The next domino

News: US home prices sink to 2003 level, click here

squirrel-chips1

A blog reader sent me proof some people are planning ahead.

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ferguson After I wrote the post below, the Globe published this interview with economist and author Niall Ferguson. His book The Ascent of Money, which I am just finishing, is one of the best texts I have ever read. Ferguson’s  knowledge and perspective is profound, which makes his comment on the  situation – “There will be blood” – so unsettling. He looks at our current descent internationally and says, expect violence. — Garth

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Well, it’s closer.

The stock market now sits at 1997 levels, which shows the last three months have been a Sucker’s Market, like the one in April of 1930 . The market then, as you know, went on to lose 89% of its value (see the chart below). Will that happen again?

As I predicted here, the US is moving to nationalize the banks, starting with giant Citibank, and beginning with a 40% stake. This will not end well.

As I also sadly prophesized, the Canadian real estate meltdown is now mainstream. A year after casting me as a fool for saying housing was doomed, Maclean’s magazine this week has a cover story suggesting home prices will not recover for a decade. (If we’re lucky.)

Commodity prices, led by oil, are going nowhere. Canadian retail sales have just fallen off a cliff. The car guys are going down and 2009 will (as forecast here) end up as the year the jobs vanished. I talked to a Bay Street smartie on Monday afternoon – a guy who has lived through three recessions and five crashes. “Never seen this,” he said. “It’s a natural disaster unfolding in slow-mo.”

At the heart is failed expectation. Homeowners expected the housing plop to be over by April. Alberta expected oil to be back at a hundred bucks. Traders expected last November would be the nadir. Car companies expected sales to resume. Billions expected Obama to fix it.

Government stimulus is so miniscule, even in its trillions, it cannot repair the global financial cleansing. Over two decades of excessive consumption, a credit romp, irresponsible lending, greed, corporate immorality and a borrowing binge cannot be repaired in a handful of months or by a single president, even if he is a rock star.

The next few months are unknown, but will not be easy. In this context, my mailbag is brimming. Today a question from Rob in BC about commercial real estate:

My question is, “do you think under any circumstances it may be a reasonable time to purchase a commercial property”? I have been a successful furniture retailer in the lower mainland the last 20 years. I have always rented our place of business and have now found a better location with a price reduced 25% from last year. I can buy the building for less than I could rent something similar for. I’m thinking serious inflation may start to develop next year and a large mortgage would get easier to pay as time goes on. I have no debts, personal or business and have substantial savings to cushion against potential future losses. My big concern is and that our sales, and our competitors also, have almost halved in comparison with the same period last year. I’ve never seen such a rapid decrease in traffic and sales in such a short amount of time since being in business. I’m certain none of us are profitable on a monthly basis at the moment and unless business picks up there will be store closings. Is it possible the pendulum swung too far in the good times and it’s now gone the other direction too far as well? If consumer confidence would just improve a little and not get worse still I know I could return to profitability. It can’t stay this slow for any length of time can it? I can’t imagine how retailers would stay in business. Your thoughts on the likelihood of consumer confidence increasing even slightly within six to twelve months would be much appreciated.

Rob, pal, have you not answered your own question?

When people stop buying houses, they stop needing furniture. You’re in a death industry, and the sales decline and losses you’ve just seen will be the new normal for the next several years. You’ll need those savings just to keep the power on.

So why walk into a pile of debt to buy a commercial property destined to decline further in value? The next giant domino to come crashing down will be commercial real estate, as plazas, big box developers and entire malls slide into insolvency. We’re on the cusp of a massive wave of store closings, from some of the best-known boxes to countless locally-owned retailers like you.

There’ll be no significant inflation next year. No rebound in house values. No surge in oil prices. No lessening of mortgage debt as the cost of living starts to rise again. This is a serious deflationary environment which will see countless months – perhaps years – of dropping wages, falling real estate appraisals, crashing car prices, vanishing corporate profits and eroding jobs.

You say you have no debts and substantial savings?

Turn out the lights, Rob. Flip the ‘Open’ sign.

Go pet your cash. It’s your best friend.

updated-chart

To enlarge, right-click chart and select 'View Image'

132 comments ↓

#1 nonplused on 02.23.09 at 8:45 pm

There seems to be a growing sense even in the main stream media that things are worse than we thought, and don’t look to get better soon. Once general recognition sets in retail sales are likely to plummet.

Nice day in the markets too. I guess the GM pensioners are going to need even more government bailout money.

#2 squidly77 on 02.23.09 at 8:57 pm

http://dshort.com/charts/bear-recoveries.html?bears-since-1950

the above graph gives recent market recovery times
IMO these markets will never recover

CRE is most definatly the next shoe to drop
just when you think its getting better it will get much worse

sorry to be so glum but you cant place a band-aid on an
arm thats 75% hanging off

#3 North Vancouver Citizen Jr. on 02.23.09 at 9:26 pm

The truth behind AIG and why the U.S. Treasury is paying out + $250 Billion to China and Saudi Arabia…

http://market-ticker.denninger.net/

#4 TomOfMilton on 02.23.09 at 9:34 pm

Psst. Is there a way to get those graphics like the chart above and other postings of articles to be a “Click to Enlarge” type format?

No need to post this if you don’t think it necessary.

Thanks,

Tom

#5 Indicator on 02.23.09 at 9:35 pm

Garth,

Would you know if the crime levels have increased?

It would be interesting to know if there indeed is a relationship to our now evident recession.

Thanks, alway have enjoyed your blogs.

#6 newboyo on 02.23.09 at 9:39 pm

Hello,

Regarding comercial real estate – Atlanta Fed’s governor says that thought of the crash in commercial real estate is making him sleepless

http://money.cnn.com/2009/02/23/news/economy/lockhart_real_estate.reut/index.htm

Quote

ORLANDO, Fla. (Reuters) — Atlanta Federal Reserve Bank President Dennis Lockhart said on Monday that rising defaults on commercial real estate was the main domestic risk that “keeps me up at night.”

“Commercial real estate is one that concerns me. It seemed to have lagged the residential real estate problems,” Lockhart told the Association for Financial Professionals in a question and answer session after a speech.

Noting that 2007 and 2008 had been dominated by the collapse of the residential housing sector, Lockhart said that its time may have come.

“(It is) possible to think of 2009 as the year of commercial real estate,” he said.

Unquote

#7 ??? on 02.23.09 at 9:46 pm

stability forecast for home prices

By Dina O’meara, Calgary HeraldJanuary 7, 2009

C algarians can look forward to a fair deal this year–at least as far as real estate is concerned, Royal LePage said Tuesday.

The city’s housing market is expected to soften by about one per cent — compared to three per cent nationally–giving new home buyers a bit of a break after burning through record pricing two years ago, according to the real estate company’s 2009 Market Survey Forecast.

The new year promises more units on the market and prices for the average Calgary home stabilizing for most of the year, increasing as the economy betters toward the end of 2009, the report found.

Edmonton, where average home prices jumped 35 per cent in 2007, isn’t expected to see any significant change to its real estate market this year after slipping two per cent in 2008.

“While a grey cloud hangs over some markets, the sky is not falling,” said Phil Soper, president and chief executive of Royal LePage Real Estate Services.

Canada’s resale real estate market should see only modest price and unit sales corrections across the country throughout 2009, he said. Both national aver-age house price and the number of homes sold are expected to decline this year.

In 2007, the average sale price for single-family homes in Calgary soared almost 20 per cent to $414,000, taking second place only behind Vancouver’s$571,000 average (a 12 per cent increase for the West Coast city).

Last year, prices across the country started falling as the shadow of a global recession cooled markets and increased investor uncertainty.

“While Canada’s housing market is anticipated to continue to move through a period of adjustment over the next six months, we should expect modestly lower home prices, not a U.S.-style col-lapse,” Soper said.

[email protected]

What’s worse – the guy who made this up, or the newspaper that reports it? — Garth

#8 john m on 02.23.09 at 9:47 pm

Great post Garth i couldn’t agree more, as businesses and factories close items like furniture will be available for pennies on the dollar thru liquidation sales.

#9 Jonathan on 02.23.09 at 10:05 pm

Right now companies such as the company I work for are stretched as thin as possible. I’m sure I speak for everyone when I say that if this goes on for another year, we will all be bankrupt. So while we sleep well tonight, if this thing doesn’t turn around, panic will soon ensue.

#10 bob on 02.23.09 at 10:15 pm

I’m watching realty trends here on the west coast and it is proving interesting. Currently there’s a crop of homes appearing on the market that were bought between 6 and 10 years ago, and are being listed now at or near the current market peaks. The present owners are presuming that a flood of greater fools are poised to leap in and pay them the equivalent of $20,000 per year of ownership for having temporarily squatted on that patch of ground. Could I be so rich!!! The folks who bought in 6 years and sooner are hanging on this year in the hopes of … Is this the harbinger of the dead cat bounce? I was chatting with boomer buddy who was looking for RE investments as he’s currently in GIC’s and Money markets.. I referred him here…

#11 Jennifer on 02.23.09 at 10:17 pm

GARTH,

what kind of future have STAPLES stores in Canada? Better than furniture retail or the same?

I am personally keeping them in business. (Actually the SOHO market will explode.) — Garth

#12 kc on 02.23.09 at 10:25 pm

Garth, I feel you hit a homerun with this day’s comments! When you were here on the west coast did you happen to notice all that “new” commercial space that is fresh on the market? And for lease signs dot every nook and cranny around the GVRD. Investors are going to to be holding those places for a few payments I think.

I stated this a couple pages back –

“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.”

Today only 2 positives on the DJIA were CITI and BoA…

go figure…. look out below…….

#13 R. Moer on 02.23.09 at 10:28 pm

The current public delusion is the “potent director’s theory”, that somehow the great men of government and industry will prevail and save the unwashed from a dire future. We are crashing, and debris is flying everywhere, and nothing will ever be the same … post impact. The Global Western economies are smashing and grinding into a billion shards of fiat paper debris.

Consider that if flying a jetliner at full throtlle … when you finally hit that fog shrouded (derivatives) mountain that shouldn’t be there… well regardless everything gets crushed.

Coach, business, first class and the crew … poof- vaporized.

The only difference in the experience is that the seats are temporarily more comfortable, and the drinks are a little better in first class until that sudden terminal stop occurs.

The loss ultimately is the same for all on this doomed adventure. We will not survive in either our current form of money or government, and the boomer generation will die as the doomer generation.

Every generation is tested in its lifetime by war, famine, disease and depression.. and is asked to aspire to the highest ideals in difficult times. I fear we have failed this task unlike our grand parents generation which did so admirably

#14 Boombust on 02.23.09 at 10:28 pm

Garth, you gloomy Gus, you.

Look on the bright side.

After all, a recession/depression merely “rearranges” the pockets the money ends up in, doesn’t it?

#15 Mike B on 02.23.09 at 10:30 pm

Question.. what part of the squirrel makes squirrel chips…OR… perhaps parts that are left by the squirrel…YUM..

Commercial RE. Recent news…Home Depot Canada was planning to open up a downtown store in Toronto but cancelled it. However to backout of the deal they had to pay a hefty sum….11 Million to be precise. Now figure… if HD would rather eat 11 million than build a store they must have figured that things will not return to prosperity for some time… years in fact… It was not worth the gamble even if they lost 11 million bucks. 4 years rent they estimated would net them 0 profits I imagine. So two things…. this tells me that HD is not willing to invest any more in this country and may well cut back all spending to its wee little friends up here in Canada, knowing full well what will be happening in our economy as it has already started in the States.
Second thing … they are aware that commercial RE will soon by a bargain so why invest now…wait it out.

Commercial RE is particularly problematic because many use tremendous leverage to buy it. As a previous poster linked about Toronto Commercial renting, it has dropped by some 60% in volume from last year in the last month or so. There will be alot of space available because businesses will just not need it.
The contagin happening down south is just at the cusp of getting very very ugly and dangerous to the structural integrity of our entire system. Remember keep your eye on the Big Dog. Canada is a very small part of the global GDP and we often take it in the teeth if the US has a rough time. Needless to say … they are having a rough time on steroids. Look for massive selloffs this week…perhaps even a fall off in the US dollar.
Hang onto you asses because if you don’t someone is going to hand it to you very shortly.

#16 Reg on 02.23.09 at 10:47 pm

Macleans also stated that they expect RE prices to decline by a further 20% or so. So if you are in a position to buy, and you think it makes sense in your case to do so, put in a lowball offer that reflects the expected decline.

#17 nonplused on 02.23.09 at 11:07 pm

I think the train wreck in commercial real estate will be slower than that of housing. Housing in Canada should hit the skids this summer by all rights, but commercial could take a little longer. Here is why:

I was involved with a commercial real estate project until some years back. From what I saw on the inside there are several key differences:

Commercial real estate lending was generally more stringent than home lending. Even when fired up pension funds got in on the act they required significant equity on the part of the borrower and a look at the books to make sure the loan plus all expenses could be met from cash flow. CR lending was typically done 40/60 (40% equity) although 30/70 seemed to be the cap.

Lots of CR is also held by non-public shareholders, often with less than 50 shareholders per company. These shareholders are often very optimistic and form kind of a little community. They like the idea of assets you can pee on even in hard times.

These smaller shareholder groups tend to authorize the reduction of dividends and renegotiation of leases where they need to in order to keep long term tenants viable if they can. The eventual conclusion might be the same, but it slows things down.

They also often have “cash call” provisions in the agreements that allow the company to “call” cash from the shareholders if cash flow drops. As long as the shareholders are liquid, they will normally submit the cash as called to whether the storm, rather than risk foreclosure. If only a few shareholders can’t meet the call, there are usually provisions for buying out a portion of their shares by the remaining shareholders who can.

Also, banks are offering pretty low rates on outstanding balances right now, rolling mortgages into lines of credit with very attractive interest rates. So long as rates stay low this provides a lot of cushion.

So the net effect is going to be that CR does not hit the markets in a foreclosure wave as fast as can happen in housing, although a disaster certainly looms. But it’ll be more like a train wreck than an airplane crash, with only the leading end of the train all messed up at first while the caboose (or electronic brake box I guess now) rolling along as if nothing happened except for the shudders coming down the carriages as the front cars derail.

Publicly traded CR companies are another matter. Their share price will reflect the stability of their tenants almost immediately, possibly forcing lender pull outs.

#18 Jonathan on 02.23.09 at 11:13 pm

Harvard author and financial crisis guru Niall Ferguson on the Globe:

“THERE WILL BE BLOOD”

http://business.theglobeandmail.com/servlet/story/RTGAM.20090223.wferguson0223/BNStory/crashandrecovery/home?cid=al_gam_mostview

#19 squidly77 on 02.23.09 at 11:14 pm

click to enlarge
http://dshort.com/charts/bears/four-bears-large.gif

#20 blackout on 02.23.09 at 11:23 pm

mike b, it’s very difficult to buy commercial re with tremendous leverage. most lenders used to want 25% down now they expect more.

#21 canuck on 02.23.09 at 11:36 pm

North Vancouver Citizen Jr.

The truth behind AIG and why the U.S. Treasury is paying out + $250 Billion to China and Saudi Arabia…http://market-ticker.denninger.net/

Can you please amplify what it is that Denniger claimed in his video? Is he saying that the Obama stimulus is wanting to pay large amounts to reimburse China and Saudia Arabia for the toxic paper that was sold to them? Is he saying if not reimbursed that China and Saudi Arabia will stop buying bonds which means the United States would be in REALLY, REALLY, DEEP DOO-DOO?

Or is Denniger saying something different?

#22 canuck on 02.23.09 at 11:41 pm

Please revise my question…that time period Denniger is describing would have been Treasury Secretary Paulson not President’s Obama’s. Paulson was replaced by Geitner which means this video is out-of-date and worthless rhetoric.

#23 Jeff Smith on 02.23.09 at 11:42 pm

Hey! That’s pretty eloquent. I just hope you are wrong for our very own sakes.

#13 R. Moer on 02.23.09 at 10:28 pm

The current public delusion is the “potent director’s theory”, that somehow the great men of government and industry will prevail and save the unwashed from a dire future. We are crashing, and debris is flying everywhere, and nothing will ever be the same … post impact. The Global Western economies are smashing and grinding into a billion shards of fiat paper debris.

Consider that if flying a jetliner at full throtlle … when you finally hit that fog shrouded (derivatives) mountain that shouldn’t be there… well regardless everything gets crushed.

Coach, business, first class and the crew … poof- vaporized.

The only difference in the experience is that the seats are temporarily more comfortable, and the drinks are a little better in first class until that sudden terminal stop occurs.

The loss ultimately is the same for all on this doomed adventure. We will not survive in either our current form of money or government, and the boomer generation will die as the doomer generation.

Every generation is tested in its lifetime by war, famine, disease and depression.. and is asked to aspire to the highest ideals in difficult times. I fear we have failed this task unlike our grand parents generation which did so admirably

#24 canuck on 02.23.09 at 11:49 pm

Oops…seems my second post didn’t show up, so I’ll repeat it…sorry if this turns out to be a duplication.

That time period of the Denniger video would have been the bailout proposal by Treasury Secretary Paulson submitted to the House and the Senate which eventually was passed. So any funding would have been under Paulson’s and not President Obama.

Obama replaced Paulson with Geitner…meaning the link is out-of-date and is consigned to having only historical value.

#25 WakeUp on 02.24.09 at 12:34 am

The stock market is at 1997 levels so now the real estate market will follow it to 1997 levels. That is what you can expect from house prices. So if you’re buying now, downsize and wait.

As far as the stock market is concerned, it will bottom before the real estate market. When? Let’s see what happens this week. If it bounces here it might set the stage for a rally back to 10,000.

#26 rick in Surrey on 02.24.09 at 12:55 am

What do Phil Soper,Mark Carney, and Magician David Copperfield have in common? Illusions, distractions and deception.

I am so tired of these “Professional Financial Wizards” trying to deceive the public. They must believe that if they keep saying all will be well long enough, we will actually believe their rhetoric! It does not take a University Diploma to realise that our economy, the U.S.A.’s economy, the global economy are taking a royal butt-kicking. To think it possible for this slide to stop and turn around in the next several months is not only ludicrous, it is irresponsible of someone in their position. It seems they put out some sort of statement every couple weeks that makes them look more and more foolish.

Tell you what Mr. Soper, if you feel so confident about the RE market, how about you co-sign mortgages for us. Then when your prediction proves wrong, you can assume the financial losses. Put your money where your mouth is, so to speak. Perhaps Mr. Carney can arrange the financing too while we are at it. Of course, tax payer’s funds won’t cover the losses, you can work it off yourself…you Jackasses!

#27 Steevee on 02.24.09 at 1:00 am

#14 Boombust,

Well, sure. Only problem is the money is being “rearranged” from the taxpayer’s pockets into the pockets of the already rich in order to sustain their wealth. The real criminals of this world get away with it again.

#28 ACS on 02.24.09 at 2:19 am

Check out this MacLeans.com article.

The shocking truth about the value of your home
New evidence shows that Canadian prices could go down, and stay down, for a decade

http://blog.macleans.ca/2009/02/23/the-shocking-truth-about-the-value-of-your-home/

#29 gold bug on 02.24.09 at 2:56 am

The furniture store owner reflects a common belief: this can’t be real.

It’s as though nobody has ever read a history book. Or talked to their parents or grandparents.

#30 Vancouver_Renter on 02.24.09 at 3:52 am

#7… Reading the propaganda from the real estate industry reminds me of a story from the Soviet Union era. ..

Apparently, a state-controlled Soviet newspaper once reported that, in a sports competition, the Soviets placed second whereas the poorly-performing American team placed second from last. What they failed to reveal was that only two teams entered the competition!

#31 Mike (authentic) on 02.24.09 at 4:44 am

Cajun Squirrel, yes it’s real and in the UK here. I’ve been meaning to pick up a bag of it, I will today; I’ll report on how they taste. Might as well get used to the taste of Squirrel! Although come to think of it, I haven’t seen many squirrels around… humm…

BTW, here in the UK, supermarket’s are running out of the “cheap stock” frozen veg, chips, rice, frozen meat, frozen fish are some of the things I’ve noticed gone.

With the DOW dropping to 1997 levels, even the analyists have given up when the bottom will be.

Garth said: Actually the SOHO market will explode.) — Garth

I hope that’s true, but I’m not quite sure it is. With a service based economy many SOHO employment will be service based. Services are one of the first things cut in a depression. Retail is maybe the next SOHO employment sector and we all know where Retail is now.

R. Moer “Every generation is tested in its lifetime by war, famine, disease and depression.. and is asked to aspire to the highest ideals in difficult times. ”

I’ll take depression over the other 3 please.

Mike

#32 Ally Ally Oxycontin Free on 02.24.09 at 5:19 am

Niall Ferguson: “Canada is [considered] a winner because its banks are less leveraged, bank regulation here has been tighter, because its housing market hasn’t been in a bubble quite the same way. It’s tempting to conclude from that … that Canada will be less hard hit in the crisis than the United States. But that is unfortunately wrong. Because this is a very unfair crisis. The epicentre is the United States, but the rest of the world, and particularly America’s trading partners, will get hit harder than the U.S.”

http://business.theglobeandmail.com/servlet/story/RTGAM.20090223.wferguson0223/BNStory/crashandrecovery/home/

So, in case nobody noticed, it is all Garth’s fault. [ STILL ]

“So many of the benefits of the boom went to the elites. If you have a lost decade plus redistribution, it may not be that dramatic a change for many, many people. People just have to get over the fact that their wealth wasn’t worth what they thought it was in 2006. Whether it’s their stock market portfolio or their housing. If we simply go back to where we were, in 2005, that’s surely not the worst thing that could happen to us.”

Is Bernie Madoff an elite crook?

BNN Real Estate Series … Going to run all week

http://watch.bnn.ca/the-close/february-2009/the-close-february-23-2009/#clip142895

Keyword: DEFLATION Gosh, I seem to remember Garth mentioning that on several occasions. That must mean it’s all Garth’s fault.

#33 TS on 02.24.09 at 5:39 am

Great post Garth! Your blogger did not seem to realize that he answered his own question…this is NOT the time to take on any more debt for any reason, and this is NOT the time to invest in commercial real estate.

Every time we see the stock markets slide further my wife and I are glad that we went against popular opinion back in the summer of 2007 and began converting all of our RSP assets into cash.

This week we are planning on shifting some funding around so that no single institution has more than $100,000 of our money in it.

It is probably impossible to be 100% protected in today’s environment, but all of us need to be as prudent as possible.

One question for you…could you list in order of most secure to least secure your assessment of Canadian banks?

#34 North Vancouver Citizen Jr. on 02.24.09 at 6:07 am

Marxism hits the U.S.

“”The problem is that we have a complete disconnect between Washington and Wall Street. Investors worldwide have been giving the economic policies of the Fibpotus a vote of no confidence at every turn but, rather than take a pragmatic approach, the Fibpotus continues to follow a course of action wedded to his Marxist ideology.
From 6 May 2008, the day that the Fibpotus took the permanent delegate lead in the Democratic primary process, to 20 November 2008, the Dow lost 42 percent of its value. The loss after 6 May 2008 was gradual (down 1,633 points in 4.5 months) as his primary victory became apparent in what was widely viewed as a Democratic year. The loss after 19 September 2008 was steeper (down 2,937 points over three weeks) as it became obvious that a Marxist was about to take over as leader of the free world.
We’ve seen additional losses following each press conference since the inauguration at which economic issues were discussed and upon the passage of the pork payoff bill and the irresponsible homebuyers bill. Now comes word that the Fibpotus is working on a deficit reduction, i.e., higher taxes, bill and the reaction is just as could be predicted.
From Minnesota Governor Tim Pawlenty, “Wait ‘til you see the markets’ reaction to increasing taxes in the middle of a deep, deep recession. If you believe they’re going to take seriously the idea of cutting down the deficit when they are exploding spending at a historic pace, I’ve got some hunting land for you in northern Minnesota.”

Even Russian Prime Minister Vladmir Putin sees the folly:
“In the 20th century, the Soviet Union made the state’s role absolute. In the long run, this made the Soviet economy totally uncompetitive. This lesson cost us dearly. I am sure nobody wants to see it repeated.

“Nor should we turn a blind eye to the fact that the spirit of free enterprise, including the principle of personal responsibility of businesspeople, investors and shareholders for their decisions, is being eroded in the last few months. There is no reason to believe that we can achieve better results by shifting responsibility onto the state.
“And one more point: anti-crisis measures should not escalate into financial populism and a refusal to implement responsible macroeconomic policies. The unjustified swelling of the budgetary deficit and the accumulation of public debts are just as destructive as adventurous stock-jobbing.”
Here’s another take on the Fibpotus from Alan Keyes.

http://www.breitbart.tv/?p=283713

Based on results, specifically, the loss of over $7 trillion dollars in the U.S. equities markets alone, the Fibpotus is already, far and away, the worst president in U.S. history.

You’ve got your Marxist president. Now, you’re getting your Marxist economic lesson. “”

#35 BOB on 02.24.09 at 6:53 am

“There Will Be Blood”

http://www.theglobeandmail.com/servlet/story/RTGAM.20090223.wferguson0223/BNStory/crashandrecovery/home

#36 Iain on 02.24.09 at 7:29 am

Niall Ferguson is a superb historian – check out his film “The Ascent of Money” and also his previous film “The War of the Worlds”. Both amazing pieces of work and his predictions are very frightening for what lies in our future.

#37 pbrasseur on 02.24.09 at 7:34 am

I doubt the stock market will fall as much as it did during the great depression, for at least 3 reasons:

1) The economy is not in as bat a shape as it was then, not by any strech of the imagination.

2) States around the world will not react with all out protectionism (and new regulations) thus making things much worse and killing any possibilities of recovery.

3 The stock market was not as expensive as it was then before its decline.

#38 Ally Ally Oxycontin Free on 02.24.09 at 8:02 am

“For years, numbered, Swiss bank accounts have carried the cache of wealth and secrecy.

That is, until recently …

You see, those secret Swiss bank accounts aren’t so secret anymore.

The United States government is demanding that Switzerland turn over the names of Americans who have secret Swiss accounts. And it is putting the squeeze on financial firms.

For example, UBS last week reluctantly disclosed that it had reached an agreement with the U.S. to pay $850 million in fines and hand over account details of 250 to 300 American customers — an unprecedented breach of Swiss banking privacy.

Plus, the IRS is demanding information on 52,000 additional UBS customers.

John DiCicco, acting assistant attorney general of the U.S. justice department’s tax division, said, “At a time when millions of Americans are losing their jobs, their homes and their healthcare, it is appalling that more than 50,000 of the wealthiest among us have actively sought to evade their civil and legal duty to pay taxes.”

**Twigged and Flagged by Canadian print Media months ago. Any action by Harper / Flairity or the OSC? The silence is deafening!

http://www.moneyandmarkets.com/how-to-profit-from-switzerlands-loss-29847

#39 Apocalypse Now on 02.24.09 at 8:06 am

Garth: Over two decades of excessive consumption, a credit romp, irresponsible lending, greed, corporate immorality and a borrowing binge cannot be repaired in a handful of months or by a single president, even if he is a rock star.

This problem is not two decades old, it dates all the way back to the dawn of money itself. The moneychangers have always found means to use politicians, be they so-called royals or so-called elected representatives to defraud the masses. We’ve had a grand experiment called the middle class that arises from time to time by restricting the power of government. This experiment reached its climax last century and is once again on a rapid downhill slide and equilibrium will once again be realized when all that will be left will be the Lords and the serfs. This day will surely dawn because the middle class has been too stupid to understand that their very existence depends on limited government not on big government. The bigger the central government, as for example in Soviet Russia or in Red China, the greater the enslavement of the masses. Stalin or Mao would be flush with envy over the size of the governments in Washington and Ottawa and big government is always followed by Big Brother. Garth knows these facts but will not or cannot warn you. Well actually he can warn you but is too chicken or should I say squirrel to do so. Self preservation is a natural instinct but there comes a time when it is better to speak the truth and nothing but the truth so help you God, and quit beating around the bush.

The time soon comes that there will be no need to worry about the size of your portfolio; no your most pressing concern will be which color jumpsuit to wear, orange, orange or orange. The Gulag that is coming to Canada and America will make the Soviet Gulag look like Disney world. Hey folks, wake up and use your God given thinking abilities; if things continue to deteriorate as they have been this past year, how long will it be before people are rioting in the streets? And what do you think the Government’s response will be – send you all to an all inclusive vacation in the Caribbean? They will send you to an all inclusive except it will not an all you can eat version, more like 200 grams of rice in a tin cup. Some wise man said that people deserve the economy they get, so quit blaming this mess on the bankers or politicians or realtors; look at yourself in the mirror. When mindless drivel like American Idol or Oprah or Hockey Night in Canada is more important than understanding our political systems, and more importantly our banking systems, then we deserve both the governments that we will get and the leg irons that they will lovingly offer as a token of their love for the citizenry. O how Big Brother loves us all! All hail king Obama, the saviour of mankind!

#40 Sail1 on 02.24.09 at 8:14 am

At least there is good news!

But the good news is only as good as this: the United States, which is Canada’s biggest trading partner, is not going to suffer as badly as many other economies around the world. And that means that from Canada’s point of view, it’s not standing right on top of the biggest fault lines in the global system. The biggest fault lines in the global system are in Asia. They may also be in Eastern Europe. That’s where things are going to be really unpredictable.”

http://www.theglobeandmail.com/servlet/story/RTGAM.20090223.wferguson0223/BNStory/crashandrecovery/home/?pageRequested=5

#41 Roy on 02.24.09 at 8:16 am

Flaherty to give canadian banks another $200B

http://business.theglobeandmail.com/servlet/story/RTGAM.20090223.wboc0223/BNStory/Business/home

Mr. Flaherty pledged to do his bit to loosen up credit by pushing to get his budget passed by the end of next month. The government’s financial plan contains measures, such as a capital boost for Export Development Canada, that the government says will leverage $200-billion in new lending.

#42 john m on 02.24.09 at 8:47 am

“There will be blood”….i think its inevitable,when people are unprepared and see no way out as their worlds collapse panic ensues..panic results in violence.The naysayers and our governments spending sprees are escalating the problem..false hopes bring disaster and resentment. As reality hits harder as it is daily people look for someone to blame.Its happening !

#43 lgre on 02.24.09 at 8:52 am

pbrasseur – watch this video since you are in denial of what is happening in the market, Celente has predicted many events correct..he explains in this video why we are worse off then we were in the great depression

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

#44 Madame Guillotine on 02.24.09 at 9:05 am

If you have not had the chance to watch the whole series, you should at least take a look at thishttp://www.youtube.com/watch?v=FzEDkFDeJ_A&feature=related re how big is a trillion?

#45 Madame Guillotine on 02.24.09 at 9:07 am

http://www.youtube.com/watch?v=FzEDkFDeJ_A&feature=related Sorry here is the link

#46 PTDBD on 02.24.09 at 9:10 am

World’s Greatest Scams
(Of stocks, banks, sausages and Greyhound dog racing.)

Chickenlittle’s younger brother joined me at pub last night. He looked calm and dapper, not his usual fluffed, flustered and frantic self. Complimenting him on his refreshing, unruffled demeanour, I casually asked him if the sky had finally stopped falling.

He relaxed, leaned forward in his chair, arched his eyebrows and gave me a glaring stare. He then proceeded to give me the lecture of my life:

“I finally figured out what’s going on. I know the whole, evil plot. Yes, yes, I talked to you of the coming Tsunami and the lurking Financial Undertoad. All that came true. Yet, yet, I had no idea of what really caused the whole thing to unravel. You absolutely won’t believe this.

Last night I watched a show on the Greatest Gambling Scams of history. They exposed the fixing of a greyhound dog race. The scam was brilliant in its simplicity. It couln’t fail.

Then I saw it! This was the connection to the current Credit Crisis and the huge drop in the stock markets.”

I patiently waited while he quaffed another ale and ordered a plate of juicy bangers…..
(to be continued, if Garth lets me)

#47 613 Happy where I am on 02.24.09 at 9:17 am

First domino was real estate (and there are STILL people who deny this)
Second domino was banking (and AIG had a huge loss even after getting the bail out money)
Next was the Big 3… and how long are they going to last
The next one will be ( I predict) consumer credit.

Wow are we ever in for one hell of a ride…. I am so glad my father never lived to see this…

#48 Contractor on 02.24.09 at 9:27 am

North Vancouver Citizen Jr….Obama a Marxist? Really? That’s an insult to real Marxist thought. He’s no Marxist. Try learning a bit about Marxism before you regurgitate tired on-line pre-election drivel about Obama. I don’t think he’s superman, but he’s generally giving things a good effort, and is trying to do more than GWB ever did to try to help the economy.

Apocalypse Now…moneychangers? Come on! It makes for good drama, but there’s no secret cabal planning to profit at the expense of us all and enslave us. No one, not the Rothschilds, not the Bilderberger group, could pull it off. I don’t care how much money one has, no one pulls the puppetstrings on our whole financial system. It defies logic if you actually think about it.

Truth is, yeah, we’re all screwed in the short term. But it’s a problem of our own society’s doing, and just like any other time in history, humankind will survive and life will go on, just like it always has. There’s nothing more nefarious about the whole mess than that.

These far-fetched theories give way too much credit to one person or group’s ability to organize and manipulate things. Nobody wields that much power.

Have a nice day, gentlemen or ladies!

#49 pbrasseur on 02.24.09 at 9:27 am

lgre

The stock market was 50% more expensive (P/E of 32) in 1929 than at the beginning of this decline.

That’s a fact, as are the other things I mentionned.

Too bad if it doesn’t fit your reality. A fact remains a fact.

#50 smwhite on 02.24.09 at 9:33 am

Anyone that even contemplated sticking a toe in the market are going to have a tough time doing so in the near or immediate future.

During the GD, the DOW tumbled from 400 to 40, or 10 to 1.

2008 the DOW was at 14000, can the DOW drop to 1400 in 2010?

#51 Reg on 02.24.09 at 9:43 am

TS on 02.24.09 at 5:39 am

Do a search on CDIC at the Toronto Star website and you will find an article that explains how you can arrange your finances so that each financial institution will guarantee your deposits up to $500,000 instead of the perceived $100,000.

And you think the government will look after that? — Garth

#52 Canned Goods and Buckshot on 02.24.09 at 10:13 am

I find the G&M’s title for the Niall Ferguson interview fairly sensational and emotionally manipulative. So too is Garth’s reference to the article. From the article in reference to “There will be blood” what Ferguson says is the following:

“There will be blood, in the sense that a crisis of this magnitude is bound to increase political as well as economic [conflict]. It is bound to destabilize some countries. It will cause civil wars to break out, that have been dormant. It will topple governments that were moderate and bring in governments that are extreme. These things are pretty predictable. The question is whether the general destabilization, the return of, if you like, political risk, ultimately leads to something really big in the realm of geopolitics. That seems a less certain outcome.”

He is not predicting violence and civil war in Canada or the US, but in a larger international context, presumably in less stable countries. To be certain we are in uncharted waters but I find these types of quotes, taken out of context, to be unhelpful. Sadly, blood and violence is common in our world: Darfur, Georgia, Gaza, Lebanon, Congo, and the list goes on.

Thanks for the comercial realestate piece Garth, but with respect to the Ferguson article, I expect better from you.

I pointed to the article. Don’t shoot the messenger. I expect more of you. — Garth

#53 WestCoast Girl on 02.24.09 at 10:13 am

It’s like watching a train wreck in slow motion…you know it’s going to be absolutely horrific, yet you can’t help but stare in morbid fascination…

‘Select’ AMEX customers being paid $300 to pay off the balance and close their account

http://news.moneycentral.msn.com/ticker/article.aspx?Feed=MY&Date=20090224&ID=9637225&Symbol=COF

But according to my family, I’m obsessing over nothing because Canada is immune….errr, right.

Last one out turn off the lights please….oh wait, they won’t be on unless the solar panel has been installed.

#54 vtj on 02.24.09 at 10:24 am

Garth, yet another great post. Excuse my ignorance but what is the “SOHO market” that you made reference to?

#49 pbrasseur: Earnings figures used to calculate P/E ratios in the 1930’s were different than the earnings figures used today. If we compare apples to apples, you’ll find that the markets during the last boom were the most expensive ever. Have a look at the following link for more detailed info:

http://www.comstockfunds.com/default.aspx?act=Newsletter.aspx&category=SpecialReport&newsletterid=1356&menugroup=Home

SOHO = small office, home office. When people lose their jobs en masse, entrepreneurship flourishes, by necessity. — Garth

#55 Jonnay on 02.24.09 at 10:36 am

Rob from BC seems to have the best position, by having cash and no debt. It nearly seems like the best thing for him to do is fold and hold tight. But just how many people will be able to do this? And how will we feed ourselves afterwards? Scary times indeed.

At least I have virtually no chance of being “under water” on my house which I bought in 2005, in La belle province, thanks to a much more reasonable market. But I am still quite unsettled, especially with big stuff slated to happen in the summer (leap2020.eu predicts a US Treasury bond market collapse during the summer), so I am doing what so many others are doing, and paying down debt as fast as possible. If nothing happens, I still come out ahead.

I also took a look at my mutual funds, and it turns out I have a nice chunk invested in long term bonds that include Canada Housing Trust bonds, which are of course mortgage-backed securities guaranteed by CMHC. Do you think those will blow up in the same way as their US equivalents?

As always, Garth, I enjoy reading your articles.

#56 North Vancouver Citizen Jr. on 02.24.09 at 10:37 am

#48 Contractor

…Seriously… I’m in favour of worldwide Marxism…Let’s give it a real chance.

….The Free World’s Democratic political and financial leaders have now proven, beyond a shadow of a doubt, to be thieves who usurped from the world’s less inclined and they shoot be shot.

CUBA has no foreclosures nor BANK Failures
CUBA is stable, has a much better health care system then the US.
Has no Ponzi scams like Madoff or Stanford and has lots of healthy banks.
Cuba has affordable waterfront condo’s and beach houses and no foreclosures like USA.

…Not seriously…

Hail hail Fredonia

http://www.youtube.com/watch?v=hfVnWH_PCME&feature=related

#57 Cara on 02.24.09 at 10:43 am

I’m with CannedGoods on this one… I came to post a link to that article, found you’d beat me to it. But, I think you were going a bit more for the sensationalistic than maybe the author would have intended. “Expect violence”? Tsk tsk, Garth. This is Canada. If it gets as bad as all that, I do expect that the human side of people will still exist. You might see “violence” – but I also think, and to a greater extent, you will see people banding together. Neighbours helping each other, families coming closer together.

I don’t think it’s anything but rather self-serving to post extremes, out of context, when you’re selling survival products. I do expect more from you. Please don’t jump the shark. :) I really enjoy this blog, for the most part.

Read the article. It speaks for itself. — Garth

#58 The Other David on 02.24.09 at 11:00 am

Sorry Vancouver, Chinese investors are going to the US looking for fire sales, you will have to hold on to those overpriced junk a little longer, seems only Canadians think buying high is a great(er fool) deal.

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/02/23/BUUE1631TP.DTL&type=business

Wealthy Chinese hunting for US homes
According to a news release by Soufun.com, a Chinese property website which has organized the trip, more than 400 people applied to join the trip, …

#59 Yes We Can't on 02.24.09 at 11:03 am

Nationalization of the US banks is the scariest thing the Obamanation has proposed to date. If you think things through the only way it will work is to eliminate cash.

To pay for such a dramatic undertaking huge tax increases will have to be imposed. Historicaly whenever that happens you end up with a black market in produce, food ect. and a thriving underground economy.

To stop an underground economy you eliminate cash.

#60 smwhite on 02.24.09 at 11:08 am

#54 vtj

http://online.barrons.com/article/SB121158260488318589.html?mod=9_0031_b_this_weeks_magazine_main

Good read.

#61 john m on 02.24.09 at 11:10 am

40 Sail1 on 02.24.09 at 8:14 am At least there is good news!

But the good news is only as good as this: the United States, which is Canada’s biggest trading partner, is not going to suffer as badly as many other economies around the world.
…………we are one of the other economies.

#62 Reg on 02.24.09 at 11:13 am

And you think the government will look after that? — Garth

Garth, I expect they’d honour that as much as the 100,000 amount. I’ll leave that to each individual to determine for themselves.

Personally, I have taken many of the cautions you have provided in your latest book. In this new era of turmoil, I don’t think are any guarantees. So, as you have suggested, be prepared. Take precautions.

#63 Doug from Calgary on 02.24.09 at 11:13 am

When did our bank bailout increase to 125 billion?

http://network.nationalpost.com/np/blogs/fullcomment/archive/2009/02/23/jim-flaherty-a-time-to-act.aspx

#64 Bonnie L on 02.24.09 at 11:36 am

Here is an interesting article on the world financial situation and world leaders.

http://www.kitco.com/ind/willie/feb202009.html

#65 squidly77 on 02.24.09 at 11:48 am

I do expect that the human side of people will still exist
thats the problem
read the history of mankind
we have been violent murderers since day 1

#66 PTDBD on 02.24.09 at 11:56 am

World’s Greatest Scams
(Of stocks, banks, sausages and Greyhound dog racing.)
cntd… Part 2

As the sizzling sausages sluiced down his gaping gullet, he poured salt and cayenne on the greasy gobblings. He licked his chickenfingers and slurpilly continued his story:

“Greyhound races are very difficult to fix. The inbred beasts always chase that rabbit at top speed. It’s almost impossible to make them go any faster. Sometimes you get this obvious, huge, overwhelming favourite that ranks heads and tails over the field. Every punter will pile on, they can’t resist. A situation very similar to a record high stock market.

So what do you do to fix the race? It’s simple. You just slow that favourite down and take advantage of the high odds on the others. You make him lose. Shortly before the race, with the help of an insider, you feed him sausages galore and bet on the second best dog. You’d make even more money if you could short that mutt like you can in the stock market. Short them at the high, that’s the ticket!”

He could see my eyes glaze over, going forward. I couldn’t see the connection between feeding sausages to a race dog and fixing the stock market. The guy was still a neurotic nutbar. Next he’ll be wailing at me to buy gold.

“No, no, no…stay with me! This is the truth”, he screamed.

“Them friggin stocks. You know them ratcheting, yo-yo stocks. It’s almost impossible to keep making them go up. Real profits are hard to come by. Paying dividends takes real money. You can’t just fake it. Then you need new developments, invention, creativity, frugality and foresight. Hell, it’s very hard work. And let’s not even mention the drudgery of keeping accurate books! You can only keep the balls ratcheting higher in the air for so long.”

Reflecting on the mixed imagery of sluicing sausages, bloated hot dogs, and juggling balls made me very thirsty but a long ways from being more informed, or richer. I squirmed impatiently in my chair as he continued.

“You know how you were always puzzled about the inanity of the whole thing? Companies buying out another at their zenith only to carry burdensome debt loads? An infinity of mortgage signings to obvious deadbeats. Huge wrong-way bets. None of it made sense for the corporations. Where was the oversight? Where was the rationale? Billions of taxpayer money forked over to bankers who still paid huge bonuses. The official story never rang true. It was always out of kilter. The story sounded phony. How did they lose all that money, especially when they had supposedly pawned it off onto the rest of the world?

Letting your stock plummet with the law of gravity is much easier. Especially when you do stupid things and take massive piles of cash off the top. It’s like they were trying to stuff the losses. Were they eating the sausage?”

I quaffed a few more while awaiting the conclusion….

#67 smwhite on 02.24.09 at 12:05 pm

http://www.youtube.com/watch?v=oILsaBMxdLI&feature=related

Funny, nobody bitched(except this blog) when expensive homes and expensive markets raised the average Canadian prices…

Message, if you don’t need to sell, wait until another sellers’s market, now the “experts” are saying soon, soon as in ten years.

#68 BOB on 02.24.09 at 12:09 pm

#49 pbrasseur , You forgot to mention the debt of the average consumer compared to the debt of the people in the last depression. People are in way over their head. Also don’t overlook the entittlements that are due to the baby boom generation. In other words this is a ticking tome bomb.

#69 CM on 02.24.09 at 12:11 pm

Niall Ferguson’s article in the Globe this morning was reassuring in a depressing kind of way, or maybe that should be depressing in a reassuring kind of way. No messing around. False hope is useless. Truth, with a few hints on how to cushion the blow, is always better. I’ve always thought that shopping as a national pastime was completely insane.

The picture of Stevie in Wonderland (NY) surrounded by a squad of heavies on many news sites today was something to make you lose your breakfast. A quick scan of the background showed a skyscraper giving a one-finger salute to the Boys in Black (or Blue). That was the best bit.

http://www.ctv.ca/gallery/html/harper_visit_20090223/photo_6.html

—–
Cajun squirrel flavoured chips
(no squirrels were harmed in their manufacture)
Available until May individually or in a six-pack (of chips) in assorted flavours.

http://www.telegraph.co.uk/foodanddrink/4206310/Cajun-squirrel-among-crisp-flavours-tested-by-Walkers.html
—–
When my parents got married shortly after WW2, my grandfather managed to find a pressure cooker (and a small fridge) as wedding presents. Anything like that was in very short supply while manufacturers switched from planes and munitions to consumer goods. My grandfather must have know somebody.

As kids, my sisters and I used to laugh at the recipe for pressure-cooked squirrel, living as we did in a city of abundant grey city squirrels, twice as big as their country cousins.

Squirrels might vanish from the city landscape altogether.

My aunt’s husband arrived as an immigrant from Malta shortly after the war. He caught squirrels and cooked them in a park in Halifax when he first arrived because he was completely broke. A kindly cop told him that hunting and cooking the wildlife wasn’t allowed in the city parks, gave him a few bucks and directed him to the office of the RC Navy. He joined up, worked there all his life, and retired as a Captain. (He also made really GOOD wine.)

Good thing they didn’t have tasers in those days.

Those are my squirrel stories.

I’ll go now.

#70 john m on 02.24.09 at 12:13 pm

#65 squidly77 on 02.24.09 at 11:48 am I do expect that the human side of people will still exist
thats the problem
read the history of mankind
we have been violent murderers since day 1
………How very true.no matter how much further we have become civilized when we don’t get what we want we resort to violence that has never changed.Today we live in the most spoiled generation in history,violence has expanded to our youth.Never before in history has there been such violence to achieve material things,drugs are rampant.A society unable to cope,honour a thing of the past much different than the society that weathered the last depression. Those that aren’t prepared will not be able to cope…this will lead to violence.Honesty is leadership,it brings calm dishonesty breeds violence and uncertainty (we are surrounded by it)

#71 Comrade Okie on 02.24.09 at 12:18 pm

Quick, hide everyone! That guy with the beard is back!

http://www.northrup.org/Photos/squirrel/low/squirrel-face-veritcal.jpg

http://lh5.ggpht.com/lisa.onizuka/RuK2TwkjzFI/AAAAAAAAG3o/jV1J0CRYemU/5b789061062823be824114f657e3af70_full.jpg

#72 CM on 02.24.09 at 12:22 pm

One more thing:

American Express paying people to close their credit card accounts

http://www.cbc.ca/consumer/story/2009/02/24/amex-buyout.html

Seems like they’ll give you $300 bucks if you pay off what you owe and close the account.

I remember when American Express card holders couldn’t carry a balance. You paid what you owed every month.

What a novel concept!

They should have stuck with it.

#73 Larry on 02.24.09 at 12:28 pm

Funny how the ones who tell you RE prices will stabilize and then rise next year depend on this to earn a salary while those who don’t say the opposite.

#74 TheComingDepression on 02.24.09 at 12:40 pm

—-You want a commercial bust? Check this bust out —–
http://thecomingdepression.blogspot.com/2009/02/massive-commercial-real-estate-bust-in.html

#75 Jon C. Coates on 02.24.09 at 12:44 pm

Garth: Perhaps you should make sure of your facts as you beat the “doom and gloom” drum. I noticed this letter to the editor printed in the Halifax Herald on 23 February 2009:

Distorting facts

I was stunned to read Steve Proctor’s Feb. 18 article on the recent talk by self-proclaimed economic guru Garth Turner. Stunned to read that “the room went so quiet you could hear a pin drop” when the authoritative Mr. Turner proclaimed that only 12 home sales had occurred in Halifax in December of 2008. Scary stuff – if it were true! As Mr. Proctor correctly pointed out, the number was actually 202 – 17 times Mr. Turner’s figure!

It makes me wonder about the accuracy of the other facts and figures, charts and dire predictions he made that evening. I am amazed someone of Mr. Turner’s reputation as an expert could trot out such erroneous statistics. Such distortions have a way of making their way into everyday “water cooler conversations,” when they come from someone like Mr. Turner. Repeated often enough, they become regarded as “fact.”

Fact: Even though they are down from record levels in 2007, home sales in HRM are predicted (by CMHC) to come in at about 2004 levels – which is just around the average annual number since 1990!

There is no question there are challenges to the global economy. Thoughtful people should consider how it all could affect them, a difficult enough task when working with accurate information. Distortions like these serve no one.

Doug Wheatley, Dartmouth

So I wonder, Garth, whose figure was correct yours at 12 home sales in Halifax for December or the 202 that Mr. Wheatley talked about?

Actually my reasearch shows that 12 homes sold during December in Halifax proper. An experience realtor who was at my talk and did some indepedent research came up with the number of 42, but admitted statistics were hard to find. The Nova Scotia Real Estate Association has published no current numbers in the last few months. The 202 number appears to be housing starts, not housing sales, and teh newspaper was erroneous in its reporting. In fact, CMHC is not a credible source of resale numbers since the agency concentrates on new housing stock. So if you have definitive new information, let’s have it. And it would be nice if you did not make it up this time, as you did with your analaysis of the Green Shift. — Garth

#76 dotava on 02.24.09 at 12:50 pm

#5 Indicator on 02.23.09 at 9:35 pm

Go step further and you will find that recession produce poverty and poverty is the one who produce/increase the crime (logical example – Godfather I). Always is better to be middle class citizen in country with wealthy middle class instead to be rich in poor country.

#77 john m on 02.24.09 at 1:01 pm

Interesting poll in the Globe>Canada gained the most when who was the U.S. president and the Canadian PM?

Franklin Delano Roosevelt and Mackenzie King

13%

1716 votes

Jimmy Carter and Pierre Trudeau

16%

2173 votes

Ronald Reagan and Brian Mulroney

41%

5560 votes

Bill Clinton and Jean Chretien

27%

3734 votes

George W. Bush and Stephen Harper

3%

438 votes

#78 North Vancouver Citizen Jr. on 02.24.09 at 1:02 pm

Did Karl Marx say this….

“”Owners of capital will stimulate the working class to buy more and more of expensive goods, houses and technology, pushing them to take more and more expensive credits, until their debt becomes unbearable. The unpaid debt will lead to bankruptcy of banks, which will have to be nationalized, and the State will have to take the road which will eventually lead to communism.””

– Karl Marx, 1867, Das Kapital

…Still a great article…

http://www.dailyreckoning.com.au/did-marx-know-all-this-was-coming/2009/02/24/

#79 Investor on 02.24.09 at 1:08 pm

Based on Garth comments and squidly77 gloom and doom, short term market bottom here. Rock this party.

#80 Makeorbreak on 02.24.09 at 1:12 pm

http://online.wsj.com/article/SB123535088586444925.html

#81 PTDBD on 02.24.09 at 1:38 pm

Less than a week after a $787 Bbbbilion dollar bill signing…..House Democrats propose $410 Bbbbbillion spending bill. (slurp)

I think they’re addicted, :-) going forward :-)

Harper says he is worried.
Obama is budgeting for 10 years?
He promises to cut deficit in half during his first term!

#82 pbrasseur on 02.24.09 at 1:38 pm

Jon C. Coates (#74)

Good post, unfortunately many here don’t need facts and figures anymore, they just need their imagination.

Mr. Coates is quite good at that, as was published at garth.ca. — Garth

#83 go green on 02.24.09 at 1:44 pm

71 CM on 02.24.09 at 12:22 pm One more thing:

American Express paying people to close their credit card accounts

http://www.cbc.ca/consumer/story/2009/02/24/amex-buyout.html

Seems like they’ll give you $300 bucks if you pay off what you owe and close the account.

I remember when American Express card holders couldn’t carry a balance. You paid what you owed every month.

What a novel concept!

They should have stuck with it.

Oh so true CM. I recall several years ago I was bombarded with offers from Amex to accept one of the credit cards. Same goes with the bunch of Cdn banks. I saved their envelopes and put as much junk mail into them as I could and sent them back – at their expense. Junk mail from them has decreased by at least 50%.

BTW, did that with those damn 10%’ers from the cons as well, but also included some ‘unflattering’ comments.

#84 MenWithHats on 02.24.09 at 1:57 pm

“Poverty wants much; but avarice, everything”

Pubilius Syrus

#85 Ultraman on 02.24.09 at 1:59 pm

CM, your squirrel stories are the best. Thanks for sharing.

#86 go green on 02.24.09 at 2:10 pm

Niall Ferguson: “European banks are far more leveraged than American banks. I don’t see Europe as offering up any particularly good model in any respect. In fact, I think Europe’s prospects could get a whole lot worse this year, to the extent that it could be very, very hard indeed to keep the Euro zone together. I think it will be possible because the costs of leaving will be so high.

Could someone please explain the last 2 sentences to me. They seem to contradict each other. Maybe I’m just not reading it correctly. Know I’m a little tired.

A bit worried. Believe the Euro has gone down and wondering whether we should convert – but to what? Gold, USD? Am really perlexed.

#87 Jake on 02.24.09 at 2:15 pm

#13 R. Moer,
Well said!

#88 squidly77 on 02.24.09 at 2:21 pm

There’s clearly a lot of spin,” he says. Even the CMHC, which promotes home ownership and depends on home sales to sell mortgage insurance, has an interest in seeing the market prosper. “There is quite a lot of uncertainty regarding the market in general right now, and there are too few uninterested parties who are giving any sort of reasonable analysis on that outlook

The predictions from those guys are very biased,” he says. “They know that in a declining market, the volume of sales falls dramatically and real estate agents lose their jobs. So they don’t want to say anything that could be seen as contributing to a falling market. If their economist predicted a decline in the market—and then it happens—that’s deadly. The guy would have to watch out for his life.
http://blog.macleans.ca/2009/02/23/the-shocking-truth-about-the-value-of-your-home/

the blog below has a post dedicated to the article
http://edmontonhousingbust.blogspot.com/2009/02/shocking-truth-about-value-of-your-home.html

Investor said
Based on Garth comments and squidly77 gloom and doom, short term market bottom here

if you ask me if its raining outside
and i respond it is and its pouring down and suggest you might need a heavy coat for protection
is that gloom and doom ?

#89 Ed79 on 02.24.09 at 2:26 pm

Another great post. Was lucky enough to enjoy “The Ascent of Money” when the PBS series of it was still up on youtube a month ago. The interview with Niall Ferguson is still there and worth watching.

Just finished reading the Maclean’s article mentioned by Garth and linked to by ACS in post #28

Favourite bit:

The sunniest forecast of all comes from Royal LePage, a national real estate company. In a recent release entitled “Correction, not crash for Canadian real estate market in 2009,” Royal says there will be a minor slip of three per cent, then “consumer confidence is anticipated to recover, prompting real estate activity to pick up once again in the latter half of 2009.” Phil Soper, the CEO of Royal LePage, says when you look at both prices and the volume of houses being sold each month, the market has already been declining since the end of 2007, so we’re due for a recovery soon. “We’ll hit bottom in about mid-year,” he says. “We believe that things will flatten out in the third quarter, and the recovery will begin for housing towards the end of the year.” He rejects the idea that the industry burnishes its predictions. “I can say absolutely that it does no one in the real estate industry any good to forecast home prices higher than the reality.”

#90 Jake on 02.24.09 at 2:31 pm

57 Cara,
I will definitely band my neighbours around me too……mmmmm, livestock.

#91 North Vancouver Citizen Jr. on 02.24.09 at 2:45 pm

6 Reasons We’re Bullish On Canada

Joe Weisenthal|Feb. 24, 2009, 2:50 PM|
Tags: Economy, Canada

There’s no corner of the globe that looks safe from the falling debris these days. Europe looks like it’s cracking apart, not just its economy but its society. China is a giant powder keg. Russia is a basket case. Japan’s been a zombie for more than 20 years. The UK? Ha.

Maybe the answer is right under our nose, or right above our border, in Canada. The more we think about it, the more we like Canada’s prospects for the long-term. Here’s what we’re thinking.

Natural resources. Canada has ’em in spades. Frequently, abundant natural resources goes alongside dictatorship and political backwardness. Not so in Canada. We’re sure Canadian democracy has its quirks, but by and large, things seem to be fairly smooth. Anyway, when global demand picks up again, its natural resources will be in high demand. And if things get really bad, and global trade breaks down it can take care of itself without being too much of a beggar.

>>>Financial solvency. Canada didn’t make the mistake of subsidizing homeowners, and it didn’t have the same kind of bubble as ours. As such its banks are healthier, and what problems they do have are more likely to be fixable since they’re not hung up on old ideas, like preserving an arbitrarily-defined “Canadian Dream.”<<>>Canada doesn’t have gigantic ghettos of disaffected, unemployed North African or Muslim youth that haven’t been integrated into its core culture. <<>>And we could imagine the bread basket of the United States moving northward to Central Canada, making the country even more rich in terms of resources.<<>>Geopolitics. Canada isn’t likely to be high on any terrorist’s target list.<<<
(Oh really?)

This is not to say they don’t have problems. Their biggest trading partner is the US and that’s not particularly good, though the US isn’t going to evaporate anytime soon.

So what do you think. Last time we posted about Canada several people argued that things aren’t any good there, but we’re looking long term.

Disclosure: The author is long Canadian ETFs and currency.

http://www.businessinsider.com/mount-up-why-we-like-canada-2009-2

Canada is a favoured spot, of course. We all know that. But it is not immune, which is the lie leaders have been promulgating. As for the list above, some are reasonable, some fiction. For example, saying Canada “didn’t make the mistake of subsidizing homeowners” is absurb when we allow tax-free capital gains appreciation in real estate, but in no other assets. That’s the ultimate subsidy. — Garth

#92 deekthegeek on 02.24.09 at 2:52 pm

As I have been telling numerous people (that roll their eyes ) whenever I have spoken about the downward spiral of the economy over the past 2 years.
It’s the Consumer stupid!
60 – 70 % of GDP is the consumer buying food,clothes,gas, videos,etc.
If everyone is saving money, no one is spending. That simple.
Garth, I also read that article in the Globe this morning and the economist is the 3rd person of repute who has mentioned that this may be a 10 YEAR down turn in the economy. Lets see who has the financial cojones to ride that one out. Canned beans anyone?

#93 Contractor on 02.24.09 at 2:56 pm

North Vancouver Citizen Jr., the smart and strong will always take advantage of their less intelligent and weaker compatriots. It’s Darwinism. Survival of the fittest. It sucks, but the sooner you learn that, the happier you’ll be in this world. It doesn’t matter which political system people live under. Because the same imbalances will always reappear in a society, regardless. That’s human nature.

Communism is a great political theory. It doesn’t work in real life, though. Period. Sure, China’s booming right now, but look at the day-to-day lives of non-party members and their lack of freedoms. You and I would be jailed there for the things we’ve written on this blog.

You cite Cuba as an example of how things could be. I hope you actually have been there.

It’s no paradise. Beautiful country. Crappy food, if you can find any. Really wonderful, warm people, especially if you can speak Spanish. Cubans generally lead horrible trying lives that most of us couldn’t stomach…

There are no foreclosures because the government owns your home and can arbitrarily decide to take it away from you if you step out of line.

There are no bank failures because their currency doesn’t trade except via the state bank.

The average wage is about $20/month our currency so there are no savings to put in a bank or Ponzi schemes.

Though ‘free’, health care is generally lacking and medicine is scarce.

There are no affordable waterfront condos – property ownership is illegal.

Yeah, life’s a hoot for the average Cuban.

Personally, I’d take free market capitalism and my democratic freedoms over that any day.

I’ve always thought Cuba looks a lot like our future here. And let me tell you, it ain’t pretty.

PS – I know you aren’t seriously suggesting that Cuba is the better way, but I felt I had to correct your erroneous facts about the country.

Viva La Revolución!

#94 Jonathan on 02.24.09 at 3:05 pm

AUDIO NOVEL “THE ASCENT OF MONEY: A FINANCIAL HISTORY”

http://www.cceia.org/resources/audio/data/000248

Garth can you confirm?

#95 Dee on 02.24.09 at 3:12 pm

http://www.bloomberg.com/apps/news?pid=20601087&sid=a6WXjhzVu9so&refer=home

How much will it take to satiate the banks? Scary part is no one knows……

#96 Future Expatriate on 02.24.09 at 3:22 pm

Can you believe the sheep? Bernake says he’s not going to nationalize the banks, and they all run in for yet another suckers’ rally.

As IF.

People in the US market who are that stupid deserve to lose everything they’ve got.

All in good time; in good time.

#97 Dee on 02.24.09 at 3:23 pm

Check out the link in the blog about falling rents in the U.S.

I hate it when anyone uses ‘highly unlikely’. Given the track record of some of those involved……

http://krugman.blogs.nytimes.com/2009/02/24/highly-unlikely/#comments

#98 lotusland? on 02.24.09 at 3:24 pm

Well, to all you vancouverites that think you are somehow immune, let me tell you about the phone call I just got.

buddy/ex employee of mine. He works for a large electronics retailer (hmmm…who could that be), 9 years with the company in a management role………….gone, toast, seeyalater………packaged. He is in his mid thirties. He is sitting at home in shock. He does not know what to do with himself, how to react etc………… I’m having dinner with him. My advice will be simple, adjust your expectations, take a job, a level down if that’s all that is available, just take it quickly.

This is one story. Retail electronics is a leading indicator, not a lagging one. More to come, unfortunately.

good luck everyone, it could happen to any of us

#99 Bonnie N BC on 02.24.09 at 4:00 pm

#85 go green on 02.24.09 at 2:10 pm

Hi Green

I believe what Mr. Ferguson is saying that Europe is over leveraged in banking and therefore has a problem (understated) with the Euro.

We are all looking for someone to blame if we are hopelessly in debt. From what I remember from your posts you have scaled back and live very modestly as do we.

Gosh, are we panicking because we are wondering how we can scale back even more?

I think we need to be positive and examine the possibilities beyond hoarding Euros or US dollars or gold or whatever makes you sleep at night. There is no way we can possibly predict the outcome for the next few years or darn it, the next ten years.

I have no opinion on selling Euros but I do suggest you rent “Mama Mia” as 90 minutes of escape. You cannot change the future by watching a DVD but I think we all need to decompress.

Then, think clearly, and make a call. Do what you can afford and be diverse. We all worry but I think the premise of Garth’s blog is to take control – me, I believe in a diversity of optimism and taking control.

#100 Sail1 on 02.24.09 at 4:03 pm

#51 Reg

Seems like a good move if it materializes.

“By offering unlimited deposit insurance, DICO and Ontario credit unions can work together to ensure sustained confidence in our system,” said Central 1, adding such a move would also “make the administration of deposit insurance less complicated.”

“Our government is serious about financial services regulation in Ontario,” [Dwight Duncan] said in a release. “The aim of these changes is to balance the needs of credit unions to remain competitive with the need for regulatory prudence, an important goal in light of the current global financial turmoil.”

http://pqasb.pqarchiver.com/thestar/access/1640190071.html?dids=1640190071:1640190071&FMT=ABS&FMTS=ABS:FT&date=Feb+7%2C+2009&author=RITA+TRICHUR&pub=Toronto+Star&edition=&startpage=B.1&desc=Province+urged+to+hike+deposit+insurance%3B+Credit+union+proposal+could+boost+competition+for+deposits+with+banks

#101 Davinci on 02.24.09 at 4:10 pm

Pet your cash, a paper money that is being printed by all governments to bailout banks and the irresponsible?

Paper money like humans have a consistent track record in history. They all die eventually.

Got gold and silver?

#102 Madame Guillotine on 02.24.09 at 4:28 pm

In these trying times it is best to be positive, therefore I feel that in regard to the measures governments are undertaking in this now global economy we should not stoop to floccinaucinihilipilification but instead declare their actions positively emetic.

#103 Zoronqueen on 02.24.09 at 4:38 pm

more bad news>

http://www.helsinkitimes.fi/htimes/index.php/domestic-news/general/5260-defence-spending-increase-is-essential-puheloinen-
http://www.salon.com/opinion/greenwald/2009/02/03/kagan/
http://www.straitstimes.com/Breaking%2BNews/Singapore/Story/STIStory_339334.html
( no more flights to Singapore from Vancouver after April)

#104 Dave on 02.24.09 at 4:46 pm

was just watching BNN and that Andy guy was having a discussion on real estate. He is bullish! wtf! where do they find these people? He’s says its better to buy than rent right now!

also, Benajamin Tal from CIBC is saying that next year would be a good time to buy real estate!

where do these guys get their information from? We haven’t seen a bottom in the stock market or the U.S real estate market yet these people can predict a buying opportunity in Toronto/Canadian real estate?

are these people plain dumb or are they lying just to get some suckers to buy?

#105 pbrasseur on 02.24.09 at 4:47 pm

#85 go green

“Could someone please explain the last 2 sentences to me. They seem to contradict each other. Maybe I’m just not reading it correctly. Know I’m a little tired.”

If you are interested in understanding current issues with Europe and the Euro you may want to follow Ambrose Evans-Pritchard at the Telegraph, he doen a great job.

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/4782749/Will-Germany-deliver-on-the-Faustian-bargain-that-created-monetary-union.html

And it’s really true that Europe could be in deep shit!

#106 Finanzkrise on 02.24.09 at 4:59 pm

Not sure if this topic has been covered in previous posts:

If a global bank is knee deep in derivatives (let’s take HSBC), to what extent does this expose deposits in a Canadian subsidiary of said bank (e.g. HSBC Canada)?

HSBC Canada is of course covered by CDIC, but is not one of Canada’s big five (which are likely to be the highest priority for protection if the financial system’s problem deteriorate further), and HSBC HQ in the UK, and the HSBC US credit risk is likely as bad as Citi.

The relationship of subsidiaries to global banks is not entirely clear to me (e.g. ING Canada has recently in some way decoupled from ING global).

Thoughts? Thanks.

#107 go green on 02.24.09 at 5:20 pm

Bonnie N BC on 02.24.09 at 4:00 pm #85 go green on 02.24.09 at 2:10 pm

Hi Green

I believe what Mr. Ferguson is saying that Europe is over leveraged in banking and therefore has a problem (understated) with the Euro.

We are all looking for someone to blame if we are hopelessly in debt. From what I remember from your posts you have scaled back and live very modestly as do we.

Gosh, are we panicking because we are wondering how we can scale back even more?

I think we need to be positive and examine the possibilities beyond hoarding Euros or US dollars or gold or whatever makes you sleep at night. There is no way we can possibly predict the outcome for the next few years or darn it, the next ten years.

I have no opinion on selling Euros but I do suggest you rent “Mama Mia” as 90 minutes of escape. You cannot change the future by watching a DVD but I think we all need to decompress.

Then, think clearly, and make a call. Do what you can afford and be diverse. We all worry but I think the premise of Garth’s blog is to take control – me, I believe in a diversity of optimism and taking control.

Hi Bonnie

I realize what he’s saying – that the Euro is in trouble, but I still don’t understand what he means. Those 2 sentences still seem contractidory to me.

We’ve got Euro’s here and in France. I too want to take control & that’s why I’m looking for clarification.

Yes Bonnie, we’ve got our act together in that we are totally debt free – no debts, have Cdn & Euro cash. Have lost big time in our investments but not panicking. .

Bonnie, we’ve always lived below our means & have always considered our ‘house’ not as an investment, but a ‘home’. Yes, I’ve been, at times, caught up in the ‘renovation’ hype. But, I’m a procrastinator, researching every purchase, afraid to make a wrong decision, that I seem to get no where very quickly :-) and my DH is just waiting for me to make a mistake so that he can blame me. But he refuses to get involved.

Sorry for my rant. I’m just feeling rather frustrated. He also doesn’t really want to become knowledgeable about the economic crisis.

#108 . . . fried egg with spam . . . on 02.24.09 at 5:30 pm

Better late than never, I guess. Don’t worry, be happy. So, drum roll please for one of Johnny Carson’s Best . . .

http://cgi.fark.com/cgi/fark/vidplayer.pl?IDLink=4051568
——
If this whole downturn hadn’t started, then the vast majority of humanity would have continued on their greedy, materialistic ways.

Time for a rap on the knuckles — not for all, but most. Things sure are moving along at a zippy rate, getting ever quicker. BTW, Russia’s commodities markets have just about bit the bullet, leaving the country on life-support.

Garth’s addendum is right — there is an increasing amount of violence thruout the world, which could lead to WW3 shortly. — http://tinyurl.com/ahknnv http://tinyurl.com/bw7qgx
——
This is one result of corporate and elite greed. Street violence is already well established in Greece, France and Spain; now that Latvia’s govt. has collapsed, fighting is becoming a world-wide epidemic.

Second link says UK police are being laid off, as money is tight. This summer is already deteriorating badly, and it hasn’t even started yet! — http://tinyurl.com/cjw7k2 http://tinyurl.com/dkelj5
——
Intro. from wrh.com: “Orwellian Doublethink — “Nationalize the banks.” “Free Markets.”

“The popular media should not let them get away with it. We won’t.

“The crash of 1904 was exploited to bring about the Federal Reserve. The crash of 1929 was used to end the use of gold coins and force the use of Federal Reserve notes on everyone.

“And now the crash of 2009 is being used to force the “Nationalization” of the banks which means that taxpayer bailouts, previously an occasional looting of the public, will now be permanent and ongoing.
http://tinyurl.com/ak4vcf
——
Other links which may / may not be interesting enough to read the whole article. As far as I know, gold is a hedge against inflation, so if gold rises dramatically in price then inflation, followed by hyper-inflation can’t be that far behind.

http://www.dailyreckoning.com/ http://tinyurl.com/ab58k6
——
Le Foreclosures are now appearing here! — http://tinyurl.com/auxgu6

#109 TorontoFamily on 02.24.09 at 5:44 pm

Garth,

Very much appreciate your response to post #74. With a move to Halifax in our future, we have been watching the market there as closely as possible with the few resources available. Based on the MLS site we have observed a growing number of listings, very few sales and an apparent expectation that the “spring” market will rejeuvenate sales and maintain (unrealistic) asking prices. As you note, there is a dearth of objective numbers on the Halifax market. Local real estate boards in other parts of the country (GTA, Victoria, Calgary) publish up to date stats and we wonder why Halifax does not appear to. As you suggested, if anyone has recent numbers on the HRM we’d sure like to see them.

#110 North Vancouver Citizen Jr. on 02.24.09 at 5:45 pm

Garth, #92 Contractor et al,

….I’ll try this one again, but I will relate it to Canadian Real Estate, otherwise I’ll be accused of being a racist.

Seriously, the world is crapping out, 100,000’s of jobs vanishing in every region of the world….agreed?

…and the “perception” of Canada…posted earlier…democracy… small population…free health care… jobs aplenty…with a healthy & strong banking system.

1/
Will Real Estate values be affected if Canada becomes the “percieved safe haven” of the world and our country gets inundated with many thousands of refugee/illegal immigrants landing on our shores?

2/
How should our government prepare, if at all?

3/
Will Eastern Canada be the “percieved place of entry” because Real Estate Prices are so inexpensive there?

4/
From my previously posted U.S. based article….
”<>Canada doesn’t have gigantic ghettos of disaffected, unemployed North African or Muslim youth that haven’t been integrated into its core culture. .
<>Geopolitics. Canada isn’t likely to be high on any terrorist’s target list.<<<

Should our government start preparing for the above possibility?

5/
Or should we just open the doors, the way Europe has eg; Denmark, France and the UK?

#111 North Vancouver Citizen Jr. on 02.24.09 at 5:54 pm

and FTR,

I was born on foreign shores…I live in North Van, and I believe our lax immigration laws already have turned parts of Vancouver into the Wild Wild West with its current “gang land wars”.

…I prefer a “Safe Canada”…a country where we can visit homes and friends rather than hide inside of them.

…Is it better back East?

#112 hmm.. on 02.24.09 at 6:52 pm

should some of you more inquiring guys be interested in answers to most questions being recycled on this blog, here is little more serious write-up on can real estate.
I’m sure even the “Garth” could find it educational

http://blog.macleans.ca/2009/02/23/the-shocking-truth-about-the-value-of-your-home

Old news. — Garth

#113 dotava on 02.24.09 at 7:20 pm

#34 North Vancouver Citizen Jr. on 02.24.09 at 6:07 am

Junior – grow up and learn as much as you can about subject that you are talking. Every system/county around the world has something that is better than the rest. Why we do not give up our dream that our [email protected] “smell better” then other and start to adopt whatever/whoever invent something what will make our life easier.
BTW – for “Junior” (no pun intended – U choose that)

#114 TakingResponsibility on 02.24.09 at 7:28 pm

RE: #109 – North Vancouver Citizen Jr.

I concur. Yes, we all should be concerned about controlling populations. And, of course population control has to do with real estate. I don’t want to sound like a realtor but the truth is that there is only so much land and too many people right now. In fact, I was interested in a comment a couple weeks ago on this blog that reflected upon Garret Hardin’s seminal work, “The Tragedy of the Commons.” Garret was interested in immigration and population control, too.

I admire Garret’s work and he espouses similar views to many on this blog regarding environmentalism and individual responsibility. He walked his talk, in other words. He even went so far as to plan his own death (and his wife’s death) when he deemed themselves too old to be useful. He was 88 and his wife was 81.

http://www.garretthardinsociety.org/tributes/obit_science_2003oct03.html

The only problem that I have with his values is that I think he waited 20 years too long to complete suicide.

I think we should have a cut-off (and not just metaphorically, of course) at 70 years. For the sake of the national debt at least.

Dear old Dad and I are just today having this debate and I have held my own in this argument citing Professor Hardin’s works but I think, North Vancouver Citizen Jr. that you would agree with me that population control begins at home. Actually, North Vancouver Citizen Jr., I do need help convincing dear old Dad and welcome your suggestions.

#115 dodgedabullit in Alberta on 02.24.09 at 7:46 pm

Greetings: In slightly under 1 hour, the Big O will address the world from Washington, I look forward to a post from Garth after the event. I will very likely shut CNN off and open this site instead.

#116 kitchener1 on 02.24.09 at 7:50 pm

#109 Vancouver pothead

You talk of Canada’s perceived strength in global perspective. If all is great here, where is the rally in the Canadian loonie? Why are’nt hedge fund and money market fund managers buying up our currency??

Truth is that history has shown that if the US goes down economically we get hurt even worse. Right now in the Forex markets the USD is doing suprisingly well, even with all of the problems the USD is seen as to big to fail.
Canada is but a blimp on the radar, if our currency failed (which it won’t) it would not have catastrophic effects like the USD failing.

Look at property prices in Eastern Europe, they are falling off a cliff because properties there were marketed to foreigners and not locals, same will happen in Vancouver.

Why would a foreigner buy a shack in crack infested Van neighbourhood for 500K when they can get something nice in Orange county or even Malibu??

#117 dotava on 02.24.09 at 7:50 pm

#40 Sail1 on 02.24.09 at 8:14 am

Did you try to think who those countries are (former Varsava group) lured to our “excellent” system in early 90’s? What crashing them now (we can’t blame Russians) our lies sold to them as are sold to us. More over what I am hearing from ordinary people from former East Germany and Hungary that they had better life before that now (hard to believe but that is what they saying).

#118 North Vancouver Citizen Jr. on 02.24.09 at 8:19 pm

Calgary Joe writes……(interesting)

http://www.businessinsider.com/mount-up-why-we-like-canada-2009-2#comments

“”We brought-in almost half a million immigrants–landed, refugee, and temporary workers–in 2008. As in what an earlier poster from Quebec said, immigrants right across the country are well-educated. Even many of the ones I’ve met coming here from Mexico are university-educated.

We’re generally a well-educated population, although you might not know it by looking only at the writings and postings of the younger ones. Over half the population of Calgary has at least one university degree. In the last federal election, amongst the seven candidates from which I had to choose, three of them were Ph. D.’s. Many of the rest of the population is very well-grounded in the trades.

And we’re green. In the centre of the city, I have composters, rainsavers, and grow much of my own food. In fact, 11% of the people who voted in that same election voted for the Green Party.

Last, but definitely not least, we’re much less religious. We recognize that morals and ethics are inherent in human rights and not necessarily in someone’s book, and we do our level best to maintain the separation of church/syngogue/temple/mosque and state.

If you think some or much of that fits with your way of thinking, come on up. You’ll find 60% of us huddled quite close to your border, where the climate is lovely most of the year, thanks to chinooks in winter and temperate breezes in summer.””

#112 Dotava

huh, whadaya giving me whatfor…I only quoted the article/writer…there are different points of view in this world you know.

#119 mike as in mike on 02.24.09 at 8:28 pm

mike b. wrote:
“Commercial RE. Recent news…Home Depot Canada was planning to open up a downtown store in Toronto but cancelled it. However to backout of the deal they had to pay a hefty sum….11 Million to be precise. Now figure… if HD would rather eat 11 million than build a store they must have figured that things will not return to prosperity for some time… years in fact… It was not worth the gamble even if they lost 11 million bucks. 4 years rent they estimated would net them 0 profits I imagine. So two things…. this tells me that HD is not willing to invest any more in this country and may well cut back all spending to its wee little friends up here in Canada, knowing full well what will be happening in our economy as it has already started in the States.”

I was chatting to an employee at the new Lowes store in Whitby yesterday and according to him Lowes has plans to open up a few more stores in the GTA. There’s one currently being built in the south Oshawa area. What does HD know that Lowes doesn’t? The HD store that you mention was temporarily canceled because of the public pressure against having a big box store in the area.

#120 dotava on 02.24.09 at 8:28 pm

#51 Reg on 02.24.09 at 9:43 am

“And you think the government will look after that? — Garth”

Excellent point – in turbulent times that is one of the last government concerns. :-(

#121 nonplused on 02.24.09 at 8:36 pm

#37 pbrasseur

All 3 of your assertions seem to be incorrect

1) Going into the Great Depression the US was the manufacturing mecca of the world, with lots of jobs, lots of immigration, and tracts of undeveloped land awaiting development. Plus little in the way of government debt and much less regulation. Today, none of this is true except maybe the immigration part.
2) The “buy American” clause in the bailout package is effectively a trade barrier and is being interpreted as such by the rest of the world. There would be a trade war, I suppose, but trade is collapsing world wide so I really don’t know what further affect they could have.
3) By every measure I’ve seen, whether P/E ratios or Index/Gold ratios and such, Recent stock market highs in 2000 were the most expensive in history. And they haven’t gotten much better. Even now the stark markets are still pretty richly priced using P/E ratios and the E part (earnings) are in a free fall. Whether we want to use the 2000 highs or the secondary highs last year I don’t know but it was the collapse in 2000 that lead governments around the world to inflate a housing bubble.

#38 Ally Ally Oxycontin Free

I wonder how many “forgetful” senators and Secretaries of the Treasury will be on that list of 50,000?

#56 North Vancouver Citizen Jr.

Are you kidding? Cubans live in abject poverty and most are trying to get out but the police state won’t let them leave! Sure they have cheep health care, so cheap that female doctors moonlight as prostitutes. Marx had some interesting economic observations but his major prescription, state ownership of the means of production, has been thoroughly debunked by the “Tragedy of the Commons” argument and 100 years of experimentation.

#59 Yes We Can’t

There is hardly any cash now, certainly not enough to go around. It’s all “Debit Cards”. They can figure out what you are doing with those pretty easy. Especially if the government owns the banks.

#65 squidly77

There wasn’t really a “day 1”, as I understand it. But human nature is animal nature by nature, so I agree with your point.

#122 prairie gal on 02.24.09 at 8:39 pm

Contractor, it is YOU who should go check out Cuba for yourself. People there do not want for anything (except maybe getting off the island) – education, medical care, food, shelter… everything else is gravy. What more do you need? What more does anyone need? Cubans can conduct trade, make money, buy refrigerators and TVs just like you and I. Yes, the infrastructure is crumbling but the people are cared for.

Its the fact that we all take more than what we need is what is bringing the western world down. We could all learn a lot from Cubans… who knows, maybe someday we will!

#123 dotava on 02.24.09 at 8:39 pm

#52 Canned Goods and Buckshot on 02.24.09 at 10:13 am

Maybe is the time to take off pink glasses. Hopefully we will chat in about 3 years.

#124 dotava on 02.24.09 at 8:42 pm

#117 North Vancouver Citizen Jr. on 02.24.09 at 8:19 pm

I found that you like to think and like to expand your vision, as
#48 Contractor on 02.24.09 at 9:27 am
give you good advice too. :-)

#125 dotava on 02.24.09 at 8:54 pm

#77 North Vancouver Citizen Jr. on 02.24.09 at 1:02 pm

:-) I am not “picking” on U – but U again talking about something that U fully don’t understand. KM is the one of greatest economical science – his theories in economy are basic – but his political ideology is out of whack especially for his time.

#126 Mike B on 02.24.09 at 9:09 pm

mike as in mike… What does Lowes know more than HD.. who knows. They are in the up phase of their plan so have cash allocated… best guess. What I do know is that the HD store was approved and ready to go and , google this if you like, cancelled the store not postponed. This cost them a 4 year rent penalty of
over 11 million…That decision was not made lightly. The article is on Globe and Star for your review.
As for Lowes, I wish them luck. Every single time I have been in their T.O. store it is empty. No lineups no sales
and in my humble opinion that’s just bad biddness.

#127 dotava on 02.24.09 at 9:12 pm

#105 Finanzkrise on 02.24.09 at 4:59 pm

HSBC – now owned by Scotiabank.

#128 Calgary Rocks on 02.24.09 at 10:08 pm

Contractor, it is YOU who should go check out Cuba for yourself. People there do not want for anything (except maybe getting off the island) – education, medical care, food, shelter… everything else is gravy. What more do you need?

A lion does not want for anything when caged in a zoo. Meat, water, safety, a stumbling kid once in a while… What more would a such lion need? The answer is freedom.

#129 Mike (authentic) on 02.25.09 at 3:33 am

92 Contractor: Re: “You cite Cuba as an example of how things could be. I hope you actually have been there. It’s no paradise. Beautiful country. Crappy food, if you can find any. Really wonderful, warm people, especially if you can speak Spanish. Cubans generally lead horrible trying lives that most of us couldn’t stomach…”

I’ll agree with the others on this forum who have been there. I’ve been there too and will go back, gladly, it’s preferable over the USA!

Did you know Cuba fought in South Africa agaist apartheid and won? Cuba fought a 12 year battle in Rwanda agaist genocide? Education and Universities are free in Cuba, free even if you want to be a doctor.

Cubans are great people, they are not stuck on the island, they just need permission to leave (like American’s do to go to Cuba!), and leaving is very expensive, so they don’t.

The US embaro agaist Cuba is horribly wrong, that’s why Canada doesn’t support the USA/Cuba embargo and neigther does the UN! Only 1 country in the UN votes agaist lifting the Cuba embargo, the US. All other countries are agaist it.

Cuba needs Americanism like a sinking island. Have you seen what Americanism has done to Mexico?

Mike

#130 Contractor on 02.25.09 at 8:40 am

prairie gal, regarding my relationship or experience traveling in Cuba…I unfortunately have to plead the 5th due to political circumstances. But suffice it to say, I know quite a bit about the country.

Calgary Rocks summed it up very nicely:

“A lion does not want for anything when caged in a zoo. Meat, water, safety, a stumbling kid once in a while… What more would a such lion need? The answer is freedom.”

If you think the Cubans don’t want for anything and if you’d be happy with the Cuban standard of living, than you’re a more noble human being than I am.

And Mike, you said “I’ve been there too and will go back, gladly, it’s preferable over the USA!”

I agree with the sentiment (except the USA bit) and am aware of the historical political points you raised. I too love Cuba and the spirit of the Cuban people. There are a great many things to admire about the island.

But I think both your statements lack perspective. You see Cuba through the lens of a traveler. And not just any traveler, but one who is rich beyond anyone’s wildest dreams in the country they’re traveling in.

Let’s do some math:

If your family earns roughly an average Canadian wage, $67,600 (statistics Canada 2006 figure), it would take the average Cuban 281.66 years to earn that amount of money at the average Cuban income of $20/month. If you’re talking a working married couple in Cuba, you can halve time that to a mere 140.83 years. For 1 year’s worth of the Canadian average family income.

Say you’re at the bar in Havana and have a good time and tip your bartender 5 CUC at the end of the night.

Remembering that they earn roughly $20 Canadian/month and you show up and slip them roughly the equivalent of $5 Canadian, you’ve given them a tip equivalent to 25% of their monthly income.

If a foreigner came to Canada and started tipping the average Canadian this amount of money in our country, that would be the equivalent of a $1,408.33 tip ($67,600/12 = $5,633.33 (Canadian monthly average income) x 25% = $1408.33). If someone gave me a $1,408.33 tip, I’d be pretty warm and friendly to them, too.

And that doesn’t account for the internal differences between the CUC (the foreigners’ currency) and the Moneda Nacional (the citizens’ currency) which trades at 1 CUC to about 24 MN roughly. So your $5 tip is actually about a $120 tip in their functional currency.

I don’t point this out to imply anything untoward regarding the Cuban people. I do genuinely like them and admire what they as a society are trying to do. I just don’t see them as a bunch of happy socialist natives living in a blissful communist paradise.

I’ve been all over the world and lived in multiple countries. I can tell you that everywhere, people are people. There are good people and bad people, kind people and mean people. And the Cubans are just like us, just trying to make a buck and scrape by best they can. The same can be said for people living in all of the world’s pariah states.

Personally, I’ll take an iPhone and granite countertops over life in the Cuban socialist paradise any day, thank you very much! I like nice things, including the right to free speech. So, I guess that makes me part of the problem.

Oh well, I guess you can shoot me when North Vancouver Citizen Jr. achieves his Marxist uprising.

#131 Contractor on 02.25.09 at 8:52 am

2 other things I’d like to mention…

Prairie Gal said: “Its the fact that we all take more than what we need is what is bringing the western world down. We could all learn a lot from Cubans… who knows, maybe someday we will!”.

I agree with you 100%, unfortunately. I think that’s where we’re heading in real economic terms, even if not in political ones.

Mike said: “Education and Universities are free in Cuba, free even if you want to be a doctor.”

Do you actually know any Cuban doctors? I do. He drives a cab on nights and weekends because his doctor’s salary can’t support his family, even with a working wife.

Again, I think it’s a great country. Just not the solution.

That’s all. Have a great day, everyone!

#132 arty on 02.26.09 at 1:57 am

Garth, do you know other canadian blogs about the economy? thanks