Entries from March 2009 ↓

The whiff


Have you seen pictures of those jobs fairs? California? Ohio? Thousands of worried people standing in line, clutching their resumes, somehow thinking they’re going to land one of a few precious positions  inside?

There was one in Toronto on Tuesday. Packed. Employers overwhelmed. And the big hire was by a community college which had “a few dozen” jobs. If it were not so sad, you’d think it were comedy.

About this time, Honda – one of the world’s leading carmakers – was telling employees that salaries are being rolled back, bonuses eliminated and 13 shutdown days scheduled for the next few months. This affects workers at several plants, two of them north of Toronto.

Yes, and Air Canada was making every move it could, including getting a new CEO, to stave off bankruptcy. Concurrently, the new Obama-approved CEO of GM was saying out loud bankruptcy of that company is now “more probable.”

Proclaiming the obvious was StatsCan, stating the economy is contracting in a major way, led by cars and houses. It now looks like GDP shrank by 6% in the first three months of the year which is, to use a technical term, frigging awful.

We are now five months after the federal election and two months past a budget, and not a dollar in stimulus money has been spent in Canada. Yeah, interest rates have come crashing down, but other than a gaggle of first-time greater fools, few are rushing into new debt. For every two jobs being lost in the States, we are shedding three. And when Chrysler or GM pull in their horns, entering survival mode, guess which operations will be sacrificed with nary a second thought?

Meanwhile, real estate continues to melt. The latest numbers show US prices down 19% in January from a year earlier, the steepest decline on record. House prices across the entire country have now dropped 30% from their peak. In some cities, it is a 70% dump.

So, tally it up.

Unemployment surges in Canada. Major employers teeter on the edge of bankruptcy. Commodities fall. Wages reverse. The economy shrinks dramatically. Ottawa fiddles.

This is why those who think our housing market (a) has hit bottom, (b) won’t decline nearly as much as the American one, (c) is actually bouncing back or (d) is just fine, because ‘it’s different here’ will make life-altering mistakes. Based on what’s happened here, the speed of it and the intensity of job loss and decline, it’s conceivable Canada is about to fall off a cliff.

Too bad most of our countrymen and women will miss this. It might be Canuck arrogance. Maybe that pervasive whiff of anti-Americanism we love. Maybe nothing but denial.

In Windsor you can now buy a house for less than a car. Think this couldn’t happen in Mississauga, Burnaby, Nepean? Think again.

Note: Regarding the photo on this posting…

Hi Garth: Took these pics yesterday, while walking around Merida, in the Yucatan. I read your daily blog. When I saw these black vultures sitting in a vacant colonial home near downtown Merida I thought of your blog. You always display such great photos. Maybe you could use one of these photos the next time you write about real estate vultures.

Your book “Greater Fool” and also previous books, is one of the reasons I have the luxury of spending the cold winters in Mexico for now. I was lucky enough to have sold a property a minute before midnight. As each day goes by, I am more and more grateful to have sold when I did. Just waiting it out…gotta know when to hold ’em, gotta know when to fold ’em. Enjoy all your postings. Thanks for your efforts. Benita.

The journey


Tuesday update: Add Air Canada to the list of the walking dead. A new CEO has been brought in to slash costs and (you read it here first) crash land the carrier into bankruptcy proceedings. This is how deflation works in Montreal, as it does in Chicago, where the venerable Sun-Times newspaper today also enters the realm of the cashless. I hope they’re paying attention in the National Post newsroom.

Today Ford in the US says it will pay up to $700  month for a year to anyone who buys a new car then loses their job. Except if you work at Ford. And the latest GDP numbers show Canada’s economy shrunk in January, which we knew. Fortunately, Barack Obama is on his way to the G20. He’ll fix it all up.

* * *

An acquaintance I had not spoken to in over a decade phoned me. From a suburban motel room, as it turned out. He’d been the CEO of some very prestigious outfits, and a shaker in politics.

In my mind’s eye he was in a pin-striped three-piece suit, polished and connected. It was hard to visualize him now destitute, calling me for money. “What you said was coming,” he softly spoke, “came for me.”

Did you see CBC’s newscast Monday night?

In Detroit, an interview with a guy who shoots racoons and sells the meat in the city. Fifteen each, two for twenty-five. Unemployment there has reached Depression levels, and more than half the people (once two million lived in Detroit) have fled. Houses for a dollar. More vacant land than all of Vancouver.

In Fort Myers, the average house price has dropped by 70%. There are 2,100 foreclosures a month. State finances are crumbling. A subdivision has but one resident left.

The spectre of a collapse in the NA car industry moved a lot closer in the last 24 hours. Stock markets tanked on the news, as you’d expect. Immediate clouds were thrown over the looming G20 summit of world leaders. Unions and workers were distraught.

In what was recently the fastest growing municipality in Canada, the auto parts factories are shutting their doors now routinely. There are more than 1,700 houses for sale in Milton, a GTA community with just 65,000 residents. First-time buyers are now freaked-out sellers, their equity evaporating weekly and the spectre of job loss hanging over every family like those engineered roof trusses. This is how homes become prisons.

Hard to see now how Chrysler will stay in Canada, or GM avoid going wheels-up. And that’s despite billions more taxpayer dollars pumped in to have them live for a few more weeks.  When the end comes, it will be a defining moment on the road we’re all on.

Travellers. Some stopped for the night. Grasping.


For today’s blog, ‘Human fuel,’ click here.


For Garth’s latest podcast, click here.