TO edition


GM Canada is set to go rubber-side-up. Stressed-out US banks are short $75 billion. You can’t eat the damn pigs. And a blog full of Gen-somethings whining because they can’t afford a cottage and it’s all the Boomers’ fault. Just another day in 2009.

As I have argued here for some months, those who think things will get ‘normal’ again have not been paying attention. Normal is history. Marquee companies have gone bust. Governments have embraced debt and deficits. The cost of money’s hit historic lows. Corporations have shamed themselves with massive firings. Bubbles have burst. Deflation’s visited. And, most of all, almost nothing seems reliable anymore in a world of spin, bravado, nihilism, extremism and shills.

Gone is the certainty that your salary will increase, your house appreciate or hard work will see you though. I repeat: Borrowing more money is no solution to a crisis of credit. And yet by crashing interest rates, governments have been encouraging citizens to do just that. There is no doubt we’re nowhere near the endgame, or that this will end badly. The biggest mistake possible now is to take on new debt.

So what can you say to Mary?

I just wanted to drop you a note to say I think your blog is terrific.

My husband and I have just moved to Toronto after living in London, England for the past 6 years. I’m a Torontonian and husband is a Londoner. We were put under intense pressure by everyone in London to ‘buy a home’ and ‘get on the ladder’. My husband was adamant that the market was over inflated and there would be a crash and everyone thought he was being a total scrooge. So we happily rented a flat, travelled Europe and put aside money in savings to buy a house in Toronto one day.

So, the time rolls around, I get offered a terrific job in Toronto, and we moved here in February this year. We’re DINKS – Double Income No Kids. We have solid, satisfying jobs and want to buy a family home – a cute little place near public transportation.

I was totally under a false illusion that Toronto is not like London. I have been shocked and dumbfounded by the prices of property in Toronto, even when people say the prices are going down. And really freaked out by the other DINKS that we will be competing with for entry level properties who will still offer over asking.

Anyways Garth, I’m not an economist or a real estate agent. Just a humble creative type. But I’ll be damned if I’m going to mortgage myself and my husband up to the hilt to buy a modest little nest to call our own. For the first time in 10 years I am living back at home with my folks and putting 80% of my earnings into savings. We have $100K saved. No debt.

I was wondering if you had any words of hope for those of us holding off …. DINKS in our early thirties who would like a place to call our own.  Should we hold off for a year and see how things shake down? Rent? Living with my parents is really not feasible forever but we’ll do whatever it takes to keep our hard earned money and not throw it down the drain.

How refreshing. A young couple who gets it (except for the living-with-parents part).

Indeed, Toronto prices are still close to their frothy highs, and the local real estate community is doing everything it can to whore them higher. Collapsed mortgage rates (which will be rising in about a year) have done to housing here what subprimes did in the States five years ago. Now more people qualify to finance a home while couples with an average income can get a bigger mortgage. That means sellers can raise their asking prices and realtors can encourage that most destructive of practices – the bidding war.

The end result is (as we all know), houses for which people pay more than they should. Equity does not go up, while mortgages do.

This is a winning move when real estate has solid long-term prospects which will allow the debt to diminish relative to the value of the property. But this time, that’s not going to happen.

The economy will take an eternity to recover from the damage already inflicted. The unemployment rate will not return to 2007 levels for years, while mortgage rates will relentlessly rise. At the same time, in Toronto there’s an absolute glut of new condos coming, plus the Ontario government is about to kill off top end of the market with its insane 8% sales tax on new homes over $400,000. This same tax will also apply to the commissions, legal fees and moving charges everybody pays. Oh yeah, and thanks to the idiot mayor, there is a double land transfer tax in place.

For these arndother good reasons, the prospects for houses suck. Once this sweet spot of ultra-cheap rates and media boosterism fades, most recent buyers will be wondering what the hell they were thinking.

So, Mary, why buy? Without the certainty of capital appreciation, why on earth would you pay a premium to buy a house that you can lease? And why cast off that common sense which has landed you, in your early 30s, with $100,000 in cash and no debt?

Keep reading. I’ll let you know when the vulture has landed.


#1 Rob Jensen on 05.07.09 at 10:33 pm

I’m not to sure that we are in for any kind of “recovery”. After all of the smoke (and mirrors) clears what we going to be left with is the new economy. Depressed prices will hold for long periods of time as will high un-employment. After all of this BS, people are not going to buy “stuff” and the mega-factories and workers around the world require everyone to buy “stuff” and then throw it away after 2 or 3 years. I believe this type of mega-consumerism is dead, along with the American Dream. What we have is a recession into a long U with positive blips along the way. This is the economy of the eighties…but worse.

#2 Avaricious Al on 05.07.09 at 10:49 pm

So, Mary, why buy? Without the certainty of capital appreciation,

Garth isn’t that just what is wrong in this so called culture. A home is to live in. If one wants to increase the value of it they should be adding that by their labour not some swindle, no matter how prettily or politely packaged as ‘capital appreciation’.

Not if it costs six or seven times annual income. — Garth

#3 8% on 05.07.09 at 11:06 pm

“Ontario government is about to kill off top end of the market with its insane 8% sales tax on new homes over $400,000. This same tax will also apply to the commissions, legal fees and moving charges everybody pays.”

If the price going down by 8% next year, then you breaks even. Is the price going to drop more then 8%?? No one knows for sure…. If the price is about the same as it is right now, then you need to pay 8% more….

Toss a coin…

#4 lgre on 05.07.09 at 11:08 pm

I have been studying freemasonry for a couple of years now, and everything happening makes a lot of sense in many ways..Garth is right, we will not be returning to the good times..he says for a while, I say ever. Their influences are all around us but most people miss it.

Times will get hard, very hard based on what has already occurred and written well before it has happened. One world government (New World Order, mentioned by many politicians including Chretien) has been the agenda for centuries and now it is surfacing.

#5 Charles T. on 05.07.09 at 11:09 pm

Stress Test Saves Bankrupt Banks Via Outright Lies

#6 Da HK Kid on 05.07.09 at 11:14 pm

Mary sounds like she in the top 1% both for her age, cash on hand and clear understanding of what is going on.


When renting in TO, and I know TO, look at areas that you are thinking of purchasing in and rent a property there so you can do you homework on A – Neighborhood and B – Finger on the pulse of this neighborhood moving forward on pricing.

Welcome to the best move in many it seems for you!

#7 Denis on 05.07.09 at 11:24 pm

Why We’re Selling and Choosing to Rent:

My fiancée and I are getting married in 9 Days and we need a bigger place. The first thing that most newlywed couples do is buy a place together since most people buy when they get married or have to move to a bigger house or have to move because of a job relocation. To the average person, this is normal. To me, I think it’s nuts!

In our case, we need a bigger place than the 785 sq ft shoebox-in-the-sky that my fiancée currently owns for the two of us and her sister while she’s here for school (and maybe longer depending on her choices after school). I also have a basement full of all my furniture and things that I have from when I lived on my own in University and I’m sure my parents would appreciate getting rid of most of the stuff that’s cluttering their basement.

Based on our combined salaries and rolling over my fiancée’s equity from the condo ~$125k, we can easily get approved for a mortgage to buy a $600,000-$700,000+ house. Trust me … It’s tempting because properties in this price range are beautiful and in great locations! Even more if we 35-year am that mortgage. That being said, I don’t think it makes financial sense to buy right now or to take on such a massive mortgage.

Here’s why we’re selling the condo to protect my fiancée’s equity and are choosing to rent:

The Toronto Real Estate Market is currently down 9% ( I’m going to use the last market slide as a frame of reference as it’s the best data I have access to and is a good indicator of what can happen in a real estate market downtrend as we haven’t seen one in a while and I’m too young (27) to realize the impact of the last one.

From 1989 to 1996, the Toronto Real Estate Market went down 27.6% (See trend on last page of TREB’s latest MarketWatch – As mentioned, Toronto’s market is currently down 9% – That’s a greater drop than in the first year after the last peak in 1989 to 1990 which saw a 6.8% drop.

Here’s how the market continued to drop year-over-year over the course of the downturn:
From 1990 to 1991, there was an 8.1% drop.
From 1991 to 1992, there was an 8.25% drop.
From 1992 to 1993, there was a 3.9% drop.
From 1993 to 1994, there was a bear market rally and the market actually increased 1.18%.
From 1994 to 1995, there was a 2.82% drop.
Finally, from 1995 to the bottom in 1996, there was a final 2.4% drop.

That’s a 3.94% annualized decrease in Toronto Real Estate Market Value over the course of 7 years. On a $400k property, that’s $15,760 per year or $1,313.33/month -> That’s a lot of money to lose. This is also a fairly conservative estimate as that annualized decrease is spread across 7 years. The first 3 years of the decline experienced a 7.72% annualized decrease ($30,880 per year or $2573.33/month).

That’s on top of the Mortgage Payment! In our case, a $400k house with a 125k down payment (which is the equity we would pull out from the sale of the condo) would give us a mortgage payment of $1,430.20/month @ 3.89% in a 5-year fixed mortgage ($10,494.71 Interest – $874.56/month and $6,667.73 Principal – $556.64/month in year 1). That’s with a 31.25% down payment! Imagine putting down the minimum 5% and taking out a High Ratio Mortgage with CMHC Insurance tagged onto their payment?

So to buy a $400k house right now is a losing proposition … Conservatively, we would be throwing away $1313.33 + $874.56/month = $2,187.89/month. Worst case, over the next 3 years we could be looking at throwing away $2573.33 + $874.56/month = $3,447.89/month. All in the order to force a savings on ourselves of $555.64/month in a rapidly depreciating “asset.”

This is why I’d much rather rent a $400k house for $1,600-$1,800 per month and tag on a forced savings of $600 to my rent to go towards a “home equity building” account.

As a side note – I wouldn’t take a hard line on completely refusing to buy a house right now, but I would only do it if I can pick up a place for 23-27% or more below peak market value. Obviously easier said than done, but with the down payment in the bank, it’s a lot easier to jump on that type of deal when it comes available. I’m expecting the worst of the decline to be over in 2011/2012 and a bottom in 2014/2015.

A home to me will always be viewed as a liability as it takes money out of my pocket (Rich Dad Poor Dad definition), but it’s your home and if you’re willing to part with the loss you’ll incur over the next 3-4 years in exchange for the pride of ownership, then that’s a decision for you to make.

Notes on my analysis:
1) Does not factor in neighborhood specific trends (I’d love to have access to these numbers).
2) Spread the down payment across different banks as CDIC only covers $100k per bank ($200k if it’s a joint account).
3) It would be interesting to correlate interest rates and employment with the previous downtrend and our current situation. i.e. how far did the rates have to drop compared to how much rates have dropped int the last year and how money jobs were lost (percentage-wise) before we made the turn.

#8 Soylent Green is People on 05.07.09 at 11:33 pm

Only continue to live with your parents if you wish to stay DINKS.

#9 victoria reader on 05.07.09 at 11:34 pm

In an earlier post didnt you tell someone to wait till august for things to change in real estate prices?

The autumn is likely to pose more buying opportunities, whch will accelerate after that. — Garth

#10 Shawn on 05.07.09 at 11:54 pm

Let’s stop worrying about what our house will be worth in the future.

A house is an EXPENSE, there is no real reason it should be an investment.

Buy what you can comfortably afford, just as you do food, clothing shether, car, vacations. Don’t expect any return from it. Stop counting it in your net worth (if you sell it you need a new one, so it’s not like ready cash).

Count your net worth based on liquid financial assets less investment loans. Do include investment property.

Don’t bother to count other assets like house, car, cloths, furniture, squirrel supply since you need those things and can’t really sell them without later replacing them.

The young couple with 100k downpayment and $100k income can go ahead and buy a house for $300 to $400 if it can be found and get a 3.9% five year mortage. Who gives a crap if it turns out it could be bought for $50k less in one year? That’s not an excuse to live with parents. Move out, show you are adults.

#11 dd on 05.08.09 at 12:11 am

$100k and no debt. Rent. And the 100k … invest in something that will return income or a capital gain.

#12 Basil Fawlty on 05.08.09 at 12:28 am

Well the word is that the sale of US Treasuries was under subscribed today and this pushed up long term interest rates before the Fed came in and started buying the bonds. It looks like the Chinese are losing interest in purchasing US debt, which may mean more quantitative easing to fund the deficit. This could put downward pressure on the currency and hence increase prices.

#13 Steve outside Canada on 05.08.09 at 12:48 am

Well said Garth, I will patiently wait for that vulture opportunity time. Let us know. I’m coming back to Canada in July and there is no way on earth that I will buy…Renting will do until the vulturing starts…

#14 Sondra on 05.08.09 at 12:51 am

Okay, I know I ‘m going to get blasted for this,…

My daughter has duly pointed out that many people are enjoying putting the blame on the government, their birthdates, companies, bankers, realtors, investment brokers.

She pointed out to me that all she hears lately on the radio talk shows are people trying to place the blame for the economy and their own situation on someone else.

Voting time is coming in BC and we are being talk-showed with politics and the blame game.

I grew up with powdered milk, pnb sandwiches, if we had bread instead of hard tack, tang, (it was good for the astronauts) and if we were lucky fresh apples. The best thing in the world was picking up the old Italian prune plums from someone’s backyard.

My grade 11 teacher told my whole class that no one in my class will own their own home, it’s out of reach for the average person. Blah , blah, blah, the end of the world. Yah, well I own 3, not strata either.

Life is what you make it.
It’s all up to you.
You can blame someone else or you can enjoy your finite time on this planet.

Born in the 60’s and I make my own party instead of whining about showing up late.
Forget the baby boomers, get a life. Yours hopefully.

Oh, and yes she’s going to choose who “our” vote goes to, as it effects her future, and she has followed politics for years, more than can be said about the average voter.

So go ahead, blast away, we’re going off to hot yoga.

#15 . . . fried eggs and spam . . . on 05.08.09 at 12:54 am

“. . . most recent buyers will be wondering what the hell they were thinking. So, Mary, why buy?”

An extremely smart couple. FWIW, rent for as long as necessary, save plenty to have solid fiscal reserves and when a gut feeling about looking at homes, only then when prices have flatlined, buy in.

By renting, there are no property taxes and no excessive maintenance costs to fork out — will be in really good shape when the time arrives.
Oops! Ummm, the printing presses are on straight double-time shifts at the Fed now! —

Apparently, China dislikes Quantitative Easing /\ /\ while the BoE likes it! /\
I posted links a night or two ago, about the Chinese being more than a little ticked with Uncle Sam’s constant interference.

The WH continually make a nuisance of itself by sticking their nose up everyone’s arses to create more and more instability, which leads to fights between countries. Now —
Turkey appears to be headed toward Iran, Russia etc. /\ /\ while Iran has invited Germany to invest there /\
It appears the sun is waking from it’s nap, just in time to increase the temperatures of hotheaded govts. here! —
Anyone recall the Pandemic Pandemonium? First link provides lotsa’more booga-booga for the forthcoming extermination of us sheeples! /\ /\

From the second story: “Margaret says: ‘Sounds like mass, forced vaccination to me’.”

This ‘vaccination guide’, if it can be called that, comes straight from our own Cdn. govt. so cull, or do away with those 65 and older worldwide! Two major cost-cutting benefits are:


#16 PW on 05.08.09 at 12:57 am

What about all the crazy people who actually want to buy a house to live in, and the even crazier people who want to pay their mortgage off? I really think the whole issue now is buyer intention. As long as buyers do not expect the value of their home to rise, and have anticipated not only what today’s mortgage payments are, but what they may be in 5 years, then they should certainly consider buying a decent house in a decent neighbourhood. Sure prices may crash or stagnate, but as long as a buyer’s intention is to utilize real estate as an actual home and not a windfall or bank balance, and to actually pay off their mortgage in 20 or 25 years, what’s the problem? Don’t they eventually end up with a mortgage-free place to live, and an asset? Isn’t it even better if the home they buy has an income-generating suite that might actually pay them an income, even after the mortgage is paid off?

#17 Popeye the sailer man on 05.08.09 at 1:40 am

“Tha’s all I can stands, and I can’t stands no more!”

Cost of Credit goes up!

Well I know it’s a little off topic, but I haven’t had anything to comment on for a while. Today I got a letter from Island Savings that my line of credit rate is going up because there margins are to small. This was a prime + 0% when it was secured, I changed it to unsecured 3 years ago and got a rate of Prime +1%. I have had a balance of 6-11,000 on this at all times as I buy large items like a tent trailer or do home reno projects or repairs like new roof, HW tanks, driveway, excavating. Anyway I am required to pay a min of 1% of the balance yet I have a direct transfer each month as a min of 2%. And make extra payments when I can. I have never missed a payment and the payments are a week before due date. So the letter said they are raising it to prime + 4% which will nearly double the amount of interest. I called and questioned them for about ½ hour, and manager said he would review my account. He called back and with another 5 min of negations we settled on prime + 2%. So what does this mean for Real-estate, I see a few things;

Any one with a line of credit can have there rates changed anytime increasing there debt costs.
To me this was a large soft general call for unsecured lines of credit, as there risk of defaults are going up, they are hoping that many will close there lines, and those that don’t; pay for the higher risk.
Anyone that is under water with there mortgage or cannot refinance there mortgage to consolidate will get stuck paying more.
I think there is a increase risk of banks calling loans in for any reason if they feel an account is red flagged for missing a payment or something.

Now because of deflation has presented a deal on a 50” TV For $999 should I take my overtime check and pay down the LOC or buy the TV….

I’m getting the TV I’ve been waiting for this price point for a long time! ;-) No reason to be depressed during the depression.

#18 Popeye the sailer man on 05.08.09 at 1:48 am

PS, does “Mad Max” come on blue ray?

So I can prepare for the “the Mad Max scenario.”

#19 confused and a little crazed on 05.08.09 at 1:59 am


as for the parents part…it hard to say. some people get along with the inlaws as long as there is an understanding of boundaries. She is an adult therefore take responsibility as such pay rent to your parents…not mooch off them. If you have to pay someone…pay family. Live like a tenant in your parents home .. diffrent levels and phone before you come over for both parties

But I completely agree if this is a one sided relationship where the child nevers grows up…depends on mom/ dad for dinner and laundry…I mean cmon you heard of the romantic comedy failure to launch with M. Maconahey.

u have to grow up sometime

#20 Popeye the sailer man on 05.08.09 at 2:50 am

“Tha’s all I can stands, and I can’t stands no more!”

We decided to move from Shawnigan lake BC to Spruce Grove Alberta for better help for my daughter and family support for my wife. I will fly out to the wet coast for 4 weeks on a ship in the Coast Guard. Every other month. Any way we listed the house last November @437,000 dropped to 420,000 in December and then 390,000 in Jan 09 sold in late Feb 09 for 380,000 and closed on “Greater fools day” Apr 1st. Fitting I think, anyway now we are renting in Spruce Grove. Having a dog made it hard to find a rental, so we lowered our expectations and are paying 1600/month for a house in Westgrove, small lot, small bed rooms, and no garage. I have read both greater fool and after the crash but my wife has not and will not, I have gone on and on and on about things in the books and the website, and have made some inroads to why we should hold off buying for a bit. Any way I’m finding these super low mortgage rates are causing support for prices in the area; many homes she was eyeing have sold, because we are looking for 4br with a large lot, and very few views of other houses that can see our deck. We are use to a large house, with a treed .40 acre. So many of the houses we are looking at are between 350,000 (needed some/much work) to 425,000 almost new (needing little work). I’m very handy and have refinished a few houses, but I want to spend more time helping my daughter then being mister handyman. Our 250,000 down payment is currently in 3 high interest savings accounts earning a paltry 2% which will be taxable. When we buy even at current prices and rates our mortgage will be lower than rent minus the 2% gain on deposits. So we don’t want to wait 5 years+, I’m thinking this fall, we can handle a bit of a drop after we buy but don’t want to ride it all the way down. I’m hoping reality sets in here in the Edmonton area because right now prices are all over the map. I found a another web site with Edmonton data where I found this chart ; I’m hoping to jump in when the bar looks like march 2006 or better. An April 7th TD bank report stated that Alberta will drop 20% this year, if I can catch the 12-15% I will be happy, even if it drops another 5-8% after over the next few years. Like Garth said at one point 20% chance of a depression. That leaves 80% chance of a recession, its hard to dodge all the bullets that will come our way, but we enjoy home ownership, and have not rented for some time. I think if we get a mortgage that we can handle at 7-8% for 20years (personal stress test) 3-4 % will be a breeze for the next 5 years. Sorry Garth I think we will lock in @ 5y fixed @3.75% having paid 10% in the early 90’s I know how high things can get.

Open to any thoughts from the masses! Or Garth!

#21 DINKs in TOKYO on 05.08.09 at 3:34 am

I to wanted to move back but I really dont see any vulture properties yet… As for Garth’s forecast about interest rates going up, I agree with most of what he says but this is the only point I can not agree with from the experience here in Tokyo. The financial markets and economy are in shambles everywhere, the excessive debt that is being accumulated by govt’s to finance and throw money at the economy are really not going to hit the economy because it is just being sucked up by the bank debts and thus not circulating and thus no inflation or reason to raise rates. Govt know if they raise rates now housing is going to go down further, thus not in their interest to do so.

#22 Leonhart on 05.08.09 at 4:20 am

Good day from Shanghai Garth,

Great to read you and stay in touch with Canadians fellow countrymen over your blog.

While I operate my company in China, I am starting to look for a farmland in Quebec. My goal is to get as much self-sufficient as possible for me and my family. Being in the sourcing possible, I am securing sources for foods, seeds, new (free) energy stuff and others.

I was wondering if you think the time is right to invest in land (small scale farming, etc.) now?

I don’t believe I will have to be into debt to purchase such property.

For the rest, I will keep on renting in Montreal living with my 2 kids and Mother-in-law. (She’s Chinese and we can’t talk much to each other…life’s good)

Warmest regards,

#23 John Castelhano on 05.08.09 at 6:38 am

Hi Garth – I’ve been reading your blog for a few wks now getting more and more “queezie” (pardon the slang) with each day. So I generally agree with your position about the state of the nation and imminent housing correction and hope you will soon offer more suggestions of where you think people should be putting their $ in times like these.
Gotta run!
Cheers – JC

#24 john on 05.08.09 at 8:17 am

What is the possibility that mortgage rates this low are the new norm?

Zero. — Garth

#25 lgre on 05.08.09 at 9:04 am

“and to actually pay off their mortgage in 20 or 25 years”

This standard was introduced to set you up as a slave, if you cant pay it off in 10 years dont buy it period. The only people that benefit from you buying a home is bankers, brokers and agents..and all of them do better with the prices as high as possible. Think about that before you buy. I see too many people living their life just to work and pay off debt..thats not life, it’s slavery.

#26 lgre on 05.08.09 at 9:06 am

‘What is the possibility that mortgage rates this low are the new norm?”

how can this be the new norm? if inflation hits 10% how can you keep rates at can’t.

#27 Just a Carpenter on 05.08.09 at 9:23 am

Why not buy a house and put your money to work at the same time. A young couple I know just built their own place with a suite. Most municipalities have really warmed to the concept of secondary suites in residential areas. Properly designed with separate entrance, additional parking and sound, proofing this young couple has the best of both worlds. Throw in the concept of a RRSP mortgage and they just may be on to something.
The idea multiple generations under one roof is nothing new. Do it smart, with separate “living spaces”, and the benefits of a multi generation arrangement can extend far beyond economics.

#28 Jon C. Coates on 05.08.09 at 9:24 am

Everyone seems to have lost sight of the fact that the first and overriding purpose of buying a house is to make it a home. If properties appreciate in value, that is simply a nice bonus. The appreciation in value should not be used to act as a credit card to be further encumbered with debt to enhance one’s life style.

The fact of the matter is that a home is a personal refuge and the sooner it is owned free and clear, the better. The only reason a home should be sold is if you are transferred out of the area and most modern companies have plans in place to ensure that you do not lose money on the necessary sale of your home to take the new job.
Nothing spells independence and security than a home which is paid for. Only real estate “professionals” seem to focus on rising house prices and that’s because they get bigger commissions.

Pay the mortgage, pay off debt and ensure that you have enough life and health insurance to to guarantee that your lifestyle will not be threatened by fluctuations in the economy. Those steps are the cornerstones of a sound fiscal life.

Enough doom and gloom. The economy is on the way up and Garth needs to write a new book about “How to take advantage of the coming boom”.

#29 Devil's Advocate on 05.08.09 at 9:36 am

No one wants to “work” anymore. Everyone wants the economy to “let the good times roll” and expects that government will make that happen. That’s not governments job. Governments don’t produce, people produce.

Everyones eyes are on the stock market hoping for easily gotten speculative gains. Speculation has replaced good old fashioned “work”.

No wonder we are in the mess we’re in. Nobody is doing anything, they’re all watching waiting for someone else to do it.

Vultures don’t want to earn a roof over their head they want to wait until the price falls to a level they can finance 100% of the purchase amortized over 40 years at a monthly payment that falls within a level of affordability that they don’t have to work more for.

Speculators want to buy something today hoping that a “greater fool” with more money will willingly redistribute their wealth to them for having done nothing.

Governments want to print money out of thin air not that which represents a note of stored wealth of the fruits of ones labour.

Is it any wonder the economy is in such shambles?

This is a “correction” people. Just like staying at the Las Vegas poker table too long – easy come easy go. Want to improve your lot in life? Work.

The results of a recent poll in my area yielded that two thirds of the residents want government to put the economy before the environment. If anything is the governments job it is protecting the environment NOT the economy. Only you and I can improve the economy and only you and I can screw up our environment. What good is an economy when we have messed our environment up so bad we can’t breath the air, drink the water or cultivate the land?

We’ve been here but a very short while. In the whole grand scheme of things our time here as a species will be but a indistinguishable blip on the radar. We seem to be ensuring that as we most certainly seem to be closer to mastering our own extinction. We have earned less right to be on this planet than any other species as we set about destroying it.

Now it appears, in our short sighted selfish greed, not only will we leave our children a legacy of debt but a seriously messed up environment as well.

I am embarrassed. Our children ought to take us out behind the woodshed and whip our asses raw.

#30 Al on 05.08.09 at 9:43 am

“Gone is the certainty that your salary will increase”

Unless of course you are a politician or work in a field where the government is your employer. Politicians will vote themselves a raise and public sector unions will simply strike until the government gives them what they want.

#31 Avaricious Al on 05.08.09 at 9:48 am

“Not if it costs six or seven times annual income. Garth”

Garth your argument is on par with me buying a auto that is so effed it can’t even honk and you tell me, “Oh well, you paid too much”. Speak to the point guy:)

#32 dbg on 05.08.09 at 9:51 am


I agree.

New book “take that gloom and make it into the next boom” by Garthy co authored by the Coming Depression

It would sell millions!

#33 My_View on 05.08.09 at 10:08 am

5 years is at 3.59%, if you rent @ $1600-$1800/month, that’s a waste. Do the math. The disciplined people who saved and waited, now is a great time to buy. Yes prices will be heading down (how far? and when its flatlines?), but like others here, I have to agree a home is a home, a place to live and raise a family. So you wait a year for a decline of 5-10%, but rates go up and you’ve paid all that rent. I’m closing on a home and it was down from the peak and we got it for 15k below asking. And of course, pay off the home quick i.e, 10-15 years. For us the math of renting didn’t add up at this point in time. By the way when is any debt good? Of course it’s scary because of all the doom and gloom, but life goes on. Put a good down payment and have a big emergency fund. Im in my early thirties, time is of the essence, my friends & family that bought several years ago are way better off than us now.

#34 molson cdn on 05.08.09 at 10:20 am

garth or anyone for that matter,
i am not going to sell so i can rent.
but i would like to brainstorm this idea: would you lock in at [email protected]% or 5.2%@10yr?
any opinions/comments would be welcome.

#35 Bill-Muskoka (NAM) on 05.08.09 at 10:23 am


The sole reason for the situation is the way the Tax Laws have been written. They protected the greedy and unethical and screwed the masses. People go with the easiest route, and the entire ‘investment industry’ has slyly promoted their own interests using the laws politicians have passed.

That is unravelling on a global scale right now! The Greed is Good mantra has played itself out! Thanks to morons like Dim Jim Flaherty (and Harper/Bush) and his IT fiasco many people have been near bankrupted for the future.

#36 KenCan on 05.08.09 at 10:25 am

Great Post Garth – agree with you but alas, there are some greaterfools out there still multiple bidding! Hopefully not many left and the normal will resume.

#7 Denis — great analysis. My wife and myself are in same situation as you. I was so surprised to note how much our joint income could now fetch in terms of mortgage. I work in Credit Risk and I know all about increasing future int rates, defaults, etc…
If buyers do not factor in an increase in their mortgages in 1 year (1% and increasing), as well as inflationary pressures on Gas, food, utilities, taxes (too much money M1 in the monetary circuit, debt by Govt), coupled with the fact that salary wont increase in the next 12 months at least, then, they will be in for hard times!!

#10 Shawn – so tell us, are you a RE agent or one greaterfool who just bought at peak prices and trying to say that you were right and get everyone else to get into the market? Well, we need ppl like you too; else, it would be too perfect!

#37 PTDBD on 05.08.09 at 10:30 am

Green Shoot News Prestidigitized from Cow Patties:

– Molly the Cow escaped from the slaughterhouse by boldly running down the street. As a reward for her audacity, she will reside on a farm with her friends and feed contentedly.

– The Chairman of the Board of the Federal Reserve Bank of New York, Stephen Friedman, resigned from his position. It was reported that he had made sizable, but pefectly legal, purchases in Goldman Sachs.

– Fannie Mae is going to the Treasury for more paper. They lost 23.2 billion. (that was much less than expected…expectations of loss will be increased, so the news will be even better next time, going forward)

– U.S. unemployment was much less than expected with public payrolls rising by 72,000. More than 1.4 million people will be hired for census over the next year. Perhaps the cesnsus should be done every year.

– Canada adds 35900 self-employed …(Blog posters? Book writers?)

– oh, and the Stress Tests…take a pill and call da Fed in the morning

(Sorry for the repetion Garth, I originally posted to the wrong Blog – A Senior moment)

#38 Flip on 05.08.09 at 10:57 am

I’ve asked this question to Garth – but he didn’t reply. So I’ll put it to this group of brainiacs:

If you were highly mobile, no dependents, many languages, masters degree and a little suitcase of cash (100 K or so) in your early 40’s. No house, no debt and no real attachment to your current place of work/city/province: where would you look at moving to?

Trying to figure out which country out there has the most potential; is not in the total mess America/Canada/Germany/UK etc… are into. A country that will not be ridden with massive debt over the next decades. A country that has a good demographical composition (not too many old-boomers).

Does such thing exist – or am I looking at the wrong planet?

#39 Sail1 on 05.08.09 at 11:28 am

# 9
The autumn is likely to pose more buying opportunities, whch will accelerate after that. — Garth

I have heard this before, just never seen it.

#40 Nalini Sharma Fan Club on 05.08.09 at 11:28 am

#3 – 8%

No, don’t toss a coin. If you buy a property worth X (anything over 400K) then you just paid X + 8%. But you are still left with X. It is not a wash.

Was anyone surprised with the results of the Governement supervised ‘stress tests’ and the released results of the tests. Propaganda at its best. So many questions still to be answered.

#41 cowgirl kiss on 05.08.09 at 11:37 am

Some of you know my story, but there is another short-term solution other than renting.

I sold my house last summer and was offered a chance to house sit which I accepted.

I agreed to live rent free (no utilities either) in a huge McMansion while the owner worked out of town. He didn’t want the hassle of renting or packing up his stuff and he needed to finish some outside renovations in order to sell. The agreement was for 4 months and now it has extended to 16 months and all the while I am very grateful for our mutual win – win and I am saving.

I keep the house clean, take care of little things like the stainless steel outdoor hot tub, and generally make sure that his house is secure and respected.

Not sure how many McMansion owning folks need this sort of help, but it might be something to look into – a new niche need.

#42 Keith in Calgary on 05.08.09 at 11:50 am

#33 My View…..

Well, I gotta tell yah……..we rent for $1,600 a month and the economics here for buying do not make sense in the slightest. We are saving $2-3K every month and renting. Now looking at making the same kind of decisions as #38 (we will probably leave the country in 5 years).

#43 VOODOO on 05.08.09 at 11:52 am

#34 molson cdn on 05.08.09 at 10:20 am
Garth would say ‘stay variable’. Likely rates will be well below 5% for the next couple of years. Then when you see rates begin to rise steadily, lock in.

#38 Flip on 05.08.09 at 10:57 am

Regarding stock market: sell in May and walk away (buy back in the fall). It’s worked often in the past.

#44 gold bugger on 05.08.09 at 11:53 am

So you’re a property-owning hippie. Besides that anecdote, what’s your point? The world exists beyond the end of your bong.

/dope-smokers crack me up.

#45 Bill-Muskoka (NAM) on 05.08.09 at 11:53 am


I love the term ‘DINK’ because it is what many are and besides, we need another simplistic acronym for the Sheeple! LOL

#46 highway61 on 05.08.09 at 12:03 pm

but hey, who knows – things might get better soon:

#47 Sondra on 05.08.09 at 12:03 pm

molson cdn on 05.08.09 at 10:20 am
5 year or 10 year.

Mortgages are something that should be a goal to pay down as quickly as possible.

Some people are going 10 year because it gives them the feeling of security. Check your payout penalty, and play the what if game. Play out the scenarios.

Personally I prefer a mortgage that is has flexible paydown options, and floats with prime. But then I have the goal of paying down a mortgage ASAP. We live on one income and use the other to invest. Live well within our means.

#48 Patrice on 05.08.09 at 12:04 pm

while you are renovating your house, perhaps you would be interested into making it disconnected entirely from the grid.
here’s your inspiration right here.

solar panels + hydrogen from the extra electricity + efficient house = totally disconnected.


#49 gold bugger on 05.08.09 at 12:06 pm

Jon C Coates writes: “Only real estate ‘professionals’ seem to focus on rising house prices and that’s because they get bigger commissions.”

Read an economics textbook.
1. Realtors don’t set house prices, buyers do.
2. Clever use of irony quotes, Karl Marx.
3. If houses cost less, people would pay less commission per sale, less HST on commission, less property (or land) transfer tax, etc. In other words, sales friction would decrease so likely there’d be more real estate sales, which would mean just as much, and possibly more, money in the pockets of realtors. Higher prices are not inherently beneficial to realtors.

Visit a library. Take out a card. Read an economics textbook.

#50 Live Within Your Means on 05.08.09 at 12:15 pm

Perhaps OT, but maybe not. For the last 2+ mos we’ve asked contractors to give us a quote on 2 bathrooms. Downstairs in the basement they’ll have to dig the cement and put in a drain to create a new shower, enlarge a room for a guest room, etc. Upstairs, in the main bath, its the same footprint, but it has to be gutted. I’ve bought the tiles, tub, showers, faucets, etc. – family room is filled with all the stuff I’ve bought & its taking over living room upstairs. Because I’m a fussy person, my hubby insisted I choose & buy everything, but will lambaste me if he thinks I spent too much on an item. These renos are not frivoulous. The main bathroom floor could give out, & 1 wall has to be ripped out due to water problems.

Sorry for being long winded. I did floor plans using , old software & prepared a fairly detailed work list. The other day rec’d an email from an estimator apologizing he had not gotten back to me due to a death in his family. Yet to hear from the other 2. All had been recommeded to me. Seems there’s lots of reno/construction work going on here in the M’times. Hubby said originally maybe it would be good if they could do it while we’re away. I said NO way. I want to be home to monitor the work.

#51 Bill-Muskoka (NAM) on 05.08.09 at 12:17 pm

#38 Flip

Personally, having changed countries, I would stay right where I am because to me life is about family, friends, and roots. If adventure and money are your thing then go for it. I have already passed through that phase of life and found everywhere is basically like everywhere else. SSDD.

The newness wears off rather fast then you either find internal happiness (the intrinsic rewards of life and homeostasis) or keep seeking it. The grass is actually the same everywhere, complete with insects, weeds, and a need for rain and sunshine. Moving is best done based on necessity, not wanderlust.

In other words, ‘Count your blessings. You may be richer than you think!’

#52 mathew gibson on 05.08.09 at 12:21 pm

# 30 Wrote

““Gone is the certainty that your salary will increase”

Unless of course you are a politician or work in a field where the government is your employer. Politicians will vote themselves a raise and public sector unions will simply strike until the government gives them what they want.”


The public service (and the services they provide) will be very hard hit in the coming years. No government can keep borrowing, it must eventually do something to pay down its debt. It has only three ways it can do this: print money, the Zimbabwe option; increase taxes; cut spending.

The first will not happen. The real response will be the most politically-palatable combination of the second two that the then-government can formulate. While this will mean increased taxes (especially at the municipal level, where much of the burden will be shunted) cuts to government spending are inevitable. This might be simply numbers, or the unions might get smart and accept broad wage decreases. But it will happen, and I can assure you that there will be virtually no striking, because most public servants (most people) will not strike in a time of high unemployment. Governments have cut the public service before (always Federal Liberal govts in recent years) and frozen wages (effectively a wage cut when inflation is considered) and the public sector did not strike. Nor will it this time.

However, you are absolutely right about politicians.

#53 Shawn on 05.08.09 at 12:25 pm

#36 Ken who said:

#10 Shawn – so tell us, are you a RE agent or one greaterfool who just bought at peak prices and trying to say that you were right and get everyone else to get into the market? Well, we need ppl like you too; else, it would be too perfect!

What I had siad was a house is an expoense not an investment, but go ahead and buy what you can afford.

Ken I am not in real estate and have no vested interest in home prices

Ken I bought 14 years ago at $135k near Edmonton. A 1982 house. Since then Bathroom reno $12k, Outside reno $30 k(new roof shingles, small veranda, garage door, cut a side door, decorative bricks on front). Major Kitchen reno $55k. Hardwood $7k, landscaping improvements $8k. That’s $112 in renos not counting lots of more minor items.

The house is worth mabye $450 and has no mortage no line of credit so I did what I wanted to and could afford.

I have no intention to sell and If i did the gain would be taken up by buying likley a more expensive houes, so where is the gain really?

My investments are in stocks 100%. Check my link for how I have done. Are you still ready to call me a people like me based on a paragrah or two?

#54 rory on 05.08.09 at 12:27 pm

My guess is that the gang here will overwhelming tell you Asia – HK, China, Singapore, or Malaysia.

#55 kitchener1 on 05.08.09 at 12:29 pm

Just wanted to update the Toronto market from a vulture perspective. Over the last 2 months I have been looking at properties in West Toronto and North York. What I have found is:

1. Lots of fools out there, first time buyers who are not business savy, the jokes going to be on them.

2. RE agents are still up to there old tricks, phantom offers are the name of the game, 3 homes I looked at all had one offer the day I viewed them, however were still on the market 1 month later with price reducations. One home even had three, yup THREE offers that is still on the market today!! Gotta love it

3. Seems like holdback offers to a certain date are returning in style, ie, seller will not take offers until certain date. I can’t beleive that first time buyers are falling for this crap, personally I love it when I see that and still see the home on the market 6 weeks from now.

4. A lot more Power of Sale properties coming up lately, banks are being much more aggressive in their marketing and selling of these homes, I looked at a few and was suprised to hear what they sold for after a couple of weeks. Banks just want them gone in a hurry, much different then last year. These properties are putting downward pressure on their respective neighbourhoods.

5. Not sure how to describe this, just some personal feelings but from watching the market/listings/ talking to my RE agent/checkign I sense a bit of urgency in the Toronto RE market, I get the feeling there is a lot more desperation then what is being reported in msm. Lots of listing agents have personally told my agent to bring any offer on many of the properties I have viewed.

There you have, my view from the front line, Garth is right, wait it out until after Aug/Sep. In a few months we are going to be at one year plus inventory levels in the GTA.

#56 mathew gibson on 05.08.09 at 12:29 pm

# 38

“Trying to figure out which country out there has the most potential; is not in the total mess America/Canada/Germany/UK etc… are into. A country that will not be ridden with massive debt over the next decades. A country that has a good demographical composition (not too many old-boomers).

Does such thing exist – or am I looking at the wrong planet?”


#57 Jan on 05.08.09 at 12:37 pm

You need a million? You need $50,000 a year to live on?
Get real Garth. I am 54 with no debt and my house is paid for. My kids are on their own now. I am currently living on only $25,000 a year and have been doing so for the last 4 years!.
What the heck are you spending YOUR money on that you need so much ? I gotta know.

Motorcycles. — Garth

Sorry Garth – I own a 2007 Victory 1634cc Kingpin plus a truck for the winter. Again..what the heck are you spending your money on??? Must be alll those wild vacations in tropics, eh??

#58 PTDBD on 05.08.09 at 12:37 pm

Investing for Dummies:

An economy is reflective of the society in which it functions.

In a society that legalizes torture, lying, grand scale theft, false accounting, the wealth scale will shift massively away from the populace to a certain few. We saw that in the USSR.

Proposals now in the U.S.A. call for Internet gambling and the legalization of marijuana to generate government income.

Imagine the productivity gains as the few remaining workers stumble in and start to toke up after all night blackjack, anti-depressants, and two hour pill-induced erections.

#59 Live Within Your Means on 05.08.09 at 12:38 pm

#38 Flip on 05.08.09 at 10:57 am

Yep, I think you’re looking at the wrong planet. I’m a lot older than you – one of those hated boomers, who lost 40-50% of their investments. But, we were savers, lived within our means, paid off our mortgage ASAP, & then started investing. At least we have pension plans. My dream would have been to sell all, live in a tiny village in the south of France, Portugal, Tuscany or near Guadalahara in Mexico and appreciate the food, wine & slow pace of live in places like those. I’ve lived long enough to realize that money is not everything, but, unfortunately, now those places have also become unaffordable. Try Indonesia, according to a poster on this blog.

#60 Grumpydawgs on 05.08.09 at 12:46 pm

Ah, the jobs numbers, finally some ‘green shoots’, or are they? The current stat offerings are really the sweet opiate of denial. The government has decided that it would be better sold as ‘ optimistic and confidence building’ if it could just get rid of those pesky unemployed, so lets all call them by another name then shall we?

In this mornings jobs numbers we see that the EI recipients who were first on the pogey train in the fall of 08 and have now fallen off and as such no longer qualify as ‘unemployed’. So instead of these people been listed as terminally unemployed the government has renamed them as ‘self employed’, how convieiant, and in BC to when we are only days away from an election, how inflamatory.

The statement issued by stats can actually refers to the jiggery pokery in the body of the issue but the facts are well and truly obfuscated by the headlines.

Thus in Canada we have a new class of entrepeneurs, the unemployed who can’t find jobs.

#61 Grumpydawgs on 05.08.09 at 12:48 pm

PS, heres the news release btw

#62 Nebbio on 05.08.09 at 12:53 pm

The sad part of this story is the pitiful state of Ontario’s rental stock. Try finding a decent house to rent for under $2000/month. I know this situation will eventually change, but anyone who has a respectable place right now wants you to make their (inflated)mortgage payments for them.

#63 Bulls eye on 05.08.09 at 12:58 pm

# 38 Flip

…This can get conflicting. For tax purpose – Alberta.

While in Alberta:
-Rent – in a few years home prices will fall, and you will have the opportunity to select a home that has
passed the initial mold test.
– Youngest population (hence the mad selloff of homes)
-No premium for Health care (though services are poor)
-Employment opportunities
-Cow Girls

Offshore: Zurich – Switzerland

Freedom from the “Grid”
Employment opportunities

#64 Shifty on 05.08.09 at 1:22 pm

#38 Flip
Sounds to me, you need to travel a little, start with Russia and talk to as many old boomers you can find.

#65 db.cooper on 05.08.09 at 1:24 pm

@ Flip

try Iceland or Ireland. I here real estate is cheap there.

#66 David on 05.08.09 at 1:39 pm

Living with Mom and Dad might not be ideal, but you are saving by not owning an over priced house that will take a lifetime to pay off and most definitely will decline further in value as the bubble deflates. If the situation becomes intolerable the couple can go rent a place in the interim.
The “throwing money away by renting” hypothesis should has been thoroughly debunked countless times and why anyone would subscribe to this discredited meme is beyond comprehension. For those who need a refresher course.

#67 Dan in Victoria on 05.08.09 at 1:51 pm

Yes, Garth that is refreshing,after all the whinning and carrying on the last while.I thank god every morning when I get up that I have been allowed the privledge of being born and allowed to live here in Canada.Some of you should get a reality check.Post#27 Just a carpenter,I wanted to sell last year and take the profit on the house and wait it out till the market bottomed,then look for a deal.The wife nixed that thought,so we came up with the idea of a suite we’ll have a positive cash flow from the house,and I suppose its increased the value somewhat,but we’ll be giving some back as prices adjust.All in all it worked out to be a good compromise for us.Happy wife,happy life.

#68 Danno on 05.08.09 at 1:53 pm

#38… Try Norway, or Sweden

#69 Makeorbreak on 05.08.09 at 1:55 pm

You never know what Toronto may look like a while from now. It may very well look like this:

#70 North Vancouver Citizen's Analyst on 05.08.09 at 2:25 pm

While I’m in completed agreement with the housing bubble continuing to bust long term, why should interest necessarily have to go up?

Japan has had zero interest for 20 years.

Tell us Garth, why can’t that happen here?

#71 . . . fried eggs and spam . . . on 05.08.09 at 2:37 pm

#34 molson cdn at 10:20 am — “. . . would you lock in at [email protected]% or 5.2%@10yr?”

Hi molson. If it were me, I’d take the second option with a large mortgage, and create an RRSP mortgage via a CFP.

As well, a few posters have pointed out if part of the home can be rented out, use that income for upgrading and improving everyone’s living space.

#72 Joanne on 05.08.09 at 2:46 pm

When interest rates rise to 6 or 7 % who will be able to afford or qualify for these overly inflated house prices? Won’t matter, market value will fall. Supply and demand. Mark to market. However many that take this bait now will be underwater. Buyer beware.

#73 David Bakody on 05.08.09 at 2:52 pm

Mary-Mary …… Rent … but do try and find a nice safe place and then enjoy life (no housing strains) and wait for the just the right move ….. as you have all your ducks lined up your home will come when you least expect it. As you may know, there are many people who want to move out and rent ( funny eh) and you just might fine a private deal via a co worker or a referral. So in the interim talk to your mortgage broker (Bank) line up a good lawyer and hold all your cards close to your chest. “All good things come to those who have the time and patience to wait”

#74 905er & Spouse on 05.08.09 at 3:03 pm

Okay…so I read the news this week and see that:

1) Job GAINS in Canada,
2) US job losses easing,
3) Markets WAY up,
4) Housing prices only drop 3% and is up in the 3 areas I want to live in like up 50K+

I am now thinking maybe I missed the boat and I will never be able to own.

My spouse tells me to chill but I’m finding it hard to keep it together and not totally panic.

#75 Grumpydawgs on 05.08.09 at 3:08 pm

#26 Igre, I’ve got news for you. Inflation is already WELL OVER 10%. Bought milk…… lately?

#76 Kurt on 05.08.09 at 3:14 pm

#38 – Flip – what are you looking for in your life? Is it just economic success you are looking for? If so, by which path – entrepeneurship, professional employment, climbing the corporate ladder, trading (i.e., professional gambling in a marketplace), marginally legal activities? Different countries favor different strategies. If it’s not just economic success, what else is important to you – political freedom, low crime rates, quality of public healthcare, climate, general culture (community oriented vs individualistic, conformist vs tolerant)? Like a home, a life is not merely an investment, it is to be lived in. May I suggest that, if you are uclear about these thing, that you live as a nomad for a while. Your ability with languages qualifies you to teach english on contract in many places. You may have other readily transferable skills. Get out and see the world, and perhaps you’ll find a country that claims your heart.

#77 Chris in England IG-AZ at the moment on 05.08.09 at 3:39 pm

Flip #38:

DA HK Kid says Malaysia, and who are we to argue?

#78 Live Within Your Means on 05.08.09 at 3:51 pm

#107 Chris in England at the moment on 05.08.09 at 10:01 am

:-) I remember well those wooden tennis rackets in a block. Unfortunately, if one was working in Ottawa in the late 60’s and wanted a social life, one had to belong to a tennis club, ski & hiking club and have friends who had a cottage in the Gatineaus, and have season tickets to the ‘arts centre’ or be relegated to just party in Hull, PQ.

I knew various people from England who lived in ‘council flats’ ? without a lou in their house. Realize that may be before your time Chris. Home ownership for most of the ‘middle class’ in Canada when I was a teen in the mid sixties was fairly common. We rented a 3 bedroom apt as my Dad had lost his job and my mom had to go back to work. Most of my friends in high school were 1st gen. refugees from Europe. When I was a preteen & liveds off the island of Mtl., we used to meet the trains filled with refugees from Europe. Our small village had ‘hostels’ where they would live for a number of months before they moved to other parts of Canada. We loved interacting with them, I started to learn to speak Polish rather than my little friend learning to speak E

“Bearing this in mind, heaven knows how I managed to buy a house myself, as not only am I too young to benefit from being a Boomer, my very young parents were just that bit too old – so two generations fell through the cracks and were cruelly deprived of Boomerism!

Still, I shall dust myself down and soldier on. All you Gen-Xers sound like you are doing OK to me. If I can see that, then surely you can too. Forget what others may have been showered with in the past. It really doesn’t matter. It only goes to show what damage labels can do. Do not be doomed by your designated label! As Patrick McGoohan said in the cult TV series ‘The Prisoner’ … “I am not a number, I AM A FREE MAN!” (Did you get that in Canada?)”

I seem to recall him on a TV show that aired in Canada.

“Despite what marketers say, 40 is not the new 20. We spent our youth making our own opportunities out of very lean times.”

I know that I, and most of my siblings did that. I grant that it was easier back then. One could leave a job and get another within 2 weeks. I’ve only collected one EI cheque in my working life, at that was when I moved from one prov. to another.

“Life is what we make at?).
it. It is no-one’s fault what decade they were born in, nor the letter of the alphabet their generation is classified under. Resenting the circumstances we were required to operate in as younsters is a waste of time. You did it, you survived, and I did it and survived too, even though I didn’t know I was doing it. (Those Damned Boomers).”

I can honestly say that it was not easy for us as boomers. While in high school, I and my 2 sisters worked 2 nights a week and all day Saturday and department stores, etc. Once exams were over, I worked for a week at Easter, Xmas and summer holidays. I don’t ever recall asking my parents to buy me a piece of clothing in high school. They just couldn’t afford it. I babysat every day after school in grade 8 & 9 & worked my ass off and in later years made supper every day for my family. My friends didn’t have it easy either. And, I’m fed up with the X & Y generations putting we boomers down. Not everyone grew up with a silver spoon in those days. Rant over.

#79 Dave on 05.08.09 at 4:17 pm

Trying to figure out which country out there has the most potential; is not in the total mess America/Canada/Germany/UK etc… are into. A country that will not be ridden with massive debt over the next decades. A country that has a good demographical composition (not too many old-boomers).


umm, I heard China is growing

#80 Vlad from Calgary on 05.08.09 at 4:21 pm

Regards Garth,

You’re message is pretty clear: don’t buy. Cash is the king.
You backed it up pretty good in your books (Currently reading “After the…” and begining looks promising: especially 3 scenarios you’re giving).

Although, I do have a question for you: I don’t see you putting inflation into the equation. Why is that?

In Contagion you’re giving some scary data about US debt and what is coming as result of that. Everything is pointing out in that direction: “uncontrolled” inflation.

In that case cash will highly unlikely be the king (You’re gonna be able to buy a lot from people that have to sell for a bargain for sure, but your debt will follow suit especially if you close your mortgage to 5 years and reduce it significantly by throving all that virtual money against the principal). Unless they “invent” hard currency (like Europe did) which will cut value of money by 50% (prices stayed on a same level – mark, euro but slaries were cut in half because of ratio 2 DM=1E).

It seems to me that people who owned anything “real” got better deal in that game, because they could’ve sold that afterwards for the same amount of E as it was in DM and people with cash in their hands and up paying more money for same products.

It looked like a debt was written of thru inflation called “intoduction of a new currency”.

Possible scenario?

#81 tuldok on 05.08.09 at 4:29 pm

Our house is currently in the market and planning to rent after we sell. We wanted to rent in Markham and Richmond Hill area but my only sourse of looking for lease houses is Can anyone tell me where I can find another source.

#82 Chris in England IG-AZ at the moment on 05.08.09 at 4:39 pm

db.cooper #65: “try Iceland or Ireland. I here real estate is cheap there.”

Can’t comment on Iceland but Irish property prices went sky high in the last few years and were comparable to England. I’m sure with their current problems these prices will come down, but they need to – they were no bargain to start with. I go over to Ireland around 4 x a year, and 15-20 years ago it was possible to pick up property and land very cheaply. Once they went headlong into Europe prices began to escalate. I would have loved to live there but I was priced out and any money I got for my house here would have been ploughed back in to one just as expensive. A shame. Lovely country ruined by the EU. They were seduced by the handouts but now they are paying the price.

#83 Chris in England IG-AZ at the moment on 05.08.09 at 5:05 pm

Live Within Your Means #78 “I knew various people from England who lived in ‘council flats’ ? without a lou in their house. Realize that may be before your time Chris.”

Noooo….!!! I was born in a city in the NE of England, and my parents were living with my grandmother (a widow), and her elder brother, in a Victorian tenement that was eventually demolished in the early 70s. There was no bathroom, no indoor toilet (there was an outhouse in the yard), no hot running water (just a cold tap in the scullery). Them were t’days! A bit like the old Monty Python sketch …”When I were young, we were so poor …. ”

#84 eddy on 05.08.09 at 5:07 pm

mary, buy something, your savings will disappear with inflation

#85 Bulls eye on 05.08.09 at 5:16 pm

#74 905er & Spouse

Breathe – people will continue to loose their jobs. The employent report was elevated due to people starting there own business – has anyone told you the success rate of entrepeneurship? You have to let savings and EI run out. This is just the begining – but if this is your threshold then join the flock – I hear that there’s a blog site for homeowners in trouble.

#86 Real Estate Deal or No Deal on 05.08.09 at 5:25 pm

Great post Garth!

I am similar to Mary … a little older, have a little less in the bank, and no …. my wife and I rent a condo.

We have a baby arriving in about 40 days … so, it is tempting to buy a home right now … but we will sit in the condo for the first six months, then move to a larger rental

… let the economy sputter and poop … and then flock down and pick from the carrion littering the road.

Real Estate Deal or No Deal time is not too far my friends.

#87 rory on 05.08.09 at 5:33 pm

#38 flip …these are aimed at the retired …have no idea on the ‘work’ potential for these.

The World’s Top 18 Overseas Havens according to

1. Argentina…from cosmopolitan Buenos Aires to Mendoza wine country…

2. Belize…one of the easiest places in the world to get foreign residency…plus some of the best diving on earth…

3. China…yes, China…perhaps the cheapest place on earth to think about becoming a foreign retiree…

4. Croatia…the Mediterranean like it used to be…

5. Dominican Republic…our editor Rebecca Tyre has just returned from a scouting trip and couldn’t be more bullish on this beautiful Caribbean island fringed with miles of white sand…

6. Ecuador…most affordable retirement haven in the Americas…

7. France…world’s best health care…world’s most beautiful city…and more affordable than you might think, especially in the secret “other” South of France…

8. Hong Kong…bustling international and expatriate enclave…

9. India…cheap, cheap, cheap…and, in some parts, beautiful…

10. Ireland…perhaps the world’s most welcoming nation, right now in crisis…meaning this country makes more sense from a cost of living point of view than it has in a decade…

11. Italy…your dream of la dolce vita could be more affordable than you think…

12. Malaysia…My Second Home program welcomes foreign retirees…

13. Mexico…most accessible choice for Americans…in some cases, only a drive away…

14. Nicaragua…long and glorious Pacific coastline…plus colonial Granada, the most romantic city in the Americas…

15. Panama…the world’s #1 retirement, offshore, and business haven…with still-emerging pockets of opportunity for real estate investment…

16. Philippines…working to make itself the most foreign retiree-friendly country in Asia…

17. Thailand…super-affordable and exotic…

18. Uruguay…safe and stable with a low, low cost of living…

#88 Investx on 05.08.09 at 5:39 pm

North Vancouver Citizen’s Analyst on 05.08.09 at 2:25 pm:

“Japan has had zero interest for 20 years.
Tell us Garth, why can’t that happen here?”

I was thinking the same thing.

#89 Bill-Muskoka (NAM) on 05.08.09 at 5:42 pm

#78 Live Within Your Means

When I was a young lad we had Saturday afternoon matinees at the local theatre. Admission was $0.25.

I would ask my father for a quarter and by the time he got done lecturing me on the value of money the show was over. Soooooooooo I asked permission to use the lawnmower to earn money. I mowed yards and always had a some change to do things with.

When I was 13 I got a paper route and delivered 176 dailys and 275 Sundays in an apartment complex that was three stories tall with about 15 buildings.

I had to have the papers delivered by 6AM and that meant getting up at no later than 4:30AM, riding my bike a mile and a half, getting the papers, riding back, and delivering them, after pedaling up a long steep hill, and then getting ready for school.

Schwinn brought out their new 10 speed Continental bike. It cost $120 and the Schwinn dealer let me pay it off over 12 weeks at $10 per week. It really helped carrying all the heavy papers.

Finally the day came when I made the last payment. I paid off the credit loan and went to look around the Hobby Shop to see what new models were available because I knew the next week I could afford one.

I had chained my bike to a steel post and when I came out, about 5-6 minutes later, it was GONE! STOLEN! I ran myself ragged seeing if I could spot the SOB that had stolen it. No luck. All that work and sweat to be ripped of by some low life POS! Maybe it is best I didn’t find him because I would have ripped him to shreds.

I called the police and filed a report but the bike was never found.

I will never forget that day!

#90 Alister on 05.08.09 at 5:46 pm

To Mary in the article:

Dear Mary: My wife and I were in the nearly same position in 1981 that you and your are in right now. We were saving quickly. By 1984 we bought a house with 2/3 down. By 1987 it was paid off. That year my wife quit working to have our first child and she stayed home until last year. My point is this – look at those big bank towers and ask yourself one question. If lending money is so good for them, then how can going deeply in debt be good for you. If you get along with your parents and you’re saving gobs of money, then be sure to be thankful to them by helping them around the house. When you get enough saved then pay nearly cash for a house and have some children. Our children have been our lifes joy and we are very happy that we were able to bring them up without money worries. Marriages are stronger when financial problems are absent. Avoid debtors hell to the best of your ability.

#91 Nostradamus jr. on 05.08.09 at 5:55 pm


…Like Garth, I have received many emails requesting my predicitons for the future of the world.

China continues to accumulate Gold and Copper instead of increasing their US Treasury investments.

Well, for the short term, long term US Treasury rates will increase, insinuating higher rates are in the cards for North America.

However, China will soon hit the wall and realize that in order to feed 1.6 Billion unemployed citizens it will begin to resell its gold and copper stocks…plunging these two commodities…US banknote will rebound.

…The purpose of Bernakes policies is to bankrupt China and India(who also hoard lots of gold)

…You heard it here first…

#92 jess on 05.08.09 at 6:05 pm

credit facilities are the growth industry just ask our finance minister

#93 jess on 05.08.09 at 6:11 pm


#94 Live Within Your Means on 05.08.09 at 6:18 pm

#45 Bill-Muskoka (NAM) on 05.08.09 at 11:53 am

I love the term ‘DINK’ because it is what many are and besides, we need another simplistic acronym for the Sheeple! LOL

Thanks Bill for equating DINK with sheeple !! – I’m a DINK because I married later in life so that makes me a sheeple. You have a mighty high opinion of yourself.

#95 WillsDad on 05.08.09 at 7:00 pm

Quote: “Okay…so I read the news this week and see that:

1) Job GAINS in Canada,
2) US job losses easing,
3) Markets WAY up,
4) Housing prices only drop 3% and is up in the 3 areas I want to live in like up 50K+

I am now thinking maybe I missed the boat and I will never be able to own.

My spouse tells me to chill but I’m finding it hard to keep it together and not totally panic.”

You sound like someone who slept in and missed their trip on the Titanic.

What’s so great about owning a house, if you cant afford to buy it without going into a lifetime of debt? I think you should check the definition of “ownership”; the bank owns you mate!

#96 David on 05.08.09 at 7:07 pm

My View, since you think people should do the math, I did it. I set rent at $1600 a month @3.59%. Based on principal ALONE that would equal a mortgage of $316, 543 to be fairly exact. That is before any of those nice incidentals like property taxes, maintenance, insurance and utility costs which are hardly chump change these days. Total annual rent payments $19,200. Total interest costs first year ownership $11, 233.66. At the end of year one the owners equity would have increased a whopping 2.5%. All this at today’s super low interest rates.
The historical normative interest rate in Canada for the past 50 years is about 6% and can you guess what will happen to home payments versus rents when there is a return to the norm?
Maybe that is the problem, not enough people bother to do the math and spend too much time listening to the realtor mantra of why pay rent and house prices only go up at 10% a year in perpetuity.

#97 Live Within Your Means on 05.08.09 at 7:16 pm

# 30 Wrote

““Gone is the certainty that your salary will increase”

Unless of course you are a politician or work in a field where the government is your employer. Politicians will vote themselves a raise and public sector unions will simply strike until the government gives them what they want.”

I was a prov silly servant for 26 years and I can assure you we never rec’d more than 2-1/2% inc. avg per year. We also had to take days off without pay to avoid people loss of jobs. Our contracts were always negotiated at least 2 years after their expiration. With inflation, we didn’t even keep up. Those in ‘exclusionary’ positions , i.e management, would receive their increase immediately, based on what the govt. anticipated would be the settlement with their unionized employees. By the time we rec’d a raise, it was wiped out due to inflation. Sometimes, those earning below a certain wage had theirs topped up and rec’d it in a lump sum which, due to our tax system, could wipe out most of it. In addition, I recall our wages were cut 3% one year. You can never make that up if your near retirement. Sick of people bitching about unionized govt. employees. There are many who work their asses off, as in private industry, and are treated like shit. And there are many boot lickers in both public & private sectors who profit.

#98 Da HK Kid on 05.08.09 at 7:17 pm

My money is on China and the newly developing ASEAN countries for growth.

Malaysia is my outstanding overall pick weighing all as an expat (may I suggest expat is an term that should expire soon given these countries are now offering local designed packages for working westerners).

What is amazing is how many boomers are looking to retire there on a fraction of what they expected OR live like KINGS OR reasonably with no burden to their families in the western world on the MM2H package.

Check it out! And YES there is a well established ICE HOCKEY League!

#99 . . . fried eggs and spam . . . on 05.08.09 at 7:24 pm

Now the ECB loves quantiative easing — — while China and a few other countries are against it.

Life is getting really complicated now, as China may take over Detroit; the infrastructure is already there, just modernize it! —
For goldbugs, it may be heading north — /\

Compare these two links. First is the depletion of the US dollar in buying terms (the chart no one was supposed to see) —

In the second link, Geithner says the US govt. will backstop all funds required by the stress tests. If the greenback dies, what does the backstop consist of? —

A Bloomberg look at what is happening. —

A much more realistic view of the unemployment situation. —

In Kelowna, the rate here has jumped to 9.7% (about 10,000 people unemployed, whereas last year it was almost full employment), housing starts slid 92% in the first quarter and gas is on the way up.

Victoria Day is coming up — that’s why!
From The Daily Reckoning. In the US, the soon-to-be-near-you triple time bomb threat . . . “Jobs. Homes. Oil. With all the shortages we’re experiencing here in the United States, there is one thing we just can’t seem to get enough of: debt. As it stands, the U.S. has nearly $11 trillion in debt already. And with $8.5 trillion committed to bailouts and $3.6 trillion more on the spending table, . . .”

#100 905er & Spouse on 05.08.09 at 8:24 pm

#80 Tuldok:
Check, and Also local newspapers. Call a real estate agent and they have access to the MLS rental listings in all areas that are not found on the public They will also negotiate a rental price/contract with a landlord when you find a place you like with them. Good luck!

#101 miketheengineer on 05.08.09 at 8:48 pm

Unemployment will go up.

There are about 450 “potential” suppliers to the company that I work at that are a very high risk of going under. They had to form a special task force to deal with it.

I expect that the numbers will go dramatically up over the summer, peaking in Sept. Then flat lining for the next year. All GM all Chysler down for the next 8 to 12 weeks. All suppliers will be forced to go down. Some will never re-open. We are talking of another 100,000 to add to the list.

Oh, and welfare will go up too.

#102 Dodged a Bullit in Alberta on 05.08.09 at 9:09 pm

Greetings: To poster #38, FLIP— If you are serious about no ties to Canada, then New Zealand is the place to be. They have a balanced population, plenty of farmland, water, and are also discovering off shore energy. They have a parlimentary system of government, and a strong culture of environmental protection. NZ has been described on other web sites as a “lifeboat”. I have been there many times to visit family, and agree, just ask Shania Twain!!!

#103 OttawaMike on 05.08.09 at 9:26 pm

97 Da HK Kid on 05.08.09 at 7:17 pm
Interesting global perspective with your Malaysian view.
Late 80’s I worked with 2 new Canadian immigrants from Sabah and they were very glad to be in Canada. Both came from fairly well off backgrounds and they rhymed off a list of problems for their nation. Including over logging and rampant govt. corruption plus some ethnic tensions thrown in for good measure. But..
Malaysia and Singapore both still look very interesting for a place to settle/adventure temporarily.

#104 Chris in England IG-AZ at the moment on 05.08.09 at 9:39 pm

Here Garth, you can take the day off. The BBC have written your column for you.

#105 Reg on 05.08.09 at 10:02 pm

I rent a perfectly nice 2 bedroom place with a basement and a backyard in Leslieville for $1010/month (plus utilities, which are, admittedly, quite high in winter because we’re stuck with electric heating). There are plenty of affordable rental units in T.O.

#106 john on 05.08.09 at 10:14 pm

Can you elaborate on why you think interest rates will not stay at this level or fall further (negative territory perhaps). There is precedent for this…Japan.

I am of the belief this is very possible.

They must know that if rates go up this will create another huge mess and bailouts.

I would suggest one of your upcoming blogs presents 3 probable scenarios of what is to unfold.

#107 VFC on 05.08.09 at 10:20 pm

Today’s numbers on employment were odd to say the least. Every report on the employment picture stated that gains had to do with additional “self-employed” people in the workforce.

How does one declare that they are self employed?
Are people who lose their jobs and can’t get EI deemed to be “self-employed”? If so, today’s stat makes more sense.

#108 Nostradamus jr. on 05.08.09 at 10:26 pm

Fried eggs and spam is the best poster on this blog site……next to me of course.

…Ontario continues towards the edge of the cliff…I don’t know that a bunker will be safe when Ontario sinks into the abyss.

…You always hear things first from me…

#109 Nostradamus jr. on 05.08.09 at 10:43 pm

>>>Pixar plans new animation studio in Vancouver<<<

…I predicted this nearly 100 years ago…

#110 Basil Fawlty on 05.08.09 at 11:51 pm

from Nostrosaurus Jr
“However, China will soon hit the wall and realize that in order to feed 1.6 Billion unemployed citizens it will begin to resell its gold and copper stocks…plunging these two commodities…US banknote will rebound.”
This implies that the Chinese are short sighted and financially inept, which is rather hard to believe.

#111 Sondra on 05.08.09 at 11:51 pm

#44 gold bugger on 05.08.09 at 11:53 am

Okay seriously we are laughing our heads off tonight, because my girlfriend for 25 years thinks the comment you made of me being a hippie and smoking a bong is hilarious. She said, “Far from it”

One thing I ‘ve learned over the last 6 months of reading this blog is how judgmental and completely out to lunch some of the bloggers are. Maybe I am too.

Really get a life.

Maybe this blog is like growing up, we eventually realize how funny we are.

Thank you Gold bugger, as some of the best jokes are when we are laughing at ourselves.

Ooh, that reminds me I have to deposit my tenants rent cheques in the morning.

And the sunset at Whistler tonight was gorgeous.
Enjoy every day like it was the last.
Thanks for the laugh.

#112 Just a Carpenter on 05.08.09 at 11:56 pm

#67 Dan in Victoria

Happy wife Happy life.

Wow that is the bottom line! I almost screwed it all up back when I was younger and thought I knew it all. I had just built a beautiful home in a nice neighborhood. Thought that I could sell it, cause after all it’s only a house, and in six months we could have another one! WRONG ANSWER!
I know I will get alot of flak for this attitude, but hey I got a wife that is worth keeping no matter what the cost! If you can’t say the same maybe you should have rented instead of buying!

#113 Sondra on 05.09.09 at 12:31 am

Good for you !
We paid our 1st house off before we had a babe. Build the nest first before the eggs are laid. Amazing how many people just go for the credit first.

Take this how you want to;
Anyways all my nieces are here we’re reading through the blog as a “socials” project, and they’re surprised at the comments and lack there of.

Gold bug; Sorry, bong not included in the Aunty inspired whistler get-a-way. They really thought that was too funny.

#114 My Head Hurts on 05.09.09 at 2:21 am

#20 Popeye the sailer man –

Paragraphs, dude.

#115 dd on 05.09.09 at 2:32 am

#90 Nostradamus jr.


“However, China will soon hit the wall and realize that in order to feed 1.6 Billion unemployed citizens it will begin to resell its gold and copper stocks…plunging these two commodities…US banknote will rebound.”

Well well, interesting. How about their cash reserves of $400 million? Wouldnt that feed a lot of people for a while?

#116 Living in Tokyo on 05.09.09 at 5:52 am

For those of you wondering about why rates in Japan can stay so low, but that wont be the case for Canada, US, or UK, consider the following:

1. the Japanese govt finances over 80% of its debt domestically. Meaning, it borrows almost everything from its citizens. Whereas the US finances over 50% of its debt externally (read Asia). North America is reliant on the willingness of foreign countries to borrow, and they will invest back home if US or Canadian rates stay too low for too long while borrowing needs keep going up. Japan doesnt have this problem as the majority of citizens who save, save in their home country.

2. Japan is extremely and culturally risk adverse. Constant threats of earthquakes, small limited land, reliant on foreign imports of various commodities, and memories of WWII. Hence the savings rate is absurdly high here. I read that the average household in Japan over 45 has 100k in liquid cash. Most of my working friends have at least 500k in liquid assets (ie not real estate). The country, as a whole, is very wealthy. And their propensity to save explains partially the deflationary impact over the past 20years, and the ability for the MoF (their Fed) to keep borrowing rates low.

3. Despite being a foreigner, I qualify for mtgs here. I can get a 30yr mortgage with a 10yr fixed rate at a ridiculous 1.5% or a 30yr fixed at 2.8% still. Nuts huh? I am not joking.

4. Despite poor western journalism and biased reporting about the dead real estate market here over the past 20 years, a lot of it is BS. Real estate is still up around 40% from a mere 5 years ago during the last japanese banking crisis. I have been looking to buy for over 2 years now, and a high end, high floor new apartment at the very best areas will stilm cost me around 1.5mm for around 100sqm. Parts of this city still makes the overpriced houses in Vancouver and Toronto look like a steal.

But then agajn, Tokyo alone has a population of 20mm plus, plus the avg household income in the core is around 80k….

#117 Sail1 on 05.09.09 at 6:42 am

Big spike in number of homes lost in GTA

Could Garth be right?

#118 Bill-Muskoka (NAM) on 05.09.09 at 9:16 am

#93 Live Within Your Means

No, sorry you misinterpreted what I said. I truly do like the term ‘DINK’, but also was noting how today’s world loves simple acronyms that eliminate thinking by the Sheeple.

Here is my favourite acronym:


#119 Basil Fawlty on 05.09.09 at 9:27 am

from Nostrosaurus Jr
“I predicted this nearly 100 years ago…”

So, what do you want a badge?

#120 Grantmi on 05.09.09 at 9:31 am

#106 VFC on 05.08.09 at 10:20 pm

How does one declare that they are self employed?
Are people who lose their jobs and can’t get EI deemed to be “self-employed”? If so, today’s stat makes more sense.

VFC…. that’s what I want to know! HOW DO THEY KNOW THESE ARE SELF-EMPLOYED JOBS!!!

I lost my job a couple years back.. I tried self-employed and consulting work! GOOD LUCK! VERY VERY HARD! And… I didn’t show any profit or any significant revenue the first couple years AT ALL! I didn’t say on my tax filling that I was self-employed. and beside! If this info. was compiled from tax filings…. it just ended! It takes CRA more than a week to get that together. And can they share that info. with the government at hand.???

So I can tell everyone I’m a Astronaut! But until you see me in space on grainy tv! Nah! I think you’re full of it.

Like to know which orifice the government pulled these stats from.

Move along…. nothing to see here!!

#121 Bill-Muskoka (NAM) on 05.09.09 at 9:34 am

#82 Chris in England IG-AZ at the moment

Ah, one can always sell the children for medical experiments! That is truly the meaning of Life! LOL

#122 grandeprairiegirl on 05.09.09 at 10:18 am

#93 Live within your means.

I’m an ‘OINK’.
One income no kids.
Bwah ha ha !

#123 Mathew Gibson on 05.09.09 at 11:27 am

Remarkable how smug are those who bought houses years before the housing boom. It’s easy to boast about having paid off the mortgage when it was a managable one. Newer buyers cannot possibly be paying theirs off in 10 years. Even if they are aggressive with repayments, this is probably only allowing them to keep up with the mortgage, not pay it down quickly.

If you bought pre-bubble, just be thankful and humble, not smug and relf-righteous.

#124 Republic_of_Western_Canada on 05.09.09 at 12:49 pm

#118 Mathew Gibson –

And that is why you don’t compete on the same basis as those who have gone before, either in business or housing.

You use revolutionary, quantum leaps of new approaches and let the established class choke on their own ways (such as bankrupting costs of fuel and wasted time to drive to work from the suburbs, or such as excessive equity sunk into flat-lining real estate when the whole world is losing their jobs).

Use manufactured housing of some description, new materials, methods, tools, and designs. Higher-density inner-city housing near all shops & entertainment, etc. etc.

#125 POL-CAN on 05.09.09 at 1:23 pm

A must read for anyone still in the markets:

Continued Turmoil on Financial Markets
A world stock market collapse could be imminent as a source of dollar support

by Bob Chapman


On Friday the dollar completely broke down, with the USDX collapsing to about 82.5, as monetizations by the Fed became a stark reality. A world stock market collapse could be imminent as a source of dollar support. We wonder how low they will let the dollar go before they collapse the stock markets to chase people back into US treasuries, which have also broken down, with treasury interest rates on the rise despite various Fed purchases of treasuries in the hundreds of billions. So much for the bogus stress tests as things turn much uglier than anticipated by the boneheads in Goldman Sachs South who are attempting to resurrect the Goldilocks Matrix. The suckers rally is simply the loading and winding of a catapult meant to throw the dollar upward as the stock market spring unwinds at the moment chosen by the PPT, which moment has already been telegraphed to Illuminist insiders for their continued looting of the sheople and for the filthy aggrandizement of their growing mountain of ill-gotten gains. The stock market shorts are being set up in the dark pools of liquidity beyond the purview of regulators as this article is being written, so if you plug yourself back into the pod electrodes of the Goldilocks Matrix again, you are in for a major shock.

Continued at:

#126 . . . fried eggs and spam . . . on 05.09.09 at 1:45 pm

#107 Nostradamus jr. on 05.08.09 at 10:26 pm — “Fried eggs and spam is the best poster on this blog site . . .”

Thanx for the compliment! Could be that we both see what is taking place here, albeit at a much faster pace than ever before.
Many of you know that my bro and his ladyfriend teach ESL in China, right over the water from Hong Kong. Received an e-mail from him this a.m., and thought you may be interested in what changes are happening there. So . . .

“We also had to re-apply for our jobs recently, for our new contracts in September. There will be many teachers leaving, some good, some not so good, due to the tightening of the age restrictions. China has always said that the upper age limit is 60, but due to the fact that many teachers are already retired and still have much to offer, they kind of ignore the rule. Well, in lieu of the recent economic downturn in the US, there are now many people who want to travel abroad to work as teachers. The result is that the age limit cap is being enforced. About 15 of our teachers are older than the cap, and they will have to leave.

“We were both offered places at the college once again, but they will not guarantee a work permit, not for age, but for political reasons. The upshot is that although many of us can still get a work contract, we might not be able to get a work visa. Just in case, I had a look at the job market in China. The information was fascinating. I think the schools are realising that foreigners need jobs, and subsequently the wages have dropped. Almost 40% in some cases. So I guess the party is just about over..not the CCP, but our party. If we don’t get work visas, we will look to another country for a new adventure.”

Guess they may be moving on somewhere, although they both like that part of the world. Possibly Malaysia / Singapore / Vietnam. Change is one of the many constants here.
This is an interesting view on Canada from a US perspective (Money and Markets). Chart further down as a comparison between the S&P 500 and the loonie. —
From Mish’s site — California continues to implode —

In the US, consumer credit slid $11 bln. Apply that (eventually) to here, as well as other countries, and see what happens.

No credit? No problem! —

Re: the supposed ‘slowdown’ in layoffs, jobs vanished forever, etc. — don’t ever get lulled into a false sense of security. Disappearing jobs are simply added on to those who have already lost theirs, EI benefits will soon dry up and welfare rates will skyrocket.

A realistic sentence from Mish’s post (US only, but can be applied to most everywhere):

“There is no way those loans can be all paid back, so they won’t. Rising unemployment and falling asset prices seals the fate.”
China says the growing US influence in parts of the world where they shouldn’t be is leading to lotsa nasty thingies. —

Compared to all the ‘feel good’ fairytales about how ‘the economy may turn next year’, perpetrated by the controlled m$m, this is more to the point. Wasn’t it the m$m who repeatedly said that Sadaam had nookular weapons?

Well, where are they, and where is Sadaam? —

#127 smwhite on 05.09.09 at 2:48 pm

#119 Grantmi

Most likely there was an increase in the number of GST/business numbers issued by CRA.

Its a misleading headline because these “businesses” end up having more liabilities than assets and most likely have net loses. Most importantly, these aren’t jobs that can help sustain current home prices or future tax demands.

Also everyone is clapping about the minimal drop in unemployment in the USA, but still losing more than 500,000 jobs a month.

These manufacturing jobs aren’t ever coming back to North America.

#128 lgre on 05.09.09 at 3:07 pm

“Remarkable how smug are those who bought houses years before the housing boom. It’s easy to boast about having paid off the mortgage when it was a managable one. Newer buyers cannot possibly be paying theirs off in 10 years”

What do you think the price of house would be if the average amort was 10 years? that is the whole point of the comment..if you are made to believe that it should take you 50 years to pay off a mortgage then housing will costs that much more. Do you believe that it’s an accident that amort is up to 40 years now? No, it’s engineered that way. So, whoever buys under the assumption that they should spend their life paying for a mortgage..then I’m all for banks shares and dividends will keep on rising.

#129 Bailing in BC on 05.09.09 at 3:23 pm

#122 Mathew Gibson

“Newer buyers cannot possibly be paying theirs off in 10 years”

Which is why they should not have bought me thinks.

#130 cowgirl kiss on 05.09.09 at 3:27 pm

I agree with #122.

I think about the guys in movies who are smug and laughing. Usually it doesn’t bode well ….

Some kindness and courage are nice qualities to have these days …

#131 hank on 05.09.09 at 3:29 pm

Big spike in number of homes lost in GTA
Banks seize properties as mortgage defaults grow

The housing crash will get much worse. Sales are still down from BAD sales last years and now it’s even worse. the RE liars/agents are trying to sucker in the last few greaterfools. Homes are sell WELL BELOW asking. Just look at globe and mail cherry picked sales and you will see people even selling at a HUGE LOSS after buying in 2007. The government can lift the stockmarket through manipulation and propaganda from the media but reality is people are losing their jobs and companies are going BUST (chrysler).

#132 Sail1 on 05.09.09 at 3:35 pm

#54 rory

Hope you are right buddy, otherwise we missed the boat 4 to 6 months ago.

#133 Nostradamus jr. on 05.09.09 at 3:47 pm

Well this is what my well intentioned, pirahna groupie, hanger on to my every word says about my post below it…

>>>Well well, interesting. How about their cash reserves of $400 million? Wouldnt that feed a lot of people for a while?<<<


“However, China will soon hit the wall and realize that in order to feed 1.6 Billion unemployed citizens it will begin to resell its gold and copper stocks…plunging these two commodities…US banknote will rebound.””””””

…My hapless dd, divide 1.5 billion by $400 million and what do you get?

and please stop emailing me, I’ve sent you my autographed picture and that’s it, no more.

btw, it’s signed…..

“to dd, with dubious delight,

Nostradamus jr.”

#134 TS on 05.09.09 at 4:47 pm

The rise in ‘self-employed’ is really a sign of how tough the job market has become… the vast majority of people would not choose self-employment if good corporate jobs were available. My guess is that the vast majority of those now claiming ‘self employed’ status have:
1) run out of EI benefits or did not qualify
2) have given up hope of finding regular employment
or 3) have taken contract positions as ‘independent’ contractors with no benefits

We’ve been ‘self-employed’ for over nine years now after being downsized in 2000…and every year brings it own unique challenges. Most of the people that I know that have tried to create an income for themselves through some kind of self employment fail within two years at the outside.

There is one overarching truth when one is self employed… you only get to eat what you can kill! In short, if you can’t sell what you do, you have no future in the world of self employment.

As Scott Peck wrote in his book, The Road Less Travelled, “Life is hard and accepting that fact totally, makes it easy.”

#135 TS on 05.09.09 at 4:54 pm

#122 Mathew Gibson on 05.09.09 at 11:27 am

Pre-bubble or post-bubble makes no difference Mathew… the fundamentals of personal financial management have stayed the same for generations…. we are successful financially when we live within our means, plan prudently for life’s inevitable curve balls, and avoid debt whenever possible.

Blaming the real estate bubble for living beyond one’s means and not being financially prudent is just a cop-out. We are all ultimately responsible for the choices we make in life….and the sooner we accept 100% accountability for our choices, the sooner we regain control of our destiny.

#136 justjanice on 05.09.09 at 5:35 pm

Canadian Banks are delusional about fiscal realities. As a result, we will find that our ‘beloved, safe, Canadian Banks’ are about as innocent as Britney Spears or OJ. Sure they have limits about what they will lend to households (can’t exceed 40% debt to income)…but those limits become meaningless in absurd times of insanely low interest rates. A business would have a hard time getting a loan for more than 2.5 to 3.5 times EBITDA, but we’ll give a potential homeowner 5.2 times income, on a loan we know will reset just because the 40% rule can still be obeyed right now. When interest rates return to normal that 40% rule gets violated pretty fast if you’ve got a massive debt load (read jumbo sized mortgage in relation to annual income). All of a sudden those debtors must scramble to get their balance sheets back in order, and the whole economy suffers as a result.

The reality is absolutely toxic to the larger economy (the place where income is made at jobs that produce goods and services and spent that income on things like shelter, food and other stuff to meet their needs). Worse, the federal government and central banks are in a straight jacket to fix it. Lowering interest rates doesn’t pump more money into the larger economy effectively, because people just take on more debt that becomes toxic at higher levels of interest. Basically our economy has become resistant to the classic economic remedy (lowering interest rates) for economic influenza. However, interest rates would be an effective policy tool if lenders were limited to a multiple of household income and the 40% debt ratio rule. This would limit the damage that is done when interest rates climb and the debt becomes more than what can be handled by the household. It would also put more money in the jeans of consumers when interest rates dive which then would be spent in the real economy actually buying stuff (and creating jobs) instead of blowing bubbles and creating wealth out of nothing….

#137 jwkimb on 05.09.09 at 6:18 pm

#122 gets it right on. The market has permanently changed from 20+ years ago. Buying an average house on average salary today? for get it. You need TWO good salaries to buy a shack today. I don’t see tha changing much, dual income is a minimum requirement forever now.

#138 Da HK Kid on 05.09.09 at 6:57 pm

#102 Ottawa Mike,

You can imagine what Asia was like 20 years ago. Malaysia along with its southern tip partner Singapore have SE Asia beat.

This along with the rest of Asia I must say.

Note the MM2H program allows entry as long as you invest $50K USD for retirees over 50 years of age. This can buy you a city flat or beach house in Penang or Langkawi. Note all pensions paid would be tax exempt SO can you imagine the lifestyle.

All the political unrest is in Thailand or the Philippines.

You can even live in a neighborhood resembling the nice custom built LANDARK home Stittsville bro!

The reality here is both SING or MALAYSIA are low tax regions with User Pay formats.

Have better health care systems then Canada. Malaysia, most notable KL (Kuala Lumpur) where I am moving too from Hong Kong will cost me 70% less to live overall, still have a Harley Davidson Chapter, Ice Rink, Rugby Club, Private Golf Club and the best Private International Schools around.

Google Malaysia my second home and see the testimonials but the program has just allowed under 50 year olds to join.

Only note that most of the recent applications are from the UK.

I would not want to be around when both the US and Canada want you the taxpayer on the hook for all that stimulus.

It’s not how much money your make, it’s how much you take home!

#139 rory on 05.09.09 at 7:14 pm

#136 jwkimb you said:

“You need TWO good salaries to buy a shack today. I don’t see that changing much, dual income is a minimum requirement forever now.”

Cannot disagree one bit about TODAY …but today is different then yesterday …yesterday we all would live in a one bath home, share bedrooms, no garage, only one car, no renos for granite or stainless steal, the couch stayed for 30 years, only one 20″ TV , etc.

The problem is our expectations have gone thru the roof.

HGTV will kill you with love … they lay the example that every kid needs their own room, parents need onsuites with 62 ways to get wet, kids get their own bathroom, we need media rooms. and 6 burners gas stoves (but yet everyone eats out), gas barbecues the size of Manhattan and on and on …please don’t forget the cottage, the boat, and the sea-doos too and the new SUV to get there.

Expectations TODAY are just too high…now you know why you need 2 incomes … just unfortunate we all think this way and trap ourselves as failures if we don’t ‘make it’ …we have been sheeple suckered…IMO

#140 Dan in Victoria on 05.09.09 at 7:37 pm

Post#122 Gee,us old farts never ever saw houses or land double in price did we.I started an apprenticeship at a buck an hour,houses were roughly 30000 dollars. Today you can find a new house a couple of miles from where I live for 425000(There are some even less than that high 300’s) a starting wage for an apprentice in my trade is 14 bucks an hour.Do the math.

#141 jess on 05.09.09 at 8:13 pm

don’t they know the 3x income rule?

May 09, 2009
The Associated Press
Web edition

NEW YORK – Even the homeless can’t escape the high price of a night in New York City.

City officials this month began charging rent to some families staying in homeless shelters.

The policy applies only to shelter residents who have income from jobs, and they could be expected to pay up to half their earnings.

Some shelter residents say the new rule will ruin their chances of saving enough money to get an apartment.

One single mother living in a Manhattan shelter tells The New York Times she got a letter saying she had to give up US$336 of the $800 she makes each month as a cashier.

About 2,000 families are expected to be covered by the new rule


#142 WillsDad on 05.09.09 at 8:56 pm

She makes $800 a month as a cashier? Time to find a better job!

#143 tuldok on 05.09.09 at 8:57 pm

Thank you …… 905er & Spouse

#144 Jonathan on 05.09.09 at 9:08 pm

#87 InvestX says:

“North Vancouver Citizen’s Analyst on 05.08.09 at 2:25 pm:
“Japan has had zero interest for 20 years.
Tell us Garth, why can’t that happen here?”

I was thinking the same thing.”

Japan had zero percent interest rates because Japan is a country full of savers. I think the Japanese save 10% of their income.

In the west, we rely on a steady stream of lending from eastern and middle eastern nations – China, Japan, Russia, Saudia Arabia, etc. Bonds in the west therefore have to be attractive enough to merrit buying.

Also, Japan was in deflation for the last twenty years. That’s not going to be the case in the west.

#145 . . . fried eggs and spam . . . on 05.09.09 at 9:16 pm

There are two sides to every story. Deflation = lotta material consumer goods are hitting the skids now. Inflation = food prices and the like are doing the opposite, so what gives?

Peter Schiff may have one answer.–
Well well, lookee here. Seems China is making inroads to a lot of places, but didn’t Brazil discover large oilfields recently? That would help China nicely! —

From “The Chinese and the Russians are making deals to get what they want. The US is dropping bombs in an increasingly futile effort to get what it wants. What’s wrong with this picture? Everything!”
America has brought in new legislation to seize control of all water within it’s borders — /\ — taking those rights away from cities, municipalities, etc. so water will belong to Homeland Security, or the feds.

With California burning up, and many other states now under drought conditions, it leads to questions — specifically under “NAFTA Plus”, which is a cute name for the SPP — will the US simply come here and take whatever they want for their own needs?

Guess they have that right, whether politicians / lawyers / sleazebags tell us otherwise. From the second link: “. . . Americans are given the same rights as Canadians to our water. NAFTA cancels our right to tax water exports to the U.S., . . .”

I have no trouble with sharing resources with those who need it, but in BC Gordon Campbell and the provincial Libs. are close to giving away the water rights, probably with the blessing of the CPC.

This may be one explanation of why Cdn. and US troops now train in each country, because it sure as hell isn’t for the purpose of protecting us from terrorists. The only terrorists are in Ottawa and DC.
The USSR failed miserably in Af’stan, and they had approx. 500,000 troops. Now it is time for the US to take their turn. —

#146 Jonathan on 05.09.09 at 9:16 pm

I hear a few comments about people wanting it all… buy the big oven, four bedroom home, buy new couches and televisions.

People forget that is what the “consumer drive economy” is. If we keep buying, we all stay in work, and therefore it is within our means.

The issue, and the only issue, is this economy works great in economics but is extraordinarily damaging to the environment. We are going to have to start making choices.. and no matter what they are, the choices will involve compromise.

#147 Jonathan on 05.09.09 at 9:19 pm

#122 Matthew

I have to agree with you. Home prices are up 100% in ten years but incomes are only up 30% or so. Factor in food and energy inflation, and of course, property tax inflation, and you’ll find that incomes are only up by 15% or so.

#148 Pat G on 05.09.09 at 9:26 pm

Hi Bill Muskoka NAM

Left a message for you at the end of ‘OOOPS’. (Garth’s previous post).

#149 Pat G on 05.09.09 at 9:46 pm

Rory #138

I have to agree with you, Rory. Marketing is a huge business and our kids weren’t around to see that folks could have a nice home and and a functioning family with half the stuff.

I used to take socks up to the cottage to darn them so they’d be ready for school in September but my moms today just buy a bunch of new ones. The last time I asked for mending wool at the store the girl looked at me as though I came from the dark ages and couldn’t understand what I was looking for. My old thrifty ways have stood me in good stead though and it won’t be so hard for me to do with less if I have to in future because I know how to manage on less. You can even have a lovely home even though it’s not very big. The art of home-making can be very rewarding and can inspire a lot of creativity with which to discover new talents and fulfill many aspirations. It doesn’t have to be all bad.

Make the best of your circumstances and you will be a lot happier. That doesn’t mean being lazy either. It just means don’t spend more than you can afford and don’t try to keep up with the Joneses. Using a little discipline is common sense.

#150 wjp on 05.10.09 at 9:00 am

# 122…Hardly smug…salary of $7000 in 1966 and house price $42,000…that would be about $75,000 today vs $450,000…of course we all knew the bubble was coming (not)…I suppose we should be whipped for having been born in the late 30s and early 40s…do I consider myself fortunate, you bet…if that is smug, so be it!

#151 Bill-Muskoka (NAM) on 05.10.09 at 9:31 am

#147 Pat G

Got it. Thanks

#152 Bill-Muskoka (NAM) on 05.10.09 at 11:13 am

#144 . . . fried eggs and spam

I watched a program on the Rotterdam Port last night (recorded on Megatructures) about three HUGE ships. One was the German ore freighter Berge Stahl, the largest bulk carrier ship in the world. It carries MASSIVE quantities of iron ore from Brazil to Europe the only two ports that accommodate her depth (23M). The Missabe Range Iron Mines of Minnestota and southern Canada have to transport the ore via the Great Lakes and St. Lawrence Seaway. They are great for the steel mills along the Great Lakes, but not very cost effective for foreign exports.

North Americans, and especially Americans, still think they have the vast majority of resources. NOT SO! Not on the global scheme of reality.

I use this to illustrate how silly we have become thinking the world looks at us as its supplier. You are correct, however, in my opinion that North America, i.e., U.S.A./Canada/Mexico are in the process of creating our own version of the EU. They power players no longer see our national borders but instead see things as EU vs NA vs Asia.

The same process has already occurred in the U.S. and Canada with ‘regionalisation’. The only continent left out, at this point, is Africa. The LARGEST of ALL continents.

As to ‘our’ water, we have the control from our wtaersheds to restrict the levels of the Great Lakes. That, however, is no real solution as the aquifier used by the entire western NA continent runs from BC to the Mexican border underground.

The Tar Sands have potential but to allow Alberta to ‘own’ them is ridiculous from a national economy perspective. The environmental catastrophe they have created is inexcusable.

Meanwhile Harper is all in a twit abouit the Seal Hunt. Well, can we really expect him to be thinking in the 21st entury? He is an intellectual dinosaur, and Ignatieff is not really any better. they are just opportunistic politicians serving a small elite group of their own ideologies, not leaders of Canada. but do Canadians really give a damn? Most do not. They are Sheeple only wanting their share and to hell with others. No wonder things are as they are. trade is fine provided it is equal and fair. Otherwise we might as well invite the Vikings to pillage us.

The current GM/Chrysler extravaganza is nothing more than America going into economic detox. Their gas guzzling Macho Machines are dinosaurs and their time has come for extinction. They could have followed William Deming back at the end of WWII, but shunned his Quality Assurance and management structure. Japan and Asia adopted them and are now leading.

Will North America eventually become one economic entity? I think it will be inevitable because the rest of the world already has by regions. The real question remains will we retain or societal sovereignty or be ‘assimilated’ by the American social ideology? Being a Dual Citizen I can say this with knowledge and experience. We are very similar, but vastly different at the same time. It is like a Rubic’s Cube. The goal is to place all the same coloured cubes together. That is segregation and is how much of the U.S. still thinks. So do we if we are honest about it. Europe, based on what I have read and heard, is not vastly different either. Each country practices a form of apartheid because everyione doesn;t know the whole reality of the other. The MSM focuses on the differences not the similarities, so people are treated like mushrooms “Kept in the Dark and fed BS.’

The one thing has changed the game plan is right here…the Internet. People can globally communicate as individuals. That is the one freedom that we must never allow to be taken from us.

Have a great day. BTW, I got this masochistic urge to make fried eggs and Spam for breakfast after reading your handle. It soon abated after remembering the taste of Spam. LOL Now, thanks to you, I am sitting here humming the Monty Python song ‘Spam! Spam! Spam! and recalling how hilarious ‘Spamalot’ was at the theater in Toronto. I suppose the ‘Holy Grail’ DVD will have to be watched later today? LMAO!

#153 Mathew Gibson on 05.10.09 at 12:53 pm

“# 122…Hardly smug…salary of $7000 in 1966 and house price $42,000…that would be about $75,000 today vs $450,000…of course we all knew the bubble was coming (not)…I suppose we should be whipped for having been born in the late 30s and early 40s…do I consider myself fortunate, you bet…if that is smug, so be it!”

No, that isn’t smug. That’s the opposite. You consider youself fortunate, and that’s the point I was trying to make. Be thankful what you have, not scornful of the mistakes others make or the circumstances they find themselves in.

Amazing how many people responded to my comment about not being smug and self-righteous by being, well, smug and self-righteous.

I think I’ll stick to reading Garth’s blog and avoid the forum.

Disclosure: I do not own a home, do not have a mortgage and am not planning on getting one any time soon. I work, earn under 40k, have a family and live simply, but richly. I am Gen X and had many classic experiences of my generation. And as much as it is relevant to talk in terms of generations (it mostly isn’t), I think the Boomer generation, like every generation, did some amazing things and has a lot to be proud of.

#154 Bill-Muskoka (NAM) on 05.10.09 at 5:27 pm

#152 Mathew Gibson

Yes, we did and do. We gave the world the Personal Computer and Apple for just one MAJOR thing. Few things have changed the world for the better than those.

All the stereotyping seems to come, IMHO, from those who hold jealousy towards those who plowed the road before them. Strange when one thinks about it. I am thankful for all the developments made by the previous generations.