No cash cop


He’s a mid-thirties cop in the West.

“First of all, thank you for “After the Crash”. I basically devoured it,” he writes me.  “Whether you respond to all your mail (if you do you are an even greater positive during these troubled days), that I can only imagine must be too numerous, I would be honored to have your solid advice.  Daily I read your blog, process what I can, and stay informed beyond what governments and media dish.  I will be brief.”

Then Philip writes me a long letter.

“I’m spooked.  Not scared.  Just spooked…for the moment.  I’m not financially spooked, I’m preparedness spooked.  Your book describes choices – I am in the middle.  That things are weird and could get worse so I want to take some action. My thing is ready cash – I have none if something crumbled one day.”

What he does have is a small house worth $200,000 with a $115,000 mortgage at 5%, a $30,000 line of credit, $25,000 in mutual funds, a $70,000 salary and a classic motorcycle.

“So, if the bank shut down tomorrow, I got nothing to buy groceries or anything with for…who knows?  I want that insurance.  Do I – a) stop paying the principal on the credit line for a while to build up a reserve (which would take a while to have 6 months living reserve), or b) refinance 3yrs into a 5 yr closed term to a low variable rate for between 140 and $150000 using some of the new mortgage to buy gold and have a cash float in a safe.  I believe I could get a similar payment with a shorter amortization.

“If I didn’t want to prepare I would stick to my status quo, feeling stupid about my inflated credit line.  However I just don’t want to rely on new space in my line of credit if I need money.  I guess what I’m afraid of most is sitting across from my banker and thinking they are a Greater Fool than I!”

Okay, Philip – assets are $25,000 in funds and $200,000 (hopefully) in the house. Debts are $30,000 in the LOC and $115,000 in a mortgage. Net worth: $80,000. Cash: zero. If you ran into financial trouble and could not sell your home, you’re basically screwed. You now feel vulnerable because you have no cash reserves, no liquid assets, no gold, no escape money in case Obama does not save the world (even after last night’s platitudes). Should you worry? What should you do?

Well, yeah, you should worry a little. The uncertainty of the times dictates that all wise people have a cash reserve – enough to buy daily necessities for a minimum of two months, and better for six. Gas, food, utilities, clothes – the basics that need to be covered. Legions of people are coming to this same conclusion, which accounts for the run on home safes and a record number of cash withdrawals at local banks (I have my sources).

The reality is, if there was a financial meltdown, if the banks closed for a spell, cash would be the most prized commodity, hard to come by unless you had something of immediate value to sell. Mortgages, loans and other payments would not be the big problem. Instead the day-to-day essential needs – garbage bags, diapers, shampoo, saddlebag polish, toilet paper, tums, fuel and food – would be impossible to get without cash. Face it, debit and credit cards may not work in the middle of a bank crisis.

Of course, I could be a wild-eyed extremist. This could be insurance that’s completely unnecessary – in which case you just put the money back into the bank when Barack fixes everything (as CNN expects).

Now, Phil the cop, what should you do?

First, do not increase your debt to get cash. That’s no strategy. Don’t refi the mortgage or run up the LOC any further to get money. Never, ever consider increasing your home loan to buy bullion. All you’re doing here is piling on non-deductible debt for non-performing assets.

Second, work more. You’re a cop – go guard something. Sign up for overtime or weekend shopping mall patrol or get some time as a security officer. Not glamorous, I know, but this is how to get dough.

Third, you say you live alone in a house. Why? Either sell the thing (now, like immediately before listings explode, then rent) or lease out your basement to a tenant (one with cash). Fourth, review your investments – you might actually be better off cashing in a third of the mutual funds and dumping the rest into a short-maturity (five years or so) bond or strip bond, because you will know exactly the amount upon maturity, and you can free up liquidity now. Or, fifth, talk to your financial advisor about a loan facility based on your funds’ value. Yeah, more debt, but at least this would cost you nothing to maintain and you’d only draw on it in an emergency, with tax-deductible interest.

Or, you could sell the bike. But, I mean, what’s the point?

Then it’s over.


For today’s blog on the future of real estate, go here.



#1 . . . fried eggs and spam . . . on 02.24.09 at 9:22 pm

“. . . if the bank shut down tomorrow, . . .” — Main reason why we got out of TD Canada Trust a few months ago, and switched to a local credit union which operates only in the Okanagan Valley – southern interior.

No exposure to derivatives, worthless US investments (anyone recall that CIBC took a $10 bln. hit on the foreclosures down south? Well, same foreclosures are starting to happen here), little or no investments in foreign money market funds, etc., etc.

Sure, if the US banks begin to fail, there will probably be a couple of casualties here as well so we would take a hit in the credit union world, but maybe not as sharp the big ones.

The bigger one is, the harder one falls (and customers as well).

I said after you lost the last election, Canada would be better off having you outside the HoC where there is no muzzling.

Would you have had this freedom under Harper? Not bloody likely!

#2 Apocalypse Now on 02.24.09 at 9:34 pm

This world becomes more surreal by the day; I feel like I am stuck inside a Picasso landscape. The world is at the edge of a precipice, nay, we have gone over the precipice and we are still discussing investment strategies like it was 1999 not 2009. I wonder what comes ‘The Day After’. It’s over boys and girls, start strategizing for what lies beyond the mortal coil; within the next decade 3-4 billion, maybe more of the 6 billion plus inhabitants of this world will depart this planet in a very explosive manner. If Depression 1 brought us WWII with its 100 million plus direct and indirect casualties, Depression II will bring about destruction on an exponentially greater scale. Head for the hills!

#3 Dell on 02.24.09 at 9:40 pm

Ha! I’m first!

#4 Boffo on 02.24.09 at 9:50 pm

It’s scary to realize the only information about the housing market is biased and more about stimulating sales then accuracy.

#5 Jeff Smith on 02.24.09 at 9:53 pm

I wonder how safe that ING bank is over in europe. I actually stash some cash there because they offer pretty good interests. Should I take it out and put it in a safe box? Last I heard Europe is in a mess.

#6 Average guy on 02.24.09 at 9:56 pm

“Or, you could sell the bike. But, I mean, what’s the point? Then it’s over” Garth you make it sound like owning a bike is the be all and end all. I’ve owned 3 bikes over my lifetime and and must admit I felt like a somebody at the time. But that time has passed and my wife says I don’t need a bike to feel important. Know how I feel now?… Like an average guy! (stains on page may be tears)

#7 Jonathan on 02.24.09 at 10:04 pm

The US collapse of 2009 Glen Beck:

#8 dodgedabullit in Alberta on 02.24.09 at 10:12 pm

Greetings: I am going back to the harsh but true advice Garth gave in “House Lust”, and the advice he gives in his book. The bike is a non-essential toy, sell it and put the cash in safe storage, a no brainer. Suck it up and make a sacrifice for your financial well being.

#9 North Vancouver Citizen Jr. on 02.24.09 at 10:14 pm

Obama’s speech tonite smacked full of Protectionism.

1/….So how will “out in the open Protectionism” affect Canada?….Is it “say goodnight” to Canada’s auto industry for starters?

2/…..How can “an end to Cancer will be found” while the tobacco/alcohol/pollution industries dominate everyday life?

3/…..therefore improving “Preventive Healthcare” is an oxymoron….. the FDA lies in the hands of Big Pharma and ridiculous $50,000+ existing cancer therapies allow human life to continue by weeks only.

#113 TakingResponsibility says….

“”Garret Hardin was interested in environmentalism, individual responsibility, immigration and population control.””……””that population control begins at home.””…..””too old to be useful.””…..””we should have a cut-off (and not just metaphorically, of course) at 70 years. For the sake of the national debt at least.””

Now that is what one can call “Preventitive Healthcare” ideas….”outside the box” thinking AAA+

#2 Apocalypse Now

“”within the next decade 3-4 billion, maybe more of the 6 billion plus inhabitants of this world will depart this planet in a very explosive manner.””

…There you have the Population Control subject cropping up again.

#10 Nick on 02.24.09 at 10:22 pm

I read “After the Crash” and am following most of the advice in it like this cop is doing. The only thing I can’t do is get a safe since I am renting a bachelor apartment right now. Bolting a safe into my floor won’t go over well with the landlord.

Is a safety deposit box a suitable alternative to us apartment dwellers? I ask because you have mentioned in this post and previous one (the book as well) that home safes are flying out of the stores.

Should the proverbial crap hit the fan, will access to these boxes be difficult because lineups at banks will be huge?

#11 Jeff Riverdale on 02.24.09 at 10:35 pm

Just in… The $500 Million Ritz Carleton Development in Vancouver just got mothballed. Odd, according to Royal Lepage and other ‘RE’ experts we are suppose to have a ‘minor’ correction followed by price increases again as early as 2010. Why cancel such a large project for such a minor bump in the road? Maybe because the develpoer has to actually put their money where their mouth is (unlike Royal Lepage) the Ritz realized there isn’t going to be any quick recovery in RE and most likely will continue to decline for quite a while.

# 1 Fried Eggs and Spam….

I don’t know how if those credit unions are exactly bastions of conservative lending / safe institutions. Last fall I figured alot of the credit unions in BC, in particular Vancouver would fail because all their assets are local RE, and if your assets are going to drop by 30%+ GAME OVER. Only because the provincial government came in to guarantee deposits for Credit Unions were they saved otherwise I think they would be in much worse shape than the big banks (not that they are in great shape either) just pointing out that Credit Unions have alot of their own problems as well.

#12 Renting...Waiting... on 02.24.09 at 10:35 pm

Hey Garth,

Hoping you answer post #10 from Nick. I am also a renter slowly taking my cash out of the bank but got no where to keep it. Only option is a safety deposit box like Nick.

#13 Waiting for a Deal on 02.24.09 at 10:36 pm

Good advice for the cop.

But honestly, we have a while before things get REALLY ugly, meaning violent and a Canadian bank going down.

The good news is your industry is a growth industry.

Why not start a business with some of your cop buddies and guard something or train others to do it so you have time and money?

You could set up the office in the basement/or in the spare bedroom and then write of the % of space used for a home office against your mortgage, electricity and heating.

Renting out the basement is a great idea. Figure it out, you won’t have any dope smokin’, drug dealing, criminal freakin’ tenants. They wouldn’t dare come near you. Probably a senior that would feel comfortable having a cop as a landlord.

The two above would decrease expenses while increasing revenue. Very spiffy! Non?

Get rid of the bike, and get a 10 speed or a Vespa. Cheaper on gas, and is eating is cooler than looking good.

Of course, there are “Pay Duties” that you could get to work.

YOU have opportunity right under your nose.

YOU shouldn’t be spooked. Just get prepared.

#14 LS on 02.24.09 at 10:55 pm

Don’t sell the bike until you’re starving. Everyone is going to need something to make them happy in this depressing time, and if that’s your bike, then hang on to it.
If you have it, it is likely worth far far more in psychological value than the few thousand it might fetch when sold.

#15 dodgedabullit in Alberta on 02.24.09 at 10:57 pm

Greetings: Here is some advice for poster # 10{Nick}: I have done a lot of renos in my time, and it is easy to stash a wad of money inside a wall in a bedroom closet, hidden behind an electric range, or inside a false outlet box, or a phony light fixture. I recall a story of someone who kept a stash in a plastic bag under the pan liner of the kitty litter. Then there is always the TV special, the toilet tank. Seriously, have a very good look around your accomodations, there are also everyday items that any burglar would overlook, in which one can stash items; would you dump out a Kotex box eh! A small fire resistant strong box can be hidden inside a wall and the wall repaired with no one being the wiser. Only caution I would suggest is that you have someone you really, really trust in the know just in case you end up in hospital etc. If I recall, the Paul Bernado tapes were hidden for a long,long time before they were revealed, and searches were conducted. Here is another, keep a decoy 200 bucks under the matteress, stash the balance somewhere else. I am in the process of figuring out where to do the same thing, but I do have a house and garage etc to work with, no sweat.

#16 CS on 02.24.09 at 11:15 pm

To Nick (#10) If the proverbial crap hits the fan, chances are excellent the boxes will be difficult to access because banks will be closed. If there’s a ‘bank holiday’ you want cash you can get at.

#17 canuck on 02.24.09 at 11:51 pm

Interview in today’s Globe and Mail well worth reading There will be blood Niall Ferguson, the author of, Ascent of Money, A Financial History of the World.

Or watch the video by the same author made by PBS

Garth, if you read the comments following the article, you’ll be pleased to know you were mentioned several times. Seems ‘some’ posters at the Globe feel you’re being a scare monger.

Silly fools…betcha they have large mortgages and are in denial! :-)

#18 R.Moer on 02.24.09 at 11:56 pm

Were officially screwed. If the Cop protecting us has arrived at a “deer-in-the-head light moment” … its over.

Go long gold, medium term cash, a fully short credit. Diligently and consistently start purchasing, every week, some additional basic dry and canned food stuffs and personal care items as safety stock – until you build a 6 month supply surplus for you/family. Need a step-by-step guide for crisis survival guide. Call a local Mormon Church/web page and ask them how they do it. Its mandated for every family.

Hug your wife/kids/dog more.

Start smiling at and helping your neighbors. You may need them some day.

By the time “Atlas Shrugs” or (Sh#tz) its all you got left anyway… and its probably all you really ever had in the first place versus the deluded rent-a-life that counterfeits what we think of as a house and career.

#19 Paul Martin Jr. - Vancouver is TOAST, Toronto is burning undercover on 02.25.09 at 12:02 am

Comment: “Indeed, the timing was the problem, not the selfish greed and arrogant stupidity, read here:

Bad timing exacts a heavy price
People who bought high now find themselves under water. The final act may play out in the courts

#20 jrochest on 02.25.09 at 12:03 am

Sell the toy. It will (doubtless) break your heart, but sell the toy.

If things go horribly, horribly bad you’ll be happy. If they don’t, vintage bikes will still be out there and you can use the cash to buy yourself a new one, so you’ll still be happy.

#21 Doug from Calgary on 02.25.09 at 12:12 am

Why not pull a small cash reserve from the line of credit immediately in case of financial disruption? And store some basic essentials for food, gas for the bike, etc. now. You can always add to it, but a couple of weeks of security is a good start and could be all that’s needed if a disruption is temporary. It’s good protection from an ice storm like power failure too, since either way you won’t be buying anything without cash.

It seems clear from what I’ve learned from this blog and the links I’ve followed that if there is a loss of confidence in the banks we won’t get much warning, and that we are in that risk period now, so some “rugged individualism” is in order!

#22 MMMM Squirrel on 02.25.09 at 12:27 am

I watched the Obama speech and was a little confused. First he said

“And though all of these challenges went unsolved, we still managed to spend more money and pile up more debt, both as individuals and through our government, than ever before.

In other words, we have lived through an era where too often short-term gains were prized over long-term prosperity, where we failed to look beyond the next payment, the next quarter, or the next election.”

And I am thinking….OK…thats a nice dose of reality…and then he said:

The concern is that, if we do not re-start lending in this country, our recovery will be choked off before it even begins. You see, the flow of credit is the lifeblood of our economy. The ability to get a loan is how you finance the purchase of everything from a home to a car to a college education, how stores stock their shelves, farms buy equipment, and businesses make payroll.

Eh???? And then to make matters worse he said:

“That is why this administration is moving swiftly and aggressively to break this destructive cycle, to restore confidence, and restart lending.”

And this is the guy thats going to save us? WOW.

#23 Apocaplyse How on 02.25.09 at 12:52 am

Glenn Beck is an idiot….a little bit of knowledge (very little) with a big mouth is a dangerous combo.

#24 Taxpayer like you on 02.25.09 at 12:53 am

Fried eggs 1:

“switched to a local credit union which operates only in
the Okanagan Valley – southern interior”

Do you think a CU full of local mortgages in the 2nd/3rd most expensive market in the country is any safer than a big five bank?

Actually, you may want to consider the smallest CU you can find in backwoods BC and check their financials. If its relatively small, and there is a problem, the provincial guarantee may be a lot more solid than one of the bigger CUs. Just a thought. Spread your wealth.

Oh and congrats on being No 1…..Sorry Dell

#25 Davinci on 02.25.09 at 1:08 am

I have the utmost confidence that our government and the rest of the world will print as much money as they need to save us.

Has anyone noticed like gold and silver prices we pay for food and energy in the store is up 30%.
However at the same time food and energy prices stayed flat on the trading markets since the beginning of the year.

That is a neat trick but like frogs in a pot you will refuse to see the temperature rising.

You hold cash, a note created when someone goes into debt and I will hold gold and silver, payment in full. Then let’s see who will have their purchasing power confiscated by a printing press.

#26 No Fool... on 02.25.09 at 1:55 am

Dumping your cash into a local credit union in the Okanagan Valley rather than having it at TD might possibly be the dumbest thing I’ve ever heard.
THink about what you just said.
Which will fail first.

Sorry for the harshness, but….

Also, Garth, I’m all for ya, but you’ve neglected to mention that this copper is going to need money to pay rent….rent ain’t free. His mortgage payments are probably less than $1000….you can’t rent a gutter for that these days…still.

Cop, buddy, keep your joint. The value will not go to zero. YOu may lose some, but not all.

#27 Mike (authentic) on 02.25.09 at 3:14 am

Second, work more. You’re a cop – go guard something. Sign up for overtime or weekend shopping mall patrol or get some time as a security officer. Not glamorous, I know, but this is how to get dough” – Garth

Great suggestion, one I’d recommend myself as there will be lots of security jobs out there as times get worse. But if you don’t want the risk of a security guard in a bank run then always save a minimum of 10% of your paycheck, put it into a high interest rate savings account seperate from your other money. Or you can stuff that 10% in cash each check in your home.

Security can come in small ways that add up.

As for safe banks, remember the CDIC rule, spread out your money in different banks, use banks that are Treasury Banks (like so you have more than CDIC protection on your side.

Forget the stock market if your a regular joe, long term hold theory is just that, a theory, and it’s not working. Just ask Japan where you had to invest in 1981 to have made any money now.

Gold is going down in value, it’s being sold off as it was over bought.


#28 RG on 02.25.09 at 4:56 am

Don’t worry so much people Ben says it will all be good by the end of the year.

#29 wjp on 02.25.09 at 6:07 am

I wonder how safe that ING bank is over in europe. I actually stash some cash there because they offer pretty good interests. Should I take it out and put it in a safe box? Last I heard Europe is in a mess.
By Jeff….

Jeff…ING Canada for less than $100,000 in an Investment Savings Account or G.I.C. is as safe as the Canadian Deposit Insurance Corporation. They are a chartered bank in Canada. How safe is the CDIC, as safe as the Canadian Government. Now there begs the question?

#30 Kevin on 02.25.09 at 6:50 am

Nick – I rented a safe deposit box at Bank of Nova Scotia recently and was told in no uncertain terms that no cash (other than collectible coins and bank notes) can be stored in it. This is to abide by money laundering rules apparently.

#31 Sail1 on 02.25.09 at 7:19 am

#10 Nick

Nick, relax! the world is not going to end.

#32 Nick on 02.25.09 at 7:54 am

Thanks for all the answers/comments to my safety deposit box question.

Re: Sail 1’s comment. No I am not panicking but I do want to have some insurance for myself. Reading “After the Crash” has some good tips for all kinds of people that have differing opinions on what is going to happen with this financial mess. For example, are you more comfortable with the government working to solve the problem or are you like Garth and know how to prepare a squirrel feast for dinner?

The tips and advice in the book are also good for every day preparedness. For example, what if another blackout hits like it did in 2004 (or was it 2003?)? No power means no bank machines or debit card purchases. I just want to be able to take care of myself sufficiently should the need arise.

#33 Glenn on 02.25.09 at 7:59 am

One other piece of advice I would give to “law enforcement” would be to avoid oppression of the populace. Or, this handy quote Ive had for some odd years. “Remember: injustice requires enforcement; just laws need merely be policed.” — Steven M. Barry

We can look to Iceland to know that when the chips are down, the local politicians and police take the brunt of the pent up angst.

Unlike Iceland, Americans are well armed and none too bright. Less so with Canadians, but the jack-booted antics of police in both nations over the last few years has set up some pretty bad karma for the biggest “street gang” in the world…the cops.

#34 dodgedabullit in Alberta on 02.25.09 at 8:07 am

Greetings: To #21 {MMM Squirrel }. Obama is correct, without credit, and loans, most of the infrastrucure, schools, hospitals, roads, even industry, would not exist today. The barter system, or cash system begins to break down as soon as transactions leave the immediate community. It is impossible to haul a tanker of crude from Saudi Araba to Canada, and then load the same ship with wheat, for the return voyage. A lumber mill needs to pay the workers wages, until the product is sold and paid for in the market place. This mess we are in is due to credit being used for items that do not add value to the economy, and borrowing well beyond the ability to repay, ever, even with 0% interest rates.

#35 wjp on 02.25.09 at 8:10 am

I am curious, keeping cash in the house, what do you do when the intruders have guns and threaten to blow off your head or worse a family member’s head, would you open the safe? I am not sure this is a great idea with some of the scenios concerning crime that have been painted here…

Then you open the safe – the one with your hockey cards. — Garth

#36 Kash is King on 02.25.09 at 8:33 am

For those keeping/hiding paper cash at home…. remember it is just paper, and think ahead about what would happen if you were misfortunate enough to have a fire. Take the necessary steps.

#37 PTDBD on 02.25.09 at 8:38 am

This Globe & Mail article clears up some of the confusion around ING Direct Bank, ING Group, and ING Canada the insurance company. I hope it helps.

#38 lgre on 02.25.09 at 8:40 am

With the mortgage being relatively small I would not sell the house, you will need to rent and it will probably be more then owning, also..there is still equity in the house and you may just drop to where you bought it but who need a place to live. As for the bike, I heard someone mention that they should keep it for their mental state..I agree..everyone needs a hobby they love and it will keep them aflot emotionanlly even in bad times.

The only thing you should do is start paying down debt and start saving, other then that you should be ok. If your house was $500k with a $300k mortgage I would say sell but with a mortgage of only $115k..thats peanuts these days..most people would kill for a mortgage that small My $.02

#39 Mata on 02.25.09 at 8:43 am

So if I have a little bit of actual gold in hand….. how do I actually USE it when TSHTF?

#40 dodgedabullit in Alberta on 02.25.09 at 8:46 am

Greetings: To poster #21, {Doug from Calgary} I was a bit surprised at Garths’ comment to not access the LOC for a supply of ready cash. I use my credit line specifically for that purpose, however I have been caught a couple of times when the ATM is down,so now a couple hundred of bucks stashed helps for a better nights sleep. Another thing my wife and I have adopted is to drive on the upper half of the gas tank, always. Stress level skyrockets if you are sitting on the Deerfoot Trail, in the winter, at night, 10 pm, accident ahead, no way to get off, and the low fuel light comes on with a “ding”. I store a small amount of fuel, 5 gallons in an outside garden shed, not in my garage. I have not found one gas station/convenience store with a back-up power supply, nor with even a wobble pump to access the underground fuel tank. However, with the lack of smarts by most staff, probably a good thing. Pretty sad eh!! I also believe that I would have a hard time getting a merchant to part with a case of soup for a Canadian gold coin, what will he do with it? I doubt the trucker would want the coin when he himself needs 100 gallons of diesel fuel. I think we are stuck with paper currency and as long as our government doesn’t go bankrupt we will have to live this way.

#41 Keith in Calgary on 02.25.09 at 8:49 am

#23 Apocalypse How said…….”a little bit of knowledge (very little) with a big mouth is a dangerous combo.”

Truer words have never been spoken…….I watched Obailout give his speech on TV last night too.

#42 Makeorbreak on 02.25.09 at 8:50 am

wjp: I am closing my account with ING. As soon as my GICs mature, I am taking them out and putting them in a bank with a street address.

I understand ING is a chartered bank and subject to CDIC, but who knows what the unraveling Depression will bring. Imagine a prolonged blackout or halt of online banking. I’d rather not be in a position where if I need my money, I have no option but use the telephone. Imagine the panick of the people trying to get through them. Virtual banking isn’t a good idea in these scary times. I want my money in a bank with a street address.

#43 PTDBD on 02.25.09 at 8:52 am

Bernanke the forecaster:

Fed’s forecast: Sluggish economy, but no recession
…Posted 1/17/2008 11:27 AM USA Today

#44 Madame Guillotine on 02.25.09 at 8:58 am

#34 dodgedabullit in Alberta

“Never spend your money before you have it.”

Thomas Jefferson

Bet anything Obama will end up lower than him on the list of best presidents.

#45 Canned Goods and Buckshot on 02.25.09 at 9:09 am

I don’t think Phillip needs to worry too much. He can build up a pantry and cash reserve slowly. He will have access to many things most of us will not if social order starts to go south.

Most people will want to be his friend. Friends help friends.

Glenn #33 makes a valid observation that people in the US are well armed. This is off course a double edged sword. It ensures a well armed militia, but then again, it ensures a well armed militia.

I’ll take issue with calling police the biggest street gang in the world. That’s not right. We have very professional police forces. We shouldn’t take that for granted. Recent news events regarding RCMP tragedies remind us that these husbands, wives, fathers, mothers, sons and daughters put their lives in harm’s way everyday for society’s benefit. IMO police have a difficult job and deal with the worst in society everyday. They are not perfect, but they are accountable.

#46 Contractor on 02.25.09 at 9:10 am

“I watched the Obama speech and was a little confused. ”

He made a hell of a lot more sense than Bobby Jindal. Watch that one, it’s absolutely cringeworthy.

What a tool.

#47 Bill-Muskoka (NAM) on 02.25.09 at 9:16 am

Gee, I guess you are all SCREWED? I am not! So sorry!

BTW, I noted the Old Farts, ‘Change? Hell NO!’ Rethuglicans sat there last night like the worthless, out of date do-nothings they truly have proven themselves to be.

THEN, a few started to come out of the stasis o f the political Matrix and think for themselves, stand and applaud the President. But the Old Ones either could stand up (no surprise there) or their ignorant pride overcame their so-called ‘love’ for their country’s future. Gee, What a shock, eh? Ideologues until Hell Freezes Over!

Meanwhile, back here in Canada, where’s the Beef? Oh yeah, I forgot, the only beef (i.e. meat) we will be seeing is the continuing saga between the four parties in Oddawahaha! If there were Oscars for boredom by government, Canada would win all the awards.

Oh, and to the Constable, Sell the Bike and get a real life! Good luck finding a buyer right now.

Sheesh, Boys and their toys. What’s that old saying? ‘The difference between men and boys is the price of their toys!’

#48 Tom on 02.25.09 at 9:17 am

The spin:

“Figures obtained from the Nova Scotia Association of Realtors (NSAR) show that of the 196 active listings in the greater Truro/Bible Hill area in January 2008, 30 residential properties were sold. That compares to 11 properties sold last month out of 239 active listings.

But MacPherson said attributed much of January’s lack of activity more on weather than economy and that overall, real estate is showing signs of balancing itself out.”

#49 preplan on 02.25.09 at 9:26 am


Your should have a emergency plan if you have a break in, a safe way out, a safe room where the kids and wife go if they cant get out, also recharge your cell phones in that room so you have a phone, maybe a weapon ? A safe way out are a must for fires and other natural disaster. Review this stuff with your kids.

buy a gun as crime will increase big time. plan for the worst and hope it never gets that bad.

“Gold is going down in value, it’s being sold off as it was over bought.”

this is will not last to much longer, as more and more countries go into near bankruptcy , it will rise, no one knows how much but its going up. Remember Obama is a fix now, short term gain = long term pain

#50 smwhite on 02.25.09 at 9:45 am

#22 MMMM Squirrel

If you listened closely to the speech, Obama said,

“Because of this plan, there are teachers who can now keep their jobs and educate our kids. Health care professionals can continue caring for our sick. There are 57 police officers who are still on the streets of Minneapolis, tonight because this plan prevented the layoffs their department was about to make.”

What I took from some of these tidbits is the plan that was launched as the plan to save the day, is really the plan to just keep day to day life going buy shoring up pay of essential services. Many states are in the same shape as the banks and I find it hard to believe that USA can reduce their debt by half as well as take care of the ever increasing amount of bankrupt states…

I assumed a small rally the past winter(Jan/Feb), but now, I don’t think its the suckers rally that Garth has mentioned as per 1929, I think that speech is going to spur that rally, and fall.I just don’t believe the average “investor” has the patience to wait for the market to come back to life, unless its immediate and it it won’t be back in 2009.

#51 Contractor on 02.25.09 at 9:46 am

“BTW, I noted the Old Farts, ‘Change? Hell NO!’ Rethuglicans sat there last night like the worthless, out of date do-nothings they truly have proven themselves to be.”

Bill-Muskoka (NAM), if I had a bumper sticker, it would read “the Republican party hates America.” They suck. Devoid of ideas. Tools.

In Canada, the problem now is that the current makeup of Parliament has everyone in it too scared to make the wrong move. It makes you wish someone would just do something, anything decisive so we can move past this.

It’s clear where society is going – to the centre-left. Harper knows it. The Liberals are trying to figure out how to take advantage of it. Too bad about Dion. Great ideas, horrible accent. I think that killed the election for them, unfortunately. And good ‘ol Jack just keeps trying to find good photo-ops.

But look south – progressive is in. Harper just delayed the inevitable with the last election. We’ll get there eventually as soon as someone grows a pair and does something decisive.

#52 eddy on 02.25.09 at 9:59 am

” I believe I could get a similar payment with a shorter amortization.”

i think he means longer amortization.

re banks:
i called td re $35 charge for unused secure lines and the person said it’s been canceled, i asked it was due to complaints and she said ‘yes’

isn’t it ironic that all the big banks in canada have shortened their names to de-emphasize canada, and now with the media saying they are the worlds best,
they’re all using generic sounding names. the old names would have been a marketers dream

#53 smwhite on 02.25.09 at 10:15 am

#27 Mike (authentic)

What will go down as one of the stupidest moves in recent economic history thanks to Gordon Brown…

(Story from CBC July 1999)

The start of UK’s gold purge:

From 1999 and 2002 Golden Brown sold 60% (approximately 400 tons) of the UK’s gold reserves at $275 an ounce, all at 20 year lows… Brown attempted to persuade the IMF to do the same, to no avail. Doh?

This I didn’t know, if your familiar with the movie Snatch and its soundtrack, the tune from the Stranglers, earned Gordon a nickname, “Golden Brown”.

400 tons of gold @ 2,240lbs per ton = 896000lbs of gold

896,000lbs of gold @ 16 ounces per pound = 14,336,000 ounces.

14,336,000 ounces of gold at $275lb = $3,942,400,000

14,336,000 ounces of gold at $900lb = $12,902,400,000

$8,960,000,000 go bye bye, that would fill some of the void for the current rainy day in the UK wouldn’t it?

It must leave a dirty underwear taste in the mouths of those in the UK pondering their bleak future. There hasn’t even been a US bank make such a shitty call and [email protected] things up that big.

So much for the USA and UK’s attempt of “rid”ing the world of gold, clap clap…

#54 dd on 02.25.09 at 10:21 am

“The reality is, if there was a financial meltdown, if the banks closed for a spell, cash would be the most prized commodity”

I am still trying to understand this statement. If there is a financial meltdown wouldn’t gold me the place to be? Is it appropriate to seperate the financial meltdown and cash? Two seperate issues?

Try filling up your car with gold, or buying groceries of paying for a tank of propane. It is not currency and you cannot live in it. — Garth

#55 Da HK Kid on 02.25.09 at 10:37 am

I’m of the same mindset as Garth. You must get cash positive right away. If you could sell the house and pay out the LOC then rent you would have the cash ready to make a play. Remember, your debt is a constant and assets today are variable, dont let these variables (which are many, many more to come) take you out!

Be ready to either pounce on huge yield returns OR feed yourself! You win either way and it’s only relative to those who are in the same position.

#56 Kash is King on 02.25.09 at 10:54 am

#39 Mata: ======> “So if I have a little bit of actual gold in hand….. how do I actually USE it when TSHTF?”


Well if TSHTF for real, afterwards if you see a large ticket item that you want that is for sale, like a house, and the seller is begging for offers…. Who knows, if it’s really bad, 10 Maple Leafs could buy a home?

It would have to be very dire at that point… it’s all about hedging against the odds.

#57 Might As Well Be Concerned on 02.25.09 at 10:54 am

Garth is right.

There will be a nasty ending to this as there is no floor to support all the negative economic events, what most of the population don’t realize is this is not a normal recession because they’ve never been through a serious one.

The plan put out by GM and Chrsyler is too optimistic. Maybe the taxpayer should put a condition on the bailout such as the person or persons in gov’t who approves it will be fired if it does not work out. Who’s going to approve it then. That way real responsibility is borne. Otherwise the government officials will act as the bankers on Wall Street… “It’s not my money, why should I care what I loan out? I still get paid.”

Just think about it. If Japanese car exports are down 69% and these are the “desirable” models. What are the sales prospects for the undesirable GM and Chrysler models?? Really think about it.

#58 Bill-Muskoka (NAM) on 02.25.09 at 11:16 am

#45 Canned Goods and Buckshot on 02.25.09 at 9:09 am

“Well armed militia’ as stated in the Second Amendment of the U.S.Constitution refers to what is now known as the National Guard, which replaced the moniker of State Militia, and is under the Governor of the State’s authority for deployment. It never meant people behaving like the Wild, Wild West, or playing Rambo.

It was one of those amendments created at a time when centralization of government caused a concern that the Federal government would be unable to protect States and their citizens. Considering the abuses by some soldiers and police, as well as later the War of 1812, and the Spanish American War, among a few, it is easy to grasp why such an ammendment was made.

It was never intended, although mis-interpreted by many including the NRA, to mean everyone was free to play Rambo!

Switzerland commands every male of age 18 to 65 to serve as their standing National Guard. They are each trained and issued a fully automatic assault rifle and cases of ammunition. If one uses the weapon without proper authrority they go to prison.

Likewise, the words portray the meaning ”right to keep’ means ‘Yes you may possess a weapon, but ‘to bear’ means to use and there is where the line is drawn.

I find it interesting that people always relate this amendment to firearms. I have swords that are just as deadly, albeit at a much closer range. Likewise, a bow or crossbow has great range and striking power. So does any object that can be weilded against another person. Consider the humble slingshot, rock, box knife (Whoa! Look out for those, eh?). Did I mention knives?

How about the entertaining Bolo? Then we have the wonderful and reliable Louisville Slugger! Strike One! You’re OUT! How about those farmers and their pitch forks? get the point?

Here is the Wikipedia link to the Amendment for those interested in reading a historical pissing contest perpetrated by the ever successful FUD method.

Second Amendment to the United States Constitution

Oh, and now we have TASER’s to consider as well. The latest foray into emotional silliness perpetrated by the MSM! Like the Daisy Air Rifle sign says! ‘Keeping Kids Off Your Lawn Since 1886 LOL

#59 patriotz on 02.25.09 at 11:35 am

“Main reason why we got out of TD Canada Trust a few months ago, and switched to a local credit union which operates only in the Okanagan Valley – southern interior.”

Great, 100% exposure to Canada’s biggest RE bubble. Our very own Phoenix.

Good thing the BC government has guaranteed credit union deposits without limit.

#60 wjp on 02.25.09 at 11:38 am

#42..when the banks are closed, they are closed, street address or not…would it make you feel better to bang on the door? As long as the CDIC insures deposits, ING is as good as anyone else. But if you feel better having your funds at the local branch of the rip off 5, go for it…

#61 wjp on 02.25.09 at 11:43 am

Then you open the safe – the one with your hockey cards. — Garth

I asked you to keep that to yourself, now everyone knows where my Maple Leaf Stanley Cup winning cards are…and you know how valuable they must be…

#62 john on 02.25.09 at 11:51 am

Homes continue to sell in Weston Downs in Woodbridge at top dollar. No decrease noticed at all.

#63 Increasing that 1% on 02.25.09 at 12:32 pm

Sell the bike and the house, if you can, officer.

#32. Nick

You shouldn’t have to defend your question, thought that’s what this blog is about, and part of the reason we are referred to it in Garth’s books. Your point is very valid to many of the readers, I’m sure, but since less than 1% post, …

The blackout was in 2003, btw. Remember my mother telling me afterwards that she got stuck in the elevator at her small apt. building. Also, recall gas being siphoned from cars, and boat in underground parking of condo, and garage door not opening… and grocery store throwing out lots of food..and hoping I could actually get any money from bank..
Lucky it was in summer..
Close relative was in Greece at the time, they showed pictures on the news there- just blackness
Taste of scariness for many

#64 Keith in Calgary on 02.25.09 at 12:34 pm

Another huge downtown 60 story condo tower was officially taken off life support today in Vancouver………The Ritz-Carlton is dead.

There goes $500 million from the BC economy. What are all those growing ranks of unemployed trades people going to do ? I guess they can always pay their debts with hope……and the change they have left over.

#65 Toronto C9 Renter on 02.25.09 at 12:53 pm

To those interested in the Toronto REmarket…

In the last 2-3 weeks I’ve noted signs of a pickup in activity, particularly at the lower end of the market. Even some small bidding wars apparently.

Will be interesting to see the month-end stats to learn whether the facts support this view. I’m guessing the YOY drop in sales will be much less dramatic than what we saw in Dec & Jan. I’d guess prices are still down though, at least 8%, little doubt about that.

My main interest is — “how quickly will the spring bounce end, and then how low will it go?”

What are others in Toronto seeing??

Thx – C9R

#66 George on 02.25.09 at 1:05 pm

“Try filling up your car with gold” It’s a central bank asset. The masters of the universe who own us in more ways than we’re probably comfortable admitting too. Like the stuff. They like it so much they vault it. It may not be currency but I think that it will have a surprising amount of liquid fungibility. Unless we go mutant biker zombies roaming the countryside as marauders there will probably be “relative” convenient ways to play with that barbarous relic. Personally however, Farming rocks the casbah.

Gold will never be a currency in Canada. — Garth

#67 hobbygirl on 02.25.09 at 1:23 pm

I just saw on Business News Network TV this AM that Smith & Wesson is selling guns like mad after yesterday’s prediction of civil war. For those of you with cast iron stomachs and still want to invest…

#68 Kettle...Pot Calling on 02.25.09 at 1:46 pm

TorontoC9 – there has definitely been a pickup in activity and no doubt there are isolated bidding wars by some nutjobs, but I’m seeing a lot of homes where the owners priced them as though it was still the summer of 07. Those places are sitting for a long time (and I’m not talking about dumps – I mean nicely renovated starter homes in good neighbourhoods….if you want details on expensive places, I can’t help you). We’ve looked at good homes that have been listed (or re-listed at progressively lower prices) for 30-60 days. List prices are meaningless.

We’ve only been casually looking around and are not intending to buy for a while yet. I really don’t know what the spring market will bring, of course, but we’re assuming prices will fall and we’re quite happy to wait it out. If we’re wrong, well, we’ve saved more money in the meantime. But I really don’t see what would suddenly cause the market to reverse the current trend.

I think you’d have to be crazy to get into a bidding war right now. I’d do nothing except go 10% under the ask (other than wait, of course).

#69 Mike B formerly just Mike on 02.25.09 at 1:54 pm

Toronto Renter C9 #65…. I too sold my house in 2007 and have the family renting a house till we see the market drop more dramatically. To date the market is quite different than it was a year ago as you most likely know.
The last few weeks have shown some “picking up” as the agents refer to it. I have seen a number of people at open houses albeit at the the very entry level end. I have seen house that have only been up for sale for a week or so have their prices dropped by 25K because they are fixer uppers. One house was up since last summer for a ridiculous 750K or more and is now listed at $619… still not sold although the agent asserts they had a verbal agreement.( whatever that means)..
I have seen zero multiple offers or bidding wars.
If things do continue to pickup I do imagine that there will be some upward pressure for prices given the greed of sellers and agents. The bulk of activity and in fact sales are in the entry level to mid range. The top end million plus are not even close to selling. I have been getting many many listings in the plus 2 million range which indicates that the very top end is crumbling. Apparently some execs are in distress… poor souls.
I am told agents are busy but it is best to take that with a grain of salt. I have seen houses that are sold but only sold “conditional” and in the odd case the condition is not waived so the house goes back on the market..

#70 kc on 02.25.09 at 1:58 pm

Here is a “nifty” overview of how the “west was lost” worth the read if you factor in how true this fellows ideas and points are. When he states that in the US they are actually fighting 3 problems. 1- imported low wage workers, 2- off shore jobs, and 3- the banking state-debt ratios.

worth a read.

How the US Economy Was Lost

also in the article is a great link to the explanations of the derives scams.

Exclusive: Derivatives for Dummies by The Other Katherine Harris


#71 bermygoon on 02.25.09 at 2:01 pm

Toronto C9

The stats at mid Feb don’t say this at all. It shows things are going from bad to worse.

#72 Harvey on 02.25.09 at 2:02 pm

My wife heard your interview on CBC radio. We went to Kamloops (a1.5 hour drive away), bought your book and both read it. We’re applying it. Thanks for enlightening us. I’m wondering if this global crash could be the beginning of a world economic system, world government, and world religion as the Bible predicts?

#73 North Vancouver Citizen Jr. on 02.25.09 at 2:18 pm

TC said:Feb. 25, 12:26 PM

Canada’s Banks…

“”I think it’s funny that when I moved to the US about 10 years ago, I was slowly joined by most of the people from my trading floor at a big Canadian Bank. We’d laugh at how conservative and moribund our banking system was. Now, it looks like it was a better way to go.

I do think it’s funny seeing PM Harper on TV with Larry Kudlow, being praised as a “free-markets” guy with a solid, truly overcapitalized banking system. What didn’t get said is that Canada’s solid banking system results from policy, to wit:

1. A federal chartered bank system that operates a little like the regulations that set up the ratings agencies here. It happened as a reaction to a banking crash, the top banks were identified and chartered…and then it’s virtually impossible to add any more. The barriers to entry are too high. We’ve added one chartered banks the past 70 years, and that was actually a concession to First Nations. But, it means all our banks are “100+ years old”

2. Virtually no role for provinces in banking. That would be equivalent of removing US states’ ability to control any aspect of finance — good luck doing that here. It gives you more defensible and implementable (and conservative) lending standards.

3. The provinces took this loss of power out on the federal govt by ensuring that we don’t have a single SEC-type body for securities (each provnce and territory has its own, with different definitions for accredited investor, etc etc etc)…which creates headaches for new brokerage entrants in the marketplace. But they usually get in line behind the Ontario Securities Commission since it’s the ” big daddy” and small provinces like Nova Scotia just dont haev the manpower to truly come up with their own securities laws for a small investor pool.””


#74 TheComingDepression on 02.25.09 at 2:19 pm

Gold will never be a currency in Canada. — Garth

It is a currency in Zimbabwe and they WERE the most highly educated country in Africa. What will make CANADA any different when TSHTF?

Ain’t Zimbabwe, cowboy. — Garth

#75 Jake on 02.25.09 at 2:19 pm

“BTW, I noted the Old Farts, ‘Change? Hell NO!’ Rethuglicans sat there last night like the worthless, out of date do-nothings they truly have proven themselves to be.”

Yeah, some of the old republicans at the Obama speech reminded me of the fathers that have to chaperone their teenage girls at the Jonas Brothers concert. It was like they weren’t even excited to be there.

#76 dave on 02.25.09 at 2:19 pm

re: Cop with no emergency cash
Speaking of toys and raising cash. I was in the same position more or less….I took some action:

Sell some the toys and junk while you can. I am doing it and I cannot believe what people buy from Ebay still and/or in the local Kijji. I have my share of extra toys and collectibles and pack rat stuff.
Old electronics – sold
Extra fancy tire rims and tires etc..
Estate pipe collection – sold most – kept my favorite 5

Any way – I raised about $3000.00 cdn over the last three months selling all the extra junk around my house.
Now I have 1 month cash reserve and a cleaner house. Better than 0

#77 Toronto C9 Renter on 02.25.09 at 2:25 pm

thanks for the feedback.

By the way here are two examples in C9 from the last couple of days (until last week there has been virtually zero action since last fall):

This one just dropped price to $849k but apparently sold early this week for around $899. Not sure why it went over list, whether bidding war or what:

This one sold after about a week on the market. Sold price was apparently about $1.65M. This one I dont get, nice street but worst possible location on the street, being only two doors down from busy Mount Pleasant:

Will be interesting to see how things take shape over the next couple of months

#78 Kash is King on 02.25.09 at 2:32 pm

#53 smwhite Golden Brown… that’s good!

Fittingly, the Stranglers had another one:
“No More Heros”.

#79 Halifax Family on 02.25.09 at 2:41 pm

Garth, someone seems to have gotten hold of our address to sell us a tax deductible mortgage. I know you wrote about this somewhere on your blog. But it is legal?

Making a mortgage tax-deductible is not that hard, and you don”t need a product to do it. Certainly it is legal, but I am intrigued someone is trying to ‘sell’ this to you. Details? — Garth

#80 Euene on 02.25.09 at 3:03 pm

Lost of 40 B$ in Montreal.

#81 Mike (authentic) on 02.25.09 at 3:09 pm

#53 smwhite : Mike (authentic) UK Gov selling gold…It must leave a dirty underwear taste in the mouths of those in the UK pondering their bleak future.”

smwhite, I think you think that I’m a UKer, actually, I assure you, I’m a Canadian living in the UK. I don’ t follow a lot of UK news vs US news. Amazingly you can’t get Canadian news in the UK (I have 900 TV channels!).

Which goes to show how little importance Canada is (sadly) to the world (even the UK).

If I remember correctly, Canada only holds 1.3% of it’s currency in gold, and holds only about 700,000 lbs of it.

Don’t know about Fort Knox, the last audit of how much gold was in there was 1971! Most likely it’s filled with empty Starbucks cups by now.


#82 Happy Renter in North Van on 02.25.09 at 3:11 pm

Cop with no emergency cash… Just in case things get bad… he can use his gun to get cash…

#83 Kootenay Guy on 02.25.09 at 3:14 pm

The House Price PLUNGE continues in the Kootenays.

• 1.5% drop per month for the past eight months up until February 1 in Cranbrook
• February is seeing a 2 % drop in house prices in Cranbrook
• …..what’s that? Tembec laid off all their employees….ooohhhh……oooohhhhh….look out below……

#84 Investor on 02.25.09 at 3:28 pm

Many banks have disaster recovery plans in place and they also have Business Continuity Plans in place which means banks should be able to operate in cases of emergency

Well business could still accept credit cards as a form of payment if they would go back to the paper form of accepting credit card payments. Also businesses could go back to in store credit until the customer could get the cash. Eventually the bank would have to open its doors.

In the scenario you are proposing the way to go is to barter. Somehow I highly doubt people will want cash if the banks shut down.

#85 prairie gal on 02.25.09 at 3:31 pm

In keeping with the ‘social unrest’ theme of today’s postings I offer the following advice: get a big dog. Heck, get two.

#86 dekethegeek on 02.25.09 at 3:34 pm

Got your book last night Garth, had to wrestle it away from the neighbors upstairs!( buy yer own ya bazzturds).
Perhaps Mssr. Policia can trade bullets for beans when armageddon comes flapping its’ wings west.

#87 smwhite on 02.25.09 at 3:36 pm

Mistakes will happen…

Lets pick a direction, based on partial fact and random guesses, run full speed with our eyes closed and hope for the best… Classic incompetence. That should make the Canadian markets feel secure Jimmy…

I recall Greenspan on 60 minutes actually saying that the experts when it came to market forecasting had a record of 50%(I’ll dig that up if somebody really wants it). 50% success rate, so about 20billion Canadian tax payers dollars to “disappear” on magic beans and/or sticky fingers?

Yes, these “plans” from our governments are just the things to do the “trick”, depending on what that trick is supposed to be. I believe the “trick” is to suck the public back into “investing” into crap banks and financial institutions.

If were only getting December reports at the end of February, what do you suppose the news coming into this summer will tell us? Better then the best “sales” month of the year.

#88 JO on 02.25.09 at 3:41 pm

While we will likely remain in intense deflation for the next 2 yrs or so, it is smart to keep a small position in gold bullion as insurance..i would not load up on it..i think short term, it has a chance of hitting 1200 or so if and when the former high at 1033 is exceeded and holds. Until then, it is more likely that we see a drop in gold to the 600’s sometime in 2010 before the next long term rally higher. I expect a notable, and possibly scary, correction in long term US treasuries which may drive long rates higher in the second half of 09..inflation will likely remain very low and many hyper inflationists will cry out the rising yields are indicative of rising inflation..not so, as long as unlent reserves at US banks do not drop due to a large number of new loans being made and spent by the public..this correction in long term bonds will not be the collapse stage i expect sometime in the next 3-4 yrs, regardless of whether we enter high inflation or remain in powerful deflation (most likely cause of any long bond crash).

As for stocking up on gold coins…i am not doing that yet..if it drops to 600’s i will add. To stay liquid in case of a banking “holiday”, i would suggest:
1) Keep currency in a safe at home. Keep at least 2 mts of this as Garth says. I would keep two safes, with one as a dummie safe in case you get robbed. I would also suggest holding 20-30 % of the cash in USD or Swiss Francs as a never know what could happen.
2) Keep day to day supplies as Garth recommends.
3) Consider a goldmoney account as a backup source of liquidity.
4) Consider buying silver coins instead of gold for now as they are “cheaper”…for those who want some medium that has currency potential at low cost and risk, consider buying a few bags of junk silver coins as they are much cheaper and might do well as currency in a bank holiday. I think it is more likely silver drops 20-30 % in the next few months.
5) Stay on top of things. Be aware of your bank’s financial situation.
Some food for thought only.

#89 David on 02.25.09 at 3:46 pm

The actual house price of $200K and gross income of $70K is close to fundamental levels. Hanging onto that property which is an asset of declining value might prove fatal. Sell now and take, if necessary, a small loss. Work overtime at safe grad weekends and hockey games and rent a nice duplex. That house will be worth $65K in 5 years time with a 12% mortgage. A $115K mortgage is still high relative to income and if you are working lots of overtime you do not need much more than a simple bed and food. Time to start enjoying life and kiss that mortgage good bye. You can buy a similar house in a few years with your savings with 100% cash and live rent free for the rest of your life.

#90 smwhite on 02.25.09 at 4:01 pm

#81 Mike (authentic)

I thought I recalled you said you were in the UK, but wasn’t sure, regardless, just coincidence my blabber about Brown was directed at you a couple days ago.

I concur with your thoughts on the USA’s gold reserves, if Brown was pushing for a move to get rid of gold, along with the IMF, the idea must have started from somewhere, most likely the USA. Million dollar questions,(1) who bought when Brown sold in 2000 time frame (2) how much gold does the US posses and did the USA sell off gold as well in 2000.

Not many know, which is why its so hard to figure what the real value is. And yes, Canada has a diminutive reserve of gold(if any), but I’m sure that there is enough in the ground, black as well as the yellow stuff, to keep Canada going for years to come.

FYI Starbucks and Tim Horton cups make great kindling… :)

#91 leaside girl on 02.25.09 at 4:13 pm

Hi there,
as much as everybody is talking about the crisis I don’t see it. The prices in Yonge and Eglinton area are still huge, all the people that we know are still highly employed (read with salaries 90K and up), buying houses and seling the old one within days of listing for the full prices. We are talking 450K for a townhouse in Vaughan. Everybody is going vacation on March break.
So all this being said I am still trying to see who exactly is hit by this recession becouse I still don’t know enyone.

#92 vtj on 02.25.09 at 4:14 pm

My apologies for being off topic but this video from, “Back to the 1970’s”, may be encouraging to some readers of this forum (there’s a short ad before the actual 2min video):

#93 Barb the proofreader on 02.25.09 at 4:18 pm

Speaking of civil war:

Obama Sets off GOP Civil War

Here’s a real political diss.

Republican Governor Jon Huntsman had some choice words for his fellow GOPers on Capitol Hill. The Republican governor said his party is blighted by leaders in Congress whose lack of new ideas renders them so “inconsequential” that he doesn’t even bother to talk to them.

“I don’t even know the congressional leadership,” Huntsman told reporters, shrugging off questions about top congressional Republicans. “I have not met them. I don’t listen or read whatever it is they say because it is inconsequential – completely.”

Just a week ago, Congressional Republicans were crowing that their lockstep opposition to President Obama’s stimulus bill had brought them back from irrelevance and marginalization. Perhaps. But it has also sparked a civil war within the party between practical, give-me-the-money governors and ideological conservatives who are talking about eschewing some of the stimulus funds — and a clash between those pragmatic governors and the GOP’s leaders on Capitol Hill.

“Good work, everyone. Obama’s stimulus has become a wedge issue within the Republican Party.”

#94 Youngandcashless on 02.25.09 at 4:41 pm

Those numbers don’t look so bad. $200k with 70k income. In Vancouver, you can barely get a studio for that price

#95 Skeptic on 02.25.09 at 4:43 pm

#89 David wrote:

A $115K mortgage is still high relative to income

Are you insane??? A $115K mortage is high relative to a $70K income? Can’t believe the number of “experts” on this forum. Helloooo, the guy has one of the most stable jobs – a cop! His mortgage amounts to $670/month, do you think he could rent a “nice duplex” for less than that? And what if his house is not worth $65K in 5 years, what if it is $160K or $180K – I just hope he thinks for himself and doesn’t follow the advice of Internet morons.

#96 Eguene on 02.25.09 at 4:45 pm

February 25, 2009
VANCOUVER, B.C. – The cancellation of a $500-million luxury hotel and condominium project in downtown Vancouver is the latest in a string of troubled developments in Canada’s most expensive real estate market which experts say is in a serious slump.
“Vancouver’s market is already crashing, it’s no longer a question,” said Brian Ripley, CEO of consulting group Oakes Ripley & Associates Inc.
Ripley believes Vancouver will be one of the hardest hit in the current reversal of housing prices across Canada because its prices ran up the most and is now the least affordable city in the country.
The credit crunch and economic downturn are wreaking havoc in Vancouver’s real estate market where sales are on a steep slide and prices are falling.
Some condo developers are giving away cars and cutting prices by up to 40 per cent to try to unload unsold units. There are also lawsuits flying between developers and buyers attempting to walk away from pre-sale contracts

#97 Goldbutt on 02.25.09 at 4:49 pm

Gold will never be a currency in Canada. — Garth

Gold may never be official currency in Canada but I’d bet that gold and silver coin certainly can or will be used. Especially during a bank crisis where currencies might be wildly fluctuating or possibly being devalued.

Okay I’ll predict the argument that gold has too high a denomination of value. That’s why you’ve got to have the sliver too.

I know if someone wanted to buy something from me during a crisis I’d rather take some good solid coin (which I can cash in later in any currency I need, anywhere I am) than having a possibility of getting stuck with a large pile of not so friendly toilet paper.

You can’t eat gold but it’s easier to stick up your a$$ that bills!

No but seriously. Cash, gold, water, and non perishable foods are always good to have around even without a crisis looming over our heads. XURBIA is the future!

#98 Sail1 on 02.25.09 at 4:49 pm

#65 Toronto C9 Renter

Your description is right on the money.

#99 vtj on 02.25.09 at 4:55 pm

#95 Skeptic:

I agree that some of the advice on this forum is narrow-minded at times. Thanks for posting a well-justified, albeit forceful, argument against #89’s advice.

#100 jess on 02.25.09 at 4:56 pm


Take two bankers. The first is conservative. He produces one annual dollar of sound returns, with no risk of blow-up. The second looks no less conservative, but makes $2 by making complicated transactions that make a steady income, but are bound to blow up on occasion, losing everything made and more. So while the first banker might end up out of business, under competitive strains, the second is going to do a lot better for himself. Why? Because banking is not about true risks but perceived volatility of returns: you earn a stream of steady bonuses for seven or eight years, then when the losses take place, you are not asked to disburse anything. You might even start again, after blaming a “systemic crisis” or a “black swan” for your losses. As you do not disgorge previous compensation, the incentive is to engage in trades that explode rarely, after a period of steady gains.

#101 Chris in England on 02.25.09 at 5:09 pm

Gold will never be a currency in Canada. — Garth

Well if someone turns up at my back door asking to buy a pound of tomatoes, a sack of potatoes, 2 dozen eggs and some home-made wine, I’ll accept payment in gold.

#102 Future Expatriate on 02.25.09 at 5:18 pm

#22- People mistake charisma for intelligence. Obama is an affirmative action idiot. Not as bad as Bush, but far more dangerous because his deficiencies are not immediately obvious to those who think with their glands.

#103 BOB on 02.25.09 at 5:24 pm

#91 Leaside,

look at history and you will see that the Romans partied the hardest right till the end. funny how people have their heads in the sand while Rome burns.

#104 dodgedabullit in Alberta on 02.25.09 at 5:29 pm

Greetings: Now that the phrase “internet morons” has cropped up, why are we debating the value of the house or mortages? The cop was asking about how to raise cash, I think Garth and many posters answered this, time to move on.

#105 dd on 02.25.09 at 5:47 pm

#95 Skeptic,

Good one. Income to mortgage is less thank 2x.

#106 No Fool.... on 02.25.09 at 5:54 pm

Skeptic (#95), I’m with you on this one, buddy.

A cheap mortgage is better than paying a higher rent, almost anyway you can cut it, but especially if the total loan amount is not that much. It’s not like he has the potential to lose $300,000 in asset value if he holds on to the unit.

Sorry to say, but Garth and others have missed the boat on this analysis.

I just read an article in the paper about how national home prices will dip 10% this year….so, that’s, what, 30% for Calgary….eeek. Not too good.

Remember that the cop’s question was not how to save money, but how to get cash. Selling a home and receiving $85,000 from the proceeds is a good way of doing that. Pay attention. — Garth

#107 Sail1 on 02.25.09 at 6:06 pm

#32 Nick

Nick, I have read the books but it is not a gospel. I’m certain if and when the world comes to an end, you will have plenty of time to get all your money out of the bank. In the mean time, have some candles ready in case the lights go out.

#108 john on 02.25.09 at 6:35 pm

91 Leaside – I agree. There has been no effect in Vaughan (in particular Woodbridge). Houses selling easily and for top dollar.

Can it be that this area is immune??

Bob 103 – I don’t live in this area but do a lot of business there and I have never seen a downward correction since the area was built some 30 years ago.

#109 Jeff Smith on 02.25.09 at 6:55 pm

Stories like this below makes me feel glad I am not living in the US, even in warm vacation climates like this. 30000 homes in foreclosure, sheesh!

#110 Rural Rick on 02.25.09 at 7:09 pm

Wow 40 Billion Loonies!
33% of the money lost and they still have jobs?
The Caisse, which is the largest institutional pension fund manager in Canada, released its 2008 financial results on Wednesday.

#111 Paul Fist In Your Face on 02.25.09 at 7:20 pm

101 Chris in England;

Gold will never be a currency in Canada. — Garth

” Well if someone turns up at my back door asking to buy a pound of tomatoes, a sack of potatoes, 2 dozen eggs and some home-made wine, I’ll accept payment in gold.”
You are getting screwed in that deal. It’s more like:
” Well if some one turns up at my back door asking for a pound of tomatoes, a sack of potatoes, 2 dozen eggs and some gold, I’ll accept payment in home made wine” Get your priorities figured out. Cheers from happy valley.

#112 dekethegeek on 02.25.09 at 7:26 pm

I just spent an hour with a commercial property assessor( young kid about 35ish ) while we were walking around the building (located in Dwntwn Vancouver)looking at different projects on the go in the building he mentioned,” Yeah i just bought a house last week! I think the market hasnt been this low in several years.”
It was all i could do to bite my tounge and not to call him an insulated idiot! Hello? Have you been looking at a newspaper,tv or radio in the past 5 months? Unbelievable . A university education does not automatically grant one intelligence or common sense.
Shakin my head. Surrounded by greaterfools and the Emperor has no clothes…….

#113 Mike B on 02.25.09 at 8:17 pm

Toronto c9 update & leaside girl. Just saw a house with a very experienced agent in an area you may deem the far north… Yonge north of sheppard. Although the house was nothing what we wanted I did get some info from the “pro” who drove up in a Porsche. Talk about stereotype… His take… The spring market may not truly happen as some people will simply not put their houses up..LOL He mentioned that the ultra wealthy are still buying ie Mats Sundins house and Ted Rogers daughter who bought an 11 million dollar mansion. You can imagine my response to that. He remarked that there are some multi offers in North Toronto. Over asking.

As for Leaside , many people are outside of the manufacturing circle, teachers, doctors, lawyers and most notably in leaside finance / broker types. As well… There is a lag between US and Canada. Bad things will not happen overnight just as solutions will not work through instantly either. Just because people are going on March break doesn’t mean they aren’t up to their eyeballs in debt. Hell… Maybe they’re realtors!!

#114 dotava on 02.25.09 at 9:15 pm

#75 Jake on 02.25.09 at 2:19 pm

Turn Titanic in any different direction by any degree is a challenge.

#115 dotava on 02.25.09 at 9:25 pm

#77 Toronto C9 Renter on 02.25.09 at 2:25 pm

#77 Toronto C9 Renter on 02.25.09 at 2:25 pm

You just got me – I was sharpening my pen to give a cheque $1M for first house (priced around $899K) also you spoiled my second cheque on $2M for a second one ($1.65M). :-(
Shame on you.

#116 dotava on 02.25.09 at 9:34 pm

#81 Mike (authentic) on 02.25.09 at 3:09 pm

If is a truth can mean only two things – they are in poop up to the nose or chemists find a way to make artificial gold (mean that is not unique any more).

#117 dotava on 02.25.09 at 9:38 pm

#81 Mike (authentic) on 02.25.09 at 3:09 pm

You hurt our Canadian feelings – our PM told us that we are the best. I am not playing with you any more give me back my dolls. :-(

#118 dotava on 02.25.09 at 9:43 pm

#84 Investor on 02.25.09 at 3:28 pm

Good luck body – when your bank have 1/18 of the money – mean that your chance is to get 5.2 cents per every dollar that you have there.

#119 dotava on 02.25.09 at 9:46 pm

#85 prairie gal on 02.25.09 at 3:31 pm

Much smarter than gun – those dogs will protect you and more over you will have a friend.

#120 Yes We Can't on 02.25.09 at 10:09 pm

#97 Goldbutt,

Copper jacketed lead beats gold every time! It’s fungable plus has a very practical real use.

#121 dotava on 02.25.09 at 10:14 pm

#91 leaside girl on 02.25.09 at 4:13 pm

Life is good. ;-)

We went to the Florida in 1999 – swimming, playing when suddenly we see the Jeep with lifeguards (sorry I didn’t check is Garth the driver) collecting people from the beach regardless that wasn’t any cloud on horizon. Honestly we barely made it to the parking loft when hurricane hit the shore.

#122 dotava on 02.25.09 at 10:22 pm

#95 Skeptic on 02.25.09 at 4:43 pm

“…I just hope he thinks for himself and doesn’t follow the advice of Internet morons. …”

You just name yourself LOL – don’t worry about us we know that.

#123 Bill Muskoka (NAM) on 02.25.09 at 10:59 pm

‘Aye Captain, we have retured to Earth in the year 2009, and they are now ready for the Confederation’s sane plan of no money, and everyone gets what they want based on equalized credits!

Gene was a genius, but they are plagued by Hangerons’ who still have to touch the money to believe it is real! Aye, ’tis a sad situation because the money is just bits and bytes in a computer. Maybe Spock can make things real for them by a little reprogramming?’

‘Yes Scotty, but the Non-interference Regulation prevents us from interfering. They must work out their own problems lest we create a nexus in the Space Time Continuim and that Pain In The Arse ‘Q’ comes calling!’

‘Aye Captain, let’s go have a wee bit of that fine Single Malt and relax!’

‘Yes Scotty, that is the best solution!’ May they live long and prosper (if they can ever grasp what the term prosper really means? Shall we? ;-)’

#124 Glenn on 02.26.09 at 1:15 am

Two issues confuse me on this forum. One, gold and silver. For any that would ask what the use of noble metals would be, let me pose a scenario. You find yourself in a Hurricaine Katrina type situation. No electricity, no water, no Wal-Mart and no McD’s.

You have lots of cash, but Ottawa is a long way away and the banks have not been open for weeks or even months. The gas stations have been boarded up for months. Now what? And dont say it cant happen.

In such situations neighbors tend to gather together. Fred has grain storage and a silo full of corn. He also has a still that he creates fuel with. Bob used to run the pawn shop, and hes got cases and cases of ammo. Tony was a manager at the local supermarket, and hes got boxes of canned beans. You get the idea.

Now, after 6 months of no federal gov’t, reliable communication (other then shortwave), or organized banking…what good is that paper money? Or, more to the point, what will Fred, Bob, or Tony prefer in exchange for their goods?

Paper, or silver?

#125 Chris in England on 02.26.09 at 8:26 am

Paul Fist In Your Face #111:

You are getting screwed in that deal. It’s more like:
” Well if some one turns up at my back door asking for a pound of tomatoes, a sack of potatoes, 2 dozen eggs and some gold, I’ll accept payment in home made wine” Get your priorities figured out. Cheers from happy valley.

I doubt any one person would be able to carry the amount of wine I’d charge them for the above deal (I am English after all .. English = champion drinker). I figure that by the time I am prepared to sell some of my home-made wine then I must have a big stockpile. So I’ll take the gold in payment as I haven’t yet worked out the secret of the philosopher’s stone and how to turn lead into gold. Then after the hangover, my only problem will be remembering which safe the gold is in (or did I bury it in a cookie jar in the corner of the barn?)
Cheers from bankrupt London.

#126 TheComingDepression on 02.26.09 at 12:15 pm

Gold will never be a currency in Canada. — Garth

It is a currency in Zimbabwe and they WERE the most highly educated country in Africa. What will make CANADA any different when TSHTF?

Ain’t Zimbabwe, cowboy. — Garth

Perhaps I can educate you Garth. Spend an hour watching this movie, your world may change:

Have a lovely conspiracy. — Garth

#127 Chris in England on 02.26.09 at 2:18 pm

Sounds like those gold coins may be circulating my way soon …

#128 Val on 02.27.09 at 6:21 pm

WOW…it’s happening here right on queue….

Inventory of homes in Cranbrook has doubled from eight months ago…..daily drop in home prices….lowest number of homes sold – November – February in a decade……drop per month has risen to 2%…..I guess Cranbrook is no longer the hottest housing market in Canada…..I think the cliff was somewhere back there……

Glad I waited and still am waiting…

1,000 people out of work with the Tembec closure (told to bring in their keys and cell phones) and CP cutbacks…

Tembec has told contractors – “bills will get paid when they reopen.”

Many that lived through the 80’s recession here are drawing parallels….

#129 Non Performing Assets on 03.07.09 at 7:30 am

Thank you very much for sharing this information.I read your blog,completely helpful to know more asset information.I also like this one .Great job !