Three harbingers


Last week, as you know, the stock market lost a chunk of its value and now sits at the lowest point in six years. General Motors shares are where they were in 1938. House prices in California are at 2001 levels.

There were big rumours this weekend Citibank and Bank of America would be nationalized. The White House tried to put that fire out on Friday afternoon, but the fact remains 2009 will see the United States government swallow banks. The shock waves will be predictable.

In Canada, as in the States, the car companies are on their knees. GM is asking for $6 billion more from Ontario and Ottawa, and even then it will shutter about 250 car dealerships and take its workforce down to 7,000. Worse, it says it can’t afford to meet its pension obligations, so expect the government to move in.

But is it fair to use tax dollars to plump up autoworker pensions when 70% of Canadians have no company pension of their own?

Hardly. And the car companies will probably fail anyway. This bailout won’t work since 2009 will bring no rebound in auto sales, and even these extra billions will not be enough for the car guys to survive until they do. This hasty action by government, not even voted on, could make our economic situation far worse – simply delaying inevitable corporate restructuring, or failure, and leaving us all with billions to pay back through higher taxes or reduced services.

The third harbinger of a wider economic collapse this year is more sinister. It’s denial.

We saw it this week with the visitation of Barack Obama, the Hope guy. By inspiring people to believe things will get better if we click our heels and scrunch our eyes, he’s preventing them from being scared and changing their habits. Bad idea.

But we all know why he’s doing it. By making folks feel normalcy is but a few weeks away, he’s trying to encourage them to borrow and spend – to buy homes and houses – and repeat the behaviour which got us into this mess. It’s hardly a long-term plan, but it seems about all Washington’s got. The first thing politicians say these days is, “we must get credit flowing again to families.” But, God knows, it was a surfeit of credit which parboiled this goose.

People should be scared. Frightened enough to take action, instead of watching CNN and waiting for the government to fix things. Like dumping wheelbarrows of money into the GM parking lot in Oshawa, manipulating folks into feeling hopeful just kicks the can down the road. It sets them all up for a harder landing. Denial’s a dangerous thing.

But, what can you expect when so many people are being misled?

Over my morning Squirrel Crunch I read the National Post’s review (yeah, another one) of my latest book. It referenced a list in there about 100 things that will disappear in a depression – a list I did not write, but which I included for useful context. Number 53 is duct tape.

In summarizing my book the reviewer write: “Duct tape, presumably, will be good for fixing those windows broken by the desperate and the criminal prowling the streets in a hunt for survival when the economy has collapsed, public utilities like light and power have become unreliable and financial institutions are limiting withdrawals to prevent a run on the bank.”

Can we be sarcastic? Yes we can. Hallelujah.


For today’s blog, “Day from hell“, go here.



#1 Westcoaster on 02.21.09 at 9:54 pm

“But is it fair to use tax dollars to plump up autoworker pensions when 70% of Canadians have no company pension of their own?”
No, it’s not. Stop the insanity, already. The powerhouses who preached free enterprise and the unions who held free enterprise at ransom are both to blame and I’m afraid it’s time to pay the piper. For the government of Canada (and the US) to play into this the way they are stymies me. I think it’s time for Darwinian principles to be applied to industry – goodbye to Cadillacs and the Alberta tar sands. But what do I know? I’m just a taxpayer.

#2 Foreign Investor on 02.21.09 at 9:58 pm

We need a “Rick Santelli” in Canada – Chicago Tea Party.

At some point the line has to be drawn and the bailouts have to stop.

They are not working.

I don’t want my kids to have to pay for our mistakes!

#3 squidly77 on 02.21.09 at 10:21 pm

keep an eye on boeing..they could be next;range=1y;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined

caterpillar is not looking good either

sorry man..harleys done to

vroooom vrooooom !!

#4 Harold #3 on 02.21.09 at 10:43 pm

I wonder what Mr. Lonely (Just call him MIke) thinks of a GM bailout?

Lets send this guy a ‘violin’ case and he won’t need no bailout.

Seriously, If we are going to spend Canadian taxpayers loot then I would think that 6 billion would be better spent on Nortel than on a GM dinosaur production plant.

#5 hmm.. on 02.21.09 at 10:50 pm

anybody interested in retro (2006)??
just to view history

very educational indeed.

#6 squidly77 on 02.21.09 at 10:52 pm

i keep looking at production levels now and the projections going forward and i just cant see how unemployment wont reach well into the 20% + range

and if that should happen well… will lead to something very nasty as people will not blame themselves but look for scapegoats to vent and exert there anger and there desperation

there is nothing on this planet that is more deadly or destructive then humans..especially desperate ones

(africans kill lions with sticks)

#7 CM on 02.21.09 at 11:04 pm

Too much Barack. I don’t trust the guy as far as I can throw him. Way before he was elected, Mavis Staples, one of the members of the Staples Singers back in the sixties, was speaking to a Phillip Adams on an Australian podcast called Late Night Live. She belonged to the same church as Obama, the one whose pastor Reverend Jeremiah Wright, was dumped by Obama after having the unmitigated temerity to tell the truth.

She said that she’d seen Obama at some services in Chicago. When asked by the host about Obama’s musical abilites, she said, “He doesn’t look like he can SING to me.”

I don’t know why everyone is going wobbly at the knees about this guy. He’s a religious conservative, has prolonged extraordinary rendition to deal with “terrorist” suspects, has bombed Pakistan and Afghanistan, killing civilians and enraging the population, and is only interested in Canada for what it can provide to the U.S. Believe me, he could turn on a dime about how “important” Canada is if it suited him.

With the fawning Harper and the tail-wagging Ignatieff, I was cringing so hard I think I’m only half my original size in all directions.

Everything we don’t actually make for ourselves is going to disappear. Get what you need now, or at least the raw materials. Be very, very nice to anyone who actually knows how to do something useful.

George Soros believes that the situation is a lot worse than even he first thought. There’s no bottom to it, as far as he can make out.

The old Chinese curse – may you live in interesting times – is hovering over our heads.

I don’t know whether Obama is just dumb or a very good actor. Whatever – he’s not the answer.

Maybe they’re trying to keep us all quiet.

#8 North Vancouver Citizen Jr. on 02.21.09 at 11:14 pm

“”Quebec would be in a better position to weather the economic crisis without Ottawa, according to Parti Quebecois Leader Pauline Marois.””

…There you have it, Quebec Soveregnty back on the table again.

This time Quebec Citizens will vote for separation and Anglo Canada will let’em go on their own…the world is too complicated to keep satisfying unhappy people.

Garth, you can now expand on many issues you knew were coming but the politician in you held you back.

…I have been outspoken…..because I am not a politician.

“Immigration” issues are rearing their ugly heads around the world…..and that issue will hit North America soon too.

The world is changing very quickly…and in more ways than we realize.

#9 Aizlynne on 02.21.09 at 11:20 pm

Over 120,000 people protested in Ireland this past week. A sign of things to come.

I for one am absolutely FED UP!!!!!! NO MORE BAIL OUTS, HAND OUTS ….. whatever the bleep you call it. I am so friggin tired of a society that refuses to accept winners and losers anymore.

I have taken my meager savings out of the stock market, and keep only enough cash in the bank to pay the bills. At that won’t change until such time as all those crooks that created this collapse are arrested and held accountable for their actions.

A revolution by the silent majority is long overdue!!! Where’s my pitchfork!

#10 john m on 02.21.09 at 11:30 pm

Every person in Canada has lost or will lose some of their worth from our broken economy and shrinking real estate values (i know i have and i don’t know anyone who has not).The government is not giving me any bailouts nor have they ever in my entire lifetime. To even consider the billions suggested to maintain a lifestyle for 7000 workers and to prop up a dying enterprise is ridiculous and unfair.Our tax dollars belong to all taxpayers and all should have representation for their wishes in how it is spent. This can not be allowed,i have written to the premier of Ontario expressing my feelings and i hope everyone does. Its our future they squandering and the future of generations to come.

#11 North Vancouver Citizen Jr. on 02.21.09 at 11:34 pm

Canadians should be in a furor and really pissed.

2010 Olympics

$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!

Ottawa will be footing @ 3/4’s of the $900 Million…that is an outrage.

I would not be against scaling back the Olympics in leiu of these security costs…to say even a mostly Virtual TV Olympics.

Most events will really only have Parents and Coaches of atheletes attending.

Olympics have grown way too over the top.

…It is time for the 2010 Olympics to be a “simplified” Olympics.

#12 madame guillotine on 02.21.09 at 11:40 pm

“If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them, will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered,”

Thomas Jefferson

“I am one of those who do not believe that a national debt is a national blessing, but rather a curse to a republic, inasmuch as it is calculated to raise around the administration a moneyed aristocracy dangerous to the liberties of the country.”

Andrew Jackson

“ Panics do not destroy capital, they merely reveal the extent to which it has been previously destroyed by its betrayal into hopelessly unproductive works.”

John Stuart Mill

#13 Barb the proofreader on 02.22.09 at 12:35 am

“But is it fair to use tax dollars to plump up autoworker pensions when 70% of Canadians have no company pension of their own?”


I know MANY who have no company pension but have worked hard all their lives. In fact many have no personal pension savings whatsoever. They simply could not earn enough to get their heads above water. That’s a fact of life. Why should we pay for autoworker pensions when we don’t have savings ourselves?

#14 Milk & Honey on 02.22.09 at 12:52 am

Edmonton hit hard by recession. Went to West Edmonton Mall today drove around for 20 min to find a parking stall the place was packed. Then tried to go out for supper and the line up at Red Lobster was out the door. Olive Garden was the same and cars were lined up onto the main road to just get into the parking.
Then decided to go to the Yellowhead Casino and had to take a shuttle bus because the main parkin lot was completely full and had to park way over in the overflow.
With all the talk of layoffs and the crumbling housing market and all the oil sands upgrader projects put on hold, you would think that people would be battaning down the hatches as the storm approches but its not showing here in Edmonton……Yet

#15 Dean on 02.22.09 at 1:23 am

Instead of giving GM 6billion why not just give the 7000 workers $ 1 million each, almost the same price!!

#16 Mark on 02.22.09 at 1:30 am

Funny, just last week I read another columnist criticizing Obama for not bringing enough of that campaign “hope” with him to the oval office. For the record, he’s putting a great deal of effort into job creation too, with massive infrastructure spending. Here in Alberta, the powers that be are telling us it will all be over by 2010, like a bad dream. I think the story will be much different in few months when we wake up and realize the home and oil construction sectors are dead, and there’s a whole lot of folks unemployed and underwater on their mortgages.

#17 nonplused on 02.22.09 at 2:12 am

#1 Westcoaster

The tar sands will be all we have one day, and this generation will live to see it. For automobile fuel? No. But every time you ouch something plastic, say “I love tar sands!”

The alternatives aren’t any better. Look what they did to BC extracting Aluminum.

To Garth:

Best post yet. You have been overly subtle until now. It’s time people realize that the time to panic was about 2-3 years ago. If you haven’t panicked yet, you are very late to the party. Sometimes you have to rub the dog’s snout in the mess. And boy, what a mess we have. I think the increased alarm you are showing is if anything too late.

People! There is only one stop what’s coming, and it cannot be avoided: The bottom. And no, we aren’t there just because we know its coming. It’s a lot further down the cliff. The cliff divers have to hit the lake first.

I used to say “panic now and avoid the rush!” Too late. Panic now and join the mob. But better that than not panicking at all. The time for that has past.

Garth, you will loose followers as you increase the level of your dire warnings. But you aren’t in politics anymore. As even Jesus said (I am not a religious man), every saved sheep is worth more than the unsaved flock.

To true believers:

Just recently read the gospel of Thomas, which wasn’t canonized by the church mostly because they didn’t have the text, although it dates to the same period. Some interesting gems in there but it is definitely more Gnostic that the canonized texts.

A total paraphrase:

A man had a great fortune. He said “I will plow fields and build great barns to store my harvest such that I will never have need again!” That same man died that very night. He who has ears, let him hear.

#18 Zoronqueen on 02.22.09 at 2:59 am

Sorry to burst you bubble but your house is probably worth only 280K at best. I’m in a similar situation as you. House in Edmonton at peak was 400K we are desperately trying to sell it, maybe the offer we got at 280K will go through maybe not. These days it seems that even people who are getting preapproved do not get a mortgage as we have had 3 offers gone sour…

Nonplused–thanks for all you advise and links… I agree that at 1550 per month rent, that house was probably worth 155K in 2002. However this house was built in 2003 at 169K.

Although we became greater fools and bought a house at 517K in Sept, in Magrath Edmonton, that’s now worth 460K and probably by the end of 2009 will be worth 380K, then our mortgage will be in negative equity. Even though we did the right thing and put 25% down…..However overall, the location is good, walking distance to grocery store, and currently a bus depot and rec center being built near by… Suprising a new home depot and Wal-mart also opened in the area…..

People like us the middle class will see all our hard earned money vanish in real estate… But we will not get any bail out as we are still able to pay our mortagage and make enough to be squeezed for more taxes ect….We will also be expected to pay for the pensions of the boomers… The very lease is that we will still have a place to live……

#19 subprimenow on 02.22.09 at 4:13 am

Just in case anyone hasn’t seen this yet:

#20 gold bug on 02.22.09 at 5:38 am

“But is it fair to use tax dollars to plump up autoworker pensions when 70% of Canadians have no company pension of their own?”

Hell, no.

At what point do people say to themselves: “It’s April 15. I have a mortgage/rent payment due at the end of the month. I have to feed my family. And if I miss another car payment I have no car to drive to work. So I’m going to NOT write that cheque to Revenue Canada” for the taxes I owe.”

And if all 13 million of us tax filers did that, wouldn’t the government be brought to its knees in a non-violent way?

I mean, the only way to fend off a parasite is to starve it, right?

The government doesn’t have enough auditors to chase down 13 million tax avoiders. And after 12 months, there’ll be another 13 million missing tax returns. And so on, until government collapses for lack of money.

#21 David Bakody on 02.22.09 at 6:27 am

From this mornings G & M ….. let the National Post think about this eh.

100,000 protest in Dublin over recession


Associated Press

Latest comment posted at 6:33 AM EST 22/02/09

Ireland plans to cut pay to public sector by 7 per cent

Stand by North America …… with Canada leading the way. Then England, Germany and France and once France has done it, the world. Then ladies and gentlemen no person on salary or hourly pay is safe ….. no one!

I am off to Porter’s Lake Tim’s to think ….. a nice Sunday morning drive across the Lakes and along the ocean just might be what the doctor ordered.

#22 Darryl on 02.22.09 at 7:22 am

We can’t set presidence with the GM pension.
When the teachers pension plan comes calling , and they will. It will bankrupt Ontario. Pensions should be between companies and employees. That’s where the trust should end. Will Ottawa bail out my RRSP???

#23 meco on 02.22.09 at 7:31 am

…from an auto industry perspective, why don’t they consider selling their standing inventory a fire sale prices (ie: at cost or less than that; how about $5,000-$10,000 a car or whatever it takes!!) in order to yield themselves the money they need before going to the government? Where are their creative solutions? They created their own mess and they should at least attempt to clean up!!

#24 Murray on 02.22.09 at 7:41 am

The defined benefit pension plan has got to go. Those remaining, OMERS and School Board employees will be contributing all of their incomes to support the retirees if the present market performance continues. It will be hard on the travel agencies as the retirees leave the vacation market; but will reduce the price of energy. Same goes for CPP and OAS, it really is a concern.

#25 AngloQuebecker on 02.22.09 at 7:49 am

I worry about Harper continuing to act just right of the NDP, giving everyone money for everything in the desperate hope that a plan will somehow happen.

#26 Jennifer Smith on 02.22.09 at 8:24 am

And then there’s this:

DHL Workers Welcome Truckloads of Food

A local town, which is bracing for thousands of job cuts, gets an important delivery today to help workers in need.

This morning, eleven tractor trailers loaded with food and supplies pulled into Wilmington. It’s an effort to help the thousands who will lose their jobs when DHL closes their hub at the Wilmington Air Park. It’s estimated nearly 10,000 jobs will be eliminated.

Somehow, the sight of Americans lining up for food aid from an organization better known for feeding starving Africans fills me with dread.

#27 Dave99 on 02.22.09 at 8:52 am

Some of these self righteous comments are a little naive. Even if you personally were not an overconsumer, you still have benefited from the good times of the past 10+ years. The money spent by the overconsumers helped to provide a job for you and others around you. If we hadn’t had this bubble, you would have less now than you presently do.

Everyone always like to think that they are entitled to everything they have (plus a little bit more). In truth, we are all entitled to a little less these days.

So perhaps we can all lighten up on the self-righteous vitriolic scorn of the world’s leaders?

#28 Calgary37 on 02.22.09 at 9:07 am

Thanks to “Flounder Digest” for providing this timely link:

I was aware of Orlov and his prediction for the USA, but I had not delved into the details yet.

This transcript of a recent talk by him was very timely, so I made a point of reading it right away. This is something that has to be read more than once. I strongly recommend that everyone print this out (17 pages in WordPad) and read through it at your leisure.

Hopefully, it will generate some new ideas for some of you. I have previously mentioned the topic of communes and a business entity (holding company). To prime the pump further, I am now going to mention the word “cooperative”.

cooperative (noun): a jointly owned enterprise engaging in the production or distribution of goods or the supplying of services, operated by its members for their mutual benefit, also called co-op

You will find this article very informative about the future that we are facing.

Be Prepared.

#29 vtj on 02.22.09 at 9:34 am


During one of your recent speaking engagements (which I enjoyed attending by the way), you mentioned that people should “be beholden to no one” and to pay off debt as quickly as possible. You also mention that if one has a mortgage and an equivalent portfolio of non-registered investments to use those investments to pay off the mortgage, and to then obtain a new loan to buy back the investments so as to make the interest payments tax deductible. IMO, such a move contradicts your first statement of “being beholden to no one”.

Given today’s environment, I believe that it would be far more prudent to use those investments to pay off the mortgage and to then begin accumulating cash for future investment or to at least use a dollar cost averaging approach to buy back the investments over the coming years. This last approach makes most sense to me, particularly as I recall your graph which shows stock markets falling to about 13% of their 1929 peak value by the year 1939 or so.


My strategy is a 1,000% improvement over having an investment portolio, taxable, and a mortgage payable in after-tax dollars. Also it is insanity today to have all your net worth in a a depreciating asset, namely a home. Comments? — Garth

#30 Bill-Muskoka (NAM) on 02.22.09 at 9:38 am

How did we miss the economy’s warning signs?: Economists admit they’re not good at forecasting ‘turning points’ such as the current recession

Economic forecasting doesn’t adapt well to novel situations.

“If you have something happening that has happened in some way before, then you have a chance of forecasting it,” said Peter Dungan, professor of business economics at the Rotman School of Management at the University of Toronto. “If it’s a new thing, you don’t have much chance … What happened this time was largely new.”

Human nature may also have had something to do with the fact that so few economists went out on a limb.

“There’s a considerable reward for being the outlier and being right, but I think there’s a severe punishment if you’re an outlier and you’re wrong because then you really look bad,” Drummond said. “It’s not like everybody missed it. You alone missed it.”

Or, as U.S. economist Edgar R. Fiedler once bluntly observed, <b?”The herd instinct among forecasters makes sheep look like independent thinkers.”

>”It’s a little bit odd for one forecaster to be throwing a stone at somebody else’s glass wall,” he added.

There they go Garth, talking about you, yet again!!! LOL

I think that says it ALL!!!! Perhaps a little Monty Python education will help them ‘You are all individuals’?

#31 David Bakody on 02.22.09 at 9:50 am

Back from my quiet morning drive …. me and Johnny Mathis …. when I stopped by the Ocean … he was singing “Maria” … I repeated it as the sounds of waves crashing ashore charged my person batteries as music and life blended …. life was so different and in many ways good in the 70’s … I can not help but feel sad driving by small places that sold toys knowing they will close up shop soon, what will happen to inventory? Who knows? but it will not be good news. I think most know what is coming and are in denial and many are just out and about on one last winter’s fling. Many may have not gone south so are spending a little extra here at home. Some area’s of Canada are better off and will take a little longer but because Ottawa runs on the big picture it will be felt by all soon enough, how could they be otherwise? Canada is 5 1/2 times zones wide and Harper has managed to offend every province one way or another …. he was the Western Hope for change and soon that is all they will have in their pockets. The tar sands are dead and although oil is needed …. much less will be used with a billion less customers world wide. So where do go from here? A kinder and supportive life where people help out other people …. lets hope so. Government bailouts will not work for it will create the direct opposite.

#32 Rhino on 02.22.09 at 9:56 am

#8 North Vancouver Citizen Jr. on 02.21.09 at 11:14 pm

“…There you have it, Quebec Soveregnty back on the table again.”

Thank you Stephen Harper, the CPC, and associated Harperites. You have rekindled the politics of division.

#33 Pete on 02.22.09 at 10:03 am

$6-7 billion for 7,000 jobs! if we had a one time payment of a million dollars for every employee, we’d be in business for a solid 10 years and our employees wouldn’t have to do any work. If we were to combine that payment with reduced revenues over the next few years it would easily give all of us 20 years of employment. Should be putting that money towards the little guys who run a tight ship.

#34 Mel Eager on 02.22.09 at 10:05 am

Why can’t we just let the big three die out like they deserve to? People are still going to need vehicles and the companies that decided to make the right products for our times already have manufacturing facilities in North America. People can buy these cars instead, and a car guy fired from GM can find work with one of the survivors. A parts manufacturer loses a contract with Chrysler but gains one with Toyota. Yes, money will flow out of North America, but Governments could make it law, that if a vehicle is to be sold in North America, it must be manufactured in North America. That would be the price to have access our markets.
Instead of bailing out fat cat execs at the Big Three, Goverments would take the bailout money, and transition it to EI to help workers survive until auto jobs come back with the superior foreign companies.
Maybe if we’re lucky, the death of the big three will take the Unions with them. Auto workers make so much money, I have a hard job in technology and a guy screwing bolts on engine blocks all day long makes the same as me. Doesn’t seem fair!

#35 Herb on 02.22.09 at 10:22 am

Time to repost Paul Krugman’s question here:

“Who’ll Stop the Pain?”

Provide your own answer, and be prepared to deal with it.

#36 mikef on 02.22.09 at 10:23 am

Garth, 250 dealerships in N.America or just in Canada?

Dear North Vancouver Citizen Jr.

Funny how the Parti Quebecois only opens at party meetings and not to the public at large?

The Parti Quebecois have lost half their party membership
since the ’90s and three quarters of their members are over fifty years old.
In Quebec the dye has been cast,I look for francophone Quebecers to be a minority in 30 years.
Separation?Since this is a real estate forum,it wont happen because all the suburbanites are afraid of what
political uncertainty will do to the value of their homes.
In previous years when houses were 80K it was no big deal, but since the last referendum home prices in the Montreal area have exploded five fold and people have become very risk averse.

Just Canada. — Garth

#37 TonyT on 02.22.09 at 10:34 am

“…from an auto industry perspective, why don’t they consider selling their standing inventory a fire sale prices (ie: at cost or less than that; how about $5,000-$10,000 a car or whatever it takes!!) in order to yield themselves the money they need before going to the government? ”

Everybody has a quick fix solution don’t they? Do you realize the consequences of this action, fire sale prices. Are you familiar with the subprime mortgage crisis, banks selling foreclosed homes at “fire sale” prices? What happens to the price of the neighbour’s house?

If GM and Chrysler sell new cars for $5000 – $10000, the resale value of everyone’s car depreciates in value. In a flash you will have millions of people with negative equity on their cars.

Car dealerships will be stuck with millions of used cars/trucks/vans on their lots worth 1/10th of their current black book value. The banks will quickly realize that these dealerships are insolvent making things that much worse.

#38 Bill-Muskoka (NAM) on 02.22.09 at 10:37 am

He’s a religious conservative, has prolonged extraordinary rendition to deal with “terrorist” suspects, has bombed Pakistan and Afghanistan, killing civilians and enraging the population

#7 CM on 02.21.09 at 11:04 pm

‘He has bombed Pakistan and Afghanistan?’ Where do you get your information from Bill O’Reilly, Rush Limburger, or some other White Supremicist, Right Wing Nutbar, Hate Monger on Faux News?

That was He who’s name will no longer be mentioned but if you need a clue he is from Texass.

I would have dumped the Rev too. There are proper and meaningful ways to express things, his was not the proper way.

Did you just land on this planet or were you recently released from an institution?

#39 North Vancouver Citizen Jr. on 02.22.09 at 10:37 am

Garth do you sense a growing influx of foreign investment into the US Dollar?

….If Switzerland’s banks have to open up all the private accounts of Americans…the US will collect all the back taxes due on them…..but more importantly, Switzerland will be finished as a safe haven bank….and no doubt in my mind, the Caymans, Bermuda, and any other off shore bank will be opened up too.

…Leaves only the US Dollar…in the US as the future safe haven.


#40 Bill-Muskoka (NAM) on 02.22.09 at 10:39 am

#11 madame guillotine on 02.21.09 at 11:40 pm

How so sadly true!

#41 Jelly on 02.22.09 at 10:51 am

subprime now,

regarding your poster bailing out the Big Three,
hilarious yet infuriatingly true advertisement.
i emailed it to everyone i know,
someone should send it to all the politicians,
that is all you would need to say…

#42 Got A Watch on 02.22.09 at 10:53 am

“So perhaps we can all lighten up on the self-righteous vitriolic scorn of the world’s leaders?”

Nope. They deserve public tarring and feathering.

These are the same morons who brought in all the bad policies that led us here. Now they are just making things worse by fostering a ‘Bailout Culture’ and constantly attempting to re-inflate the burst bubble.

They deserve no respect or support. The ‘political and business elite’ class are the root of the problem, and they are all from the same mold. Educated in the ‘important’ Universities, MBA in “Business”. Taught in Economics 101 that Keynesian and Friedmanite wishful thinking is actually how the economy works. Thinking they are the smart ones who know how to accomplish things.

They have led us off the cliff, and now they think they are the ones smart enough to devise solutions to the problem they created.

Off with their heads! No bailouts for anyone! Time for a tax revolt. Vote with your feet, just stop paying. Time to starve the beast.

#43 Jelly on 02.22.09 at 11:09 am

Dave 99,

Regarding your post,
While the first half of it is a good point, the way you
ended is CRAAZZYY!

“Everyone always like to think that they are entitled to everything they have (plus a little bit more). In truth, we are all entitled to a little less these days.

So perhaps we can all lighten up on the self-righteous vitriolic scorn of the world’s leaders?”


#44 vtj on 02.22.09 at 11:10 am

My strategy is a 1,000% improvement over having an investment portolio, taxable, and a mortgage payable in after-tax dollars. Also it is insanity today to have all your net worth in a a depreciating asset, namely a home. Comments? — Garth

Under normal circumstances, I agree that your strategy makes sense, but not today for the average person IMO. I see two significant risks. The first risk lies with the investments themselves which may well fall significantly further in value (as they did in the 1930s in NA and as they have in Japan since 1990). It’s very difficult to diversify to mitigate risk with today’s intertwined global economy.

The second risk lies with the loan itself. In my experience, most financial advisers will suggest that a secured loan be taken either against the investments themselves or against the paid off home. In either case, it’s difficult to predict the loan provider’s reaction to further economic declines in the future. Might they call the loan? Might they increase the interest rate?

For instance, I was very surprised this past week when I received letters from the two major banks with which I have secured lines of credit against my home, each with a zero balance. Both institutions increased the interest from prime to prime +1% & prime +0.5%, respectively. This was done in an effort to “serve me better”.

Your strategy is too risky for me right now and I dare say too risky for most people as well.

Suggest you get some facts. The loan is non-callable, 100% tax-deductible and will carry an historically-low rate of interest. That makes it as close to free money as you will ever get. Second, the investments can be short-term bonds held to maturity which have 0% risk, or seg funds whose principal is 100% guaranteed. Third, having existing mortgage debt payable in after-tax dollars on an asset already declining in value (a house) is plain nuts. I sure hope are are not a financial advisor. — Garth

#45 Jelly on 02.22.09 at 11:15 am

Dave 99,

Also, regarding your ridiculous comment telling us to
lighten up on blaming world leaders,


#46 Jeannette on 02.22.09 at 11:24 am

The CEO’s running the auto makers are just as responsible for the pension problem as the workers. Years ago they were told it would hamstring the companys yet they signed the contracts knowing they would be retired and out of the line of fire when the SHTF.

Bailing out the pensions now is foolish.

#47 Bill-Muskoka (NAM) on 02.22.09 at 11:25 am

#32 Mel Eager on 02.22.09 at 10:05 am

Hear! Hear! I watch these line workers and think ‘Have they invested in education, other than how much torque the nut or bolt really requires, as you and I have?’

Construction labourers LABOUR and work in horrid weather conditions much of the time, yet do they get the benefits and pay scale these shorts, shoulderless shirt wearing workers do? Hell NO! Look around the construction sites and you will see people in their 50’s and 60’s still working hard when they should be able to relax after all the years of back breaking work. They can’t stop because they have never been able to get ahead enough to save up for such a luxury.

I am not anti-union because unions became necessary to protect the workers from arrogant and corrupt mangement. BUT!!!! It has gone beyond realistic. Now the unions are milking everyone for their high pay and benefits. Who really thinks any of today’s cars are worth the price charged? Hell, I used to be able to buy a nice home for less than most of today’s vehicles.

As to the billions of our taxpayer money the government wants to spend to preserve these jerks I, too, say ‘Give the money directly to the workers, and let the companies that know how to run a profitable business hire them. In fact, with all the money the auto workers get paid they should be able to buy the companies and run them themselves.

GM is one of the worst run companies in history. They tried to eliminate competition by buying them when they did not have the cash on hand to do so. All for the Stockholders benefit, not the general public’s.

I have said, and will comntinue to say, take all the exec’s assets and liquidate the companies, then let a real auto manufacturer, one that cares about their product and future, take over the industry. Enough of the ‘investment firms’ running businesses they know absolutely nothing about just to take the profits.

Things are going to end up like the ‘Flashpoint’ episode we watched from Friday before last where the laid off (fired) Bank Security Chief took his revenge because his life, and his wife’s future were destroyed. Interestingly, the manager assigned to wield the proverbial axe, learned how devastating her sheep like commitment to the ‘Company’ actually was on a personal level.

The HR Axe People need to stop being in ‘personnel’ and start being ‘personal.’ Will we read about it the news? probably not because it would show how bad things really are for too many people.

They get away with it because the politicians refuse to write tough labour laws that truly protect workers, especially senior ones, from corporate beheadings. We have seen some improvements, but things like accountability to the management directly is still a long way from being real. When the cuts need to happen, then the first cut should be to the the Top. That is what I call real Trickle Down Economics.

Companies go through more paperwork and trouble to hire a Landed Immigrant or non-citizen foreign worker than they do to fire a long term Canadian employee. These people pay taxes as well.

Right now people 50+ are being discarded very rapidly so companies can avoid pensions and benefits. These are, most often, people who have invested most of their working life into making the same companies a success. Thanks a lot, eh?

They should start handing out Gold Dildos instead of watches, because Time is Up and the former denotes the real treatment the employees are being given.

We Boomers have not been perfect, but we worked darn hard and built much of the world the younger generations have enjoyed. Want to see Pissed Off? Just stand by, because it is coming!

#48 Taxpayer like you on 02.22.09 at 11:35 am

Garth – vtj 27 has valid point imo. The manouver you discuss does nothing to alleviate debt, it only makes interest deductible. Whether the house is depreciating is actually irrelevant, the debt would still be there. If the portfolio increases, great, but if it decreases you are no better off.

Also, vtj may trigger tax on capital gains if all investments sold now. Perhaps a middle ground where those assets which minimize cap gains (the losers?) are
sold off and mortgage paid down, then split the amount currently allotted DCA to investments to partly go against remaining mortgage?


I answered those concerns. The investments can be guaranteed, the loan non-calllable, and the homeowner far better off being able to deduct mortgage payments from taxable income. Selling existing assets for a capital gain? Doubtful in this environment but if that were the case, you’d obviously balance the taxable gain (a maximum of only 25% of the gain – 75% is effectively tax-free) against existing mortgage payments which come 100% from after-tax income. Give it up. This is a no-brainer. — Garth

#49 nearmilton on 02.22.09 at 11:37 am

If you can’t sell them, burn them.. Gives new meaning to that song burning down the house.

#50 vtj on 02.22.09 at 11:44 am

Suggest you get some facts. The loan is non-callable, 100% tax-deductible and will carry an historically-low rate of interest. That makes it as close to free money as you will ever get. Second, the investments can be short-term bonds held to maturity which have 0% risk, or seg funds whose principal is 100% guaranteed. Third, having existing mortgage debt payable in after-tax dollars on an asset already declining in value (a house) is plain nuts. I sure hope are are not a financial advisor. — Garth


Now there’s a response with meat on it – thank you.

For the record, no, I’m not at all a financial advisor. I certainly would like to find one who manages my finances with the kinds of insights you just did however. Not easy to come by in my experience.

Thanks again for the very useful response.

#51 Opportunity on 02.22.09 at 11:45 am

Auto Industry – Squeeky wheel gets the grease or in this case lots of money.

#52 go green on 02.22.09 at 11:46 am

Yeah I really feel for them.

“MD Retirements Stalled
Doctor shortage (and early retirement) over thanks to the stock market

To gauge the impact of the financial crisis, all Dr. Maria Hugi has to do is look out the window of the home she purchased a few years ago in Dupont, Wash., with her fellow ER physician husband.

The couple, who also are both ER doctors in Vancouver, where they have their primary home, bought the little house to be nearer the Fort Lewis U.S. army base where they also put in shifts.

“The house next door foreclosed a few months ago,” said Dr. Hugi, “and its lack of value has affected the whole neighbourhood.” She figured her abode in Dupont, identical to the darkened building next door, has dropped by US$200,000 from the US$450,000 they forked out at the height of the housing market.

While few Canadian physicians have a totem of the financial collapse right outside their door, they do have vivid reminders of it as close as their nearest investment statement.”

“Indeed, doctors do have many economic advantages that the average Canadian doesn’t have. The one-payer system is recession-proof; Canadians get sick, and because of medicare don’t think almost at all about the cost of a doctor visit. Also, the overall Canadian population is getting older, and its collective health will worsen with age.”

I mentioned to my neighbour a month or so ago (a retired psych nurse, who works part time here & normally works on a 3 mo term in the US, because she likes working part time & spending the winter mos. in a warmer climate) that I was holding off seeing my ENT cause of the cost to the health care system. In the last 2 yrs. I have wax buildup in my ears & put drops of olive oil in my ears every few days but it doesn’t always help. She basically laughed at me.

A week or so ago, rec’d a call from a new Med. Clinic, saying that our GP of 16+ yrs. had retired and had passed on our med. records to them. What a surprise. Our GP didn’t even have the courtesy to notify us. She’s only in her 50’s. Called her office & the # was disconnected. I visited the new female Dr. & my DH visited her Dr. hubby. My DH asked if they were holding a wine & cheese. My DH spent 5 mins with him talking about an inherited med. problem & 15 mins talking about computers with him & gave him some advice :-) They’re both online w/our new medical records system. Our new GP’s, BTW, are in their mid 40’s & originally from Egypt. Been going to a dental school for some work (yeah, unbelievably long) & all students are from the mid-east.

Sorry for the long post.

#53 double mike on 02.22.09 at 11:53 am

1 million per worker is outrageous, true. The problem is that powers that be don’t have another choice. They got caught with their paints around their ankles and now they are running scared shitless. It’s understandable. I personally would be scared of the possibility having good part of 7000 pissed of assembly workers roaming through Ontario on their Harleys. With all due respect provoking people to turn to pitchforks is not a good idea.

So yes, we are stuck with Stupid 3 turning valuable natural resources into shit for a while. But it beats Mad Max scenario any day.

#54 Bottoms_Up on 02.22.09 at 11:59 am

#5 hmm.. on 02.21.09 at 10:50 pm
Looks like Peter Schiff’s getting the last laugh now. Good for him.

MLS–anyone notice the number of listings are starting to pick up for the spring ‘selling’ season? Prices will soon collapse once sellers realize there are no buyers…and likely no buyers for a few years…

#55 squidly77 on 02.22.09 at 11:59 am

milk and honey #13
went to west ed mall
went to red lobster
then went to the casino
a spec buyer for sure..

seven thousand million dollars to save seven thousand jobs..that our money folks

obama and hair dryers have much in common
how he can speak and speak and speak and speak and say absolutely nothing is mind boggling

#56 Bottoms_Up on 02.22.09 at 12:07 pm
That’s one way to get yourself out of a contact to buy a new house–burn it down!!

#57 double mike on 02.22.09 at 12:08 pm

#47 nearmilton
That’s a good thing concrete doesn’t burn. Can you imagine all those new condos in downtown going aflame? ;)

#58 Another Albertan on 02.22.09 at 12:09 pm

@13 –

I had my first pilgrimage in nearly a decade to West Ed last weekend when I was visiting from Calgary. He’s what I saw:

-outside: parking lots packed with average-looking, run-of-the-mill entry-level to mid-range domestic and import cars and a bajillion late-model “rig rocket” pickups and SUVs.

-inside: just about everyone was walking around with the deer-in-headlights looks… slow-moving and stunned

-inside: just about no one walking with a bag of merchandise, except for teenagers who were obviously in the stores offering 50 to 70%-off sales

-inside: the breakdown of shoppers’ attire was roughly 75% “decidedly average” (clean clothes of no particular style or fashion) and 25% “are you kidding me?” (dirty sweatpants or jeans, the wearer looking like they had slept in their clothes and hadn’t showered in a few days). Only a small smattering of individuals who were “nicely put-together” (you know it when you see it, as it’s fairly obvious…)

-outside: the “kidding me” crowd was driving a nice mix (say, 25/75) of beater cars and rig rockets.

Combine these observations with my industrial tourism through the east side and through Nisku and with my corporate reconnaissance:

-TONS of For Sale signs on land, buildings, equipment and heavy-duty vehicles

-few vehicles in facility parking lots during working hours

-the purchasing dept of major owner/operators starting to call around asking their consultants if they know anyone anywhere in the world who might be interested in buying semi-custom, long-lead-time equipment and supplies

[exercise for all readers: if equipment has been sitting in a yard for over 6 months and took greater than one year to deliver from the manufacturer due to lead time because it is semi-custom and purchasing is looking to unload and construction is delayed until at least spring of 2010, what does this say about future possibilities for getting said installation done post-facto after things start up again? I know the answer, but I’m under non-disclosure…]

-HR depts of companies of all sizes trading notes on creating consistently-sized compensation packages for permanent, full-time employees

-rumours that rig rockets and similar amp’ed-up field trucks are yielding somewhere between 20 and 25 cents on the dollar on trade or at auction

Add it up… by my and other consultants’ estimation, there is under 6 weeks before more wide-spread layoffs occur in Alberta. “Spring breakup” in the oil patch is already occurring due to reduced capital spending. Q1 numbers are going to make last fall’s quarter look great. The trickledown to non-energy-related companies will be noticeable very quickly. It’s gonna hit like a ton of bricks for those still stuck in denial.

#59 Taxpayer like you on 02.22.09 at 12:10 pm

“…the homeowner far better off being able to deduct mortgage payments from taxable income.”

Great responses Garth, but shouldnt this read “deduct the mortgage interest”? If it is only the interest, then isnt this benefit offset against the interest income
generated by the investments you suggest (granted it
wont be as high as the loan).

Again, at the end of the day, the total balance sheet is the same. You have assests – home and investments, and a loan/mortgage.

If you straighten me out on the interest v. mortgage
deduction I will gladly yield to you my master (heavy
asthmatic breathing……)


Ninety per cent of mortgage payments are interest, which are deductible from taxes in this case. This is a huge monthy cash flow for most people, as mortgage rates are 4% to 7%. It means taxable income can be reduced by tens of thousands a year. By comparison interest-generating investments yield 2% or 3% and the taxable portion is 50% at most – which means a max tax profile of 1% to 2%, which is about equal to inflation at present. If you are equating these, you inhabit a different planet than I. — Garth

#60 ERC on 02.22.09 at 12:10 pm

Has anybody figured out yet that 7 Billion to save 7000 jobs is 1 million per employee, given th choice I suspect they will take the million. Yes, I know that each direct job results in support jobs but still?

#61 rory on 02.22.09 at 12:22 pm

#45 Bill

Finally a rant worth reading to its conclusion…your diligence and practice to this blog are finally producing some very good results…sounds like this rant finally came from the heart.

FYI – I have sent my MP my thoughts on the auto and pension bailouts …pls all make sure you all do the same or at least direct them to read this, I assume, representative blog of Canadians feelings.

Oops …maybe not a good idea to tell politiicans you believe Garth T…they may just do the opposite for spite …maybe just send in your thoughts.

So what happens if the gov’ts do give in as in once the money is committed it will be near impossible to retrive …better not to even get there …hopefully the Swedes will give us all pause to rethink the situation.

Bill and others …I agree the union execs helped auger in the demise of GM and others …no question about it…no give but always take…and now hopefully they will give and give until it is all gone…wonder what the Union Exec’s pension plans look like …think it mirrors their members …wanna take a guess.

#62 JO on 02.22.09 at 12:25 pm

7000 jobs saved for billions ! You want socialism, you have it.

No bailouts for no one. Recessions and depressions have been happening for all of history, and no one should ever be bailed out. Anyone who got trapped into the high consumption, debt driven, cheap money lifestyle laid for them by our central bank, the large commercial banks, and your friendly government has to be held accountable. Bailouts never have and never will work. No one ever talks about the lost GDP growth, elevated unemployment, lost savings and long term wealth destruction that this bailout/stimulus debt (and the interest we pay on it which takes from the budget each year) and resulting taxes costs us. Now, I am disgusted with the amount of taxes (federal, provincial, municipal) confiscated from the fruits of my labour. Seeing much of this money used to support a bloated government and now bailouts/stimulus for a few sectors makes me outraged.

The good news is this bailout mania/era will come to a sudden halt. Big government, money in the hands of a central bank and large commercial banks with little restrictions mean less democracy, less wealth, and market interference/distortion. Deflation is the markets’ way of catching up and bringing everything in line.

Wait until the government and other public sector pensions come knocking on the door for help. They will attempt to keep their benefits at the expense of the younger generation and those who do not have a pension. This madness must be stopped.

Contact your MP and speak out. Stop the bailouts and ongoing deficits. Do not support any company asking for a bailout.

#63 ThumbsUp on 02.22.09 at 12:27 pm

#25 Dave99

“The money spent by the overconsumers helped to provide a job for you and others around you. If we hadn’t had this bubble, you would have less now than you presently do.”

On the flip side, money spent by overconsumers helped to raise the price of what they spent on, like gas & house, made it more expensive for everyone including those who didn’t want to overconsume.

Government support of a sector (housing by CMHC/Fanny/Fredie) made people believe the house price will go up forever and everyone bet on it. The other sectors that are in fact the foundation of the housing sector were put in an uncompetive position, that’s what led us here today.

The stock market had voted, let GM go, there will be new demand for better cars that fit the market.

The leaders really over-regulated in some area and over-deregulated in others, as another poster stated, they led us here.

#64 buy gold on 02.22.09 at 12:29 pm

I think all unions should be abolished
they do nothing but hurt the taxpayer in the long run
and they only protect the workers for not doing a days work!! or only working 5-6 hrs a day all companies should be privatized/

#65 john m on 02.22.09 at 12:50 pm

NO to auto company bailouts and no to anymore of our governments spending and borrowing on our tax dollars without our representatives having a voice for the people! I can’t even begin to express my disgust with the decisions of the governments with our future—BUT im even more disgusted with my fellow citizens who can spend hours complaining but don’t have 5 minutes to spend sending off a letter to their government representatives expressing their displeasure. Well the time to make a stand is now…when the money is spent its gone! If your aren’t willing to be part of the cure then you are part of the problem!

#66 Bill-Muskoka (NAM) on 02.22.09 at 12:52 pm

On real life and what matters. How we ALL grow old!

When an old lady died in the geriatric ward of a small hospital near Dundee, Scotland, it was believed that she had nothing left of any value.

Later, when the nurses were going through her meagre possessions, they found this poem. Its quality and content so impressed the staff that copies were made and distributed to every nurse in the hospital.

One nurse took her copy to Ireland. The old lady’s sole bequest to posterity has since appeared in the Christmas edition of the News Magazine of the North Ireland Association for Mental Health. A slide presentation has also been made based on her simple, but eloquent, poem.

And this little old Scottish lady, with nothing left to give to the world, is now the author of this ‘anonymous’ poem winging across the Internet:

Crabby Old Woman

What do you see, nurses…………….What do you see?
What are you thinking…..When you’re looking at me?
A crabby old woman………………………Not very wise,
Uncertain of habit,………………….With faraway eyes?

Who dribbles her food …………… And makes no reply.
When you say in a loud voice…….’I do wish you’d try!’
Who seems not to notice ………The things that you do,
And forever is losing ………………..A stocking or shoe?

Who, resisting or not, ………….Lets you do as you will,
With bathing and feeding, …………The long day to fill?
Is that what you’re thinking?….. Is that what you see?
Then open your eyes, nurse,…You’re not looking at me.

I’ll tell you who I am ………………As I sit here so still,
As I do at your bidding, …………. As I eat at your will.
I’m a small child of ten……..With a father and mother,
Brothers and sisters……………..Who love one another.

A young girl of sixteen …………With wings on her feet
Dreaming that soon now ……………A lover she’ll meet.
A bride soon at twenty, ………….My heart gives a leap,
Remembering the vow………. That I promised to keep.

At twenty-five now,…………..I have young of my own,
Who need me to guide …….And a secure happy home.
A woman of thirty,………….My young now grown fast,
Bound to each other………..With ties that should last.

At forty, my young sons……Have grown and are gone,
But my man’s beside me………….To see I don’t mourn
At fifty once more,…………Babies play round my knee,
Again we know children,…………My loved one and me.

Dark days are upon me,……………My husband is dead,
I look at the future,……………….I shudder with dread.
For my young are all rearing……….Young of their own,
And I think of the years. And the love that I’ve known.

I’m now an old woman……………..And nature is cruel;
Tis jest to make old age …………………Look like a fool.
The body, it crumbles,…………Grace and vigor depart,
There is now a stone………..Where I once had a heart.

But inside this old carcass……A young girl still dwells,
And now and again,…………………..My battered heart swells.
I remember the joys,………………I remember the pain,
And I’m loving and living…………………Life over again.

I think of the years…………..ll too few, gone too fast,
And accept the stark fact………..That nothing can last.
So open your eyes, people,……………….Open and see,
Not a crabby old woman;…….Look closer….see,…..ME !!!

Remember this poem when you next meet an older person who you might brush aside without looking at the young soul within…..we will all, one day, be there, too !

#67 David on 02.22.09 at 1:19 pm

The problem with these bail outs is that the taxpayers are on the hook with no potential payoff down the road. Firms asking for bailouts and recapitalisation SHOULD expect existing shareholders and bond holders to see their asset values written down to zero if necessary in exchange for infusions of public cash. Greedy and incompetent management should either be removed from their positions or forced to work for very reduced salaries. None of this is terribly complicated to apprehend, only a matter of political will is involved. Shares and exercisable warrants in exchange for bailout dough and wipe the slate clean of worthless balance sheet garbage carried at grossly unrealisable values.

#68 john m on 02.22.09 at 1:23 pm

#64 Bill-Muskoka (NAM)….wow what an amazing poem,it sure makes one pause and think..thanks.

#69 wellwell on 02.22.09 at 1:39 pm

About two weeks ago, a Pennsylvania Congressman revealed on C-Span just how close the world came to economic collapse in mid-September. There was a run on U.S. banks to the tune of $550 billion in one hour, stemmed only when the FDIC increased the insured deposit limit from $100k to $250k. Without that action, the world economy would have decimated within 24 hours:

#70 Bill-Muskoka (NAM) on 02.22.09 at 1:41 pm

#66 john m on 02.22.09 at 1:23 pm

Thank you. Yes, it grabbed hold of me as well. It is one worth sharing and remembering, especially for the younger generations. As we are so coy to say on Remembrance Day ‘Lest We Forget!’ Fact is, we do not!

#71 Got A Watch on 02.22.09 at 1:49 pm

A great Canadian market and economics Blog, Ben Bitrolff, a Toronto trader, is always worth a look:

Financial Ninja‘Economics . Investing . Trading . Technical Analysis’

His latest post is apropo: “Latvia: Another Government Falls”

For those looking for further reading on economics and markets, the Blogs he links to on the right side of his Blog page there are all among the best in that area of interest.

He’s been around for a while, I like his perspective. He’s not in favor of the Government “solutions” either, to put it politely.

#72 TheComingDepression on 02.22.09 at 1:50 pm

Here is a very interesting technique that Omaba is using on the public……..>'s_Use_of_Hidden_Hypnosis_techniques_in_His_Speeches.pdf
Look very closely in my eyes, listen to what I have to say, watch my hands…

#73 Comrade Okie on 02.22.09 at 1:52 pm

The discussion about GM’s pensioner’s is interesting given the extent of moral outrage and beggar thy neighbor thoughts expressed. I would ask this; what makes a Civil Servant more deserving of the security of their pension?

While deliberating, consider these things;

1. GM workers could actually be fired for incompetence or uselessness.

2. Their jobs were not virtually guaranteed until they decided when to leave.

3. They could not receive pension at 52 yrs. old while their job remained in place.

4. The majority actually had to do something when they showed up each day.

That said, my next contribution will be recipes for BBQ Squrrel and râpé Opossum. Heh..

#74 Dan in Victoria on 02.22.09 at 2:01 pm

#64 Bill-Muskoka(NAM) Thanks for that poem it brought back a flood of memories about my grand parents who I miss terribly,they went through the depression in Broadview Sask.They told me that it would come again.Heres a link for a simple explanation of the credit Thanks again Bill.Dan

#75 Bill-Muskoka (NAM) on 02.22.09 at 2:02 pm

Regarding the bailouts. We are all interconnected economically at this point from the lowest paid to the highest.

When a sector, especially a major sector, of our economy faces devastation the ripple will be like a tsunami hitting all of us. The defaults will affect all of us directly or indirectly. We need to keep this firmly in the forefront of our thinking in critiqueing the plans.

The Error is Over, now we must, like a triage nurse, assess how to prevent the most seriously injured from economic devastation and death. Those of us who lived through the last major fiasco of the 1980’s and 1990’s (a much lesser event in my opinion) watched many of our friends, neighbors, and family members be divested of their dignity.

All of that pain to save the banks that lent money without sufficient collateral to foreign nations. what pissed me off the most was that we had to watch foreign governments be absolved of their debts while the rest of us had our own lives descimated financially with 24% interest rates to re-coup’ the losses the banks, at the behest of the U.S. Government, incurred. The entire world was affected in the process.

Did the U.S. send their mighty Army into Mexico to take over the oil fields then? NO! Did they send the troops in ANYWHERE to secure the people’s money? NO! But, they did not hesitate to do so to the Middle East because, afterall, they are ‘different than us!’ HYPOCRITES all!

This time we need to demand the assets of those responsible be taken and returned to the people whose lives have been descimated by their greed.

I still think a few good Tar & Featherings will be quite effective of message to those who laugh at ethics and our laws. Failing that haul out Madame Guillotine and let the heads roll! ;-) Oh, and BTW, the government does NOT get to take all the fines and assets for their own. They must be returned to the victims of these fraudsters.

Let their names be published everywhere, and their faces known. Let them not be able to escape justice nor responsibility. These are criminals, not people to be admired. So much for arseholes like the Sopranos, eh?

How many read the article that Visa and Master Card want ‘a piece of the action’ in the debit market? I say NO! NO! NO! InterAct is a non-profit company that was set up to provide the people with a means of electronic transactions. We need to make it damn clear that is not to be changed. While the politicians are at it let them cap the credit card interest rates to 10% as well. Do they have the cajones? Only is we hold a bigger knife to their throats than the credit card company lobbyists do.

Taking a swipe at the debit card competition: Visa and MasterCard interested in offering debit cards in Canada

I say ‘NEVER AGAIN!’ At least this go around the interest rates have been lowered to almost zero. perhaps the Bozos learned that one lesson?

#76 Carole AB on 02.22.09 at 2:02 pm

#64 Bill-Muskoka (NAM) watch for the older person with the young soul in this! ( Keeping in mind the Uk may be the next Iceland while they march in Ireland )

#77 North Vancouver Citizen Jr. on 02.22.09 at 2:06 pm

Garth says…

“”My strategy is a 1,000% improvement over having an investment portolio, taxable, and a mortgage payable in after-tax dollars. Also it is insanity today to have all your net worth in a a depreciating asset, namely a home. Comments? — Garth””

….You are absolutely correct….Inflationary economies/systems may not return for many years so home mortgages payable with after tax dollars is the wrong way to go and replacing them with secured loans that are tax deductable is the better way.

…You never commented on the possibility that the U.S. may surge into a single World Currency.

#22 Meco…..I believe a buyer will in fact be able to purchase for near half price later this year.

“”…from an auto industry perspective, why don’t they consider selling their standing inventory a fire sale prices (ie: at cost or less than that; how about $5,000-$10,000 a car or whatever it takes!!) in order to yield themselves the money they need before going to the government? Where are their creative solutions? They created their own mess and they should at least attempt to clean up!!”

#78 Carole AB on 02.22.09 at 2:07 pm

#64 Bill-Muskoka

sorry got the link wrong it is :

#79 Bill-Muskoka (NAM) on 02.22.09 at 2:08 pm

#70 Comrade Okie on 02.22.09 at 1:52 pm

You’ve got that right. CUPE members, or whatever their union is called (I forget and haven’t the time to go searching) have more deadwood than an aboreal forest.

I have friends in provincial government in management and they cannot rid themselves of these worthless sucks. They want to, but the union prevents it without a ridiculously long process, and then seldom does it happen. The Goodun’s want to be rid of the Badun’s as much as the people want them kicked out.

#80 rory on 02.22.09 at 2:15 pm

#64 Jeez Bill …your killin’ me again …just when I thought you were finally getting off the preach and teach platform …I am sure their is a blog somewhere called “tugging at my heart” or “cry me a river” or “poets of the yesteryear unite” that would be better suited to your latest reply … where is that rant and rave Bill on the issues …yes issues, facts, discussions, rants, opinions …please Bill…this drippy bleeding heart poetry is killin’ my desire for this blog …now write or copy a poem on the auto/pension bailout…now that would we be a killer, I mean keeper.

Every one has a secret or a hurt …young or old or anything in between …so respect ALL…golden rule and all that …enough said…back to ranting etc.

We all need to keep the pressure on so that gov’t funded pensions go hand in hand with John Q’s public diminished pension returns …you think that GM pension has problems just think how many more people are employed with public service pensions…like I stated in a earlier dated blog gov’t employees, at all levels of gov’t, for equal work, receive on average 8 to 40%+ greater TOTAL compensation than the private sector … read it here … …it has been criticized that it is from right wing establishment but facts are facts …find something to dispute it and post it.

#81 Got A Watch on 02.22.09 at 2:15 pm

If they follow the Swedish model and do it well, it could work. A large problem is, it would be put in the hands of the type of people who created the problem, like Turbo Tax Timmy Geithner, formerly of the NY Fed Bank:

Big Picture Blog – Nationalize the Banks

It’s about his friend Nouriel Roubini, affectionately known as ‘Dr. Doom’, and how his ‘Plan’ is gaining traction. Which is why the stupid White House talking head had to deny the rumor on Friday, which amounts to confirmation.

If they do implement this Plan properly, and I stress PROPERLY, like the Swedes did it, it would be a huge step forward towards finding a bottom to this crisis. Along with strict international regulation of CDS, Hedge Funds, Banks etc, which is all being discussed around the coming G20 meeting.

The problems arise where the Bank in question is so far underwater that compared to the losses, little can be recovered by taxpayers. Since there is no transparency to these US Banks, no one knows how bad the problems are. Banks do not want to put any “value” on huge piles of “assets” they are now stuck sitting on, as they would probably be instantly vaporized.

Obama’s proposed solutions so far all put the taxpayer on the hook for most (all in some cases) of the losses, but let the Banksters off easy. A taxpayer revolt looms the more bailouts keep happening. That is not going to fly. Neither is printing unlimited money, the Chinese have just that nixed that option, by now demanding guarantees on US Government debt that currently has only an “implied” guarantee, not an express one. There is a huge difference, the latter (what the Chinese want) explodes US debt to really unsustainable levels.

Odd how the neo-Communist Chinese can now force the capitalist USA to live within its means. Karl Marx is high fiving.

#82 Got A Watch on 02.22.09 at 2:34 pm

This article summarizes the problem: How did we miss the economy’s warning signs?

“Economists admit they’re not good at forecasting ‘turning points’ such as the current recession

…Some economists admitted they were stumped.

“Trying to do an economic forecast in this kind of turmoil is a bit like trying to put a value on your house while the kitchen is on fire,” Douglas Porter, deputy chief economist at BMO Capital Markets, said in October.

Around the same time, economic forecasters at the University of Toronto put out an unusually frank release that was titled, in part, “We don’t have a clue and we’re not going to pretend that we do.” ”

ROFL, that whole article is full of great quotes. Print it out and frame it, honestly.

I guess ivory towers don’t have internet connections, or they could have found about all this stuff years ago by reading some Blogs.

#83 john m on 02.22.09 at 2:34 pm

Just to be fair…Bailouts of failing enterprise are not achieving anything but disaster.Lets consider who the real failures are…our politicians who are even considering this.The depression has not hit the white house or parliament hill obviously just consider last weeks Obama visit and the cost to taxpayers–its showtime as usual.Now Harper’s off to Washington with his entourage and more tax dollars gone to the wind…all of which could be accomplished thru a conference call.Curiously they are making a big production about the wealthy lifestyle of corporate executives and their squandering of cash while they themselves are doing the same but on a much larger scale and we are paying the tab as they cruise the skys in their “corporate jets” .Where are the cost cutting measures on parliament hill? Is it not time our employees (the government) started facing some of the same realities as their employers (the taxpayers).

#84 timbo on 02.22.09 at 2:36 pm

this might be something to ponder

It seems everyone is up to their necks it debt and a reset is becoming the only solution. Only when there is blood on the streets will this be politically viable due to the middle class being wiped of their savings.

putting my money in food companies, energy and precious metals. fiat currency does not make sense anymore as everyone is maxed out. Staple companies will recover first after the wheels fall off. Might even invest some coin in taser international. lost a bit but might come in handy when robbers come for the cupboard. lol…

remember, if you stock up on supplies don’t tell anyone as your the next supermarket when the lights go out and you can only carry so many bullets…..mad maxx??

#85 North Vancouver Citizen Jr. on 02.22.09 at 2:55 pm

1/…Eastern Europe About To Go Bust, Taking Western Europe With It….(100,000 protestors in Ireland.)

Europe, Financial Crisis

If you think things are bad here, take a quick peek at what’s going on across the pond:

The Telegraph: Stephen Jen, currency chief at Morgan Stanley, said Eastern Europe has borrowed $1.7 trillion abroad, much on short-term maturities. It must repay – or roll over – $400bn this year, equal to a third of the region’s GDP. Good luck. The credit window has slammed shut.

Not even Russia can easily cover the $500bn dollar debts of its oligarchs while oil remains near $33 a barrel. The budget is based on Urals crude at $95. Russia has bled 36pc of its foreign reserves since August defending the rouble.

“This is the largest run on a currency in history,” said Mr Jen……

2/…Canadian UAW is asking for $$$…how about the RCMP?

….RCMP want $900 million for 7000 RCMP officers for what, four weeks work to secure the 2010 Olympics.

…That works out to $126,000 per Mountie…

a/ We know now that “World will not come to Vancouver Olympics”…because Eastern/Western Europe, Russia, and Asia are in turmoil and broke.

b/We also know that only parents and coaches turn out to 3/4 of the Olympic events…so why not make those simple “TV only events”.

#86 Iain on 02.22.09 at 2:58 pm

#87 Toronto C9 Renter on 02.22.09 at 2:59 pm

Soundbite from Toronto RE market…

We viewed an open house in Midtown yesterday which we liked. It was listed on Friday. Right location, right house, right price.

We started preparing our agent to put an offer together. Was busy going through the details this morning. You know, how quickly I could get a certified cheque arranged, who would do the building inspection etc.

Went back today to make some measurements just to confirm a few things. White hand written note on the sign “sorry, house is now sold”

#88 Bill-Muskoka (NAM) on 02.22.09 at 3:00 pm

#71 Dan in Victoria on 02.22.09 at 2:01 pm

You are most welcome. Hope most of the memories were sweet?

#89 Johnny Five on 02.22.09 at 3:03 pm

ON post #64

Utter bile. Sentimentalist tripe. That and 50 cents will get you a phone call.

#90 Comrade Okie on 02.22.09 at 3:04 pm

#76 Bill

Like any organization, Government has a responsibility to those it represents and by side stepping confrontations with CUPE, ultimately the Party forming Gov. is the root cause of imbalance. Allowing the latitude of such things as letting someone retire at 52 just because they want to, is ultimately the Government’s decision. That takes them out of the paying in category, and put’s them in the drawing out. So they replace them with a newbie who contributes far less than the oldster draws out, thus putting the balance on the back of the pension plan, a decade or so early. To be financed via pension fund management I guess. Whoops!

Back to the Auto World and economics, something that has always bothered me was the endless push to produce more with less people. Robotics as example, results in faster production, more vehicles and far less people employed. Straight to the point, if they continue to reduce the number of employed persons, where do they think all the customers for the ever growing production will come from? The Civil Service? Maybe the Service Industry?

Like 0 down 40 yr. mortgages, their derivatives and oil speculation, these things are all focused on the here and now, and don’t take into consideration long term effect.

Squirrel recipe coming soon.

#91 Bill-Muskoka (NAM) on 02.22.09 at 3:06 pm

For those more atuned to a visual explanation “Master of the Universe”

#92 Bill-Muskoka (NAM) on 02.22.09 at 3:16 pm

Still thinking of that Mexican vacation? Well, you might want to read this article before booking, much less going there. As Crime Mounts, Mexicans Turn to Vigilante Justice

#93 Taxpayer like you on 02.22.09 at 3:26 pm

NVC 74 “…..secured loans that are tax deductable….”
No! Garth goes over this. The loan itself is NOT tax deductible. The interest on it is paid with before-tax dollars. Potentially a huge difference.

The advantage Garth outlines makes sense proportional to the total interest being paid (dependent on principal
and interest rate).

The original blogger stated they had enough investments to pay off their mortgage. They never stated what kind of investments they had or for how long (tax implications) or what rate, amount or amortization they
had on their mortgage. My gut feeling was that they were only in the high five or low six figures, and their income was moderate (otherwise they would have an advisor and accountant of their own dealing with this).

One problem I have with accountants/advisors is that
many seem to be totally driven to reduce tax, and not to
provide options which may actually be better from an
investment perspective (heavy asthmatic breathing…)


#94 CM on 02.22.09 at 3:27 pm

#36 Bill-Muskoka (NAM)

“He (Obama) has bombed Pakistan and Afghanistan?’ Where do you get your information from Bill O’Reilly, Rush Limburger, or some other White Supremicist, Right Wing Nutbar, Hate Monger on Faux News?

“Did you [CM] just land on this planet or were you recently released from an institution?”
If your life experiences are anything to go by, it seems that I’ve been on this planet about as long as you have.

Recently released from an institution? No – but I used to work in one. My references were stellar.

My sources of info?

New York Times, Reuters, Democracy Now, you know…all those Fox News types.

U.S. Concedes Afghan Attack Mainly Killed Civilians
Despite rhetoric, Obama continues Bush policy on detainees: Indefinite detention, no legal rights
Obama Upholds Detainee Policy in Afghanistan
Obama Expands Missile Strikes Inside Pakistan
The curious tale of America’s predators in Pakistan

“…the drones, which have wrecked such havoc and are the cause of much popular anger against the United States…”
February 16, 2009.

US Drone Attacks Kill 61 in Pakistan

“A pair of US missile strikes over the past three days have killed sixty-one people in Pakistan. On Saturday, a remote-controlled US drone bombed three compounds in South Waziristan, killing thirty. Earlier today, another US drone struck the Kumman tribal region, killing thirty-one people. The US has now struck Pakistan at least three times since President Obama took office.”
Jeremiah Wright?
In depth interview with Bill Moyers.

Way beyond the looped soundbite that they played over and over again.

#95 Bottoms_Up on 02.22.09 at 3:29 pm

Rory #77
Please educate yourself before spewing false information:

#96 Bill-Muskoka (NAM) on 02.22.09 at 3:33 pm

#87 Comrade Okie on 02.22.09 at 3:04 pm

Same routine as most corporations, except the age. Where did they all learn the same heartless tricks for older workers? Could it be the same seminar that teaches idiocy like in Phoeniz, AZ ‘Yes, it’s hot but it’s a DRY HEAT!’ or in Winterpeg/Yellowknife ‘Yes, it’s cold, but it’s a DRY COLD!’? LOL

I attribute it all to the MBa degrees that have been handed out like Cracker Jack prizes for the past few decades. Might as well go study the other Bible to learn about ethics, eh?

We have in our universities the largest Sheep Ranch possible! No Scots in kilts allowed BTW! ;-)

#97 Bill-Muskoka (NAM) on 02.22.09 at 3:41 pm

Oh, now this is the ultimate of scams. Brought to you by the Vatican, AGAIN! And we thought the bailouts were beyond belief?

Why Catholic Indulgences Are Making a Comeback

It sounds too good to be true. Now, for a limited time — the year of St. Paul, to be specific, which ends in June — say a prayer, pop by a designated church and qualify for an indulgence that deducts time from your scorching sojourn in the cleansing fires of purgatory.

Indulgences (no relation here to bubble baths or truffles) have been part of Catholic doctrine since the Crusades. When the Church offered them for sale in the 1500’s — call it mercy for money — religious reformer Martin Luther protested. These days, they can’t be bought. “How does that MasterCard ad go?” muses Sister Mary Ann Walsh, spokeswoman for the U.S. Conference of Catholic Bishops. “Some things are priceless.”


Guess this is the Holy See’s idea of an infrastructure program, eh? LMAO! I guess this means we will no longer have to fund the Catholic Schools here in Ontario? Poor John Tory…another failed attempt at Glory!

#98 Dave99 on 02.22.09 at 3:59 pm

For those who continue to whine about the corrupt/stupid/incompetant/weak/etc political leaders…

My question is this…

Does it not seem like a quite a coincidence that all of the leaders of all of the countries in the world are equally incompetant?

Seriously, who do you hold up as an example of good leadership and doing the “right” thing?

The Irish, British, Eastern Europeans, Europe, Americans…they are all suffering worse than we are right now.

And who will suffer the least? Maybe the Cubans? The Chinese?

So is that the political leadership you want? A totalitarian society?

As it happens, it is those companies that are indeed the most “totalitarian” that will suffer the least throughout this mess. Companies like Microsoft which have major shareholders who can ignore the complaints of their shareholders about not leveraging sufficiently and holding on to too much cash.

In contrast, the companies that have to answer to their shareholders (ie the pension plans, etc that manage YOUR sense of ROI “entitlement”) – well those are the ones that are going belly up after years of trying to give the required rates of returns to their investers to match what all of their competitors were giving.

Democracy has been called “the tyranny of the uneducated majority”.

Our global economy is in this situation precisely BECAUSE our politicians have been giving us what we wanted.

Don’t we all therefore have some responsibility in cleaning up the mess? Rather than wagging a finger at all of the “morons” out there?

Just a thought…

Or maybe I’m just another moron, and really we are all innocent victims suffering at the hands of a bunch of crooks. Whatever you need to believe, to get you through the day…

#99 Bill-Muskoka (NAM) on 02.22.09 at 4:00 pm

#87 Comrade Okie on 02.22.09 at 3:04 pm

Re: Squirrel recipes. I note that WalMart Super Centre has fresh, cleaned rabbit for sale. Can squirrels be far behind?

I guess opossum would be tasty too, but one cannot ever tell if they are really dead until you stab them with your steely knife and try to kill the beast! LOL

Where is my Road Kill Cafe menu? Ah, here it is!

#100 rory on 02.22.09 at 4:12 pm

#92 Hey Bottoms Up …first things first …the usage of the word spew is, IMO, a union member in the public service talking (they appear to have all the anger for whatever reason – boredom, fear, no prospects, only 20 years more to go, no control over your destiny – please to tell where the anger comes from).
I also did not write the article so ‘spewing’ does not appear to be appropriate.

Second, people employed by the public service wrote your linked article. I guess that means they are objective – NOT. The article mentions ‘increased professionalism – good point but still not relevant as the private sector had to increase it also so I think they cancel each other. You poor babies in the public sector that do not get as much time off as Europeans – talk apples to apples here not apples to oranges.

Last, because I could write pages, MY referenced article seems to have facts and studies and assumptions …yours – fluff , which usually implies no real facts just made up ‘stuff’ to try to take the bite out of the real facts…SO your turn BtmUp.

P.S. – I was not aware my article had anything to do with taking away your ability to pout…sorry I mean strike …reality bites …get some…you are not immune and you should NOT be immune.

Another P.S. – I just had a quick re-read thru my linked article …what really pisses me off is that you did not read any of it did you???

I am feisty today!

#101 Bill-Muskoka (NAM) on 02.22.09 at 4:14 pm

#91 CM on 02.22.09 at 3:27 pm

Ah, and you think that President Obama personally authorized the military actions in an ongoing campaign, which was active under He who’s name will not be mentioned long before he took office?

Ah, the NYT, now there is a marvel of accuracy in reporting to be sure. Too bad I can’t get in to read it without a subscription. Thanks for the effort regardless.

The Reuter’s article says nothing regarding Obama.

The Raw Story article is loaded with the term ‘appears’ which means they are writing in speculation.

Go ahead, and believe whatever you like. I heard a seagull crapped on an oil rig and that made the price of oil go up! Oh look! There! A Shiny Thing!

I think the Washington approval before pressing the pickle died back in ‘Nam! They are operating under established ROE’s. No pre-authorization required unless real WMD’s are used.

#102 rory on 02.22.09 at 4:19 pm

#93 Bill

Bill, hi …hard to argue about the sheep …but this can be said for every profession, every soldier, every politician, every anybody… even our teachers and parents who start us out in life …it is the system …only regulation can help `cuz we are all going to push the envelope whatever that envelope is …ask why people climb mountians …human nature dude.

#103 North Vancouver Citizen Jr. on 02.22.09 at 4:29 pm


… to comment on the U.S. dollar becoming the world currency “last standing”?


…the Pacific Northwest may become the safest place to live in this crazy world?

#81 timbo…your Post beat me by a few moments…

europe going bust…

#104 go green on 02.22.09 at 4:30 pm

#94 Bill-Muskoka (NAM) on 02.22.09 at 3:41 pm

My Dad was brought up Lutheran from the old country. Never set his foot in a church except to get married, before JP’s could do it which is how I tied the knot. Mom was a ‘hypocrit’ re religion. She went, & we were forced to when young, living in small towns in PQ, but as soon as we moved to Mtl. , where we were among the masses, no more church attendance. Yea. I’ll send the article to my DH whose Mom is one of those old fashioned Sat. eve. Mass attendees. How nice it is when we call when she’s at Mass & his Dad actually gets to talk :-) Gee I’m so looking forward to seeing her this summer!!

#105 My_view on 02.22.09 at 4:33 pm

Great Post,

I too am pissed. This is bs to the max. Previous post someone commented on how the CEO’s are taking pay cuts and are being regulated, so what their still in power calling the shots. The U.S.A./taxpayers now owns, banks, insurance company’s, homes, car company’s and what the hell else?

#106 kc on 02.22.09 at 5:09 pm

A couple pages back someone was asking about opinions of the nationalization of US banks and what the possible out come for Canada might be.

Maybe we should start by looking at the whole picture and then break it down to our country.

Banks in the UK and Europe are insolvent (or close to it) from maximum leverage and joining the US party. Lehman and Bear Stearns implosions fractured the gambling markets into shatters while sending shrapnel world wide.

I would guess that these implosions in the UK have hit our banking sector in someway (not like any one is actually confessing to it) and now the US is facing collapse. Those 2 big banks have to be bringing down European banks for many derivatives are/were written into insurances that the banks wont go bankrupt. Now that they are actually facing full bailout situations it makes for the question of how many Canadian banks have also written derivatives that state insurances of the big guys going broke?

If a Canadian bank wrote those type of Derivatives and CITI does go bust of is nationalized… what happens next? Or GM… or GE… or if the Atlantic gets hit by a 10KM astroid….

The derivatives market is so complexed that 100 mathmeticians working 100 hour weeks may get to figure it out in a month, however, we don’t have a month.

From what I can figure out is many Derives are written to include that it is not payable unless GM goes broke or CITI … etc. now that we are facing this possible outcome only the wind knows the answer. (Unless someone in here is privy to that type of info… please enlighten us).

Canadian banks are facing faster sell offs during the last week, spooked investers are fleeing the sinking ship.

Now that Canadians owe 140% of their wages who would want to be heavy in bank stocks?

“The total debt-to-disposable income ratio rose to 140% last year, Mr. Lochhead said, referring to the Institute’s report, The Current State of Canadian Family Finances.”

Here is a small report and graph on this site that shows where canada stands: “The Special Report reviewed the vulnerability of these markets to rating downgrades as well as focused on the risks and potential costs associated with stabilizing their banking systems (after analyzing 150 banks around the world).”

More on Canadian banks can be read on this interesting thread:

Now one thing I would like to add to this – Who holds the loan with the company you work for?

The place I work needed funding 3 years back and was turned down by all canadian banks – reason: they didn’t want to expose their risk to forestry companies- << straight goods!!! Our company had to look to out side the country to find $$$ to finance a major expansion with a new operation. they are an investment broker and not a bank. Makes me question how many investment funds are/were over leveraged at greater ratios? look at it this way, over here in BC we have many high $$$$ projects being built and the companies are going tits up or lost funding. (millinum is example on Olympic village).

US banks going national might stem off more end game scenarios, better then going TITS UP and taking down the world with them. monday will prove interesting.

#107 Kash is King on 02.22.09 at 5:27 pm

Just wondering if all the fuss about not letting GM die, might have something to do with whether or not some pension funds might be holding GM equity or GM bonds?

What would the consequences be? Probably the gov’ts would bail out the pension funds… :P

#108 Zoronqueen on 02.22.09 at 5:32 pm

milk and money
Have you considered the posibility that people who are near the bottom end might want to go out with a bang? What worries me is the people will continue to spend the avaliable credit since they feel they are going to go bankrupt anyways??

I don’t know about you, but what I have noticed is that the upper middle and “rich” don’t tend to pay income taxes anyways… They either find a way to make everything deductable or have some sort of business that will max deductions….So what will happen is that the middle class and poor that have been overstreched will be unable to pay taxes anyways…. Leading to my assumption of above… Going out with a bang….

Dave 99
I do agree that yes, we all have a part to play with the extras over the years, however the point is that in this climate, the savers have been screwed over and will be continued to be as now their hard earned money will be used to redistrubed to gover nment and businesses that they did not have a say over…

Bill/Go green–I have read that poem before, and I stress that that lady is depicting the deterioation of health care services. Most will agree that even though we still get “free” health care, it is not distrubted fairly. We do not care enough for the elderly as they have “no use” to our society. Boomers will continued to be squeezed as now they have a responsibility to care for the ailing elderly….

I may have a very pesimistic view of things to come, but I believe that ultimately, people will bind together and provide the warmth and share resources in hard times.

#109 squidly77 on 02.22.09 at 5:54 pm

The derivatives market is so complexed that 100 mathmeticians working 100 hour weeks may get to figure it out in a month, however, we don’t have a month.
if only it were that simple
they are all based on pie in sky models that are now fully broken its probably best to say that it was mostly fraud

#110 kitchener1 on 02.22.09 at 6:05 pm

#102 KC
In regards to the 140% income to debt ratio that you cite. That number is HUGE!!! that 140% represents a mean average that means that for people in debt that # is much larger. Canada has a small % of mortgages in realtion to total home ownership numbers. For that 140% in debt, there are millions of people like myself who have zero debt, meaning for people in debt its probely closer to 160-180%

#111 TheComingDepression on 02.22.09 at 6:10 pm

Here is a graph showing Real Estate prices in the future. Correct me if I am wrong but it looks like we are going to see prices from the 1970’s. Thats what , 90% off current?

#112 TheComingDepression on 02.22.09 at 6:11 pm

Sorry here is the graph without that annoying site of

#113 ThumbsUp on 02.22.09 at 6:12 pm

#95 Dave99
You do have a unique view, but your argument is unfounded

Microsoft is just another public traded company, I believe it’s the most widely held company, there is no single big share holder.

Those went belly up – you said because of answering to the demand from the shareholders, they lied about their operation, they frauded, they Madoffed!

The leaders – they are no different, I guess you’ll defend them by saying they had to answer to their shareholders, who supported, endorsed them. equally they are Madoff, now it blow up and they run out of cover.

#114 WestCanOil on 02.22.09 at 6:15 pm

Want to know about what’s going on in the oil patch? Check this out Garth :

#115 go green on 02.22.09 at 6:31 pm

#105 Zoronqueen on 02.22.09 at 5:32 pm milk and money

Bill/Go green–I have read that poem before, and I stress that that lady is depicting the deterioation of health care services. Most will agree that even though we still get “free” health care, it is not distrubted fairly. We do not care enough for the elderly as they have “no use” to our society. Boomers will continued to be squeezed as now they have a responsibility to care for the ailing elderly….

Hi ZoronQueen – I did not read that poem before but can relate to it. My Mom lived with us for the first 4/5 years in this home. We had only been married for a few years prior to moving here. The family’s thoughts were that she’d live with us during the winter months & then go back to her little home in the country during the rest of the year. After a week or so we realized she could not go back & live on her own. She had a degenerative eye disease – damn forget the name. We were afraid she’d burn the house down just heating her lunch on the stove. My DH got along well with her. Long story short, she went into a ‘senior’s home’ at 84 & died at 86. Several of us took turns bringing her to our places ea. wkend. I still feel guilty for having made that decision. I would never want to be in her position.

#116 kc on 02.22.09 at 6:31 pm

squidly… tht picture is cute :) garth should see about using it on the top of this blog…LOL

#117 Reg on 02.22.09 at 6:53 pm

JO on 02.22.09 at 12:25 pm

Jo stated, “Contact your MP and speak out. Stop the bailouts and ongoing deficits. Do not support any company asking for a bailout.”

What about those co.’s who are asking for a loan that will be paid back?

#118 Dave99 on 02.22.09 at 6:53 pm


Microsoft was referenced in one sentence out of my post. Your focus upon that single sentence belies a wish to avoid responding to the overall intent of the post.

As for Microsoft, Gates owns 9% (more than the next two largest institutional investers combined). When one also considers his indirect influence it will require a concerted revolt by other shareholders to thwart his wishes. It remains his company.

#119 Rural Rick on 02.22.09 at 7:12 pm

I am getting a little tired of the union bashing displayed in some posts here. I am pretty sure most are from people who never worked shift work in a factory or were treated unfairly by an employer. Don’t get me wrong unions are not perfect but as Bruce Springsteen says they are the only voice for the working people.
All of our work benefits in the world of labour flow from the battles fought for all of us by organized labour.
The 40 hour week, vacation pay, sick days, maternity leave, yes and pensions. Employers did not wake up one day and say lets give benefits to our employees.
They came at great cost many lives were lost in this struggle with management goons beating men to death
on the picket line.
Can’t dismiss a union employee? Balderdash that is what an incompetent manager always says. Speaking of incompetent management the big difference between Asian auto plants and North American ones is the size of middle management. Asian managers get their hands dirty.
Unions are only as good or bad as their membership lets them be. Stop blaming the unions for this disaster it was caused by bad management period. Don’t let them shift the blame.

#120 Sail1 on 02.22.09 at 7:15 pm

EU backs sweeping new financial rules

A step in the right direction maybe?

EU sweeping new financial rules

#121 Kootenay Guy on 02.22.09 at 7:27 pm

My predictions;

1.) There will be civil unrest in the United States if;

– the incessant bailouts do not come to an end
– things continue to get worse – I see even Arnold S. has part time employment now

2.) In Canada our government will keep bailing. There may be some reaction but they will largely be able to have their way.

A pity this is not a hockey game….then we would see an uproar from the populous….with Don Cherry as our spokesperson….:-(

Most people I talk to are in denial;

• It’s an American problem.

• We are going to escape relatively unscathed.

• This is annoying….why couldn’t this happen in the summer after hockey is over……?

• We will be out of it by this fall…just a few tough months ahead

• The stimulus plans are going to bring new prosperity

• Pass me another beer would you “Bob” and “Doug”

Okay, so this is rhetorical….

#122 flota on 02.22.09 at 7:34 pm

This is the best quote by far…

Phil Gramm: Recession Is “Mental,” America Is “Nation Of Whiners”

Just listen to this song and in no time everything will be all right.

#123 nonplused on 02.22.09 at 7:45 pm

#33 Herb

The answer is “no one can.” It will get worse and worse until it can’t get any worse, which will coincide approximately with the last of the unpayable debt out their being written off.

#35 TonyT

“Equity in cars”? Now that’s a concept I had not heard before. I always assumed cars depreciated to nearly zero over a 5-10 year period.

#52 Bottoms_Up

I don’t think the market is going to collapse this spring any more than last spring. It’ll just keep sliding $5000 per month like it’s doing now. Maybe a bit faster with all those listings. But then it’s very hard to predict these things.

#56 Another Albertan

Why on earth would you go to West Ed?

Your data is very convincing. But why would companies wait until spring to start laying people off? There is no time like the present.

#64 Bill-Muskoka (NAM)

Oh great now my mother is on this blog too.

#67 wellwell

I don’t believe the “run on the bank that almost killed the whole world” story. It was circulated by an actual politician, so it has to be a lie. It is IMO just more propaganda to justify the trillions they are throwing around Washington at tax payer expense.

#100 North Vancouver Citizen Jr.

The collapse of the Euro zone means bad news for everyone, including the Pacific North West.

#124 TS on 02.22.09 at 7:55 pm

Here’s an interesting link that recommends AGAINST buying gold.

#125 TS on 02.22.09 at 7:59 pm

#92 Bottoms_Up on 02.22.09 at 3:29 pm

You link was to an article produced by an organization with a very obvious bias. Interesting reading but people should still take this with a grain of salt given the origin of the article.

#126 ThumbsUp on 02.22.09 at 8:48 pm

#115 Dave99

I understand your view/intent and appreciate it.

Gates holds 9% (I don’t trade) because he believes there is profit in investing in the company, end of day he invests to profit. lots of funds and individuals RRSP hold it. that’s not the point, the point is trust, no lie to the shareholders.

I don’t agree with your ‘everyone’ is responsible, and I do believe the leaders are more responsible than most individual citizens.

Capitalism vs. Communism – it is a stretch to come to the conclusion that Cuban & China will suffer less, and that has no connection with leader’s leadership.

it’s good debate and lots of food for thought.


#127 dodgedabullit in Alberta on 02.22.09 at 8:56 pm

Greetings: I just love this, now when I do a letter to the editor, instead of using the word f……ed,which they won’t print, I can say that “Canadians are being Madoffed”. Priceless!!!

#128 GenXer on 02.22.09 at 9:16 pm

I answered those concerns. The investments can be guaranteed, the loan non-calllable, and the homeowner far better off being able to deduct mortgage payments from taxable income. Selling existing assets for a capital gain? Doubtful in this environment but if that were the case, you’d obviously balance the taxable gain (a maximum of only 25% of the gain – 75% is effectively tax-free) against existing mortgage payments which come 100% from after-tax income. Give it up. This is a no-brainer. — Garth

Garth – as you know, what you are describing is the Smith Manoeuvre. This move has absolutely nothing to do with a mortgage – it is simply leveraged investing. I find it frustrating that financial planners continue to link this investment strategy to housing just to make it more pallatable to a wider audience.

The reality is that your strategy poses increased risk. Better not to borrow to invest in uncertain times, unless you believe that you can lock in at low interest rates and ride hypder-inflation to increased profits. Since you have made it clear that you don’t believe inflation will come back any time soon, I don’t see the guaranteed upside in your strategy.

Not sure where you’re going to get a loan that’s non-callable, 100% guaranteed against the purchased assets and provided at an interest rate below the returns available in the bond market at this time. Last time I checked, the banks wanted to make money. If you found a financial institution that will give you this deal, please pass along some names!

If you knew of what you write, you’d realize this is not the Smith Maneouvre, a strategy I have never endorsed and which does not work in the current climate. If you don’t know where to get a non-callable loan to buy guaranteed assets, then maybe you should spend less time talking about them on blogs. — Garth

#129 TomOfMilton on 02.22.09 at 9:25 pm

#70 ” GM workers could actually be fired for incompetence or uselessness.”

1990’s Oshawa Car plant. Workers in a tiff decide to sabatoge the paint process for vehicles by throwing coins, debris and bodily fluids. Damage? Depends how you calculate such things (enormous by how much they would harp on us about affecting production)
Number of mentally deficient hot heads fired: ZERO
It taught me a bit more about unions. I’m still learning more and liking less. Sure I’ve had to put up with a bad boss or company or two…but there is such a sense of entitlement and wacky sense of ethics spewing forth from Union environments …for decades. I’m not sure anyone is really being protected anymore..not in a real sense. When you spoil a misbehaiving kid…are you doing them any favours? When the time of reconing comes its more painful for them. I’m not saying ban unions hell no…people need choices. But it should exist on its own merit.
By the way. I very much agree…incompetance in public sector should also get no better treatment. You’ll note the Unions there as well.

#130 Another Albertan on 02.22.09 at 9:38 pm


Going to the Mecca of Merchandise was not my idea!

I’ll clarify… Energy-related companies have already laid off a couple of rounds of people, principally contract employees. Construction job losses are in clear evidence by investigation of the various union websites and through direct discussion I’ve had with HR managers for construction and fabrication companies.

Here’s the current rub:

Contract employees are typically just subject to a standard co-termination clause. Trigger the clause and BOOM, they’re outta there. Permanent, full-time…well that is decidedly more complex. Contract employees are typically meant to bolster basic staff levels.

PFT employees will need to be packaged out. There has to be a plan to deal with the implications to the business itself, so this needs to be created along with a name list and signed off by management. HR can then take the list of names and look at creating compensation packages. There has already been a fair amount of information exchange between HR departments in both the owner and vendor categories. Everyone wants to know what everyone else is offering for packages.

The time required to cycle through the various steps is considerable, especially if there are large numbers on the list. To put it in perspective, there was a large service company that was discussed almost two months ago on this blog. They had laid off around 1000. Well, let’s just say that I wouldn’t be surprised if there was another round of 1000 in the next few weeks. This time it won’t be contractors. It will be fulltimers and the “options offered” will include early retirement. The discussions and paperwork for the second round of 1000 started shortly after the first 1000 were laid off. From discussion to (pardon the pun) execution, it will be nearly 8 weeks.

No company really wants to corner the market on banker’s boxes and abattoirs. Many will draw the process out as long as possible in the hope that there might be a positive turn of events. Having gone through pain to hire the employees in the first place and having trained them, many companies know that they will likely lose these people forever. That’s hard to swallow.

At least one major fabricator has plans to reduce their industrial group to a third. Not by a third, TO a third. From the time I first heard of this plan to the time where they might complete, we are talking about 4 to 5 calendar months.

While the reporting of the numbers in the media may sound fast, clean and clinical, the actual process is much dirtier and is fraught with inefficiencies and pain.

#131 Jake on 02.22.09 at 9:44 pm

How do you know your home in Magrath is worth $460K right now? It is only worth what it will sell for. So let me know what that number is if you sell. A friend of mine sold a couple of weeks ago for $30,000 under asking on a home that had been priced just over $300. Negative equity at $380,000 is very scary if you ask me. Unless you have a solid 6 figure income I would get out. My home is going to drop hard, but my mortgage payment is $250/month. We were approved for $550,000 monsters in the Magrath area but we bought a modest townhome just down the streen for a couple hundred thousand less. There will be a blood letting in Magrath, even if you can walk to Safeway and a park.

#132 TheFirstRick on 02.22.09 at 9:45 pm

#116 Rural Rick on 02.22.09 at 7:12 pm
Extreemly well said.

#133 TomOfMilton on 02.22.09 at 10:08 pm

Just a question to try and confirm something:
While speaking to a man who is in a management position at one of our country’s banks, he told me that in Canada, only in Alberta is it possible to hand the asset over to the bank and walk away from the mortgage…without needing to bankrupt. I was a little shocked a I didn’t know that was possible in Canada at all.
If this is so…it sounds like Alberta might see the swiftest drop in housing prices?
Although if prices fall far enough, many will compare which is easier:
Living for 7yrs with bad credit rating
Or trying to save the150K they lost on home value in 7 yrs?

#134 Jake on 02.22.09 at 10:17 pm

Bill, where do you get your news? Your feelings? Please, let us know who we can trust and how Barack will make the suffering George Bush helped initiate any better. Business as usual in the middle east. I listened to the head of the Canadian Islamic congress give a lecture in an International Relations course on the deterioration of Afghanistan since the US invasion. His name is Mohammed Elmasry. Has anyone ever asked themselves what the hell we are doing there? Oh right, we are freeing the people from the Taliban and crushing Al Quaeda networks. We are stopping the poppies (yeah right). We are stopping Osama. We are putting billions into trying to establish a new order in Afghanistan and losing some of this countries best citizens in the process, not to mention the deaths of tens of thousands of Afghanis. The effort to give the people western freedoms in Afghanistan is massive, yet we cannot even get food shipments into Darfur. The people in Afghanistan have been getting walked on for decades. According to Elmasry, the only leadership to bring them stability and slow the drug production has been the Taliban. Don’t expect them to just roll over either. They are fighting for their land, their families and their homes, just like the North Vietnamese did.

Same war on terror, new lovable leader.

#135 Taxpayer like you on 02.22.09 at 10:22 pm

GenXer 125. Garth is sticking to his guns on this one, and I believe he is correct that this is not the Smith manouvre. I think that involved a closely held law corporation account.

In the very simplest terms, it is a “no-brainer” as interest would be paid before tax, but life isnt always simple is it? Garth has dismissed the concern of capital
gains as unlikely, but we should note that the investor would give up any chance at the upside of the portfolio. Again Garth may dismiss as unlikely, but still a possibility nonetheless. Garth recommends the non-callable loan with govt short term bonds – absolutely the safest – but assumes the investor has no problem carrying the
current debtload. It should also be noted that the interest write-off would be on a steadily decreasing amount as the loan is paid down, but the tax on the accrued interest would steadily increase.

Garth – thanks for a good blog, even if we got a little off todays topic.

#136 Torquemada on 02.22.09 at 10:26 pm

only in Alberta is it possible to hand the asset over to the bank and walk away from the mortgage…without needing to bankrupt.

Section 40 of the Law of Property Act if you want to attempt to read Legalese.

We viewed an open house in Midtown yesterday which we liked. It was listed on Friday. Right location, right house, right price…Went back today to make some measurements just to confirm a few things. White hand written note on the sign “sorry, house is now sold”

Well of course the right house, at the right location, at the right price is going to sell. However, how many of the places for sale are being offered at the right price?

#137 timbo on 02.22.09 at 10:30 pm

#103 -kc

thanks for that banking web forum hit. If that is true it will be interesting if things really turn ugly.

for a primer on derivatives here is a link and a glimpse into the past as it was still sunshine and wheelbarrows full of money back then

No TV, little sleep and now seriously
thinking about my bank carefully …..

ignorance is bliss , blogs are nightmares that keep you awake at night…

#138 Bill-Muskoka (NAM) on 02.22.09 at 10:44 pm

#131 Jake on 02.22.09 at 10:17 pm


President Obama has been in office a mere month. Why don’t you email him and the Joint Chiefs of Staff and tell them how smart you are? I am sure they will be very impressed.

Now, let’s try a little honesty, eh? What is your REAL goal with all this?

1. You just don’t like Obama?

2. You are against the war in Afghanistan?

3. You are actually a terrorist who’s friends are getting their asses kicked by the U.S. and Canadian forces?

4. Other?

If you listened to President Obama’s response to such questions during his news conference with PM Harper last Thursday you would know he is waiting on a report to use as a basis for the Afghanistan plan.

In the meantime there are troops on the ground and some of them are my personal friends. So, if an air strike is needed it will be done, until such time as things are stabilized.

Is that okay with you that our troops get the needed support to protect them until this fiasco can be ended?

Personally, I have never thought the war was either a good idea or Canadian in nature. However, I support our troops and those of the U.S. regardless of having any support for the war.

BTW, have you ever been in combat? I have!

#139 BigAl on 02.23.09 at 2:45 am

#116 Rural Rick –
I agree.

You see, its starting already – the ideological fingerpointing at Joe Average worker. Blame the worker, the “millionaire” auto worker who supposedly lived high on the hog all their lives. The “billionaire” government worker.
But what was said above is true – people never want to blame bad management. They always want to go for the easy target – the worker on the floor.
Look at the economic mess today. It’s insane (really insane) to even BEGIN to suggest that autoworkers, government workers, or any other working person had anything to do with this mess. Come on really. Blame the managers, leaders, and politicians who are paid to plan and foresee. There is blame to be meted out, and it is to the leaders. It is the height of intellectuall laziness blaming these easy targets.

Regarding the price of cars: Go to any country in the world and look at prices of comparable cars and THEN try to say that autoworkers are the cause of high car prices. In fact, in North America, about 10 percent of the final price of a car goes into worker wages/benefits….20 percent goes to supervisor/management wages/benefits.

And it IS lazy managers who “can’t fire” bad employees in the public sector. When I worked in government we would literally beg the manager to do something about people who weren’t doing their fair share (95 percent of us were), but they would refuse, avoid the issue, hide in their office, leave early for golf or their ever-present phantom “meetings”, enjoy lavish trips to head office on a bi-weekly basis, and on and on. The managers were the ones who did practically nothing, lived high on the hog, and then they have the nerve to argue their hands are tied. By the way, those are the same public sector managers who, when you want to complain, hide and refuse to come out and speak to you and force you to fax or write them a letter.

So if you want to continue blaming workers for the world’s problems go ahead…but nothing will change until you hold the people in charge responsible.

I am not an autoworker, but my dad was. We were never rich, had a small average house, and I paid my own way through university. Hardly rich or well off. The nonsense and tripe about overpaid autoworkers is just so off the wall.

#140 Mike (authentic) on 02.23.09 at 3:15 am

As a GM fan and never owned any other vehicle, GM lost there way 30 years ago and is a bloated cow of mismangement.

$1 million per job? Right. And we the tax payer will help them out, will they care about us once they get our money? And why does the GM pres look and act like a shady car salesman? Gez.

Sorry GM, you had a 100 years to get it right. I’ll be sad to see GM go and sadder to see the GM workers go. But they company left the workers behind many moons ago.


#141 Mike (authentic) on 02.23.09 at 3:51 am

Just heard on the news…

US Banks to offer GM $40 BILLION dollar loan. The largest bank loan offered in history.


#142 MikeB on 02.23.09 at 4:24 pm

Garth is not the kind to say ” I told you so” but I am.
He told you so. Stock market is down almost 300 points
Our great leader reiterates the obvious
OTTAWA (Reuters) – Canadian Prime Minister Stephen Harper, voicing deep concern about the financial system in the United States and other countries, said on Monday he could not see how the current recession can end until they are fixed.
“We’re obviously all hugely worried about the American financial system and about the financial system of some other countries,” the Conservative leader said in an interview in New York with Fox News.

AAAhhh yeah thanks … didn’t people like Garth and the folks down south also mention this is a problem some months ago.
Apparently the market does not like the offer to GM..
talk about delaying the inevitable. If people here are not scared witless yet then they are not getting it.
We are more on the edge of a giant multi year correction than we were last year. Just keep printing that cash dudes. Even Kramer thinks that we are near chaos if they nationalize the banks .
Solution… squirrel bait…

#143 barb the proofreader on 02.23.09 at 5:08 pm

#28 BILL-MUSKOKA (NAM) “Or, as U.S. economist Edgar R. Fiedler once bluntly observed,
‘The herd instinct among forecasters makes sheep look like independent thinkers.’”


BTW the stock markets will generally be ‘up’ next week – temporary basis – for short term trades only.