s article on house prices.

#88 rory on 02.21.09 at 1:12 pm

#73 Reg said:

While the government continues throwing our money at the banks and automakers and their pension plans, the rest of us working stiffs will be left kicking horse turds down the road.

Rory says – don’t forget the gov’t throwing your money at their gov’t pensions plans also …if Defined Contributions Plans are down 20 to 40% then the gov’ts gold plated plans should also be (are not they invested in the same stock and bond and RE markets) …no new taxes or service reductions to make up the shortfall – rejig their benefits, just like I will have to, or work longer to recvoer the shortfall.

As to a previous post – “power to the people” as it is our money.

#89 Marie on 02.21.09 at 1:23 pm

#77 TS wrote:
“A good working farm is something to consider. Something that has the potential to generate the food, shelter and energy needs of your family, and (hopefully) generate at least a small profit.”

This is very naive and based on the assumption that anybody can farm. Being successful at it is far beyond the abilities, knowledge and physical stamina of the great majority. There is no such thing as a good working farm without a skilled farmer. Farming is something you grow into, that you prepare for, not something you buy into. Which disqualify most everybody to have a fair chance to be even remotely successful. A mad rush to buy farmland will just compound the problems that real farmers already face by inflating the value of the land. The wisest thing to do to insure to food supply is to support local, ethical farmers. We dont have the luxury of having a bunch of clueless townies getting in the way of the farming community. And we dont need a new class of feudal landlord exploiting rural labor. The best road for most folks is to get into movements such as New Urbanism.

From Wendell Berry:

“In our time it is useless and probably wrong to suppose that a great many urban people ought to go out into the countryside and become homesteaders or farmers. But it is not useless or wrong to suppose that urban people have agricultural responsibilities that they should try to meet. And in fact this is happening. The agrarian population among us is growing, and by no means is it made up merely of some farmers and some country people. It includes urban gardeners, urban consumers who are buying food from local farmers, consumers who have grown doubtful of the healthfulness, the trustworthiness, and the dependability of the corporate food system—people, in other words, who understand what it means to be landless.”

For a reality check, here is a text from the New England Small Farm Institute about the requirement to become a farmer.
http://growingnewfarmers.org/nesfi_library/virtual/pdf/outline.pdf

#90 JO on 02.21.09 at 1:55 pm

I continue to see some people blame “free markets” for this mess. One guy made a comment that said former treasury sec Paulson believed in capitalism and free markets. Who in their right mind believes this nonsense ? You can have true free markets only when you have sound/hard money. Free markets cannot and do not exist in a debt based, fiat money, fractional reserve system where the value of your currency and short term rates are in the hands of the bankers. You also cannot have free markets with a large government. What you have now and over the last 38 yrs or so (since 1971, some say since 1913) is a mercantilist or crony capitalism system where bankers and the government as well as the corp elite use the central banks and government policy to concentrate economic power and benefit themselves. This is not true capitalism nor free markets. Make no mistake, buying cars for 0 % over yrs, buy now and pay 2 or 3 yrs from now, buy a house for 0 or 5 down, and the like are not signs of free markets, but rather solid evidence of the crony system in place. Blatant distortion of money and credit markets for the benefit of the elite and government.

We need sound money and a banking sector that looks more like the one we had in the late 1800’s – way less leverage and credit that was issued against savings, and underwritten on old fashioned standards. After, make a few major accounting changes to make sure no off book assets are held and that no games can be played, and voila, we are ready to take our economy forward. This will need to happen in the next 3-4 yrs once the debt has been destroyed and these silly efforts to save the current ponzie system inevitable fail.

By the way, I do not want nor wish anything bad on anyone. What i am sick of is seeing the prudent and responsible ones punished through inflation and high tax rates, and now, deficits and the entitlement mentality that permeates many people who became willing debt slaves.

Speak up, contact your MP, and tell them no bailouts. Loans to these companies are the same as cash infusions since they are on the verge of bankruptcy. No private bank would ever lend to these clowns.
JO

#91 Bill-Muskoka (NAM) on 02.21.09 at 1:59 pm

Now I am finding the RE ads to actually be as funny as the Comics section. LOL

Some that cracked me up were:

‘Four Bedroom Family Home’ Really? What else would it be a Bordello?

‘Three Bedroom House With Hot Tub and In A Great Neighborhood’ Ah, the Swinger Set is alive and well I presume? VERY Friendly neighbors I am sure! No one wants undesirables in their Hot Tub!

‘Inlaw Capacity’ Well, what most people really want is their inlaws living with them.

‘Dead End Street in Orillia $174,900’ Wow, you get the street thrown in, eh? Either that or it means that is where you will end up buying this place?

‘You Can Almost See The Lake’ Yes, now that is what people look for in ‘almost’ waterfront property. Nothing like having the constant angst of ‘almost’ seeing what you wanted to see. A Masochist’s dream come true.

‘Has The Market Hit The Bottom Yet?’ Well, take a gander at this place and you will see what the bottom looks like.

‘Attention Kids’ Yes, kids, ask mommy and daddy to buy you this place for your club house for only $224,900.

‘A River Runs Through It!’ Check out the cost of the Flood Insurance before you even call!

‘K-9 Heaven’ A real Dog of a place I am sure?

‘Out of Town, In Town’ Well, that should be a RE tax nightmare for the buyer?

‘Peek-A-Boo House’ Perfect for all you voyeurs. Great view of that bath and bedroom for those late night forays. Especially nice at Halloween as well.

‘A Condo With A View’ Yes, this is not your typical Prison Cell Condo without any view. Former inmates will NOT feel at home nor probably qualify, unless you stashed the cash in a safe place and they never recovered it.

and my absolute favourite:

‘Gorgeous Home With In-Law’ Yes, we are selling our home and throwing our inlaw in with the deal. Good Luck.

‘We already sold the children for medical experiments!’

Seems Monty Python’s ‘The ‘Meaning of Life’ lives on?

#92 PTDBD on 02.21.09 at 2:06 pm

Blackbail

Once you give in to them and start bailing them out, they’ll just come back for more. The more you have lent to them, the more you have to lose if they finally go bankrupt. Hence, you will be compelled to give them even more. Give in to one, you’ll have to bail out the rest.

Prentice should be asked if he is able to get default insurance on this so-called “loan”. If not, then it is a disastrous gamble.

All along, we have been threatened with the “dire consequences” of inaction. It appears now that a swift, bold, short shock of bankruptcy would have been much preferable to this slow, agonizing road to perdition that will eventually take us to the same dead end.

Let those that can make a profit prosper. Do not support the losing enterprise. It is the way of market.

#93 john m on 02.21.09 at 2:14 pm

Obama and Harper to the rescue….very puzzling–it appears it is all gung-hjo to spend a million dollars apiece to save seven thousand jobs–and by the same token are demanding wage cuts..well wage cuts are inevitable as jobs get scarce throughout north america.Wage cuts at the top filter down thru the ranks.I agree wage cuts are necessary after all there is little market for much of anything.But wage cuts,less jobs,and a debt ridden government spell little future for the homebuyer or the seller,or the person struggling to pay a mortgage.Imagine what 7 billion dollars would do to stimulate green energy programs,it would build factories,create jobs and actually be a product in need worldwide,mass production of Garth’s products on “exurbia” would make those products very affordable for all. Curiously Tony Clements stated they are not going to bail out pension funds…hmmm and just what exactly does he think these companies are going to do with all that money…it sure as h-ll is not to create jobs in fact they are cutting back on their workforce. Well so much for the messiah and the man with all the answers.

#94 Zebedee on 02.21.09 at 2:26 pm

I was driving down Crowchild Trail in Calgary this week and saw something new. A grubby looking man, who in spite of it actually seemed to be a decent kind of person, was walking between the cars at the traffic lights. He held up a piece of cardboard saying that he is an out of work carpenter looking for honest work. More and more a sign of things to come I’m afraid.

#95 Calgary37 on 02.21.09 at 2:46 pm

The Pre-Planned Financial/Economic 9-11 of 2008

I have had this article printout for some time, but without a link source.

When I went looking for a link, I discovered that this is a very popular article. Many Websites have this article posted.

I am listing this site since it is a gateway to many more articles.

http://www.bibliotecapleyades.net/sociopolitica/sociopol_bigcrash04.htm
by T. Anthony Michael

http://www.bibliotecapleyades.net/sociopolitica/sociopol_bigcrash.htm#contents

The 2008 Big Crash – The Collapse of World’s Financial System
This site contains a lot of links.

Power to the People. Let the Revolution Begin.

#96 Barb the proofreader on 02.21.09 at 2:48 pm

#25 T.O. Girl “I have seen some sold signs, I would have thought things would be worse”
………
SOLD signs in Calgary get left up for 6 to 12 months by some agents which I was told 2 years ago by my real estate.

Also proof…. my friend bought a house a block from us… because they LOVED the neighbourhood. We told them last summer to hold off at least a year, but no, they waited only a few months and the same house that had been on the market for over a year was still for sale. So they impatiently bought it last October and the SOLD sign is STILL OUT FRONT. No new sale, just an leftover sign to make people think things are moving.

#97 Vancouver_Renter on 02.21.09 at 2:54 pm

85 wrote… “Well, today,I would be either newly retired, or being forced into retirement from GM, and what would I have ZILCH, Nada, Nyet! I am so glad I followed my inner guide those many years ago, because now I would be in dire straits financially had I not.”

Back in the 1980s, my older siblings bought houses and were assisted by first-time home buyer federal and provincial government grants. When it was my turn to buy a house eight years later, that benefit was GONE. That experience opened my eyes to reality… Throughout my life Baby Boomers will always get there first, get the good deal, and leave nothing for me.

I am very confident that, when I turn 65, there will be no CPP available to me. The Baby Boomers’ entitlements will have bankrupted the nation and, for people born in the 1960s, the government will say, “Sorry. We’re in dire straights. Only those in desperate financial situations qualify – and you saved a bit of money so you get nothing, in spite of the fact that you contributed to CPP for decades.”

That is why, in my small business, my wife and I no longer pay ourselves salaries. Instead, we declare dividends. In doing this, we neither contribute to nor accumulate entitlements to CPP.

#98 Jeff Smith on 02.21.09 at 3:13 pm

Yah but would you trust that stuffs though? If you ask the fox at the hen house how is it going? Great! Don’t worry! All is well, I have every thing under control!! Burp!

#48 Anon on 02.20.09 at 10:06 pm

#25 T.O. Girl:

If you go to the TREB site and scroll all the way to the very bottom, you will find the monthly market reports listed on the right. So in the right hand ‘banner’ under “Market Watch back Issues in PDF format.”

#99 Cara on 02.21.09 at 3:14 pm

Bill – Muskoka – post 85. So very true. He was a wise man, your neighbour. And you too, for learning from him.

At the end of it all, and the good thing about situations like this is that they stand as reminders to us that there IS an end. It will never be how much house you had, or how new your car was, that matters but how many people you touched. As Mother Theresa said, “One of the greatest diseases is to be nobody to anybody.”

I have never been to a funeral where they talked about how rich the person was, or what kind of pension plan or education they had. They only talk about who they were, and how they made the people around them feel.

Thankfully, that kind of impact can be had by anyone with a willingness to share – even the little they might have.

I’ve found it odd in my travels – it always seems those with the least are the most willing to share.

#100 TS on 02.21.09 at 3:49 pm

89 Marie on 02.21.09 at 1:23 pm

Marie, I spent many years in the agricultural business and my comment did not suggest that everyone leave the city to become large scale commercial farmers – your posting seems to infer that.

To your point, I agree that the average person does not have the knowledge or skill necessary to be a large scale commercial farmer. But, we are not talking about a 1,000 plus acre farm or cultivating 6 sections of land in my posting.

What we are talking about here is the notion of self sufficiency. It does not take a rocket scientist to become a hobby gardener/farmer and grow sufficient vegetables etc. to help sustain a family. There are many, many families right now in urban areas that are growing a large portion of their food needs on fairly small plots of land.

An acre or two of good land can grow a significant amount of food to more than support the average family. Proper crop rotation etc. is needed, but these skills can be easily learned by the average home owner.

Garth’s Xubia web site is all about taking more control of your life and becoming more self sufficient. That is the level of ‘farming’ that my posting was referring to.

Let’s not forget that it was not that many years ago that many families looked after the vast majority of their food needs on relatively small plots of land. My wife’s mother grew up on one such farm. It was small by today’s standards at only a few acres, but it was well tended by the family and was a small commercial enterprise producing market vegatables and some fruit. With some rabbits and chickens that the family raised they were able to look after most of their food needs quite easily.

Self sufficiency is not a naive notion as you suggest. It is something that everyone should be taking seriously and planning for in the future.

My wife and I will be re-introducing a vegetable garden to our suburban lot this year and we’ll be adding some pots etc. to the deck to increase our ability to grow vegetables on our property.

When I was a kid growing up in Western Canada it was very common for everyone to have their entire backyard as a vegetable garden. Those backyard gardens produced an amazing amount of food when properly tended.

A couple of acres with a small, efficient home, and a well thought out garden, fish pond etc., along with self-generated power through wind, solar and geothermal has the potential of making the average family reasonably self sufficient.

The McGinty government reportedly will be announcing some major changes to current legislation to encourage more green energy production. Although these details are not known (but should be next week), if the Ontario Liberals follow the lead of countries like Germany we could end up with legislation that could make ‘energy farming’ an economic reality in Ontario. Depending on the legislation and tax incentives proposed, it may be quite feasible to set up energy farms of fairly small plots of land (e.g. 2 to 5 acres) and have these small farms generate a profit for their owners.

There are lots of things that can be produced on a small farm other than fruits and vegetables. Self sufficiency is one of them.

#101 Bill-Muskoka (NAM) on 02.21.09 at 3:54 pm

I’ve found it odd in my travels – it always seems those with the least are the most willing to share.

#99 Cara on 02.21.09 at 3:14 pm

Cara, So have I. Real people are a blessing no matter what their position on the socio-economic scale.

I remember one of my favourite cartoons of a Hippo in a Tu-Tu and the caption read ‘No one is completely worthless. They can always serve as a Bad example!’

Unfortunately, there are more bad examples given attention than the good ones in today’s media.

Have a pleasant day!

#102 squidly77 on 02.21.09 at 3:54 pm

the bailout money comes from you and me

“My family will be down 500 euros ($628.8) a month because my husband and I both work in the public sector,” said Sheila O’Shea, a primary school teacher who was also protesting at education cuts that have hit classes for special needs children.
http://www.calgaryherald.com/business/fp/Thousands+march+against+cutbacks+Ireland/1315767/story.html

make noise or dont complain

#103 Bill-Muskoka (NAM) on 02.21.09 at 4:00 pm

#97 Vancouver_Renter on 02.21.09 at 2:54 pm

Trust me, not all Boomers are or will fare well. I, for instance, paid into the U.S. Social Security program for decades. Will there be anything there for me? Confidence is NOT high as the Congress has ‘borrowed’ so heavily from the fund that it is way in the RED!

The little I will get back from CPP is hardly worth the cost of the the cheque. That comes from being self-employed almost the entire time I have been in Canada. OAS may be a little better. My wife will get much more, but still a pitance in today’s costly market from her CPP.

We just got our annual statements on our investment accounts and they all LOST money. They are all the safest ones possible as we are not gamblers. Had we been more so we would have seen even bigger losses.

Thankfully we did not get bitten in the Dim Jim IT fiasco!

Funny how the Cold War ‘Red Threat’ is now one affecting almost everyone, only this is RED INK!

#104 TS on 02.21.09 at 4:11 pm

#89 Marie on 02.21.09 at 1:23 pm

“A mad rush to buy farmland will just compound the problems that real farmers already face by inflating the value of the land. The wisest thing to do to insure to food supply is to support local, ethical farmers. We dont have the luxury of having a bunch of clueless townies getting in the way of the farming community. And we dont need a new class of feudal landlord exploiting rural labor.”

Marie, your comments are rife with emotion. The sad reality is that many family farms have been going bankrupt for a number of decades and are being swallowed up by large corporate enterprises. That is not the fault of ‘clueless townies’ as you suggest, but is caused in part by the skill set and abilities of the farmers themselves, as well as their inability to generate sufficient economies of scale to successfully compete.

Just because many commercial farmers cannot generate a sustainable future on rural land we should not deny the potential of self sufficiency to small scale operators.

Anyone interested in statistics on the decline of the number of farms in Canada can use this link:

http://www.statcan.gc.ca/ca-ra2006/articles/finpicture-portrait-eng.htm

What the statistics reveal is an increase in the mega-size commercial farms, i.e. those generating over $250,000 in receipts, and a drop in small to medium sized operators. This trend is nothing new – it has been going on for 30 years or so.

It is not difficult to see where the future of farming and rural land use will go in Canada based on the statistics: we will see an increase in large scale corporate farms. These will continue to grow by swallowing up the small to medium sized operations that are unable to compete economically.

I think we will see many of the small to medium sized farms that fail chopped up into smaller, ‘hobby’ farm sizes to accomodate the movement of urban people who are seeking self sufficiency.

Marie may not like the prospect of that happening…but it is where market forces have been going for many years.

#105 rory on 02.21.09 at 4:12 pm

This is why I love the name “Professional” in Realtors – NOT!! Seen this so often.

Check the link: http://www.realtor.ca/propertyDetails.aspx?propertyId=7865934

Price is down over 100K or 15% (CLOSE ENUFF % wise + bad intial pricing) …but is now Feb 20 and the ad says only until the end of jan …if you were the client would you not be proud of how your Realtor is marketing your house given the $$$ you are spending …jeez how hard can it be to provide REAL service …a real pet peeve in the monoplositic MLS system run by ____ (insert your own word(s).

#106 Pat G on 02.21.09 at 4:14 pm

Hi Bill (MNAM)
Very good posts ! They really resonate.

Hi Rhino,

I am hoping the same thing — that with the decline of some of the big media, we will see more small, independent media spring up.

There are still some good, investigative journalists out there. Some of them have been a little more candid recently about how the last election was won and have been bold enough to expose some of the current deceptions and re-writing of history Harper et al have been trying to slip into rhetoric.

Some are saying a crisis is a bad thing to waste. This could be true in a number of areas.

#107 Reg on 02.21.09 at 4:39 pm

#82 Might As Well Be Concerned

You are wrong about how good the benefits at GM are. First off, they do NOT get private room coverage. I am a recently retired GM salaried employee, and the best I have is semi private. However, in todays world, you cannot get semi private rooms. So, in fact, GM could save money by simply providing ward benefits.

Quite frankly, I am getting tired of the whining by those who constantly suggest GM employees had it so good. That is simply sour grapes. Was it a good living, absolutely. Having said that, those same GM (and other automotive workers – both salaried and hourly) have made it possible for others to enjoy a higher standard of living.

Here in Oshawa, the newest LRH Cancer Treatment Centre was built primarily on the goodwill and donations from these people you seem so bitter at.

I would also suggest maybe a thank you would be in order for their support through taxes (they pay a hell of a lot in taxes) that enable people to collect welfare and other types of social assistance. Hell, it has become lucrative to the point that some have made it a career to be on welfare.

As to GM executives… I agree. I personally feel there should be some accountability enforced and quite possibly, criminal charges. Hell, Conrad Black did nothing near this extent and they were all over him. I can’t believe that our executives are being treated with such kid gloves.

As to their 10% pay reduction… well, if you make 10 to 15 million a year, does a 10% reduction hurt. Not a bit. And if you made that amount of money would you really care if you lose your pension. I doubt it.

Having said all that, every GM employee (and other auto worker) could work for free and it wouldn’t come close to saving the co’s. The workers are NOT the issue here. Wall Street is. Bankers are. Greed is.

If you want to be constructive, how about you write a note to your MP, MPP etc., and ask that they encourage our federal government to press for open markets in countries that dump their crap here. Given a level playing field, they could pretty much climb out of this mess alone.

#108 Murray on 02.21.09 at 4:46 pm

As a retired farmer after 38 years of seven day work weeks, some of these posts concerning farming are laughable. Just look at the “tender fruit lands” that McGuinty “saved” with the Green Belt Legislation. They are becoming increasingly covered by Greenhouses. The Greenhouses are staffed by Mexican workers; because to date Canadians won’t work in them for $14 per hour. Market Gardening has too many climatic factors to be profitable. Yes anyone can be a sustainable self-sufficient farmer like the Mennonites. As long as you are willing to live as though this is the 18th Century. Most of our produce comes by Air with a huge Carbon Foot print, and without subsidies Canadian Farmers can’t compete.

#109 TS on 02.21.09 at 5:05 pm

A very interesting piece here about the future of ‘mall’ shopping. The other related issue that I see raised is the potential collapse in value of commercial real estate. We have not seen that market segment go over a cliff but I think that may be just around the corner.

http://finance.sympatico.msn.ca/savingsdebt/insight/article.aspx?cp-documentid=17985593

Check your RSP portfolios folks…if you are holding any REITs in them (real estate income trusts) you may want to get out while you still can.

#110 Waco on 02.21.09 at 5:11 pm

Like many of the readers here, I continue to be struck by the level of ignorance among our leading policitians, our financial elite and, most ominously, our economic “pundits”. Few appear to recognize the depth of the crisis we face and more disturbing most still aren’t prepared to ask the hard, fundamental questions…

The problem, as we know is that so many of the establishment are tied immovably to the old system of economics where it is clear to me that the system is definitely broken and beyond repair. But a man, any man, a realtor, a CEO or a PM will make himself believe most anything if his salary or career depends on it.

Then lots of salaries and careers are at risk here, so lots of heels are digging themselves in.

#111 Barb the proofreader on 02.21.09 at 5:40 pm

Rhino and Pat G, I hope you both are right, the media should be spread out and hungry, not fat and docile.

On another note, why hasn’t it occurred to the Auto Industry to look to the Oil & Gas Industry for “loans” or bail out?
Household budgets were already gouged by Big Oil. They have the money.
Now the gas-guzzling auto industry wants our tax dollars? Why don’t both of those industries unite and try to do some good, instead of continually trying to rip off the consumer?
Big oil owning Auto companies would then help to sustain the demand for their product, it’s a no brainer, and at the same time get their foot in the door of moving into modeling cars for use of the next big resource market, alternative energies, which they will also exploit.

#112 Anon on 02.21.09 at 5:41 pm

#98 Jeff Smith on 02.21.09 at 3:13 pm

“Yah but would you trust that stuffs though? If you ask the fox at the hen house how is it going? Great! Don’t worry! All is well, I have every thing under control!! Burp!”

That is a valid concern I guess. I had assumed that the numbers/data would be legit but the conclusions drawn from them would have to be scrutinized as they are often (ie. ALWAYS) spun to mislead, misinform, misrepresent, etc. I am not saying I disagree with your statement, but where else can we turn to for hard data to investigate what is really going on?

#113 JamaicanGirl on 02.21.09 at 5:46 pm

Cara, great post…thanks!

#114 Bill-Muskoka (NAM) on 02.21.09 at 5:52 pm

#104 TS on 02.21.09 at 4:11 pm

Very accurate statements. The small farmer was the norm before the Mega-Everything fiasco happened. Again, it was all about stockholders being attracted to fund non-productive workers at exhobitant salary levels.

ADM (Archer-Daniels-Midland), a family held corporation based in Minnesota started the huge expansion of buying up little farms into their corporate ‘collective’. They were not satisfied with merely making a profit, but like Microsoft wanted to gain complete control over their industry. They expanded into the livestock arena after they secured the feed grain part of the agribusiness industry.

They are major Blabbyists (aka, Lobbyists) in Congress, and now have gone public (if I recall right?).

At the turn of the previous century 90% of people were self-employed. That was slowly changed with the advent of the Industrial Revolution and the move to urban centres. Now, we are seeing the reverse trend.

In short, it all comes down to those who want wealth without the sweat they demand from others. GM, and all the mega-corps function on this modern Feudal Lord/Slavery system.

It is very effective in the U.S. because of the lack of a National Healthcare System, which in turn forces people to tow the line to keep their corporate subsidies, which, of course, are enhanced by the government subsidies to the corporations.

Likwise, Labour Laws have been a very hard battle because the Barons believe in minimum wage Slavery like they proport to believe in God. ‘God, make me wealthy and I will do some good!’

Gary Hamel, of Harvard School of Business said back in 1992 of management It was once the case that unless you were caught with your hand in the till, or publically slandered your boss, you could count on a job for life in many large corporations. Loyalty was valued more than capability, and there was always a musty corner where mediocrity could hide. Entitlement produced a reasonably malleable work force, and dependency enforced a begrudging kind of loyalty. That was then, this is now.

Talk all you like about building a high committment organization, but isn’t commitment reciprocal? No wonder loyalty isn’t what it used to be.

Shouldn’t authority be as much a function of foresight as hingsight? In a world of discontinuous change, shouldn’t authority rest not only on experience, bus also on the capacity to learn and adapt?

Many more articles have been published since and here is an interesting link Time For Managers To Stand and Deliver

A quite interesting quote from this article Since the credit crunch began in earnest in August 2007, when the European Central Bank injected Σ95bn worth of funds into the money markets, it has continued to gather momentum and threaten or destroy some of the biggest names in business. From Bear Stearns and Lehman Brothers to General Motors and Woolworths, the fall-out from the first severe downturn of the 21st century has yet to play itself out.

The Old game just won’t play anymore to thinking people. Unfortunately, we still have leaders (those who presume a title makes them a leader) who believe loyalty is the foremost thing to cover their own incompetencies. They rise like a drunk from a gutter to overpower the sheep that follow them mindlessly using FUD as their weapon of control.

Now, who didn’t know what was coming? Seems at least two so-called Canadian ‘economists’ failed to see the approaching light!

#115 Carole AB on 02.21.09 at 5:54 pm

I was wondering if anyone have opinions on this rather scary forecast from Europe 2020? Global breakdown of currency when America and Uk default this summer…what would it mean for Canada etc?? I like that they email newsclippings, but are they getting a little panicky? There descriptions are also quite colourful in translation.

http://www.leap2020.eu/English_r25.html

GEAB no 32 is now available 4th quarter 2009 phase of global geopolitical dislocation

“history is not known to be patient therefore the 5th phase of this crises will ignite this required process of reconstruction but in a harsh manner by means of a complete dislocation of the present system…..if the G20 leaders don’t get it right (their last chance at next meeting) the world will enter this phase of geopolitcal dislocation like a “drunken boat” and the world will look more like Europe in 1913 than 2009

#116 Bill-Muskoka (NAM) on 02.21.09 at 5:56 pm

#106 Pat G on 02.21.09 at 4:14 pm

Thank you!

#117 North Vancouver Citizen Jr. on 02.21.09 at 6:19 pm

2010 Olympics…lol

…I have posted that the Olympics should be scaled back, cancelled or made appropriately “Virtual”(tv telecast for most of the events)

2 X’s lol….Do the Mounties think Canadians are stupid?…they must…

$900 million for security for utilizing 7000 mounties for what four weeks?

…That works out to $128, 571.00…per Mountie!…spread over what….four whole weeks!

3 X’s lol….This is payolla..simple payolla, fraud, graft, whatever you want to call it.

#118 eddy on 02.21.09 at 6:31 pm

need a real estate guru?

http://www.miamicondoforum.com/?p=1204

#119 Bruce on 02.21.09 at 6:43 pm

Gerald Celente’s forecast is the gloomiest I’ve seen yet:

http://www.youtube.com/watch?v=9nJ7LM3iyNg

#120 David Bakody on 02.21.09 at 6:45 pm

#111 Barb the proofreader on 02.21.09 at 5:40 pm

Some days Barb I think the plan is to have the working class and their children beholding to government debt around the world for years to come thereby tying the hands of both allowing the rich and powerful to do as they please.

#121 Da HK Kid on 02.21.09 at 6:45 pm

Latest from Mish!

Watch Those Home Owner’s Insurance Policies

Here is some practical advice from “Richard R” about the amount of insurance you may be holding on your home. Richard writes …

Mish

We just got our homeowners insurance policy from a company who took government money and voila, presto, the value of our house went up! Our plain-Jane ranch home has under 2400 sq ft, vinyl siding, asphalt shingle, gravel driveway and 2 car garage with no outbuildings or hot tubs. It was valued at $697,000 replacement cost without the land.

By questioning and reviewing the house it was reduced by their own formulas to $492,000 replacement cost. This is probably high but not crazy for Southern Connecticut.

Difference in policy premium is almost 25%!

I can’t imagine what the difference might be in Las Vegas where 4000 sq ft homes that sold for 1.3mm now routinely go for $395k…

Have a great weekend.

Regards,

Rich

Thanks Rich!

Please check your policies and make sure you are not overpaying!

Mike “Mish” Shedlock

#122 Got A Watch on 02.21.09 at 7:28 pm

I say no bailouts for anyone.

Why do taxpayers have to go to work to support industries that are on the wrong side of history.

By that line of thinking, we should still be paying gas lamp lighters and buggy whip makers and ice delivery men to keep on doing their jobs too.

Bankruptcy and re-organization are just part of the evolution of the economy. Companies and whole sectors rise and fall. That will happen regardless of bailouts.

To say that “OMG! Look what happens if they fail? We can’t allow that?” just encourages an economy where the Government is the lender of first and last resort and determines which sectors continue to operate and which fail.

A ‘Central Planning’ economy doesn’t work, Comrades.

#90 JO – I agree with most of that, but the chances of a gold standard (I assume that’s what you meant by ‘hard’ currency) coming back are, well, better odds of being hit by a meteor. Governments like paper money, it gives them the illusion of control.

#92 PTDBD – Brother!

#115 Carole AB – Leap2020 is a Euro think-tank with a pretty good record of predictions, from what I have read. Their last few reports have not been, err, hopeful. I think their timing is a bit early, but the general thrust is, sadly, probably close to reality. I’ve only read the summaries, I’m not a subscriber.

For a good fright try this interactive event map, it’ll help you not to sleep well at night:

Global incident Map “A Global Display of Terrorism and Other Suspicious Events”

#123 Coho on 02.21.09 at 9:39 pm

Posts #85, #90,and #99

Great posts! Very well said.

It seems that most people want things to be where they were two years ago…wishing to get back to the pursuit of a shallow unsustainable materialistic lifestyle. Living in a virtual bubble within another virtual bubble has burst.

Getting back to basics and what is important (love, support and friendship) towards your true friends and family and cooperation between people in their communities is what will make these turbulent times easier to live in. Ones who based their happiness on the size of their house and identified themselves with their job title or social status won’t be very nice to be around.

What each of us are made of (what we are within) will be exposed in the comming months and years. We’ll all be making major realizations about our “real” selves.

For some people, these realizations will be happy ones. For others, not. They may realize that what they “owned” ((houses, cars, portfolios (Mammon))…has actually owned them.

#124 Bill-Muskoka (NAM) on 02.21.09 at 10:24 pm

#92 PTDBD on 02.21.09 at 2:06 pm

In other words ‘Never negotiate with Terrorists, aka, Losers!’ Right? LOL

#125 Bill-Muskoka (NAM) on 02.21.09 at 10:27 pm

They may realize that what they “owned” ((houses, cars, portfolios (Mammon))…has actually owned them.

#123 Coho on 02.21.09 at 9:39 pm

For all else there is Master Card! LOL

#126 nonplused on 02.22.09 at 2:58 am

#59 Mike (authentic)

What bank do you work for???? Sure, folks who bought in at the top of the gold market had to wait 30 years to break even. But the vast majority who bought in at prices well below the top never saw a loss even over 30 years! They bought sub 200 and it’s never been sub 200 since.

Will it go back to $200??? I certainly hope so, because otherwise we’re screwd.

#67 BOB

Land is good yes but remember that even in normal times a 2% land tax means you give your property to the relevant authorities every 50 years not counting compounding or inflation. When you own land you pay to buy it, and then rent it from the local government. Even a 2% land tax mean there is 0% for your kids. Nothing. They take it all away. If you are really rich you can pay the taxes yourself, and thereby pay for the property 2 or 3 times, but your kids get only the 1 time.

Go mobile! Buy an RV and live on Crown land, until they figure out how to tax that too.

#70 donny

See the UBS thing. Sweden is toast. They are killing Saab as the only answer they have to what the US is doing to them via the lawsuits (search: UBS tax evasion). To get this, you have to understand Saab is 50% owned by GM.

#81 Reg

Dummy. You cannot raise income taxes by using other income taxes to fund the whole of the income. I would prefer well thought out posts on this site. If it becomes the bastion of stupidity I am gone.

#127 Reg on 02.22.09 at 11:13 am

#126 nonplused…

In other words if our posts don’t agree with your thought process you are leaving? BTW – I was simply answering someone who actually posed a question.

Do you really feel the need to try and belittle someone with a derogatory name before you reply. Does it make you feel bigger somehow? Smarter?

#128 Scot on 02.22.09 at 12:18 pm

Garth…In 1972 my first mortgage was at 12%. I can now buy a house for 250,000.00 and mortgage 200,000.00 @ 4.5%. I pay 7.5% less than I did in’72. Over 5 years that is 66,000.00 less than I would have paid in’72. Hence I can take a 66,000.00 hit to my home value and be on par with my’72 position which I was happy with. I am off on this equation? Talking total dollars spent.

#129 john m on 02.22.09 at 4:43 pm

Bailouts,National Debt and where we are headed>>>The Destabilization of the Federal Fiscal Structure

This is the most serious public debt crisis in Canadian history.

The bank bailout potentially destabilizes the federal fiscal structure. It leads to a spiraling budget deficit, which must be financed at tax payers expense. The entire structure of public spending is affected including federal-provincial transfers. The (federal) public debt is slated to increase by 14 % over a two year period. The provincial debts are also likely to increase dramatically.
The 75 billion dollar bailout is to be partially financed by increasing the public debt.
The Minister of Finance has intimated that further measures are envisaged “to bolster the availability of credit” with the government “injecting capital into banks if necessary.” (Bloomberg, January 23, 2009) It is worth noting that in addition to the $75 billion, the government has pledged “to backstop more than $200 billion in interbank lending so banks can boost their lending capacity.” (Toronto Star, December 13, 2009). The implications of this decision remain to be carefully analysed.

What we can expect is a combination of budgetary compressions coupled with an increase of the public debt. Most categories of federal expenditure (excluding defense) are likely to be affected.
The federal fiscal structure is in jeopardy. The budget deficit finances the bank bailout.
What is likely to occur are more government “handouts” to banks and corporations coupled with a massive austerity program and a spiraling public debt.
The size of the public debt is also affected by the economic crisis. Company layoffs and bankruptcies seriously affect the revenues of the State. Unemployed people and bankrupt companies do not pay taxes. The increase in unemployment and the contraction in salaried earnings will backlash on tax revenues, which in turn contributes to exacerbating the fiscal crisis both at the federal and provincial levels.
by Michel Chossudovsky

Global Research, January 25, 2009

#130 Pension Guy on 02.22.09 at 7:05 pm

The reason the GM Canada pension plan is so underfunded is because the Ontario govt called GM “too big to fail” and granted them relief from minimum funding rules. So if GM goes bankrupt there’s going to be a big lawsuit from GM pensioners against the Ontario Govt – and they will win. One way or another, Ontario taxpayers will be pitching in.