Losing it


A tough job these days is sorting the wheat of truth from the chaff of spin. Without a doubt, those who can do this will emerge from this financial night intact.

Every news cycle brings more conflict. On Wednesday, for example, Petro-Canada laid off Albertan oil sands workers, UBS bank axed 8,400 white collar jobs, Conquest Vacations sank after 37 years and the CAW told Chrysler-Fiat to get stuffed. Oh yeah, and house sales went up 7% last month while Obamernanke said there are signs the worst of this ordeal is behind us.

So, is it getting better or worse? Is anyone’s job safe? Or are we all just freaky paranoid and head faked?

As I’ve said here, job losses will mount for the rest of the year, and it will take until 2014 or so to return to 2007 levels. If we’re lucky. Energy prices and interest rates will start to rise smartly within a year or two, and there will be an astonishing number of people who never work again. At least for corporations, who have again proven loyalty is an unknown concept.

Just as we are emerging from the worst mess since the 1930s, expect peak oil and climate change to start moving all the furniture in our lives. The USA is inexorably being eclipsed by China, which is not good news for a country with 70% of its stuff sold to one customer. The wrong one. And don’t even ask what happens when Pakistan becomes an Islamic state.

Against this backdrop, kids still want to buy houses. That’s okay. They did throughout WW2 as well, in the Depression and during the War of 1812. Nothing wrong with that. But are first-time buyers making a smart move in the Spring of 2009?

The banks who lend money and the realtors who flog houses say, absolutely. This week they were happy to report the housing market is stabilizing with sales activity rising for the second month in a row (wow, two whole months). Prices are down about 8% on the year (twice that in Vancouver), but this is a big deal since markets are eroding at the slowest rate in six months.

bmo1 Bank of Montreal used the occasion to launch a First Home Essentials Kit, one day after hosting a mock press conference (covered by hungry reporters, just like a real one) in which the big news was: This is a great moment for first-time buyers. The Kit, impeccably timed, offers worksheets on how to buy, online tips on how to borrow, and a free prize worth $1,800 if you lose your property virginity.

Granted, lower prices and cheap mortgage rates mean young couples now qualify to borrow and buy more than a year ago. But that only makes sense if prices will be higher in one, three or five years than they are today – or, if the cost of homeownership has not risen enough to wipe out any equity gains the kids garner. Given what I said about mortgage rates and energy costs, that’s a nasty question.

But, back to times of war and prior misery.

My parents were married in 1938 and bought a house two years later, when Canada was less than a year at war (they had been engaged since 1931, but couldn’t afford to marry because of the Depression). The house in London, Ontario cost $3,900 and they managed to put $1,200 down. The guy they bought it from let them pay the rest off over ten years – about $300 a year, which was one third of my father’s annual income as a teacher.

In other words, they put 30% down and accepted a decade-long amortization at an interest rate not far off today’s. The payments did not exceed 30% of family income and the house cost four times annual earnings.

And that was normal.

Today the Bank of Montreal (and all its colleague banks) will happily loan you heaps of money to buy a home for which you have only 5% of the purchase price. For example, to buy a $200,000 home, the bank will loan you $190,000, with a payback period of 35 years and just $10,000 down, with a gross annual income of $48,000. The home might still be worth four times earnings and the debt servicing be a third of income, but there ain’t much skin in the game.

What happens in five years when the mortgage payments potentially soar? After all, rates have only one direction in which to travel. And what gives if housing prices flatline until then? It means five years of interest payments, property taxes, utility bills and maintenance costs with no return. Better to rent and invest that ten grand.

And then, where are you going to find a $200,000 house? Not in Toronto, Calgary or Vancouver – the very urban markets BeeMo is targeting with its current promotion. Actually, the average house price in Canada last month was $288,641. In Toronto, $363,050 and in delusional Vancouver, $649,342.

Sorry, kids. It’s a bowl of chaff.


For Garth’s latest podcast, click here.



#1 North Vancouver Citizen's Analyst on 04.15.09 at 9:35 pm

Here in delusional Vancouver, listings are starting to explode with the onset of the warmer spring weather.


Job losses in BC are now the worst in the nation.
For rent signs are everywhere, and it’s already mid-month.

Excuse me, I have to go buy a condo now before I’m priced out the market forever.

Did I mention that Vancouver has been tapped to be the next gangster/homeless/junkie capital of the world?

#2 Investor on 04.15.09 at 9:38 pm



#3 ts harpoon on 04.15.09 at 10:06 pm

“…Just as we are emerging from the worst mess since the 1930s, expect peak oil and climate change…”

I am quite impressed Garth, that you continue to mention PEAK OIL amidst all of the other valuable information contained herein. I am sure it will eclipse Climate Change and anything associated with the word green.

I once called on MP Dan McTeague (The gas pump ticker price watcher MP) to discuss the issue. McTeague said he would not enter into the debate about oil depletion because he did not think it was ‘real’ issue. I wasn’t surprised.

No politician wants to tell voters that the Canadian dream has been cancelled for a lack of energy resources. The CAN/U.S.A. economy would disintegrate.

Everyone wants cheap gas but I want oil priced at 300 bucks a barrel. Make it 500. This highly valued commodity should match the cost (per cup) of a double double. What does a cup of sweet light crude oil cost at 50 bucks a barrel? About 10 cents. Wake up people.

Garth, I think we need to elaborate on the facts of the global oil industry. The point that you do mention it is extremely significant. BLOGOSHPHERE: WAKE UP TO THE REALITY OF THIS ISSUE! REALITY HAS A WAY OF NEGOTIATING ITS TERMS…

I cannot think of anything more disabling (Peak Oil) to a nation or person except maybe losing that job and paying higher iterest rates on a home which I will not be able to afford later on.

This is a really tough issue to digest Garth. It is estimated very few citizens in Canada/U.S. what the hell Peak Oil is or means. Or do they?

#4 Jonathan on 04.15.09 at 10:08 pm

My sister mentioned that someone with a $45,000 gross income can qualify for $250,000.. no wonder the market is rebounding.

Does anyone else notice that we are solving the debt crisis with heaping dose of more cheap debt? Shouldn’t we focus on building our economy on a solid foundation of innovation, productivity and savings/investments? Bidding up existing assets through debt isn’t real economic growth.

#5 905er & Spouse on 04.15.09 at 10:13 pm

You are right on about the first time homebuyer being screwed.
We are Gen X and most people we know have moved out of Toronto to Burlington, Brampton or further where housing is more affordable, and even there it is still overpriced. There are too many beautiful urban neighbourhoods in the GTA with small starter homes being knocked down and monstrosities put up in their place. Our generation has not been able to buy these overpriced small homes where there is this transition taking place. However, now these homes sit with no buyers. Everything was luxury, luxury, luxury. Sure, what developer doesn’t want to put up the most expensive luxury homes with the biggest markup? Now who has the last laugh, as there are no takers for all these big homes, while the young buyers continue to flee outside to the suburbs. That’s what they can afford and who can blame them.

#6 Leonhart on 04.15.09 at 10:15 pm

Is there a blog I can find similar information about the Real-Estate market in Quebec?

I have good source in China also for clean and fre energy manufacturers.

Keep up the good work!

#7 Da HK Kid on 04.15.09 at 10:15 pm

James Grant was on CNBC pitching his Bearish attitudes of the Governments Kitchen Sink Stimulous approach.

You tell me if inflation is coming at some point!!!!

Gov’n Big Stimulus
Combined as % of GDP
Aug 1929-Mar 1933 – 8.3%
Nov 1973-Mar 1975 – 4.0%
July 1981-Nov 1982 – 2.8%
Dec 2007-Present – 29.9%++++

And ‘++++” this is noted as no enough.

When asked about GOLD, he said part of the portfolio for sure, when asked about USD he said everyone is printing money so the USD has some confidence.

This will be an unprecedented change in the way we work, live and economics of any flavor.

History is being made and we dont know how this will end up but one thing is for sure it will be completely different,

SO, to Garth’s post above, why the hell would you BUY ANYTHING right now especially RE which is again if at the bottom and with 30% is a scary proposition!

Will the US be relative to the rest of the world. I say the Banksters and Ponzi government in the USA will figure out how to survive.

The stimulus is to cover their asses a trillion dollars high and the banks are key to survival. They are clearly worried that if one wheel starts to shake on the bus that all the wheels will just fall off or worse it goes right off the cliff.

It is now obvious especially with the path we see taken by the US government that it is all a sham, especially with the banking 1st quarter earning reports and the best banks showing manipulated fluff before the bad ones try and fluff even.

Note the stress tests were put in place for a reason to falsly examime but most importantly defer the earning reports so they come out slowly and less shocking.

Again, the US Fed and Admin are so worried in the wobbly tire that the stimulus and government intervention was the only choice.

#8 Bob on 04.15.09 at 10:19 pm

Yes, Garth. But it’s a bowl of shite…

#9 ts harpoon on 04.15.09 at 10:22 pm

peak oil defined: 21 minutes running time. Yes, he has a bad cold.


#10 smwhite on 04.15.09 at 10:24 pm

Well said Garth. I don’t think you can spell it out any clearer than that. Some have heeded your message, others mocked it. Those that refuse to acknowledge what lies ahead for the next couple years, have that right.

The hope from the RE industry is for the unknowing to focus on the pretty numbers; make you feel warm and fuzzy, and don’t worry about the mass destruction of jobs.

Except if you lost your 9-5, and who cares what you think of the real estate sales message, unemployed people don’t buy homes.

Before you watch this video, remember, real estate is local and now is the time to buy, especially if you hadn’t previous gotten sucked into the vortex!


It’s an oldie but a goody!

#11 KJ on 04.15.09 at 10:30 pm

Ok, the whole first time buyers newsreel the other day in the various publications across the country after the condo-king/RE/ bank love-in, just made me mad! How stupid do they think we are???? And as for the rise in sales that is currently making every one feel so positive that its time to buy again, forget it folks, its just the usual spring fever/spring fling market going on. Watch out, in a couple of months it will all sink again…but if you want to sell, now is the time. I would like to buy a nice home, but I don’t live in the part of the country where the median house price in $280-something. Hey if you have a nice 3 bedroom plus home in Kelowna priced $250 to $280 K let me know, cause I’m not buying until I see one of those.

#12 Jeff Riverdale on 04.15.09 at 10:31 pm

I love how the Realtors talk about a ‘bottoming process’ because Sales are up from January & February. In the states they were spouting the same stats, until someone looked it up and found that sales are always higher in March than January going back something like 50 years that data is available. The housing market is always busier in March than January for many reasons, winter, school for kids etc.

But if you believe those stats I’ve also noticed the number of pumkins sold in October are much higher than September and WAY higher than in August. Pumkin sales will go through the roof in November based on that logic:) Better load up in the months before and cash in all those profits when you sell in November!

#13 Happy Renter in North Van on 04.15.09 at 10:37 pm

Garth asked…

What happens in five years when the mortgage payments potentially soar?

Answer… The Big 5 will go cry to the Federal Gov’t of the day to ask them to buy their garbage mortgages off them… Of course, this won’t be labelled a “subsidy” or a “bailout”…

#14 POL-CAN on 04.15.09 at 10:42 pm

Recovery? What recovery?

This is from today’s TAE and it should scare you shitless……


I know I wrote about it yesterday, but I have no choice, I must again. The upbeat messages coming from the guys I labeled the Three Stooges,
Summers, Obama and Bernanke (and Geithner can be their D’Artagnan) were this morning put into a very bright light, and a clear focus,
by the arguably worst overall economic numbers to come out of the downturn to date. I would strongly suggest that when they try that again,
they take the opportunity to address these numbers while they’re at it.

Political capital is not something that is based on, or derived from, rational evaluations. The majority of Obama’s popularity doesn’t seem to
come from people who do much if any analysis of his economic policies; they are simply under his spell (or his wife’s, daughters’ or dog’s).
What I personally probably like least of all is that the president himself, through his refusal to come clean on economic realities, and to be
open to the people about the miserable state the country is in, lends credibility to these asinine tea parties sprouting up, which have as much to
do with reality as the commander-in-chief’s recent speeches. The more lies and half-truths the White House spreads, the more they empower
the forces lining up against them. If you don’t tell the truth, Mr. President, they don’t need to either. Here’s the crunching:

That distant rumbling is no longer far away
Sam Zell, who made billions in the field, says US commercial real estate values are already down 30%. That is at a time when just about everyone still tries not to talk even mention CRE.

Deflation is officially here
The US consumer price index fell at an annual rate of 0.4% in March, the first time since August 1955 prices have decreased on a year-over-year basis.
March retail sales fell 1.1% since February, while wholesale prices fell 1.2%.

US industrial output dropped most since 1945
March output for factories, mines and utilities fell 1.5% in the past month. Industrial production is down 13.3% since the recession began in December 2007 and 12.8% since March 2008. Output fell at a 20% annualized rate during the first quarter of 2009.
Factory production dropped 1.7% in March; it has fallen 15.7% since December 2007, and 15% in the past 12 months.
Vehicle output is down 34.5% in the past year.
Production of high-tech equipment fell 3.1% for the second month in a row, for a cumulative drop of 22.6% in the past year.

Tax revenues vanish into thin air
As of March – or halfway through fiscal year 2009 – federal tax revenue is 14%, or $160 billion, lower than last year, the Congressional Budget Office reported.
Individual income tax receipts dropped 15% while those for businesses fell a whopping 57%.
Revenue from miscellaneous taxes and fees has fallen by $10 billion, or 12%.

A pinch of irony, anyone?
Local tax collections rose 3.2%, as gains in property taxes (!!) offset falling sales taxes.
David Walker, former comptroller general of the United States, warns taxes will double.

Spend spend faster faster
Government spending levels midway through the fiscal year rose by $480 billion, or 33 percent.
Large increases in how much the federal government spent on Medicaid (up 17%) and “other activities” (up 21%) like unemployment benefits.
The CBO estimates that the annual deficit will spike to between $1.67 trillion and $1.85 trillion. That’s nearly four times last year’s then-record $455 billion deficit.

Home sweet home
Foreclosure sales had dropped in the second half of 2008 as mortgage companies delayed taking action against delinquent borrowers.
But foreclosure-related filings increased by nearly 6% in February from the month earlier, and were up almost 30% from February 2008.
More than 2.1 million homes will be lost this year because borrowers can’t meet their loan payments, up from about 1.7 million in 2008, according to Moody’s Economy.com.

And finally a warning for anyone thinking of applying for Obama’s refinance plans:
Ronald Temple, co-director of research at Lazard Asset Management, expects home prices to fall 22% to 27% from their January levels.

Before you sign those papers, ask yourself what the numbers are going to look like once your home has lost another 25%-30% in value.
Will it still be worth it to refinance? Don’t ever forget that refinancing takes away your right to walk away, forever. It changes non-recourse
mortgages into recourse loans. Be very careful with that, it can make you a debt slave for the rest of your life.
I can’t wait for the next clown to claim the “shallow recession” is over. Anybody keeping tabs on who says what when about what point in the future? It’ll be a gas…..

#15 Da HK Kid on 04.15.09 at 10:44 pm

One more note, and I may have posted this previously is the shadow inventory of over 600,000 homes NOT on the market.

It has just come to me that this was not only hidden but for very good reason as if they were released the banks stress tests and quarterly earnings would be an absolute nightmare as they might be hard to manipulate.

We are all being played and with the now new mediums such as blogs like this one it is again WHY the Govn has taken the broken egg (our economy) and wrapped it with enough paper money to fill a football stadium.

#16 Da HK Kid on 04.15.09 at 10:57 pm

Classic CNBC BS optimism on US RE Industry (buyers and builders). No mention of shadow industry.


#17 dd on 04.15.09 at 11:08 pm

#1 North Vancouver Citizen’s Analyst

“Excuse me, I have to go buy a condo now before I’m priced out the market forever.”

Haven’t we all heard that line a million times on the west coast. It was true for a long long time. Hopefully people are not buying it now.

#18 chibidani on 04.15.09 at 11:20 pm

I’m one of those “kids”. I’m 26 and just gave birth to our second child. We would LOVE to have a house to raise them in. But living in Greater Vancouver, I know that right now its not possible, and we make more than the average income. We rent, we’ve invested what we can for a down payment, and we’re waiting it out. Thanks to your site and a few others (and common sense!) we know that right now is not the “right time to buy.”

But… if now is the time to sell, but not the time to buy, how are those people supposed to sell?

#19 Grumpydawgs on 04.15.09 at 11:22 pm

4 X’s earnings? What a fantasy! The current price/income ratio in Vancouver is 10.82!!!!!!!. Bwahahahahahah. That leaves pretty much every Johnny and Janet First Timer so far out of the fundamental equation that only The Bank Of Mommy and Daddy can get them into the real estate game if they beggar thier own retirement plans into the mix. There are still the scumbag realwhores and the development pimps who are offering teaser one year rates at intrest only fixed monthly payments that have suckered quite a few sheeple into some of the MACBULK deals here in Vancouver. Either the sheeple can’t add, can’t read, can’t figure, have no one smarter than themselves to advise them or are simply surrounded by people as stupid as themselves or are just inherantly pathetic to fall for the scams aimed at FTB’s. I hate to say it but perhaps there should be something akin to a mandatory credit counselor who has a mandate to explain the reality of a real estate contract to first time buyers. We have ploticians presenting private members bills to Parliament foe mandatory pre-marital counseling, whay not the same with real estate. A bad real estate contract can be a lot more damaging than a bad marriage.

Inflation is raging, no matter what the good people at Stats Can tell us about the CPI. You can’t eat Chinese T-Shirts or Keyboards. The ‘volitile’ components like food, fuel, education cost, utilities and taxes are not included in the CPI Hedonics calculation. Sorry, I can’t eat my TShirt or drive it to work.

Point being, unless we wait bread prices are going to double the current price within 18 months. That would see the Purchase parity of the Canadian buck lose 1/2 it’s current value setting off a massive wave of inflation.

Ergo, intrest rates can only go up from here, putting every new mortgage at risk within 3 years unless RE values shoot up, intrest rates stay low, wages go up 50% , how likely is that to happen all at the same time?

And Johnny better keep it in his pants cause if Janet gets pregnant they won’t be able to stay in thier ‘starter’ 500 sq ft concrete coffin. Flex space doesn’t mean a childs nursery. You can’t raise a child in a 500 sq ft box without services or amenities. It will turn into a nightmare if any of these youngsters follows the realwhores advice. The BMO should be ashamed of themselves, but I know they aren’t.

Dr. Davis Foote, Canada’s foremost demographer has already stated that there is not enough FTB’s to absorb the current inventory.

#20 Basil Fawlty on 04.15.09 at 11:32 pm

If we are experiencing deflation why did I notice today a 30% and 33% increase on two different products regularily purchased at the grocery store?

#21 Mike on 04.15.09 at 11:44 pm

Speaking of “delusional” Vancouver–where, then, is the money coming from to buy all these overprices houses? I am fascinated by this. Can’t just be overseas money.

For instance, there is a two bedroom townhouse literally at the foot of the Oak Street Bridge listed for $450,000. What fool would buy this!?

My wife and I are sitting on a chunk of cash after a decade in Hong Kong and are looking to buy in Vancouver but refuse to “bet the house on the house.” I am a teacher and make a decent income but will not commit a third or more of our take-home for two bedrooms and a bathroom.

Who’s buying these units?

#22 "Joe Six Pack" North Vancouver Citizen Jr. on 04.15.09 at 11:53 pm

I told you’all months ago….a Refugees problem was coming to bite Canada in the A$$…It’s here….and its just the start from many more refugee countries who’s economies are in terrible shape and look to Canada because we are a super wealthy and safe country.

“””Mexicans trying to immigrate ‘through the back door,’ says Kenney, Canada’s Immigration Minister “””

……Mexicans taking advantage of a new direct flight from Mexico City to Calgary to claim refugee status in the city…..

To all my detractors on this blog site who are unable to think “outside the box” I say to them………

Peace be with you


#23 nonplused on 04.16.09 at 12:19 am

Well, I drank Garth’s potion from some months ago and bought a new (to our family) North American automobile for my wife. 37,000 kms, and less than half the original list! And I bought from a dealer, so I know I overpaid. I’m just not one to spend weeks driving around to people’s houses to look at run down cars that still have liens, so I willingly pay a little extra for the mechanical check and the clear title.

I bought a Ford. Always been a Ford guy, not that I don’t like imports, I do, but Ford has always had reasonable quality and pricing in the type of vehicle I am looking for. Owned a Porsche once too (924) and although the purchase price was good and the vehicle was fun, maintenance was a first class bitch. The feedback I have from associates that have bought more recent models is that the only thing that has changed is that the purchase price is a first class bitch now too.

But what surprised me was how busy the Ford dealers are. Visited a few and they were all packed! And all the salesmen said they were selling mostly used cars, either couldn’t get new ones with the features people wanted or nobody would pay even the discounted price.

The Volvo dealership was different. No salesman would give me the time of day, a similarly equipped vehicle was 20% more expensive, got worse mileage, had less towing capacity, and the salesroom was pretty empty. Just us and another couple, but still the sales staff was too busy to show us anything.

The Nissan dealer was better, staff was attentive, but they had no used models (that we wanted) and weren’t budging on the list price. If I wanted a used one they would email me when something came in.

I’m not sure why the Ford dealerships were so busy. I think it’s because everyone is afraid of GM and Chrysler right now, but some people still like low prices and domestic production.

I’m still sure I over paid. But I like 37,000 kms, fully loaded, less than half price.

What is the take away? If the big three keep cutting production, eventually used prices will rebound too. Get the clean ones while you can.

#24 Jack the Lad on 04.16.09 at 12:21 am

So the stock market is a leading indicator, and stocks have been rallying for the last month.

Some say the stock market leads the real economy by 6 months.

Yet unemployment figures could be horrible for the next 4 to 5 years (according to Garth), which would suggest the real economy ain’t getting better anytime soon.

How do you explain the recent rally then?

Just all smoke and mirrors and destined to crash?

#25 nonplused on 04.16.09 at 12:39 am

PS this was all different from when I bought my Vstar 1300 a year ago. The manager, on vacation, by phone (never even got to meet him), took the reduction from $17,000 where the original list was to their clear out of $14,000, which I hit, and then said “no, you don’t”. “There is a factory rebate coming this weekend, so if you agree to buy we will apply the rebate to your purchase price.” It finished at $12,800 including GST. If you live in Calgary, and like motorcycles, snow machines, or quads, you go to Blackfoot Cycle. They deal fair, just their profit, no racketeering. They could have kept this rebate, that I didn’t know about, and who knows maybe they kept some, but I bought for less than I thought I had. More honest that most.

#26 Munch on 04.16.09 at 1:20 am

Brilliant article, Garth!

It’s very difficult to add value here, but let me try.

Here’s a guy who visited us in Johannesburg recently – I have been following him for a couple of years – he publishes a weekly article (Mondays) which I find enormously enlightening – scroll down to “The Coming Age of Austerity” on the left hand side



Munch from South Africa

#27 Da HK Kid on 04.16.09 at 1:59 am

Wow, lots of goods stuff today, this is a great link for US unemployment and how it is growing.

When Did Your County’s Jobs Disappear?An interactive map of vanishing employment across the country.


I would like to see the same drawn up for Canada!!!

#28 Cameroni on 04.16.09 at 2:20 am

Thanks for those comments about interest rates Garth.

I have been harping on the subject for some months to friends and family to no avail. You are exactly right though. Rates have only one way to go and that is up.

How quickly though can depend on a lot of variables and unknowns. What crisis might bring on a rate spike? We certainly don’t need to look far in the past for guidance on that question and how Opec and events of the 70s put a big interest-rate damper on the party of the early 80’s.

I know I would not want to have to renew a term mortgage at 3 points higher a year from now. The big worry too is how many folks will bankrupt for each point gain, further eroding confidence in the larger real estate market. It’s a scary scenario. And a situation that could actually end up being more damaging than the current credit crisis.

And speaking of rates having only one way to go but up, I think it is interesting that currently only 2 percent of all Canadians live on farms. There is a statistic that will soon be changing, because like all relationships in numbers, this one is out of whack.

Farms and farm land are a very good bet these days in my opinion (not all farmlands of course). We are all familiar with stock markets rising and falling over days, over decades. I think we tend to forget that populations move in similar ways. From city to country and back to city again. It’s just like breathing. From a growth perspective though, the trend back to farms has only one way to go. And that is also up.

The shifting of populations to cities is just an example of a long-run trend that must reverse course to bring balance back. With 98% of people urbanized (a really unusually high rate), and a crisis of confidence taking place in almost all areas of the economy, a reversing trend in the not-so-distant future could be fairly dramatic.

It is my very strong belief that the reversal of the decades long trend to urbanization is one key area to watch now. A ground floor opportunity perhaps for those so inclined to retry a lifestyle most city-dwelling people cannot even comprehend.

All the best to you.


#29 Coho on 04.16.09 at 2:37 am

Garth – “Just as we are emerging from the worst mess since the 1930s…”

Hold on there just a minute, cowboy… :)

I think that statement is much too premature. IMO, the only thing we may be presently emerging out of is the “financing unsustainable lifestyle through inflated home value slumber” we’ve been in for a decade or two.

Besides, I don’t think the ruling elite have done finished twisting us dry from its stocket market manipulation. A very astute person I know has noticed the abnormally huge volume of shares trading of certain stocks…probably financial stocks. Should we assume this is from many eager gamblers suddenly regaining confidence in the markets and thus jumping right back into the game, or by the powerful unseen uber rich elite pumping money into the markets causing them to react the way it wishes in order to suck people into continuing to play the game until they have nothing left?

What is happening is the separation of the middle class from its wealth.

#30 mooncake on 04.16.09 at 5:56 am

More trouble in the US.


#31 Just someone on 04.16.09 at 6:12 am

Garth you wrote:

“And don’t even ask what happens when Pakistan becomes an Islamic state.”

That is a false statement.

1. Pakistan is already an Islamic state. Its official name is “Islamic Republic of Pakistan”.
2. Its state religion is Islam with 95% of its 174M inhabitants being of the Muslim faith.
3. Pakistan is also the second largest Muslim country in the world.
4. Most official holidays in Pakistan are Muslim.

At least verify what you post before you scare people with your book selling agenda.

Fundamentalist state, of course, with an anti-US bent akin to Iran. I think the meaning was clear. — Garth

#32 McFly on 04.16.09 at 6:14 am

The Canadian Real Estate Association must be stretching it now. They compare March 09 sales to February 09 sales. Of course the numbers are up as they always are. And April should be better than March. What a scam! Just look at TREB stats on http://www.torontorealestateboard.com/consumer_info/market_news/mw2009/pdf/mw0903.pdf
Here is tell the real truth about numbers. The percentage of sales relative to total listing inventory is the real picture. Example from TREB: 2008 sales were 74,552 on 162168 listings availabe. Thats about 45% down from about 57% in 2007when they posted 93,193 sales. Unfortunately they do not like to track inventory very well. When you see their chart of past years this can show you what can happen… example 1990 (last recession) sales 26778 and listings 94480 (28.3%) average price $254,490. The word of the day was “stay alive til 95”. By 1995 sales had improved to 39273 with 81767 listings (48%) average price $203,028!!!
So I am calling it here. Based on the current trend for TREB numbers the spread between supply and demand is widening and will likely be closer to 35% by the end of this year which can only mean lower prices ahead.

#33 Canadian Army guy on 04.16.09 at 7:15 am

Why do you say that Pakistan is not yet an Islamic state? It’s been Islamic for ever but officially since it obtained its independance.

Plus what’s wrong with purchasing a home if that’s what one desires?

#34 lgre on 04.16.09 at 7:38 am

The Toronto Star can’t get enough of the spin by Sopher and friends, they have been printing the RE propaganda everyday since the numbers came out. Too bad they dont do that when the numbers are not in favour…although we are still down yoy, but the new way of measuring now is month/month

#35 Kash is King on 04.16.09 at 7:40 am

Who is the ‘Greater Fool’ Now?

By: Lorimer Wilson


#36 Joe on 04.16.09 at 8:01 am

Just yesterday on Canada Am I saw local councilor and real estate agent Debbie Hanlon tell everyone that housing in St. John’s was booming. Yet one of the people who lost his like in the offshore helicopter crash had been a real estate agent and changed jobs to get into a more secure career. Sad. Who was right.

#37 Stuff on 04.16.09 at 8:09 am

Frustrating is all i can say.

My wife and I have managed to save a pretty decent downpayment. Problem is in Toronto that pretty good downpayment is not even a dent in most properties.

So we tried looking in Oakville and I couldn’t believe my eyes, Oakville is just as bad as Toronto.

So it seems I got three options now:
1) Over pay for a house in Toronto that will put us into debt.
2) Continue to wait and save


3) Quit my job and move to Woodstock to pay for property cash and work part-time at McDonalds (if they are hiring) to cover expenses.

I don’t get how 2 people who make a decent, regular living, with a good downpayment cannot afford to buy a simple home nearby a City like Toronto without getting themselves into a whole lot of debt.

It just doesn’t make sense why people keep buying homes.

#38 Chris in England on 04.16.09 at 8:12 am

With banks already trumpeting about profits and their intention to pay out big bonuses (bigger, in some cases, than the previous ones) and governments trying to stimulate the economy by bolstering confidence – so we all go out and load ourselves up with more debt and spend money on things we don’t really need – one thing they don’t seem able to control is the inconvenient spanner in the works: the understandable human desire not to go any deeper in the shit once the hazard has been identified.

From today’s Daily Mail in the UK: http://tinyurl.com/cvd4af

Spend, you dolts, spend! (No, we too scared).

#39 ally ally oxycontin free on 04.16.09 at 8:16 am

Quick everboddy … What’s the word for bluster?

“But Mr. Marchionne sounded a note of caution about the alliance, saying Fiat could walk away if U.S. and Canadian unions don’t agree to significant pay cuts at the ailing Detroit auto maker.

“There’s no sense in being optimistic,” Mr. Marchionne said on the sidelines of a meeting in Zurich, according to a Fiat spokesman who was present.

“There’s a lot to resolve.” …


Now, humming right along here, to the haunting reverie of ‘99 blue-green balloons,’ what about Fiat’s debt? [ and you can pronounce the b ]


SEE … Fiat: Makin’ it up as it goes along

Product aesthetics? … Har har har … I did see a dog trying to sca-rew a football lookin’ like thet oncet.


”Fiat’s flagship Cinquecento (Italian for 500), intended to fill the small-car void that is crippling Chrysler. Europeans apparently like the 500‘s Neon bug-eyed face, circa 1997, and its AMC Pacer blobbiness. But will buyers in North America, whom Fiat gave up on 25 years ago after failing to achieve showroom appeal from Boston to Bakersfield?”

Manageable debt …

”Remember, Fiat is a company so undisciplined that its debt mysteriously “ballooned,” to use Marchionne’s term, to $7.6 billion (U.S.) last year, three times what Fiat estimated. Credit agencies have cut Fiat’s debt to junk status. And Fiat is a candidate for bailout funds from Rome. And this is Chrysler’s saviour?”

Say, don’t that sound like a MIRAGE, made in heaVON?

We ain’t outa the woods yet !


#40 Some Guy. on 04.16.09 at 8:19 am

So……what the hell am I to do???? Was looking to buy my first home…eventually….and now???? Your post was awfully confusing for a simple minded man like myself.

#41 Down South on 04.16.09 at 8:42 am

Last week I was listening to the local CBC news while driving home. A real estate guy was all excited about the opportunities to be found in the area. He mentioned a couple from Calgary came to town a bought themselves a principal residence AND a duplex as an income property.

I live in WINDSOR. Yes that Windsor. Home of the highest unemployment rate, one of the highest vacancy rates, cancer rates and smog days, and a city without any credible leadership or future.

I heard that and could only think that your post “Trapped” was written for that poor western couple.

#42 PTDBD on 04.16.09 at 9:02 am

Sorting the wheat from the chaff….

“Our core business remains sound and is performing well…” says the CEO of America’s second largest mall owner as the company declares bankruptcy.

The fact that Poland has borrowed $20.5 Bbbbilion line of credit from the IMF indicates how really strong Poland’s economy is says the confident radio announcer. “Poland has a sustained record of sound economic policies…”, fundamentals are strong, blah,blah,blah.

President Obama answers tax protestors that he has delivered the most progressive tax cut in history. 95% of all families will get a tax break. Hmmmm, ok. That’s truly a loaves and fishes miracle. All those trillions in spending increases are going to be paid by?

#43 Dave on 04.16.09 at 9:14 am

So the stock market is a leading indicator, and stocks have been rallying for the last month.

Some say the stock market leads the real economy by 6 months.

Yet unemployment figures could be horrible for the next 4 to 5 years (according to Garth), which would suggest the real economy ain’t getting better anytime soon.

How do you explain the recent rally then?

Just all smoke and mirrors and destined to crash?

the economy that matters is the American economy. Their real estate bubble has popped and they’ve been going through massive job loss for a while.

Our housing bubble hasn’t seen that decline yet. Just because the stock market rally has begun, doesn’t mean we’ll see prices of homes stabilize in 6 months. We still have to pay the price for inflated homes.

#44 Sam Mcboldon on 04.16.09 at 9:27 am

To #37

Instead of Oakville, ever think of Hamilton,
GO Trains, VERY CHEAP houses downtown in good areas.
Was there last week and witht he Stelco shutdown i see no more pollution

#45 Gord In Vancouver on 04.16.09 at 9:43 am

#21 Mike

Speaking of “delusional” Vancouver–where, then, is the money coming from to buy all these overprices houses? I am fascinated by this. Can’t just be overseas money.

For instance, there is a two bedroom townhouse literally at the foot of the Oak Street Bridge listed for $450,000. What fool would buy this!?

Many of these bloated prices were the result of massive Vancouver real estate speculation which took place between 2002 and early 2008. Much of the cash that was used to cover investment home mortgages came from the what was then a red hot rental market, and, possibly, reverse mortgages.

Abuse of the 0 down/40 year mortgage definitely fueled the bubble as well.

I’m sure overseas money contributed to the early stages of the bubble. You have to remember; however, that these people didn’t become successful by putting their money into overpriced assets; hence, locals were probably much more influential between 2004 and 2008.

#46 PTDBD on 04.16.09 at 9:49 am

@Pol-Can…good financial stats summary post. Could you post the link for TAE? I’m not familiar with it.

#47 David on 04.16.09 at 10:10 am

A big chunk of concrete fell off the Woodward’s tower in Vancouver the other day. I’m sure it’s fine, though, totally not a rush job or anything…


#48 POL-CAN on 04.16.09 at 10:27 am


Here you go…. A daily must read….


Garth, you used to have a link to TAE. Did you have a falling out or something? I find the way I&S write very thoughtfull and informative….


#49 Bill-Muskoka (NAM) on 04.16.09 at 10:28 am

#3 ts harpoon

Well, while you have expressed a rather realistic view please consider the following facts.

1. The price of public commodities (energy, food, transportation, medical/health care, etc.) are determining factors in society’s growth and stability.

2. When prices become grossly disparaging for any particular segment of society there cannot be stability because we are all interconnected whether anyone accepts that reality or not.

3. The will to survive in large part regulates how we conduct ourselves towards others.

4. We have yet to progress to a true integrated social system whereby the basics are assured that each person may achieve, with proper effort, growth and a reasonable level of existence, hope, and happiness. We need to accept the fraility of our own humanity, and then we will accept the fraility of others.

5. There have been thousands of patents issued which could solve our basic needs problems, but because of the belief in the so-called ‘free-market’ system (which means an unethical, non- regulated free-for-all by the worst, as practiced) those solutions have been locked away and prevented from being instituted for the good of all people by a few greedy, unregulated narcissists.

6. The people continue on with their petty attitudes of seeking power over others for their own ego satisfaction, and largely based on FUD, which is a learned behaviour.

Until the people simply learn to say ‘No! I will not play the game’ the so-called political leaders will continue on with the game as is.

We feed the Beast that seeks to consume us. When will we stop doing the drug and seek cleansing? What is the disease?

Perhaps it is as simply as ‘Take what you need, but no more!’ We are still acting like Feudal Lords believing only in what we can hold and not each other.

As Pogo said so well ‘We has found the enemy and they is us!’

#50 Bill-Muskoka (NAM) on 04.16.09 at 10:44 am

#39 ally ally oxycontin free

In the U.S. Fiat became known as ‘Fix It Again Tony’ thanks to their quality control. Seems to me that what is happening is the Globalists are now desperately seeking to breath another breath? Chrysler produces some very fine and advanced products. The greedy investors want instant results. That is not reality.

Daimler, aka Mercedes-Benz, brought some excellence to the products, but it was Daimler’s mangement that caused some cash flow problems as well. Now we see a company long ago rejected as a producer of a POS’s by American consumers claiming to have some magick elixir?

Well, the FIAT CEO certainly has said it straight, if you read his statements’, but the Globalists are still thinking all the local knowledge is unimportant in their so-called business plan.

No one is saying Cerberus (The Dog who guards the Gates of Hell) is the real problem! They are interested in one thing and only one thing making fast money. They also own control of GMAC (General Motors Acceptance Corporation) which finances all GM’s products including weapons systems.

When one connects the dots what do they show? I see the picture of Pure, unadulterated GREED driven by a religious belief in their ‘system’ which is incompetent!

Reminds me of the TD Canada Trust commercial with the little mattress manufacturer. They see the potential because they understand the product and the market demands, whereas their competitors only were interested in the fast money aspect and without vision.

#51 lgre on 04.16.09 at 10:45 am

“Plus what’s wrong with purchasing a home if that’s what one desires?”

if you desire it enough to overpay for it, then be my guest..nobody is stopping you.

#52 TorontoBull on 04.16.09 at 10:51 am

actually many argue that the stock market is not a very good leading indicator (check Roubini).
Also there has been few respected experts that suggest that the only leading economic indicator in the current situation is whether there is stabilization of the housing market, which seems far from bottom right now both in

#53 TorontoBull on 04.16.09 at 10:52 am

added to prevoius post:
now both in US and Canada.

#54 Anonymous on 04.16.09 at 10:54 am

#33, Canadian Guy wrote:
“Plus what’s wrong with purchasing a home if that’s what one desires?”

A couple things.

1. You will be able to purchase it for 40%-50% less money if you wait a year or two. You can still have the house, but you shouldn’t buy it right now.

2. Moral hazard. As a taxpayer, I’m sick of bailing out fucking idiot homeowners who can’t afford their overpriced houses. Take a look at the US. Just because you can obtain financing, doesn’t mean you can afford it. Do you understand the difference between cash and credit?

That’s what’s wrong with buying anything you “desire”. Have some fucking restraint, will you.

#55 613 Happy where I am on 04.16.09 at 11:26 am

Meanwhile, in downtown Ottawa, my neighbour just his 3 bedroom, 1 and a half bathmiddle row unit (I have the end unit ) for just under $400,000… what is he smoking?????

I had quite the conversation with the real estate agent who drove up and stuck her “for sale” sign on the grass. Seems she thinks the house will sell for 370,000 based on compables in the Hood… mainly condos. I personally think she is way off tee… I even mentioned that my former brother in law, a real estate broker, told me my house was worth 330,000 a month or two back…

Maybe the agent thinks people who are downsizing from their mcmansions will consider a crumbling old row house as an alternative to condo living???? who knows???

These folks have their heads in the clouds…

Will keep you posted…

#56 Mrs Loquacious on 04.16.09 at 11:26 am

I live in Vancouver in the downtown core where boxes in the sky are aplenty. My hubby and I would consider buying a place here if it was affordable and cost-effective, but so far all signs point to NO. Garth cited his parents’ purchasing conditions as an ideal and I wondered what that would look like in Vancouver today.

So, using Garth’s formula for best-case scenario for new homeowners, and the likely-flawed-but-you-get-the-picture backwards calculation, here’s what I discovered.

If the average home in Van costs $650,000, the annual income of a household would have to be greater than $162,500 in order for the home to be 4x the annual income. How many people earn that much per year, even combined?!?

Next, if one were to put down about 30% on the average Van home, one would need to cough up about $195,000. I don’t know many new homeowners with that much in cash or liquid investment, or at all, period.

Now, pretending that one has the income and the savings, what would the monthly payments need to be at 1/3 of annual income, in order to get this place paid off in a decade or so? 1/3 of $162,500 is $54166, divided by 12 is $4513/month.

Sure, my hubby and I might have the income, but we certainly wouldn’t have enough for 30% down. We also don’t think it would be worth paying $4500/month for a place that probably needs upgrades in a few years or right away, or was built so shabbily by the BC bud-loving workers that it will start crumbling before the economy even picks up again.

Renting gets more and more attractive every day.

#57 Outlaw on 04.16.09 at 11:58 am

31, Coho
you are right on the money, glad to see someone thinking through the smoke these days

#58 Outlaw on 04.16.09 at 12:03 pm


Poland’s economy is a bit different than ours for example, it is more localized, has not been fully globalized yet, dont get me wrong the crisis is felt there too maybe a bit less though. Real estate is extremely overpriced, levels comparable to Toronto real estate, but average income is 5 fold lesser, imagine that.

Automatic earth


#59 @Garth 2 on 04.16.09 at 12:14 pm

A few points I wanted to make:

I want to take the time to really commend Garth on his post “Hit and Run”, the reason I’m still around here: Every once in awhile, Garth unearths the truth and tilts the playing field a little. Deconstruction of the disinformation agenda from an insider’s perspective is the essential good of this blog. So, thanks for that one Garth!

Now in response to this: “..a decade ago, I said real estate … would be substantially reduced … by at least 2015.” While I agree on fundamentals, I am nonetheless surprised by the gulf between your predictions and the reality (and yes, my crystal ball is in the shop right now too). Since 1998, a Toronto home at $225K has appreciated to today’s $375K, crisis be damned …before the TFSA, there was real estate. The demographics issue and the pension crisis are largely out of the current news (though that shouldn’t be), so the market trudges on worrying mostly about crunchy credit.

Now back to “Jack the Lad”, who has the *real* question of the day to which I have no answer: The recent equity rally and the result: a perceived replenishment of the down payment. The rally is absolutely adding fuel to my local market (TO) and it’s rocket fuel. So Garth, I would like to hear your opinion on the March stock market rally and what a DOW at 9000+ by 2010 will do for Canadian real estate. Preach on!

#60 Strataman on 04.16.09 at 12:25 pm

Plus what’s wrong with purchasing a home if that’s what one desires?

Nothing! Of course you could take your 25% down payment out in cash and use it for a camp fire too!

#61 jwk (nee jwkimba) on 04.16.09 at 12:30 pm

US housing in worse shape now then 6 months ago. near the bottom? Not quite.

Don’t worry, this can’t possibly happen in Canada!


Choice quote indicating permanent new reality:

“It does look to me like we’re hitting a bottom,” said Ian Shepherdson, chief United States economist at High Frequency Economics, about building permits. “We’re now seeing a restabilization at a much lower level. It doesn’t mean they’re about to rebound.”

#62 Bill-Muskoka (NAM) on 04.16.09 at 12:53 pm

#52 TorontoBull

The Stock Market is nothing more than the live tally board for the Gamblers at the Temple of The Money Changers.

It used to be slightly meaningful, but it is a game board now where Losers gamble with other’s money for the most part.

The DOW Industrials are just as outdated and meaningless as well.

Religious traditions and dogmas die hard.

#63 Makeorbreak on 04.16.09 at 12:54 pm

Leonhart: There is a French blog that is interesting and well documented. It has a section on Quebec with active participation. Si vous pouvez lire le français, voici le site:


#64 PTDBD on 04.16.09 at 12:57 pm

Thanks for posting the link to the automatic earth site. Wow, there’s a lot of information there.

As to the question “How do you explain the recent rally then?”.

I have a theory, but then again I also have an ingrained, learned, trust problem, but I’ll throw up (bad image) some assumptions for your consideration:

– Stocks and the N.A. economy exist on a life-support of debt

– Trillions of prestidigitized money was created out of thin air to buy debt

– Billions was given to large banks at almost zero interest rates

-Some of these banks, the predators, didn’t need the money. It was forced upon them so that the banks which were in real trouble would not be singled out.
(they did not want bank runs.)

– Predators used this money to drive up the financial indexes to put a bottom to the drop. At each injection, commodities also went up.

– If markets go down routinely in a straight line, they wouldn’t be markets. They would be a sure bet. Ratcheting of prices is needed to sustain buying and selling interest.

– The whole house of cards is built on debt and now has been shored up with a foundation of debt creation never seen before.

– Will the market keep going up? It all depends if the money spinners can keep the confidence game going as debt defaults grow.

#65 SSS on 04.16.09 at 1:00 pm

#29 Coho
Thanks… your comments make think, no one will be safe from this.

#66 ally ally oxycontin free on 04.16.09 at 1:08 pm

#50 Bill-Muskoka (NAM) on 04.16.09 at 10:44 am

I just don’t see this car ever making it in N.A.


Now, if 1. the merger does go through, and 2. there is some reverse market penetration into the EU,
3. coupled with Chrysler product design, and 4. flex manufacturing [ mixed Fiat assembly line ] Chrysler’s problems may be averted in the short term. But, there is still that overhang from before the merger.
… the debt problem and the general lack of confidence in any financing paper. If Rome, Washington and Ottawa are in, again it may be a short-term solution.

Too many conditionals, Bill. The U.A. / C.A.W have already made significant concessions. I don’t see the “squeeze game” as being successful … and, regardless of title searches / pledging of assets in decline, I don’t see any government EVER recovering what they’ve advanced.

#67 David on 04.16.09 at 1:17 pm

For the doubters, just run the numbers, and no, there is no one discrete outcome, but the range of outcomes in itself looks bad.
Quantitative easing means printing more money and when the economy is not growing what does that mean? Higher interest rates down the road.
Interest rates double to 8% and home prices decline 25%. Run the numbers. Pick your interest rate and pick your price decline. Any number will do. Energy costs and taxes pick, those also.
Choose your own scenario and run the numbers again, based on potential outcomes.
Is it fair to say OUCH!!
There is no bottom to miss right now, regardless of what Brad J.Lamb (aka Beldar Conehead) has to say.

#68 ally ally oxycontin free on 04.16.09 at 1:17 pm

Canadian Manufacturing Shipments Commentary (pdf)


U.S. Housing Starts Commentary (pdf)


#69 questioning on 04.16.09 at 1:27 pm

but if majority of people are fools, the market will go as fools’ prediction. yes?

#70 Got A Watch on 04.16.09 at 1:28 pm

Looking at the economic fundamentals, this crisis has years to run yet.

All these “bottom is here” callers make me laugh.

Sure, we can correct the biggest credit bubble in history with a year long recession, and then sail on into the sunset.

Puppies, ponies and rainbows for everyone. “Never a better time to buy” says your Realt(ho)r.


#71 POL-CAN on 04.16.09 at 1:32 pm


RE : Market rally

Here is an interesting take on it. It implies that based on volume alone the markets are being pushed up by very few computerized market makers i.e. GS and that the next leg down should happen in a matter of days, weeks at most….


#72 77yldiuqs on 04.16.09 at 1:46 pm

#33 “Plus what’s wrong with purchasing a home if that’s what one desires?”


Except for the fact that you will have to listen to the control freaks on here who think they are the only ones who know anything.

#73 . . . fried eggs and spam . . . on 04.16.09 at 2:05 pm

These two should be read, one after the other to see where our future excursion will take us in 2010 (gotta have the ‘lympix first, so Rovvcenou is still a world-class dump)!

http://www.xurbia.ca/ — and — http://www.dilbert.com/
As far as all this RE nonsense goes, foreclosures are still rising in the States and here, so yes, if zombie sheeple are still hypnotized by home ownership, then it’s a terrific time to buy, take on loads of debt and dig themselves even larger holes.

If I were by myself, I would rent, not buy. The less material stuff I have / own, the better off I am. Basics, that’s all. My 78.95 cents worth!

#74 dave on 04.16.09 at 2:07 pm

After reading the blog and books I have concluded:

1)The mainstream news is managed
2)Home ownership is a mind-virus.

These are two elements in Canada that are creating the new Surfs – New France 2009.

re: Home ownership Mind Virus – I have gone over all the reasons not to buy and did the math etc. with my young employees. They do not listen and sign up for the huge mortgage anyway. It don’t matter at all what type of education and reason you try to show them. I still have to sign the employment and wage form for the mortgage application for them – it pains me to do it.

Seems like no one took Canadian History 101 in college.

#75 @Garth 2 on 04.16.09 at 2:18 pm

PTDBD, I won’t take issue with anything you’ve said, except that you didn’t answer the question and instead reframed it. The question is best answered by someone with a long history, who has weathered recessions like these and paid attention to the indicators while doing it. i.e. Garth or any other person with some serious years at the helm.

Preferably, someone that watched closely the Savings and Loan crisis, the Long-Term Capital Management bailout and other similar disasters unfold and eventually subside.

Quote of the day goes to wikipedia’s description of the LTCM debacle:

“Some industry officials said that Federal Reserve Bank of New York involvement in the rescue, however benign, would encourage large financial institutions to assume more risk, in the belief that the Federal Reserve would intervene on their behalf in the event of trouble. ”


#76 The First Rick on 04.16.09 at 2:19 pm

I do like that photo in this article.

It looks like Wayne Gretzky looking up to Peter Pocklington as he is being traded to the Rangers.

And look where Peter Puck is today!!!!!


#77 ca on 04.16.09 at 2:21 pm

Garth —

On his blog today, Charles Smith has an excellent explanation of why housing prices are headed down for a long time.


#78 OttawaMike on 04.16.09 at 2:38 pm

Garth said: “Just as we are emerging from the worst mess since the 1930s, expect peak oil and climate change to start moving all the furniture in our lives.”

I had a conversation last night with a relative working at the National Research Council on a new project for the US Airforce & Pratt Whitney, the jet engine manufacturer.
They are bench testing conversions of all major military jet engines to coal based synfuel. Perhaps the US military has been studying peak oil as well?

#79 TakingResponsibility on 04.16.09 at 2:45 pm

Just to add to and maybe clarify for those interested…

RE: “And don’t even ask what happens when Pakistan becomes an Islamic state.”

For further information or a balanced and knowledgeable view of Pakistan, check out the only reliable news source, “The Real News”. Link: http://therealnews.com/t/

Political science professor and analyst Aijaz Ahmad speaks in the March 12, 2009 vid: “Pakistan is in complete chaos – Bad decisions.” Specific link: http://therealnews.com/t/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=3400

One of the points made is that there appears to be legitimate reasons why some people living in Pakistan other than puppeteers dislike US interference. Good contextual information.

Having noted another knowledgeable view on Pakistan, I would also add that fundamentalism is indeed dangerous ANYWHERE as people seem to lose the ability to listen or learn from other people. It really doesn’t matter the religion, the political platform, – fundamentalism exudes fear by invoking that same emotion and completely excludes compromise, dialogue, or humanist values.

We need to be very watchful of fundamentalism at work in Canada – especially in light of yesterday’s post.

#80 jess on 04.16.09 at 2:48 pm

IN the United States it has been said that public sector salaries overshadow the private sector by more than 20 percent. Has anyone took a look at the government of Ontario’s 100k+/year salaries. I put the numbers into my excel and this is what i got. Has anyone else summed the numbers to double check mine.

Hydro One and Ontario Power Generation
$10,803,304.32 taxable benefits

$294,523,711.09 schools
$1,687,328.64 taxable benefits

Municipalities and Services
$10,264,823.98 taxable benefits

crown agencies
$3,322,660.45 taxable benefits

Legislative Assembly and Offices
$75,513.60 taxable benefits

Judiciary Ontario Court of Justice
$1,011,619.97 taxable benefits

Hydro One and Ontario Power Generation $1,224,304,243.41
$10,803,304.32 taxable benefits

Municipalities and Services
$10,264,823.98 taxable benefits

$10,381,769.80 taxable benefits

10- Colleges
$1,057,910.36 taxable benefits

11- Hospitals and Boards of Public Health
$5,865,373.11 taxable benefits

12-Other Public Sector Employers
This category includes all other organizations and corporations not captured in a specific category.

$2,531,242.29 taxable benefits

Energy sure is costly eh?

April 16, 2009
OTTAWA – The number of bankruptcies across Canada swelled 22.1 per cent in February compared with a year earlier and was 13.1 per cent higher than in January.

#81 TorontoBull on 04.16.09 at 2:56 pm

excellent article on housing:

#82 "Joe Six Pack" North Vancouver Citizen Jr. on 04.16.09 at 2:58 pm

You wanna talk Real Estate…..

“””Texas Governor Rick Perry Threatens Secession From The Union”””


I keep telling you’all the Pacific Northwest is the safest place in the world.

…and then Ontario will amalgamate w/ Michigan, Ohio and New York State…lucky Ontario gets even more unemployed plus lots and lots of guns.

#83 $fromA$ia on 04.16.09 at 3:49 pm

Gold drops $20 today and total U.S. job losses will hit tomorrow. Perfect day for the U.S. Fed to sell of gold and push Gold down. Been watching every business day at between 5 and 7 a.m. theres a good slide on gold, no doubt in my mind the feds minipulating things and yes I know that we are in a deflationary period that should push gold down anyway but we all know what happens after deflation so get your tickets now or later.

Canadian banks on another roar this week. I really hope they aren’t going to scalp all that loose money buying up their bank stocks. I am really concerned about that very potential dividend cut.

#84 Dawn in Calgary on 04.16.09 at 3:56 pm

#74: After reading the blog and books I have concluded:
1)The mainstream news is managed

Perfect example today:

“The number of bankruptcies across Canada swelled 22.1 per cent in February compared with a year earlier and was 13.1 per cent higher than in January.”

“It tallied 9,020 consumer bankruptcies in February, up 25.2 per cent from a year earlier, while proposals by individuals to rearrange their debts – which could lead to bankruptcy if rejected by lenders – surged 38 per cent to 2,686.”

“Alberta had the most intense insolvency surge, with total bankruptcies and proposals in the province up 55 per cent from a year ago at 893, edging up 3.2 per cent from January.”


Calgary Herald’s version:

“Thursday’s bankruptcy report showed the biggest jump in filings were in Ontario, up 3,572, and Quebec, up 3,075, in February. In Ontario, 3,404 consumers filed for bankruptcy during the month, with 2,895 filing in Quebec.”

#85 crashing yuppy on 04.16.09 at 3:59 pm


Please read this and Comment

This article has set a new low for the house pumping media. Shame on you Globe and Mail.

Guy just happens to move up from a 250,000 townhouse to a 1.1 M home because he couldn’t resist the “deals” out there. PULEEEEEEEEEEEZZZ My guess is that there is a directive to print positive stories about the ecomomy and house sales or else.

#86 Flip on 04.16.09 at 4:07 pm

Dear fellow Nigerian,

I am Ken Lewis, CEO of Bank of America, and have a little problem with a $25,000,000,000.00 we have received from the U.S. government. I did spend $3,600,000,000.00 on bonuses to myself and my close friends but have a balance of $21,400,000,000.00 that I have to allocate quickly in order to avoid scrutiny by the authorities here.

That is where we need 42 individual ready to receive $500,000,000.00 each (I will take care of the remaining $400 million with my personal expenses).

You assistance is requested as a non-American citizen to assist the Bank of America, in moving these funds out of the United States. If the funds can be transferred to your name, in your Bank of Nigeria account, then you can forward the funds as directed by Bank of America. In exchange for your accommodating services, the Bank of America would agree to allow you to retain 10%, or US$50 million of this amount.

However, to be a legitimate transferee of these moneys according to United States law, you must presently be a depositor of at least US$100,000.00 in the Bank of America.

If it will be possible for you to assist us, we would be most grateful. We suggest that you meet with us in person in New York, and that during your visit I introduce you to the representatives of the Bank of America, as well as with certain officials of the American government.

Please call me at your earliest convenience at 1.212.583.8000.

Time is of the essence in this matter; very quickly the American government will realize that the Bank of America is maintaining this amount on deposit, and attempt to ask questions as to why the money has not been spent.


Ken (BIG BUCK) Lewis

CEO/Bank of America Corporation
100 North Tryon Street
Bank Of America Corporate Center
Charlotte, NC 28255

#87 Mark on 04.16.09 at 4:12 pm

To Mike (#21):
“Who’s buying these units?”

I’ll tell you who.. it’s idiots who listen to the media hype – who are scared of being “forever priced” out of the market because property “only ever keeps going up”.

Most of them are in their late 20’s early 30’s. They’ve never seen house prices lose value before. So a 10% drop and they (wrongly) believe that now is the time to rush in before it starts shooting up again.

The problem is that it then becomes a self fulfilling prophecy.

Ask any Vancouverite what they think of the recession, etc. And I can gaurantee you that 99% of you will come back with what the media is feeding them:

“wont happen here”,
“vancouvers economy is too strong”,
“everyone wants to live here”,
“we wont be in trouble, the olympics are around the corner”
“house prices cant possibly drop here”
etc etc.

And my fear is as long as they keep believing it.. These idiots might keep forcing prices up (in the short term), buy going back to old habbits and buying lots of “investment” properties.

I hate to see what will happen to the local economy in 5 years when interest rates are at 10% or higher, and most of them have lost their jobs – “hey – it doesnt matter i’ve lost my job, i’m still making money off my rental unit! AND it’s gone up in value so if i sell it – i’ll be RICH!”.

I’m considering moving to Australia…

#88 Bowlsh!t on 04.16.09 at 4:25 pm

This is from Toronto Star

For one thing, the realtor and musician has reluctantly cancelled his popular Monday morning jam session at his Beach home for three weeks running.

“Music is everything to me and it really upsets me when I have to do this, but it’s been really busy,” the Royal LePage realtor says.

So he is complaining about getting business? He will have his chance to jam once the house market crashed. He will be jamming the blue on the corner of Yonge & Dundas for spare changes

#89 Bill-Muskoka (NAM) on 04.16.09 at 4:33 pm

LMAO! Texass going to secede. Yeah! Sure, and with their French history maybe we can get the Quebecois to migrate there and make Land Claims?

#90 smwhite on 04.16.09 at 5:07 pm

#87 Mark

Nice post Mark, I believe Austrailia is probably the best positioned anglo-saxon country to come out of this. I thought Canada was a close second but after the last round of rate cuts, we’re following the USA down that path. Austrailia was putting the brakes on(raising rates) well before there appeared to be a bubble in RE there.

Their trading partners, China, Japan and other pacific rim nations.

Canada, we got the USA…

Pretty straight forward isn’t it?

#91 Jake on 04.16.09 at 5:50 pm

#79 TakingResponsibility,
Well said. The most violent, manipulative and dangerous country in the world is our neighbour and we are worried about the “fundamentalists” on the other side of the world. Men in suits and ties with beautiful smiles are way more frightening then men in desert attire any day. I guess we in North America can’t complain too much though. The men in suits are only robbing us. It’s the Pakistani’s who will be on the receiving end of the tougher love from the sky. Pretty ironic how they are making us slaves and bombing the hell out of the middle east to give them freedom.

#92 Jake on 04.16.09 at 5:54 pm

#72 Hey we realize that you have a man crush on Squidly, but could you please just come up with your own name. Maybe take some time during a lull at one of your open houses this weekend and try to come up with one.

#93 Too Old Bob$ on 04.16.09 at 5:54 pm

“#72 77yldiuqs. Plus what’s wrong with purchasing a home if that’s what one desires?”

Except for the fact that you will have to listen to the control freaks on here who think they are the only ones who know anything”

Haha! if you really want it, then just go get it. Don’t tell anyone here or they will laugh at you.

To be honest, I wish back in my buying days I would have had a little more information as to what was really going on. I bought back in 1981 because my roommate was moving to the City and I didn’t want to rent anymore. I bought a house that the owners only lived in for 8 months. They wanted to upgrade to an acreage. All the people I knew told me that if I don’t get in now I will never, I repeat NEVER own a house, the price will continue to climb out of anyones affordable range.
Ok! 25% down, assumed 5 year mortgage. 1 year later, price drops $10000.00. Ow! but instead of whining about it or walking away (note 25% down) I kept it and paid it off in 7 years. So I say go ahead and buy it. If you plan on living in it for 10,15 or 25 years or more…so what. I’m sure eventually with inflation your home value will go up and thus justify the purchase.

As I said before, I wish I could have had the insight that you can get from internet blogs back in those days. Just remember to sort out the BS from the Cow dung.

#94 lgre on 04.16.09 at 5:57 pm

“Is Goldman Sachs Running The Plunge Protection Team?”

The Working Group on Financial Markets, known colloquially as the Plunge Protection Team (PPT), was created in 1988 by Ronald Reagan, in response to the Black Monday stock market crash in 1987. Their operations have always been shrouded in secrecy, with a Washington Post article from 1997 writing that the group aims to prevent the “smoothly running global financial machine” from locking up.

Conspiracy theorists have long claimed that the PPT manipulates U.S. stock markets by using government funds to buy stocks in the event of market dislocation, but skeptics argue that such an operation would be unworkable.


#95 Too Old Bob$ on 04.16.09 at 6:03 pm

In reference to the picture. Since when do people celebrate buying a house, condo or apart., with champagne or sparkling wine. Why would you toast the fact you have taken on a large mortgage that could possibly cost you 2-3 times the asking price. I thought you were suppose to celebrate when you are mortgage free, like I did with a Beer!

#96 jess on 04.16.09 at 6:10 pm

Forgot to add the cost of 100k+ /year


$2,922,672.33 taxable benefits

#97 jess on 04.16.09 at 6:14 pm

ROUBINI: No. My estimate suggests actually that expected heavy losses for U.S. banks are going to be something like $3.6 trillion this year and the IMF is now coming with estimates of $3.1, $4 trillion for the global economy. I think in the case of Goldman Sachs, you have a bank holding company now still behaving like the hedge fund. They are borrowing from the government at 0 percent. They got $12 billion from the government for AIG exposure and they’re doing lots of very high, risky trading activities and giving the (INAUDIBLE) spreads, they are making money, but it is kind of like gambling on public’s money.

#98 . . . fried eggs and spam . . . on 04.16.09 at 6:46 pm

From Mish’s site — Deflation has gone global — http://tinyurl.com/cvwc4q
Seems China is having its’ own problems.

http://tinyurl.com/caznlp — and — http://tinyurl.com/crukjy — and — http://tinyurl.com/cn6gn5

#99 Jonathan on 04.16.09 at 6:56 pm

Dave says: “So the stock market is a leading indicator, and stocks have been rallying for the last month.

Some say the stock market leads the real economy by 6 months.

Yet unemployment figures could be horrible for the next 4 to 5 years (according to Garth), which would suggest the real economy ain’t getting better anytime soon.

How do you explain the recent rally then?”

The stock market in Canada peaked in July 2008 – reached over 15,000 points. It was looking 6 months ahead and anticipating $200 a barrel oil. That never happened. The stock market is just guessing and hoping – that is all it ever does. Economics is certainly not a science.

#100 Leave it to Canadian Beaver on 04.16.09 at 7:38 pm

Sir Garth

Pardon me for this silly question but why don’t our Leaders push for “long term” fixed Interest Rates
like my Pop had? Here Biff and Muff, you have 25
years @ 6.5 % to pay this humble abode off.


#101 David Bakody on 04.16.09 at 8:23 pm

Interest rates on LOC at CIBC went up 1% without much prior notice …… just like that … so what is next? Perhaps mortgage rates once enough buy into Real Estate forecasters vision of future thought their rose coloured glasses!

#102 . . . fried eggs and spam . . . on 04.16.09 at 9:01 pm

Heard on Global News — YUCK! – msm trash, but hockey’s on CBC — that the owners of Bellis Fair, the mall just across the border have filed for bankruptcy.

Supposedly, they are the second-largest mall owners in the US.

#103 taxpayer like you on 04.16.09 at 9:17 pm

87 Mark; 90 smwhite.

This quote is from the 5th Annual Demographia International Housing Affordability Survey: 2009

“Unlike the other national markets in the Survey¸ Australia has thus far been able to avoid material
house price declines. It seems likely that, sooner or later, the inherent instability and unsustainability
that characterizes bubbles will lead to house price declines in Australia. However, were it possible
for Australia to retain its highly over-valued house prices, there would still be a significant cost.
Future generations would pay far more for housing than in the past, and Australia’s relative standard
of living would decline.”

The national income multiple for housing in Canada was
3.5 – Australias was 6.0!

Pack your tent……..

#104 Bottoms_Up on 04.16.09 at 9:22 pm


It’s different here (in Ottawa):

“Alphabet Creative, a local ad agency, created the site and the outdoor ad campaign for two Ottawa radio stations owned by Newcap Radio. The goal, they said, was to point out that Ottawa’s economy is stronger than that of the rest of Canada.”

#105 taxpayer like you on 04.16.09 at 9:42 pm



#106 Mark on 04.17.09 at 12:08 am

“The national income multiple for housing in Canada was
3.5 – Australias was 6.0!”

Give me numbers for vancouver vs aus…

I know montreal is cheaper – but if i was going to move that far, may as well move countries. (wont have to learn anotehr language either!)


#107 Future Expatriate on 04.17.09 at 2:56 am

When Pakistan becomes a fundamentalist Islamic State, the world gets MAD (Mutually Assured Destruction) in the Mideast and avoids Israel, another paranoid fundamentalist state, triggering Armageddon by lobbying a few nuclear bunker busters at Russian advisors building power plants in Iran.

Well worth the “risk”, since Islamic fundamentalism didn’t plant the thermite in the WTC in the first place. After all, isn’t Democracy giving people what they want, even if its a theocracy? Soon enough they’ll come out of it. Think Iranian shopping malls for a good example.

No sorry, “spreading Democracy” is propping up untenable unsustainable fascist military dictatorships in the image of the US; how could I have forgotten?

#108 Paul johnston on 04.17.09 at 8:14 am

Garth – while forward projections remain the currency of this exercise, a dose of current realty is also helpful. In fact, its absolutely essential.

Look at what’s happened in the last 60 days in the Toronto real estate market. It has shown incredible strength. A short synopsis here:

Pundit, biased, off-side or not – the numbers clearly indicate that at least one part of the economy is showing incredible strength thanks to interest rates, consumer confidence and a return of demand.

Them’s the facts…

#109 Bill-Muskoka (NAM) on 04.17.09 at 9:47 am

#86 Flip

Ain’t it the truth! LMAO! Nigeria finally explained with honesty.

#110 Bill-Muskoka (NAM) on 04.17.09 at 9:56 am

#95 Too Old Bob$

They celebrate to demonstrate that they, like their friends, are idiots. Misery LOVES company and nothing shares the moment like Sparkling, eh?

I wonder how many actually realize that with compounded interest they are paying back 300% of the principle? I figured that out way back when I was a mere 20 years old.

Society talks about homelessness, they talk and talk and talk. But when will the people’s elected representatives look after the people’s interests by mandating a 1-2% simple interest on mortgages?

I think the Eagles answered that one with ‘Hell Freezes Over’.

#111 Too Old Bob$ on 04.17.09 at 2:44 pm

“#95 Too Old Bob$
They celebrate to demonstrate that they, like their friends, are idiots.”

ROFL Geez! Bill could you be a little more explanatory.

BTW! didn’t Cone Head Realtor mention that most people couldn’t figure out fractions. What is 300%?

#112 nonplused on 04.18.09 at 12:47 am

#89 Bill-Muskoka (NAM)

I thought Louisiana had the French history. Dang, once you release poisonous toads on a land mass, they end up everywhere! (reference: Australia)

Still, I wouldn’t count Texas out. Unlike Quebec, the money flows out of Texas, and so does the oil. It’s a warning shot across the bow. Plus they are all still gun toting confederates at heart.

If the Soviet Union can fail, any very large empire can fail. Rome, Greece, Ottoman, Balzantine, Mongol, British, Dutch, Spanish, heck China is the only one that hasn’t! But they had their share of trouble too. And the Mao revolution might be counted as the failure of that one too.

#113 Bill-Muskoka (NAM) on 04.18.09 at 9:30 am

#110 Too Old Bob$


Okay, using KISS Math that means 3 times the principle, i.e., original principle borrowed $100,000 X 3 = $300,000 paid back with interest. And here they thought Pay Day Loans was ripping them off, eh?

The simplest way is to get the figures, take the monthly payment and multiply it times the number of months, then compare that total to the amount borrowed. SHOCK & AWE!