Lion en hiver

brown11

Sadly, many of your friends, colleagues and relatives are floating.

They live in another dimension, where only other people lose their jobs, home equity’s about to come racing back, taxes won’t rise, interest rates stay low forever, the local car dealership and Home Depot will always be there’ and no consequences will result from governments spending their way into a debt hell.

Well, let’s see where this may be going. In the article below I wrote of the latent forces of deflation – a threat I have alluded to here over the last year. It grows. This, despite the protests of those who have a naked, self-serving vested interest in reflation and excess: the gold bugs and the indebted. The former wish for a currency collapse that will impoverish millions of families so their metal will increase in value, the latter are desperate for a bout of inflation to boost real estate values and water down their crushing mortgages.

Both will be disappointed.

Meanwhile, if you’d like a window on the future, gaze across the sea, where the UK appears to be going to the mat.

Britian’s about to become one of the First World countries to achieve junk bond status. The kingdom will soon lose its G-8, Triple-A credit rating, as Standard & Poor’s lowers its outlook from “stable” to “negative.” Stating the obvious, S&P said the UK will soon have a debt equal to 100% of its entire economy, which would place that country not far behind the average US household (130% debt) or the typical Canadian family (127% debt). This was enough to rattle financial markets, send stocks skidding and raise the prospect other countries will soon be following suit. Like the US.

Why is this happening? What does it mean?

Simple. Political leaders are doing whatever possible to prevent a neo-depression on their watch. This involves massive and unprecedented spending increases, issuance of currency, repurchase of debt obligations, corporate bailouts, the wholesale embrace of deficit spending and debt accumulation and the gutting of monetary policy resulting in zero interest rates. The consequences of this are unknown, since such actions have never before been taken. But they won’t be positive. Count on that.

Britain, for example, is torpedoing the long-term value and stability of its currency, guaranteeing a return to high tax rates, reduced competitiveness and a lower standard of living for virtually all of its citizens – especially homeowners with mortgages who will suffer falling equity (who wants to live in a stagnant, high-tax land?) and rising debt costs (interest rates have only one direction in which to travel).

In fact, actions today by short-term thinkers like Gordon Brown, Stephen Harper and Barack Obama will have an impact on the next generation or two of consumers, investors, voters and families. In order to escape the debt holocaust we all so richly deserve – and narrow cheated in November – political leaders have opted to spread the pain out over the next couple of generations.

In doing so, they have created this alternative universe in which the misinformed, malinformed and merely ignorant believe their governments and the media sycophants. It’s sad what is happening, and about to happen, to a few great countries.

Sadder still for the common folk. Many have been set on a path to perdition.

112 comments ↓

#1 Charles T. on 05.22.09 at 10:02 am

Great post Garth. Excellent summary of what is going on in our finanical world.

#2 Dave on 05.22.09 at 10:04 am

This, despite the protests of those who have a naked, self-serving vested interest in reflation and excess: the gold bugs and the indebted. The former wish for a currency collapse that will impoverish millions of families so their metal will increase in value,

——————————————————

so Garth, what’s your position on gold mining stocks? Considering that in the last 5 great deflations like this one, going back a few hundred years, gold mining stocks soared as credit contracted. Are you saying what’s going on here is an anomoly or are you just uninformed?

#3 Da HK Kid on 05.22.09 at 10:25 am

Well said Garth, bottom line is a well orchestrated master Ponzi scheme to play the majority sucker for now until there is a new game the elite can think up.

It doesnt take much when the SHEEPLE prefer to be manipulated anyhow. Deflation is taking hold. The hand your holding and the players at the table will all loose as the house always wins.

I wont play that game, neither should anyone visiting this blog however you wont be able to help yourself and it shows when you turn around and become a first time home buyer or property owner lowering expectations counting on HOPE!

How about the gift the market is giving you right now to sell your deflationary possessions and drop your debt completely.

I expect Garth at some point to show a picture of a toaster with the general populous wedged into the slots with a big banner showing “TOASTED!”

I am no longer worried quite honestly about the government ponzi play but more how I will play the stupidity of those getting manipulated in it.

There is no text book approach to that! Nobel winners cannot formulate the outcome.

Choose a position now!

The term HOPE is being thrown around allot lately. It is a very dangerous world.

#4 smw on 05.22.09 at 10:33 am

Political leaders are doing whatever possible to prevent a neo-depression on their watch.

Which translate into they are doing what ever it takes to get re-elected.

Your bang on, most politians are short term thinkers, like fund managers. Thats scary because its not a few million dollars they are handling, its their respected countries’ future.

And these are the people in control of your money, therefore, your destiny.

Very obvious now that there hasn’t been a US president in many years that isn’t a puppet with the hand of the “illuminati” up their ass.

Harper really wants in this elite club doesn’t he?

People, learn a lesson about RE from your friends across the pond, or like your Aussie friends that decided not to follow the rest of the world down in the interest rate game and squashed their RE bubble, as best it could be.

#5 The Coming Depression on 05.22.09 at 10:35 am

Thank God I listened to Garth and sold all my GOLD and SILVER and bought the US Dollar. After-all the dollar will be the preferred choice of all major industrial countries. GOLD will be worthless. Up 2% the last year, put a fork into it. Hell, whats a top notch country that owes some 60 trillion dollars need GOLD for anyway? They’ll be able to pay that off and avoid a depression..EASILY.

#6 Brian on 05.22.09 at 10:47 am

I like much of what Garth says but he seems stuck on Deflation, while espousing how terrible it will be.

So Garth my question is: If you were supreme leader of Canada and had the ability to devalue your currency via monetary inflation would you sit on the fence and let economic deflation occur under your watch?

#7 please talk about something else on 05.22.09 at 10:48 am

A double-A rating is hardly “junk bond status”.

It’s a significant event – but UK treasuries are still easily considered investment grade.

Wait. — Garth

#8 Eduardo on 05.22.09 at 10:53 am

“This involves massive and unprecedented spending increases, issuance of currency, repurchase of debt obligations, corporate bailouts, the wholesale embrace of deficit spending and debt accumulation and the gutting of monetary policy resulting in zero interest rates. The CONSEQUENCES ARE UNKNOWN, since such actions have never before been taken.”

THE CONSEQUENCE IS INFLATION! AND IT’S WELL DOCUMENTED.

#9 Slice on 05.22.09 at 10:55 am

I have no house (came back to Toronto from the Ottawa Valley and suffered house price sticker shock). I have a little savings and still have my job, but also zero, zilch, nada, debt and a 2004 car that looks great.

I got really tired of watching the happy newcasters telling us of the “good news” as housing prices skyrocketed further out of reach every month. Obviously they were happy because their own equity was rising, while ignoring the plight of those who did not have a house.

Payback is coming for the patient people. I’ll keep renting my beautiful, large Mississauga house on a corner lot for $1300 / month and pocket the $25K per year I am saving.

I was a vulture in 1982 when people in Toronto walked out of their houses and left the keys in the door for the banks to repossess. If the 20 & 30-somethings don’t believe this go ask your parents. Prepare to freak in 5 years when your mortgage rate doubles (that’s ONLY 6.5% by the way).

I’m not buying anything for the next 5 years except cheap beer and wings.

Slice

#10 My_View on 05.22.09 at 10:57 am

The drama, sheesh….

http://www.theglobeandmail.com/blogs/markets/rosenberg-us-downgrade-unlikely/article1148680/

#11 Kelly McMae on 05.22.09 at 11:10 am

It’s really difficult to understand these people. Rampant self-interest or blatant adherence to ideological dogma. Intertwined most likely. How many of these “leaders” (puppets) actually believe sacking future generations with undue hardship is acting in the best interest of the commonweal?

I’m wondering if you or anyone else has links to the raw data and information that is often presented on this blog. Some people provide great links but often they lead to more blogs/opinion sites.

Ie; Canadian debt load 127%, where can I seek out that information?

#12 john m on 05.22.09 at 11:23 am

Great post Garth–we had a problem,now we have a catastrophe in the making. Excessive personal debt ,easy credit,and overinflated housing prices.but our standard of living WAS basically safe there WAS money in our Governments coffers. Correction will start at the bottom regardless of how much money our governments have pumped into “political face saving false economy”. Our leaders have borrowed more and thrown our tax dollars around like drunken sailors encouraging people to go deeper in debt. Someone has to pay for this and it will be the already overextended,struggling taxpayer as our standard of living deteriorates from their actions.We had a crash and we have a hell of a lot bigger one in the making in my opinion.

#13 Flip on 05.22.09 at 11:31 am

meanwhile… In today’s Financial Post:

“Canadian consumers are becoming increasingly confident about the prospects for an economic recovery and appear ready to start spending again, according to a national confidence survey. ”

I think the Denial stage is becomming apparent. That or “while the Titanic sinks – might as well play music…”

#14 Grantmi on 05.22.09 at 11:34 am

Just listening to Bill Good show on CKNW here in Vancouver.

He’s having a part of his show devoted to why you’re buying a home here in Vancouver… and said the Philip Till had Hemelt Pastrick on his show in the morning.. and is now HP is revising his 30% down turn in the price level of homes here in BC to now only 15%..,

He says he thinks the market has hit bottom and we should be starting to climb due to new home buyers.

Baaaaaaaaaaaahhhhhhhhhhhhhhaaaaaaaaaa!!

Move Along!! Nothing to see here!!!

#15 Ryan on 05.22.09 at 11:38 am

Interesting times indeed!

1st!

#16 hagbard on 05.22.09 at 11:44 am

Gold bugs do not have a “self-serving vested interest in reflation and excess”. They’re just trying to preserve wealth. Speaking on behalf of my fellow gold bugs, we’d be more happy if things remained stable or improved. Its not going to happen.

#17 Mark McK on 05.22.09 at 11:50 am

Garth, love your blog, I catch myself checking your website every couple of hours hoping for more. I do have one question though, what is the answer to Britain’s woe’s? The Worlds woe’s? I absolutely agree with you, I just wonder what insight you would be providing them if you were a member of their parliament, or even if you were in their shoes.

Please keep up the good work! I love it!
Mark

#18 JoJo on 05.22.09 at 11:58 am

Garth, I’m asking you again where you can see the deflatory living expences for single family income for next 3 years. Cheaper food,oil,less property taxes,insurance costs,cheaper sevices,education fees,
transit fares…. Man today is everything more expensive than Bubles in 2007,2008.Even RE prices in May( Toronto area) are same as 2007,2008 , Do you shoping around at all?
#84 Grantmi on 05.22.09 at 9:22 am
WOW! Blown away at the Welfare stats out this morning in BC. Front page news in the Vancouver Sun.
Up 47% since last year!!!!

Couples and Couples with kids coming in for welfare because they can’t pay their car loans, credit cards and MORTGAGES!!! Holly Crap!
http://tinyurl.com/ppec84

So what? Look at the Stock Market TSX and DJIA,again gain of real estate prices, Gold,Oil,Food prices.
Garth is this deflation with Zero interest.

Canada is a World Leader of quantitive easing in the world,and number One of supporting banks and corporations (BTW Canada has the highest income taxes in the world).
Power of printing money is NOT DEFLATION. Garth did you see Railly on the Stock Market from 10th March till 8th May. Almost 40% gain.
At the same time Canada Stat. reported the worst informations in Canadian Economy. And last year Oct/08 Canadian Economy was still in very good shape
and we saw collapse of Stock Market ( -50%).
Goverments and Banks made biggest financial scam.
From first video about goverment manipulation in USA,
Canada even has more manipulation on the stock Market( TSX).

http://www.myprops.org/content/EVIDENCE-OF-GOVERNMENT-MANIPULATION-IN-THE-STOCK-MARKET-Dan-Shaffer-explains-on-Fox-Business-News-video-and-transcript

http://geraldcelentechannel.blogspot.com/search/label/Gerald%20Celente%20TV%20Interviews

(please watch Youtube video )
REP. ALAN GRAYSON SLAMS FEDERAL RESERVE INSPECTOR GENERAL ELIZABETH COLEMAN

http://www.youtube.com/watch?v=uUreWxKGOkY

#19 gold bugger on 05.22.09 at 12:07 pm

“Political leaders are doing whatever possible to prevent a neo-depression on their watch. This involves massive and unprecedented spending increases, issuance of currency, repurchase of debt obligations, corporate bailouts, the wholesale embrace of deficit spending and debt accumulation and the gutting of monetary policy resulting in zero interest rates. The consequences of this are unknown….”

Except they ARE known: INFLATION and lots of it.

I don’t get why you keep insisting that inflation is a conspiracy theory fostered by people who diversify some of their holdings into gold. Not everybody who favors gold does so to the exclusion of every other asset class (that would be fanatic) and not everyone who favors gold does so because they hope for hard times (any more than you are hoping for hard times when you pen your predictions).

It’s beyond me how anyone could enumerate the set of circumstances you have and predict deflation. Notwithstanding that inflation is an increase in the money supply, not a change in prices, even for the people who think inflation/deflation are “changes in prices” should know that prices aren’t going down. Not unless the only price you look at is the price to buy a house or buy a new car. Prices are rising for plenty of things that get purchased more often than once every five years.

But whatever. Don’t buy gold. I want it as cheap as possible at the beginning of every month when I hit the bank to trade in my monopoly money.

#20 ~d on 05.22.09 at 12:10 pm

Garth,

Good post as usual.
May I (we) have your thoughts on the CAD vs USD; near, mid and long term? I’m assuming our dollar will positively correlate with commodities (oil) but what will it look like relative to the USD?
Regards,

~d

#21 PTDBD on 05.22.09 at 12:16 pm

:-) moving forward :-)
on the road to perdition
a world without contrition
R: “how did we get here?”
E: “step by step”

#22 Houston_Texas on 05.22.09 at 12:20 pm

Garth here’s a link to show what can be had in Sugarland, Texas, outside of Houston. http://www.garywander.com/Sugar_Land_listings.shtml

This same property would be $400K in Calgary.

This speaks volumes about the Canadian housing delusion.

#23 Rasputin on 05.22.09 at 12:27 pm

I’m a gold bug but I sure don’t hope for a collapse of the dollar. I actually believe that a mostly deflationary outcome is almost certain. I think we will get inflation in the stuff we need, such as fuel and food, and deflation in everything with debt attached to it. Like real estate and vehicles. Recessions are about pain and deflation will cause every debtor a pile of pain. But I also recognize that every government in the world is trying to destroy their currency…one of these days they just might get it right. I look at it like house insurance. I’m not praying for a break in or a house fire but recognize that it could happen.

Inflation is the wet dream of every debtor as Garth noted and when everyone is counting on a certain outcome, that pretty much guarantees that it won’t happen. I also keep gold as insurance against political stupidity. Of that there is an infinite supply in this world. The other reason for gold it that it’s an asset that you don’t have to go into debt to get. I don’t have enough cash to buy a house outright, which is my ultimate goal, and I don’t want to go into debt to buy a declining “asset”. Gold covers the possible inflationary outcome and cash covers the deflationary risks. I’m not trying to made a killing. I’m just trying to get through the next few years with my ass(ets) intact.

#24 Alex on 05.22.09 at 12:27 pm

The Coming Pandemic of Paper Money

Whether this year is the death watch of the US dollar or next year or perhaps the year after is as yet unknown; but, what is known, is that all fiat currencies eventually succumb to the ever-increasing pressures placed upon them by government

This time the deflationary depression will be accompanied by an extraordinary global currency crisis. Government attempts to reflate their deflating economies will instead give rise to additional massive economic distress.

Just as low 1 % interest rates reflated economies in 2002 but also caused property prices to balloon then collapse in 2006, today’s even lower 0.25 % rates coupled with today’s unprecedented monetary creation will create an unmitigated global currency disaster that will destroy money as we know it.

To stimulate deflating economies, so much fiat money is being printed that money will eventually become worthless. Throughout history this is how all fiat currencies have ended, in the uncontrolled printing and circulation of increasing amounts of increasingly worthless paper.

Last month, M-2, the monetary aggregate in Japan increased at a rate even greater than 100 % annually. The printing presses are now being run as never before in the US, the UK and Japan in the desperate hope that it will save them from the overwhelming gravitational pull of deflation, an economic black hole of immense inertia.

The borrowing, printing and circulating of excessive amounts of fiat money has been done before and does not work. Doing so is a recipe for disaster; albeit a time-honored recipe that has been tried in the past always with the same result.

It will be no different this time. If you think otherwise, just wait and see.

#25 Munch on 05.22.09 at 12:46 pm

Okay, so politicians are Pond Scum! What’s new?

#26 .9999 on 05.22.09 at 1:08 pm

r.e.
For everyone who is asking why GT is such a deflation bunnie.

It’s because he has a RE fetish. He wants deflation so he can feed his fetish and buy more RE cheaper.

For those who want REAL future inflation/deflation advice?

1. Marc Faber. It’s inflation. Check.
2. Jim Roger. It’s inflation. Check.
3. Warren Buffet. It’s inflation. Check.

#27 Theo on 05.22.09 at 1:17 pm

Been following your blog for a good while now. Found that more often than not you were closer to the mark then the “pundits”. Your comments on how deflation could affect the work environment are interesting.

Time magazine had an interesting series on how the work environemnt is changing. While not using the “d” word, they put a positive spin on the change that is coming, some things they are expecting to see (lower/eliminated benefits, wages,) aligns with what you’ve been saying.

http://www.time.com/time/specials/packages/article/0,28804,1898024_1898023_1898169,00.html

#28 EJ on 05.22.09 at 1:18 pm

I don’t see how governments that maintain inflationary monetary policies ever deserved a AAA rating. Sure, you’ll get your money back on investment, but it’s been diluted.

If Moodys, S&P, and Fitch maintained any sort of independence and had an ounce of integrity, these countries would have lost AAA last year. Any time it’s up for debate, these ratings firms will get coerced by the US government into maintaining their bogus ratings and investors will lap it up as usual.

The subprime AAA ratings were damning evidence of these firms’ market honesty.

Just more fraud in a fraudulent system.

#29 Charles T. on 05.22.09 at 1:46 pm

Garth in your post you said the following:

“In order to escape the debt holocaust we all so richly deserve – and narrow cheated in November – political leaders have opted to spread the pain out over the next couple of generations.”

I think you meant to say political leaders have opted “to try” to spread the pain out over the next couple of generations.

#30 nonplused on 05.22.09 at 1:50 pm

It’s all just paper. When they close the banks for good one evening the physical infrastructure of the world is all still going to be thier in the morning, just none of the money. But as long as we have trees we can’t print up some new stuff.

I think maybe I’ll buy a farm. All of rural Alberta is for sale right now even though inventory is off in Calgary and Edmonton from last year.

#31 Nostradamus jr. on 05.22.09 at 1:51 pm

…Canada’s Future Prime Minister Garth Turner…

I believe the total US Debt is 375% of their GDP

…Can you say “RESET”…

President Obama will suddenly stand up one day soon and announce to the world….

“”The United States of America as of today has Nationalized all our foreign debt…deal with it.””

…and the U.S. Dollar remains the world currency….Gold falls into the abyss….deal with that.
——————————–

Below is how the $3 Trillion Debt is shared worldwide…

Foreign owners of US Treasury Securities (January 2009)

Country… $ billions of dollars … % percentage

People’s Republic of China 739.6 24.07%
Japan 634.8 20.66%
Oil exporters 186.3 6.06%
Caribbean banking centers 176.6 5.75%
Brazil 133.5 4.35%
United Kingdom 124.2 4.04%
Russia 119.6 3.89%
Luxembourg 87.2 2.84%
Taiwan 73.3 2.39%
Hong Kong 71.7 2.33%
Switzerland 62.1 2.02%
Germany 56.4 1.84%
Republic of Ireland 50 1.63%
Singapore 38.3 1.25%
Thailand 37.2 1.21%
Mexico 34.9 1.14%
India 32.5 1.06%
Turkey 31.3 1.02%
Korea 31.3 1.02%
Norway 21.9 0.71%
France 17.9 0.58%
Israel 16.9 0.55%
Egypt 16.9 0.55%
Netherlands 16.8 0.55%
Italy 15.6 0.51%
Belgium 15.5 0.50%
Chile 15.2 0.49%
Sweden 12.4 0.40%
Philippines 11.6 0.38%
Colombia 11.3 0.37%
All other 179.4 5.84%
Grand Total 3072.2

…I predicted the above nearly 500 years ago…

#32 nonplused on 05.22.09 at 1:58 pm

hopefully this trend does not continue:

http://www.bloomberg.com/apps/news?pid=20601087&sid=azKCkG5fBATc&refer=home

#18 JoJo

I think Dan Shaffer’s entity is not the government but the banks. I mean, if I were CEO of a bank that the government just made take $100 billion, what am I going to do with all of that money? More important still, how do I move a bunch of it in to my personal bank account? Bankers do not let that sort of money flow by without dipping in their own personal cup.

So here is my sneaky CEO Retirement Appreciation Plan (CRAP): Issue myself a bunch of stock options at record low prices, borrow $100 billion from the TARP, and instruct my “equity traders” to start buying financials with the money. It’s brilliant. And perfectly legal.

That’s what happens when stupid governments force too much money out there. It gets embezzled one way or another.

#33 Davinci on 05.22.09 at 2:02 pm

Garth Said: “I understand why your best friends are inanimate. (How’s that?)”

I thought it was very funny, for those that don’t know I became a gold bug 2 years ago.

How is this joke…

The loonie describes a person willing to hold it for long term savings. :)

My joke hurts more than yours as your joke assumes the unlikely that I have no friends thus the one friend I have is gold. My joke get’s funnier over time as your purchasing power gets wiped out since you most likely have a lot of loonies or loonie bonds.

Ok enough with the stabbing jokes, you are standing your ground and I am standing mine. I have done my research and gold is money, you have done yours and governments will not allow high inflation or worse hyperinflation.

So, lets bet each other a 500 letter comment where if I loose I will praise you and the government issue fiat. If I win you praise me and admit that gold is money.

I will let you make up the terms of a “win” and the time frame, you game? :)

Whatever the terms, I’m in, it’s a bet.

#34 Bill-Muskoka (NAM) on 05.22.09 at 2:04 pm

The answer as to the cause is

People
Obviously
Lacking
Intelligent
Thought
In
Critical
Situations

and

Government
Refusing
Economic
Enforcement
Duties

#35 The Tallyman on 05.22.09 at 2:37 pm

Memo to: Adam & Eve & family

In response to your request for assistance in maintaining your excessive lifestyle
all I can say is… You are on your own.
I warned you…
Inbred bunch of bastards!

#36 Investx on 05.22.09 at 2:46 pm

Canada in better shape than most, IMF says

Canada’s strong policy framework and proactive response has put it in a better position to deal with the global financial crisis than most countries, but it still faces a challenging near-term economic outlook, the IMF said Friday.

Full article:
http://www.thestar.com/business/article/638770

#37 Dennis on 05.22.09 at 2:50 pm

to #20 ~d

I have been reading Garth’s articles since 2000 and in 2001-2002, when 1.00USD was buying 1.65CAD he was maintaning that Canadian currency will continue losing its purchasing power compared to USD because the US economy according to him was very strong (which was actually not right at all) and also Garth’s idea was to abandon CAD and accept USD as a joint North American currency, because we couldn’t compete with Americans.
In one of his articles he mentioned that those Canadians who were buying USD were geniuses and that was the way to go in the future.

Apparently we saw a completely different story and those who were buying USD lost a lot. Unlike those who bought silver and gold (which quadripled since then!) or just simply stayed in CAD

When it comes to taxation and real estate – Garth’s expertise is unrivaled, but in terms of macroeconomics and global picture – I don’t think this is the right site.

#38 Investx on 05.22.09 at 2:58 pm

Retail sales rise for third-straight month

Retail sales increased for the third straight month in March in a further evidence of a stabilizing Canadian economy or at least a slowing of the torrid pace of decline experienced early this year.

Full article:
http://www.thestar.com/business/article/638659

#39 Basil Fawlty on 05.22.09 at 2:59 pm

“…the gold bugs and the indebted. The former wish for a currency collapse that will impoverish millions of families so their metal will increase in value…”
Good grief what a trite analysis, suggesting that people trying to protect themselves from governments run by printing press financial misfits, are somehow wishing to see millions impoverished. Personally I am interested in nothing more then the ability to keep feeding myself, while staying warm in this popsicle of a country, inside my Mazorati.

#40 Nathan in Edmonton on 05.22.09 at 3:02 pm

You’re bang on Garth. Staff at my wife’s place of work were told this week they are all getting a 10% wage decrease; she said it was unbelievable many of her co-workers where on the phone to their banks having to negotiate loans that just got that much harder to pay back.

#41 ryan on 05.22.09 at 3:04 pm

Man…what to say?

I will echo the comments of others and say that anyone who has a interest in diversification into gold does not really wish to see the collapse of the monetary system. Say what you want about the future of the shiny metal…it has and always will have value. End of story. If the currencies did collapse it won’t be good for any of us…I think most of us looney ‘gold bugs’ just think it’s prudent to have a bit of an insurance policy.

Inflation is not exatcly going to save the housing market were that even to occur. The fact is that the relative value of real estate in Canada against other goods is going to decline at a horrific rate. I don’t care if that takes place during a deflationary cycle or inflationary. It’s about the relative value, not nominal.

Finally….we cannot equate all the policies followed in the US to likely outcomes by taking a similar approach in Canada. There are differences. The Canadian economy is far more exposed to a protracted downturn that the US. We have many, many more months and years ahead of us that are going to be painful. We are not just two years behind, it’s much worse than that…we will come out of this more than two years behind the US. That’s what happens when you don’t have a diversified economy or dominant canadian multi-nationals. We dig stuff up, grow things, chop stuff down, drill, catch etc. but we don’t realy manufacture or add value to our primary goods. We also have not, as yet, followed the same quantative easing policies that have taken place in the US…..and yes it is possible that will happen, but it’s equally likely we won’t even get a chance to pull that safety valve. The situation here is accelerating too quickly. We also don’t have a self-sufficient internal market which makes easing all that beneficial for the economy. It won’t be as effective here as it has been in temporarily steadying the situation down in the U.S.

#42 . . . fried eggs and spam . . . on 05.22.09 at 3:20 pm

“Lion en hiver” — is that French for “The Tiger In Summer”?! Things are about to get mighty hot now, and tigers are nasty puddytats!

#3 Da HK Kid at 10:25 am — “. . . It is a very dangerous world.”

True, but I would say it is on the way to extreme!

#12 john m at 11:23 am — “. . . we have a catastrophe in the making. Excessive personal debt, . . .”

This is what sheeple are for — give ’em lots of goodies, trinkets to tickle their fancies with, along with plenty of cheap cash then when the time is right (not yet) — PULL THE PLUG!

Later this year and all of next year is when the hurt kicks in.

#24 Alex at 12:27 pm — “The Coming Pandemic of Paper Money . . . Doing so is a recipe for disaster; albeit a time-honored recipe that has been tried in the past always with the same result. It will be no different this time. If you think otherwise, just wait and see.”

Humanity has evolved spiritually, but is relatively unchanged physically, except for one thing — the world’s population, which is close to seven billion.

Could be this is why the NWO wants to cull two-thirds of us so, as The Christ once remarked, “. . . the meek shall inherit the earth.”

Well, they can have this classroom of a planet. Give me liberty or give me death!
——
Let’s all enjoy something about The Dark Side! (3:28 clip). — http://tinyurl.com/rxlb5o
——
Guess we ain’t seen nuthin’ yet, but there’s always two sides to every story! — http://tinyurl.com/qlbh85 /\ http://tinyurl.com/psegra

Remember the second wave of foreclosures, downfall of the dollar, The Cycle of Nines, the major downturn beginning next month and gradually choking the mortgaged-to-the-hilt? — http://tinyurl.com/qta7fy /\ http://tinyurl.com/oowsvd

“This can cause huge jumps in the monthly payment, with increases of over 50 percent not uncommon, van Dijk says, making these the ultimate ‘exploding mortgages’.”

BTW, if there are any holders of US Treasuries here, dump ’em ASAP or use for toilet paper — they’re close to worthless!

#43 Nostradamus jr. on 05.22.09 at 3:21 pm

“”Lion en hiver””???

Who cares trying to attract Swedes here…this is an English blog site.

…”Aweenda shmure da froog’s legs”….”Bork, bork, bork!”

#44 Canuck99 on 05.22.09 at 3:45 pm

“This involves massive and unprecedented spending increases … The consequences of this are unknown, since such actions have never before been taken. ”

Such actions have never before been taken? Excuse me?!?

Direct from Wikipedia on the monetary model of hyperinflation:
“In the monetary model, hyperinflation is a positive feedback cycle of rapid monetary expansion. It has the same cause as all other inflation: money-issuing bodies, central or otherwise, produce currency to pay spiralling costs, often from lax fiscal policy, or the mounting costs of warfare. ”

Sound familiar?… If you’re curious how this will play out, and has played out many, many times before when banks balloon the money supply check out our sorry fate at: http://en.wikipedia.org/wiki/Hyperinflation

Garth wants to paint gold bugs as bad guys because they just want to protect their hard-earned savings from disappearing into a fiat-driven black hole. The reality is that if Garth, and others of similar influence, encouraged and praised people who protect their savings with a portion in physical gold and silver rather than castigating such individuals then society as a whole would all be much better off this ridiculous derivatives-driven runaway train inevitably derails.

#45 timbo on 05.22.09 at 3:46 pm

#16 hagbard and #8 Eduardo,

both of you are right but it does not matter.

Come up with a engame scenerio where the G20 debt can be paid back?

If you are thinking inflation , then what would happen with an world economy’s in depression with a massive increase in debt service. People are not going to spend facing increasing costs and no job growth. they will belt tighten and matress stuff. The world is going to run to any little bubble it can find to preserve what little wealth is left and when it becomes apparent to all that there is no hope, price controls will be put in place. That means everything including what people are hourding to cover what is happening.

I never said printing or socializing the banks was right, just it is the only thing they can do. You cannot play the last card until it is obvious that you are forced to play it.

Again California for the US and Ontario for Canada is the benchmark. If the terminator is forced to layoff 10’s of thousands and cut services to 0 it will show that deflation is picking up and is feeding upon itself. This will spead creating 10’s of millions unemployed and forcing public opinion against paying debt ,like Germany in the 30’s.

We in Canada are in the same boat, we cannot sell product to a country that cannot afford to pay because it has not money. If our export market dries up we follow.

hold onto your gold with worry because if it gets ugly they will call for it at a price you will have to live with.

Again to my first point, come up with an engame scenario that can get this debt paid without collapsing the system. If you cannot then in the end any inflated price could see price control action to slow the stampede.

#46 Calgary37 on 05.22.09 at 4:00 pm

Nouriel Roubini: The Prophet

For those of you who appreciate Roubini’s work, here is an interesting background article about him from the New Republic.

http://www.tnr.com/politics/story.html?id=72d11e65-5086-4f71-a91d-408211a6b8b7&k=97200

Cheers.

#47 timbo on 05.22.09 at 4:24 pm

A site to behold
http://www.usdebtclock.org/

#48 john m on 05.22.09 at 5:02 pm

Canada Offering Guarantees of Life Insurers’ Debt (Update2)

By Theophilos Argitis

May 22 (Bloomberg) — Canada began guaranteeing borrowings by life insurance companies in the latest effort to ease credit conditions for the country’s financial institutions.

The Canadian government is offering to guarantee life insurer debt with maturities of three months or more at a base fee of 110 basis points, the Finance Department said in a statement on its Web site.

“This program will help Canada’s life insurance industry access wholesale debt markets,” Finance Minister Jim Flaherty said in the statement. The moves are aimed in part at keeping the country’s financial institutions competitive following bailouts in the U.S. and Europe.

Flaherty has said increasing the availability of credit in Canada is a priority because lending is slowing during the recession. The government has also offered to provide guarantees on more than C$200 billion of commercial bank debt to revive lending.

No lender has used the bank debt guarantee facility, which has been in operation since last October, said Chisholm Pothier, a spokesman for Flaherty.

“It’s not something that we’d necessarily be looking at utilizing from day one,” Sun Life Chief Financial Officer Rick McKenney told reporters yesterday following the company’s annual meeting of shareholders. “It’s an important thing to have from a public policy perspective, to recognize the importance of the insurers in the Canadian economy.”

Canada’s government has also pledged to buy as much as C$125 billion in bank mortgages and C$12 billion in debt backed by car leases. Canada also agreed to backstop a C$32 billion restructuring plan for insolvent commercial paper, in a bid to bolster the country’s financial markets.” ————-Deeper in the hole we go–generations will suffer to repay these attempts to hide reality with their tax dollars and destruction of our standard of living, and we have no voice just sheep on the way to slaughter.I wonder how many citizen’s entire lifetime of taxes has already been thrown to the wind to reward the incompetence of so few?

#49 David Bakody on 05.22.09 at 5:10 pm

Some months ago I wrote: The Guardian stated that 360,000 jobs would be lost in the city of London alone by 2012 ….. hello? I marked this in my desk note book; US National Debt: Noon 26 March 2009 m$11.1
Trillion as I type: $11.338 Trillion and the graft is going almost straight up just as it did in 1942! Our #1 trading partner …… partner.

#50 timbo on 05.22.09 at 5:26 pm

Very interesting video’s today.

http://dailybail.com/

#51 Dan in Victoria on 05.22.09 at 6:11 pm

Well, some of the Brits know whats coming, in 2007 one left every 3 minutes. In the past year Foriegn Currency Direct has seen a 37% increase in the transfer of funds to Australia and the US.For more, http://www.themovechannel.com/news/841434e7-35a6/

#52 Avaricious Al on 05.22.09 at 6:36 pm

Garth when you start counterfeiting gold I will worry about holding gold during a defation. I think in either a deflation or inflation gold is golden, it is just that wee bit between the two that can be dicey.

#53 Chris in England IG-AZ at the moment on 05.22.09 at 6:56 pm

Mark McK #17: “I just wonder what insight you would be providing them if you were a member of their parliament, or even if you were in their shoes.”

His advice would be Don’t even think about buying a first home, let alone a second … oh, I forgot – they get the idiot taxpayer to finance all that! In that case, go right ahead and buy as many as you like (and don’t forget the floating duck house for your lake).

#54 Chris in England IG-AZ at the moment on 05.22.09 at 6:58 pm

And our existing parliament gives us all the advice we need. Spend spend spend you fools (and thanks for the manure and the duck houses).

#55 Argentum Aurum on 05.22.09 at 7:01 pm

Gold is a hedge against inflation and a total breakdown of the system. Its time is coming.

AgAu

#56 Jordan on 05.22.09 at 7:08 pm

Today my landlord was bragging about how he managed to secure a mortgage for a person with ‘the *******’ credit. Which goes to show that the lending standards may have changed but mortgage brokers use different loop holes to sell their product anyways.

#57 jess on 05.22.09 at 7:10 pm

federal reserve bank of san. francisco

http://www.frbsf.org/publications/economics/letter/2009/el2009-16.html#4

How much deleveraging?

…”Since the start of the U.S. recession in December 2007, household leverage has declined. It currently stands at about 130% of disposable income. How much further will the deleveraging process go? In addition to factors governing the supply and demand for debt, the answer will depend on the future growth trajectory of the U.S. economy. While it’s true that Japanese firms and U.S. households may differ in important ways regarding decisions about paying down debt, the Japanese experience provides a recent example of a significant deleveraging episode that took place in the aftermath of a major real estate bubble and is useful as a benchmark.

The Japanese stock market bubble burst in late 1989, followed soon after by the bursting of the real estate bubble in early 1991. Nearly 20 years later, stock and commercial real estate prices remain more than 70% below their peaks, while residential land prices are more than 40% below their peak.

Figure 3 compares Japan’s nonfinancial corporate sector with the U.S. household sector over 10-year periods before and after the leverage-ratio peaks. In both countries, leverage ratios rose rapidly in the years before the peak.

After Japan’s bubbles burst, private nonfinancial firms undertook a massive deleveraging, reducing their collective debt-to-GDP ratio from 125% in 1991 to 95% in 2001. By reducing spending on investment, the firms changed from being net borrowers to net savers. If U.S. households were to undertake a similar deleveraging, their collective debt-to-income ratio would need to drop to around 100% by year-end 2018, returning to the level that prevailed in 2002.”…

#58 Grumpydawgs on 05.22.09 at 7:47 pm

The shell game goes on. Savings are ‘disappearing’ in front of your eyes. The scam that gold is a ‘ barbaric relic’ is forgetting to calculate purchase parity. The 1979 dollar is now only able to buy .29 cents of goods. Gold on the other hand is up over 800% compared to the value of the DJIA since then.

http://investmentscore.com/editorials/become_an_instant_billionaire

The game of hiding the unemployed behind EI cheques and a clamp down on information is resulting in massive numbers of new welfare claimants. The article highlights only the couples ( +75%)and couples with children ( +57%), it does not count the huge numbers of single persons who are now on welfare.

http://www2.canada.com/vancouversun/news/story.html?id=c259fa55-adc8-4e08-b15a-5bffd5dbd149

BC has been in information lock down mode but the truth is spilling out into the streets. Unemployment in the US and the UK has set another record as of yesterday report. Information in Canada is not available. Feeling fat and sassy? Maybe we’re just stupid.

Vancouver has quietly announced that it will ‘wrap’ undesirable buildings in plastic advertising during the Olympics. Mass ticketing campaigns have been used to turn homeless into criminals.

4500 of these ‘criminals’ are people who were kicked out of BC mental hospitals to fend for themselves on the street.

Truth is hard to come by in Canada, and it isn’t always pleasent.

#59 Too Old Bob$ on 05.22.09 at 7:53 pm

Inflation= items of desire, want or absolutely needed, regardless of cost.
Deflation= items of no interest, not needed and can be purchased some other day when affordable.

Question about Gold, Silver: when the monetary system collapses and paper money has no value, what do the people use for barter if they have no gold or silver?

#60 ts harpoon on 05.22.09 at 9:13 pm

Sheeple: Your world is about to get a whole lot smaller-Jeff Rubin.

“Another round of triple-digit oil prices, Rubin warns, will see a relocalization of manufacturing to Hamilton from Guangdong. Western access to cheap Asian labour will decline as energy prices rise — and that’s going to
increase the price of basic goods, like food, by as much as 40%. Also in Rubin’s crystal ball: $7-a-gallon gasoline in the United States, along with a crash in the greenback that will make driving so expensive many poorer Americans will realize they can no longer afford it…”

http://www.canadianbusiness.com/managing/strategy/article.jsp?content=20090615_10005_10005

#61 RJ on 05.22.09 at 9:36 pm

“Meanwhile, if you’d like a window on the future, gaze across the sea, where the UK appears to be going to the mat.”

Yeah, then gaze at this-

http://goldmoney.com/en/charts.php?cn=0gbp12&ca=1+Year+Gold+Chart+in+GBP

#62 . . . fried eggs and spam . . . on 05.22.09 at 9:53 pm

O/T, but a good read (true story) on how humanity can ‘turn the other cheek’. Connection to Vancouver. Restores a little faith in ourselves.

Following quote is from wrh.com. — http://tinyurl.com/6n9q4s

“Nobody is ever quite the hero or villain they are often made out to be.”
——
I mentioned earlier that the NWO (Bilderberg Group and a few others) wanted to cull about 2/3 of the world’s population to have a little more freedom and space for themselves, and that (from my POV), they were welcome to this planet.

This could be a lead-in to the cull. Comment from wrh.com. — http://revolutionarypolitics.com/?p=754

“According to Reuters, 4.9 billion vaccinations against the supposed swine flu could be ready shortly. Are the governments of the world preparing to vaccinate the entire populace?”

It is good to recall a sentence from one of Jimi Hendrix’s songs: “. . . if I don’t see you here, I’ll see you on the other side — AND DON’T BE LATE!”
——
Gold is up and Bonds crash. Or is it that Gold crashes while Bonds do a fly-past of the moon?! — http://tinyurl.com/owsppz /\ http://tinyurl.com/63k35z
——-
A para. from The Daily Reckoning: “Recession Turns Malls Into Ghost Towns,” says the Wall Street Journal. “Malls are emptying out because they were built for a world that no longer exists. They were built for a world where people increased their debt and their consumer spending far faster than they increased their real incomes. Now that people are cutting back on spending – in order to reduce their levels of debt – they can no longer afford to go to the mall. As a business or an investment, malls have got to be bad places for your money.”

When the “For Lease” signs appear in malls in Canada, that will be a clear sign things are unravelling speedily.
——
The Terminator may well be terminating himself out of office! — http://tinyurl.com/ofa4dm
——
#59 Too Old Bob$ at 7:53 pm — I still prefer silver dollars, as gold is somewhat obtrusive.

#63 ts harpoon on 05.22.09 at 9:56 pm

Sheeeeeeple…We have an energy supply problem!! Hello! Stephen Harper is not going to talk to you about this issue. Puh-lease. Do not let the tar sands give you a false sense of security.

Take a moment and determine for yourselves: a Canadian perspective – Mr. David Hughes:

http://media.globalpublicmedia.com/RAM/2006/11/Hughes112506.ram

#64 bluefood on 05.22.09 at 9:58 pm

http://globaleconomicanalysis.blogspot.com/2008/12/humpty-dumpty-on-inflation.html

Inflation is a non starter. For those who really understand the long-cycle will also understand that gold acts as a superior hedge against deflation not inflation, just look at the period between 1980 and 1999, at an annual average inflation rate for the period of arounf 4%, gold went from $850 in 1980 to $250 in 1999. However, during hyperinflation, gold will perform as a great inflation hedge. The caveat here is that hyper will not be found anywhere regardless of the FED monetary pumping. See attached articel for a more quantitative analysis.

#65 john m on 05.22.09 at 10:28 pm

Headline—“GM borrows 4 billion more,prepares for bankrupcy”……………. lol certainly not a headline i ever thought possible, talk about incompetent lenders and unfortunately they are running our country as well :-)

#66 Davinci on 05.22.09 at 10:33 pm

#37 Dennis
and
#39

Well said, after reading all the comments here about gold it is clear to me there are lots of gold bugs here.

I thought they where very few of us because for 37 years, 8 financial advisers 10 good friends I see every day and 1000s of acquaintances NOT ONE has ever mentioned gold.

Today my friends co-workers look at me like I’m was wearing a tin foil hat when I started buying gold at the top of the market. Today at lunch we where talking about gangster books and I recommend the ultimate gangster book, “The Creature from Jekyll Island”. One person said “That book is about the truth of reality, that just too depressing”, then 5 other people agreed.

I said nothing after that and thought, we deserve our fate.

#67 Dee on 05.22.09 at 10:41 pm

I really don’t pay too much attention to S/P or Moody’s. They triple A sub-prime mortgages etc…They’re sorely lacking in the creditability department.

Not a gold bug but am thinking about using it as a hedge. There are still some good stocks out there that pay healthy dividends.

As for increasing money supply? They’ve been doing that for years via tax cuts. Now instead of stimulating consumer demand or increasing portfolio values it should be used to build infrastructure not upgrades to homes, patching up roads or handout to banks. Helping GM pensions set a good precedent. And before I get flaming arrows thrown at me please learn union history and their role in the creation of social safety nets. I’m sure even Mr. Garth wouldn’t want to see his pension cut.

Inflation can and will be reined but it create a political stink.

#68 POL-CAN on 05.22.09 at 10:49 pm

Pause to think what if?

Loud Paradigm Shift Rumblings

.
.
A paradigm shift has begun, with banking power shifting to the creditor nations as the usdollar is supplanted, made possible by several new institutional pillars as well as newly forged alliances.
.
.

rest at:

http://www.321gold.com/editorials/willie/willie052209.html

Makes me want to go and by some gold. Lots of it actually. But since I am not a gold bug, although I understand gold’s place and value, RE might not be such a bad idea after all…. Hmmm….

#69 Mathematically Challenged on 05.23.09 at 12:12 am

“Question about Gold, Silver: when the monetary system collapses and paper money has no value, what do the people use for barter if they have no gold or silver?”

According to Garth: Squirrels

Alternatively: put your makeups and trashy clothes on and find a place downtown where all the Johns and Johnettes are.

You do your name justice. — Garth

#70 . . . fried eggs and spam . . . on 05.23.09 at 1:11 am

Yo! =-O I’m a Gemini, but see what she writes about things ‘speeding up’ (the karmic pace of time). — http://www.conspiracyplanet.com/
——
Three countries with three rather large debt loads. First, the UK — http://tinyurl.com/oskzs2; second, China — http://tinyurl.com/qw9y6e; third, the US — http://tinyurl.com/obekb8.

What goes up must come down. POP goes lotsa little tiny, cute and fuzzy bubbles all over!
——
The WHO says the world should prepare for more severe flu cases and death. These morons / bimbos are the ones who are actually running the show, yet have no idea of the experience of the after-life.

I’ve got news for these bozos — these clay temples, or sack of clothes that each of us wears is simply a temporary shelter, and in accordance with the natural order of life, this, too shall and must pass away. — http://tinyurl.com/qvbg5v

#71 Ghost of Tom Joad on 05.23.09 at 1:17 am

Garth, I trust that your heart is in the right place, but my gut tells me that you’re wrong. Not trying to disrespect you and I’m sure a lot of the gold bugs do want armagedon — but I agree with all of them that gold is the way to go. I look at the massive amounts of money that the “world leaders” are thieving and know where this is going — flush.

Folks if you want to hear an awesome daily radio show all about gold and toilet paper (i.e., US dollar) — go to http://patriotarchives.blogspot.com/
These guys rock and deliver a one hour radio show weekdays that you can listen to from your computer.

Garth — sincere thanks for your articles each and every day. It’s great to get your perspective on things.

BTW: Gordon Brown and Barack Hussein Obama are New World Order scum that serve their globalist bankster masters. For those ready to wake up, check out Alex Jones at http://www.infowars.com to find out more.

#72 Darryl on 05.23.09 at 7:24 am

#33 Davinci
Not taking sides in this issue but…
The problem with your proposal is that Garth Turner is a public figure and you are a blogger behind an alias.

How about if you are wrong you will put your mug and phone number on a highway bill board for one month stating that you called it wrong. That would be more or less fair.

#73 Kilt on 05.23.09 at 8:45 am

Hey Garth.

# of comments appears to be decreasing. Can mean two things.

I agree with the gold comments.

There are sane investors out there like myself who will look at oz of gold and say ‘sure it’s shiny and heavy, but no way in hell I gonna give you $1000 for it’.

Kilt

#74 guava.ca on 05.23.09 at 9:12 am

I have a Johnson Matthey 1 ounce gold bar, a 1/10 Krugerrand, and about another ounce in jewellery.

Willing to trade above for worthless condo in downtown Toronto ;)

#75 Calgary37 on 05.23.09 at 9:25 am

GOLDEN RULE: He Who Has the Gold Makes the Rules

In view of the recent discussion on Gold and the future of the US Dollar, I was going to post links to the most recent pertinent articles but the list was getting too long. Suffice to say, there are many persons who are writing what the real trend is, and it is not what the Obama team says it is.

[NOTE: China is now the #1 producer of Gold. Meanwhile, a long-standing rumour claims that the American Gov. no longer OWNS ANY GOLD even though they still show a large amount on their balance sheets.]

Anyone who has been doing the same type of reading and research as I have been doing, can easily agree that by the end of 2009, the US dollar will be below 80 and the price of Gold will be above 1000 (in weaker USD) . By the end of 2010, there will be a new Digital Global Currency System called the Bancor (as per John Maynard Keynes). The price of Gold will be revalued to 5000 Bancors and will be used as backing for this new Global Currency. A minimum sales price will be set for petroleum and all other natural resource commodities. Some other commodities could also be used as a backing for the Bancor.

[NOTE: On Thursday, the USD Index closed at 80.13. On Friday, it hit 79.90 and closed at 80.05. The Canadian dollar is approaching 90 again.]

In fact, if Russia and China got most of the oil producers, most of the resource producers, and the major holders of Gold together in a consortium, they could implement this Digital Global Currency System immediately. All they would need is a suitable computer system to handle the transactions. In the meantime they could determine the exchange rates that they want to start out with. For example, with a minimum price of oil set at USD 75, is there an advantage to price oil at 100 Bancors or at 50 Bancors?

[NOTE: This type of system would be a real system that would facilitate world trade, stabilize commodity prices and NOT just function as a control system for the Globalists and their One World Government.]

[Problem > Reaction > Solution]
REMINDER: The problem is NOW. China is NOT going to wait 5 or 10 years to remove the USD as THE world reserve currency.They are going to provide a Solution for this Problem soon. They will have a lot of help as many other groups would like to collapse the American Dollar for a variety of reasons.

In closing, remember that Gerald Celente said: Panic of 2008, collapse of 2009. From July through November can still be very eventful. However, this was supposedly a subject discussed at the recent Bilderberg Meeting, so it is possible that this man-made manipulated collapse can be postponed again.

Cheers.

Power to the People. Let the Revolution Begin.

#76 Jonathan on 05.23.09 at 9:47 am

Our company is considering an acquisition, so I have to do some research on the future of home construction in Ontario. I was looking through some CMHC (Canadian Mortgage and Home Corporation) reports on mortgages. The rate of credit growth in mortgages has been rising by 11-12% per year, for years now. Last year mortgage credit continued to grow at 9%. But if you look into the numbers, banks pulled back on mortgage lending by about $200 billion, and CMHC increased their mortgage lending program from 80 to 250 billion. And now you know why we didn’t have a meltdown.. yet..

#77 CalgaryRocks on 05.23.09 at 10:03 am

#67 Dee

No arrows here but I will have to disagree that taxpayers with no pensions supporting those with pensions is a ‘good’ precedent.

Typpical socialism though where you have a class of underqualified, overpaid insiders acting as parasites on the majority. Nothing new here.

#78 Basil Fawlty on 05.23.09 at 10:52 am

How significant is this?
“It is absurd if two important trading nations such as ours continue to carry out our commerce in the currency of a third nation.” — Luiz Inacio Lula da Silva (President of Brazil, speaking with the Chinese delegation)

“The US should be afraid, very afraid. China is questioning the dollar’s status as a reserve currency and, at US$1000 an ounce, gold has become the world’s de facto currency.”
— John Ing (Maison Placements in Canada)

#79 the Coming Depression on 05.23.09 at 10:54 am

Here’s the facts people: OBAMA: WE HAVE RUN OUT OF MONEY! Have your GREAT depression face on? Read it:
http://thecomingdepression.blogspot.com/2009/05/obama-were-out-of-money.html

#80 Dawn in Calgary on 05.23.09 at 11:05 am

Tired of all the goldbugs high jacking the RE blog. The discussions here have devolved.

Why don’t you create a gold blog and move there?

Please don’t link to the (I’m sure) many gold blogs. I really don’t care. I’m bored with this topic.

#81 Got A Watch on 05.23.09 at 11:16 am

Let me state for the record that I am not a goldbug. I trade it – you know, buy low, sell high. I have traded precious metals for 8 years now, and made money, no losing years, or even close. Silver has netted me more profit, in % and $, than gold.

Precious metals are always highly volatile, subject to seasonality, and fickle. It is a market driven almost entirely by sentiment. When things are good and the economy healthy, few have any interest. When things go bad, and crisis abounds, investors and traders thoughts turn to precious metals, as a store of value and a safe haven.

Long term buy and hold of any asset has fallen out of favor. Just blindly holding an investment is no guarantee of constant returns and future prosperity. If you are going to invest, you are forced now to be a short-term trader, or suffer wild swings in the value of your holdings. If you feel you can’t or don’t want to trade, then the best thing to do is just buy Canada Savings Bonds, just keep rolling the short-terms (don’t buy long terms).

Canadians have an advantage in investing – the Tax Free Savings Account. The greatest opportunity to build wealth is right there. Even if you only put $1 in this year, the account once opened grows the tax free balance allowable by $5,000 each year plus any profits you make on whatever you invest in. So in 5 years it will have a tax-free balance of $25,000 plus any profit earned in the mean time.

Forget about regular savings, RRSP’s or any other “investment” – first open the TFSA, then buy assets inside it, whether they be stocks or Bonds or whatever you favor. I personally will use mine to buy high risk mining stocks for trading, in the hope of some large capital gains which will increase the tax free balance available in my TSFA. At least for the first few years. As the balance grows it will become my only trading vehicle in time- why pay taxes if you don’t have to.

When I said to “buy gold”, it was in the context of having to find a place to park your capital that will hopefully protect you from rising prices on consumer essentials (food, energy) while the money you buy them with falls in relative value. Some people may see oil as fulfilling that role. In general, it could be almost any “hard” (physical) asset, like a commodity (not real estate) that can be expected to rise in price (or at least hold level) in the next few years. There are not many assets that fit that description.

Right now we are seeing prices of oil/gold and many other commodities rising as they are priced in US $, which are falling in value. If and when the Gov manages to generate positive CPI inflation, which is vastly more preferable to them than deflation, prices of commodities will really move. That factor is absent now, but it will not be forever. Historical lows in interest rates cannot last forever, they will rise, and so will CPI. Insider “economists” are openly stating now they want the Gov to achieve 6% CPI for ” a few years” as the desired target, see Mankiw and Rogoff.

This is not to say gold, oil and any other asset will not be volatile over short terms. That is where trading, not holding, comes in. Optimally, try to capture a chunk of each price rise, then take your profit, and wait for another buying opportunity. I know not everyone can/will trade, but this is the reality we are facing. You have to adapt to the times.

If people want links to websites that will help you self invest, I can provide. In general, I would avoid any Bank “wealth manager”, or any financial advisor – they will sell you what head office says, not necessarily what is best for you. It is time to take charge of your own affairs. Even if you know nothing about investing, and are not interested – you have to learn- no one cares more about your money than you, and no one else will spend the time if you don’t. They can find a new customer much easier than you can recover from deep losses.

Sorry to ramble on so long.

#82 Mike B on 05.23.09 at 11:50 am

Pol-Can #68 since you are one of the few lucid individuals on this site and consistently bring new insights I was wondering if you could extrapolate on your recent post. Do you sincerely think that RE, even with Toronto crazy prices, might be a good hedge albeit at a huge price premium these days? Only true value homes seem to be selling and the ultra expensive and bad condition ones are sitting.

#83 Future Expatriate on 05.23.09 at 12:01 pm

Garth CAN’T ever admit to being a goldbug… everyone knows where his freezer is.

Plus like Gold Bugger said, the cheaper the price stays, the more gold bug a gold bug can be.

It’s full of rodent steaks and Tamiflu. — Garth

#84 Munch on 05.23.09 at 12:30 pm

Economists are ALWAYS wrong!

ALWAYS!

Rgds

#85 Barb the proof reader on 05.23.09 at 12:49 pm

“path to perdition”

Garth,

For your readers (as I’m sure you are quite up on all this):

Here’s 2 great video links people can send to family that explain 2 areas of how Common Man has been led down the road to this perdition for decades now:

The 1st is Moyer’s show from last night — the bottom line on how America has to get rid of the useless “middlemen” .. the insurers who pointlessly drain healthcare trillions. It a scheme run by tyrants — quote from the show — stopping the will of 60% of Americans. Watch both doctors David Himmelstein & Sidney Wolfe’s segment as well as the segment featuring the now famous Nurse Donna Smith who is a front line witness and excellent spokesperson. Hey, they even make mention of Tommy Douglas! This show is excellent and full of facts, brilliantly told.


The second video’s a year old, but no less informative, posted by Dan #23 on 05.17 called: “Who killed Canada”. It is a very eye-opening treatise of how Canada has got into such a mess, who is hiding the facts, and by whose hands we’ve fallen so far behind in our standards and world status. This is somewhat upsetting for those who hadn’t been paying attention or who believe the MSM, but watch it to the end:
http://tinyurl.com/plk56n

Anyone who watches these will not regret it. They are great summaries of why and how we have been so misled, and by whom.. AND WHAT TO DO ABOUT IT.

The same consortium of players plays the RE game on us, gold, oil, banking, etc. Grab a coffee or watch them during lunch or dinner.

Citizens have to be more informed, and hopefully future generations will be smarter, and not be so lax as we have been. That is likely to be the case. Power to.. the people.

#86 Barb the proof reader on 05.23.09 at 12:52 pm

(oops!) :) I forgot the first link:

“Watch both doctors David Himmelstein & Sidney Wolfe’s segment as well as the segment featuring the now famous Nurse Donna Smith”

http://www.pbs.org/moyers/journal/05222009/watch.html

#87 Calgary37 on 05.23.09 at 12:52 pm

RE: #80 Dawn in Calgary on 05.23.09 at 11:05 am

It seems that Dawn and some others who believe that this site is only for Real Estate need to be enlightened.

I do not speak for Garth, but the original purpose for this site was to promote Garth’s first book. However, he wrote another book, started up a survival site and closed his original blog site.

When some of his original bloggers migrated to this site, the topics broadened to include the Global Financial and Economic Crisis and the various subsets of these big issues. What happens around the world will eventually affect us in Canada, as will the policies of our various Canadian governments. This includes the question of, “Should we still be in Afghanistan”.

That said, the range of topics on this site are still NOT as BROAD as they were on Garth’s original site.

For example, I am aware of at least a dozen negative things that could happen in the near future, but I have not been discussing them here. My long-range timeline is January 1, 2013. Are you ready to live in a Mad Max type of World?

Are you still bored?

I am not the only person who posts informative articles, so I would suggest that you pay attention and learn something from people who appear to know more than you do.

When TSHTF and you find it necessary to migrate from your current location, will you be able to carry your Real Estate on your back? Meanwhile, the person who has some gold to carry will have no problem at all.

Cheers.

Power to the People. Let the Revolution Begin.

#88 frank f on 05.23.09 at 12:54 pm

I am out! Just sold my home to a young greaterfool couple . It was only a matter of time before we would of gone bankrupt. We made a huge mistake one and a half years ago buying , now our nightmare is over. Not sure how much we lost but at least we don’t have to file for bankruptcy. Do people see whats going on in the economy? we thought we were done and couldn’t believe there were more greaterfools out there. Advise for those looking to buy, don’t do it. Home owners are looking to jump out of that debt trap which will lead to bankruptcy. The first time in my life the media helped us by the non-stop propaganda of lies. How are those idiots able to get a loan in this really bad recession?

#89 Barb the proof reader on 05.23.09 at 12:56 pm

Moyers show clips, view both, Dr. Himmelstein & Dr. Wolfe’s segment as well as Nurse Donna Smith: http://tinyurl.com/qbh7ah

#90 Basil Fawlty on 05.23.09 at 2:20 pm

While many people find the topic of gold to be over done and uninteresting, if the metal is not important why would there be a movie called “Goldmember”?

#91 ally ally oxycontin free on 05.23.09 at 2:26 pm

When malls get mauled …

Recession Turns Malls Into Ghost Towns

http://s.wsj.net/public/resources/images/P1-AQ003_DEADMA_NS_20090521191211.gif

http://online.wsj.com/article/SB124294047987244803.html

#92 ally ally oxycontin free on 05.23.09 at 2:36 pm

California Leads State Job Losses

Forty-four states lost jobs in April, led by California where employers slashed 63,700 positions. Michigan’s 12.9% jobless rate was the nation’s highest.

http://online.wsj.com/article/SB124300070987247341.html

#93 POL-CAN on 05.23.09 at 2:43 pm

# 82 Mike B

I don’t know about lucid. I think someone like Got A Watch is much more knowlegable then I in these matters. He is one of the most interesting reads on Mish’s site and I wish he would start to contribute to TAE as well. Are you reading this GAW?

I think that the US$ is done. If not this year then next for sure. The Anglo empire (UK/USA) is dead.

There will be a new reserve currency backed either fully or partially by gold. This is inevitable. What will it do to us here? I do not know but suspect it will not be pretty.

I don’t know about RE. I thought that it would have fallen 25 % from peak by now but it seems that cheap money care of BoC managed to slow the fall down some. I think that the price decline will start again as soon as the stock markets resume their downward trend. I tend to agree with Ilargi of TAE on house prices globaly i.e. 70 to 80 % off of peak by the time the market bottoms a few years from now. Of course by then the Fannie/Freddy/CMHC will be gone/broke as they are helping to prop the market up and we will have a period of hyperinflation and currency collapse as well.

For the record I went short at the start of April and am getting killed. At least I limited myself to only my play money :) I think we are due for a correction now, with another rally before the crash in the fall. At some point not even the PPT can fight the fundamentals.

Honestly I am sick of renting.

I sold my last house in June of 2007 after 7 months of multiple price reductions and many low ball offers. That was in Chatham which had a very weak market even back them. I took a 40 K bath on that place plus my divorce expenses. It was not a good year.

We are looking to buy in the fall in C1, C2, E1, E2, E3, W1, or W2 regardless of what the market is doing. For us it is the location that is important and we are willing to sacrifice on size but not on price. Our self imposed limit is 600 K and belive me that it buys you a lot more now then this time last year. This will be our partial inflation hedge.

Hope this made sense as I threw my thoughts together rather quickly….

#94 ally ally oxycontin free on 05.23.09 at 2:48 pm

Minutes of the Federal Open Market Committee

“With few exceptions, participants judged that their projections for economic activity and inflation remained subject to a degree of uncertainty exceeding historical norms.

http://www.federalreserve.gov/monetarypolicy/fomcminutes20090429ep.htm

#95 PeakOil on 05.23.09 at 2:59 pm

#76 Jonathan

So banks cut mortgages by $200 billion and at the same time CMHC insured mortgage values increased from $80 to $250 billion and this averted a meltdown. Ummmm…. this actually means there are less mortgages out there, not more. Only banks give out mortgages not CMHC. CMHC is an insurance company. It just insures the mortgages the banks provide.

So I can’t quite figure out how less mortgages overall stopped a meltdown??? You would think it would have caused one… but it didn’t. It did create something though…. It’s called less sales, that’s why overall sales are way down. Those numbers you posted just shows that lender are making it harder to qualify for a mortgage these days.

If you want to know why CMHC’s insurance business increased by $170 billion? The reason is; it came from GE getting out of the mortgage insurance business in Canada. No competition for CMHC means CMHC gets all the new business now. But don’t worry…Genworth has just set up shop in Canada so CMHC has competition again.

#96 ally ally oxycontin free on 05.23.09 at 3:34 pm

90 Basil Fawlty on 05.23.09 at 2:20 pm

While many people find the topic of gold to be over done and uninteresting, if the metal is not important why would there be a movie called “Goldmember”?

And, why would Jean Chrétien’s former principal advisor be dubbed Eddie Goldenschlong?

#97 CM on 05.23.09 at 3:48 pm

Somebody call the cops. The Feds are selling off the family silver.
—–
Feds sell historic silver

http://cnews.canoe.ca/CNEWS/Politics/2009/05/23/9547496-sun.html

“The federal government has quietly sold off several pieces of historic silver and china from Rideau Hall at bargain basement prices, Sun Media has learned.”
—–
Of course, who (whom?) they sold it to has to remain a secret, according to the “authorities”. Why exactly?

It’s OUR stuff. We should know who bought it for next to nothing and got the deal of the century.

Reminds me of Stevie’s grand pronouncement about something or other as he was emptying OUR coffers to bail out one or other of his buddies. “This is not going to cost the government anything.”

Of course it didn’t cost the government anything. It cost Canadians a gigantic amount, however.

Great links, Barb the Proof Reader. I saw the Bill Moyers vidcast this morning. I hadn’t seen the one with Mel Hurtig in it before. Stevie and his buddies would love to privatize health care. Tony Clement, when he was health minister, was down at the Dem National Convention last year, rubbing elbows (and probably other stuff) with the health care lobbyists who were there. That was when Canadians were dying from listeriosis.

Time for the torches and pitchforks, I think.

#98 Got A Watch on 05.23.09 at 4:40 pm

Canada has some great analysts. One of our best, world-class, in fact, is Bob Hoye, whose work (and Garth’s, who has a new podcast up there) is oft featured on Howe Street, a Vancouver website focused on economics and resources.

Bob’s specialty is analysis of past economic history and how it applies to modern day. A sort of pattern-matching analysis, that involves all of recorded history. He contends, correctly, that there is little new under the sun in economics or in history.

Bob posits we are now in ‘The Sixth Great Depression’ of Western civilization, and closely tracking the pace of the 1873 Depression, which was called the ‘Great’ one until the 1930’s was named ‘Great’.

His latest article re-printed there is the text of a speech he gave on May 14, Great Depressions Are So Methodical which I must point out to anyone who is interested in history, economics or how Depressions unfold, applicable right now to our ‘Greater Recession’.

Highly recommended.

#99 Got A Watch on 05.23.09 at 5:11 pm

POL-CAN – Thanks for your kind words. I am just a self-taught trader who reads a lot, because I have the time.

I am lucky enough that I do not get up and go to a fixed job everyday. Instead I sit in front of monitors at home all day. Hmmm, sure sounds like a job. Ouch. I can take a day off whenever, but somehow, I rarely do. I am drawn like a moth to the flame.

Unfortunately, I have found there are only so many hours in a day. I have a list of daily websites that I read each morning, before the markets open. Then I am usually watching the market with one eye, and reading some Blog or news item with the other. I generally get to commenting here or on Mish’s Blog in the afternoon, if I have the time.

I look in on TAE once in a while, but I just do not have time to comment there too. I came here as I was looking for a Canadian focused economics site, 99% or more you find are US or UK based. Seems like a good crowd, not too many people I would not want to have a beer with over a barbecue, so I come back. It’s Saturday evening, time to go do just that. Have a great weekend.

#100 Anfisa Chekhova on 05.23.09 at 5:49 pm

#93 POL-CAN –

What is this ‘we .. buy’ you speak of? Did you not learn of ‘divorce expenses’ the first time?

#101 dbg on 05.23.09 at 7:05 pm

It seems the more I read on this and other blogs is that people with opinions are STAGNANT. I obviously will fall into this definition as I am going to give an opinion but opininions can be narrow and negative or optimistic.

The world has not been static and has continually evolved. Our economies and cultures continue to change. Why can’t the people see this and not be so determinsitic. The gold bug – depression forecasting community has to be the least evolved in forecasting.
With the technology that exists and continues to move forward how can you actually believe that the world situation is going to fall off a cliff.

It’s exciting times folks we are going to make the next “great leap forward”.

Let’s get going…..and make the next step up to a community that is about better and not survival mode(guns and gold).

Cheers,

#102 dbg on 05.23.09 at 7:16 pm

“I don’t know anybody in our industry actually who’s cutting their R&D budget,” said Ballmer. “I know people who are doing a lot of different things, but most people are not slashing their R&D budget.”

Microsoft’s research chief Craig Mundie said in February the company was not cutting back on its $9 billion R&D budget this fiscal year.

#103 Barb the proof reader on 05.23.09 at 7:27 pm

#97 CM: “Time for the torches and pitchforks, I think.”

No kidding CM.. I loved the dedication to the cause the doctors showed. Amongst their suggestions: civil disobedience.

Moral: It’s easy to persevere when you know you’re doing the right thing, even against all odds.

#104 john m on 05.23.09 at 8:25 pm

Well Garth all i can say is if it was not for your blog,your intelligence and your foresight id probably all ready have given up on mankind and built a remote cabin somewhere in the wilderness,you are the only source of intelligence on the planet and i thank you—your advice and knowledge has helped more people than you know—a local guy who does rottotilling today told me he can not keep up with the people wanting gardens in their backyards this year—–that gives me faith in mankind as well—sure wish our government had your knowledge and intelligence and the basic common sense of the average laid back Canadian–$1000 worth of seed would have put more meals on tables across Canada than the billions pumped into a bankrupt auto industry……..and the demon’s of disaster in the Banking industry………….Thanks Garth for being you!!

#105 john m on 05.23.09 at 8:48 pm

Another thought as i drift off into relaxation after an incredible day in the sun..can you imagine the march and protest on parliament hill if the government tried to pull this bullshit in the 60’s and early 70’s……….so for all the anti boomer generation’s comments–where are you?–you grew up with a lifestyle where you could achieve anything you wanted –and it was the boomers that made that possible!! You have sat back and abused your credit ,never made a stand about anything ,never even voted in most cases and now feel resentment towards the future costs of an aging generation—–you not only amuse me you amaze me your visions of entitlement were sadfully created by the boomers who made it possible……….your turn to quit whining and step up to the plate —us boomers are waiting :-)

#106 . . . fried eggs and spam . . . on 05.23.09 at 8:55 pm

Here we are again, happy as can be, all good pals and jolly good company!

Aaarrrgghhh Begorrah! Now is the time to head forth into The Conspiracy Theory realms again, where the dark void of nothingness exists.

As many of you are aware, my bro and ladyfriend are in SE China. In conjunction with the flooding in eastern Oz, they were also swamped overnight — way more than expected. Someone has major grievances with those parts of the planet!

I would tell you that these are conspiracy theories, but they have proof to back them up so these theories are now theoryless! — http://tinyurl.com/pq6zaf /\ http://tinyurl.com/pb65oh

Now, join the dots to see where the world is heading very quickly. Don’t forget, the US is essentially broke and creating money out of the ozone layer.

It takes two to tango, and for increases in money supplies, there have to be decreases somewhere else. The stuff below comes from the first link. — http://tinyurl.com/q5ukgn /\ http://tinyurl.com/om8cld /\ http://tinyurl.com/qylfru

“The United States will invest one billion dollars to develop key components for a swine flu vaccine and conduct clinical studies into its efficacy, Health Secretary Kathleen Sebelius said Friday.”

Webmaster’s Commentary: “How convenient for the large pharmaceutical manufacturers in the US which are licensed to produce flu vaccine for antigens. And remember; if these jabs are mandatory, if there is an adverse reaction, or even death, there is absolutely no legal remedy to be had.

“A little clause in the US Patriot Act gives pharmaceutical manufacturers complete immunity to any possible litigation against them due to a bad reaction to their product, even death.”

From the second link:

“Although questions remain unanswered about the effectiveness of a swine flu vaccine, how many doses it will take to protect a person and who should get it, U.S. Health Department said, “we can’t wait” for the answers before putting the manufacturing machinery in motion.”

Webmaster’s Commentary: “In other words, this is another looting of public funds to give to political contributors in big Pharma.”

With the possibility of hyperinflation happening (see link), all these bailouts to big biz, cost of living rising for ordinary folk and the war mongers creating and distributing fear all over via the m$m, I’m heading off to Neptune for a multi-gazillion year holiday!

#107 M I K E on 05.23.09 at 9:22 pm

Garth

If your call on Gold is as good as the call you made for the spring of 2009 RE. I should go and load up on GOLD.

I’m so glad there’s so many here bashing Gold. It makes me feel that I made the right call to buy and hold the shiny stuff :)

Here, keep this prediction handy $1500 – $2000 in 12 months. Let’s see who gets the last laugh.

Cheers

#108 R**F**'on on 05.23.09 at 10:17 pm

I’ve been reading your blog for a couple months now and I want to make a few comments. Just look at the $1.25B boondoggle that Harper set up for PPP’s (private-public partnerships that the Liberal gov’t in BC is using to steal us blind). 12 people hired in 2 years to jump start this???? Just wait for another bleepin’ scandal to come out of this…Garth, I know you’re a former politico, but it seems all this money that’s goooone, is the fabrication of gov’t. If we get rid of gov’t and these scum suckers and their gold plated everything, maybe we’ll be able to pay for things again. My Mp, useless James Moore, has done absolutely zip in the 10 or so years that he has suckled at the golden teat, and has completely cowed to anyone (mostly developers, like all politicians) in his history of public office. Useless, useless, useless. Yet he’s collecting $150k a year plus these 64 1st class airline tix to anywhere they want to go, on top of a paid for place in Ottawa (money they can use to put to their own mortgage if they don’t stay). And on top of that, a per diem. By the way, what’s your pension that I’m paying. I bet it’s as gold plated as ever. I would be surprised to see this comment make it on your board. Vive Le Revolution. Hang ’em all !!!!!!!! Guillotine…………………………………………………….

My pension is $26,000, and I donate it. Here’s a solution: stop whining and stand for office. — Garth

#109 Future Expatriate on 05.23.09 at 10:38 pm

#97- Don’t worry about the silver. The gov’s got lots of paper, hot and fresh off the printing presses. Who needs the archaic relic of real precious metals?

(The wise rich who bought it, apparently.)

#110 D from London, ON on 05.23.09 at 10:39 pm

# 105 – John M(isinformed)

Stop smokin’ that 60s and 70s swampweed, brother! Those protests in the 60s and 70s may have had a crowd of boomers marching around for the cameras, but they were mostly organized by your elders. Go ahead and check it out – the organizers were born in the 1920s and 1930s (some even earlier!). Do some research under ‘civil rights’, ‘anti-Vietnam protests’, etc. Sorry to burst your bubble, but the protesting ‘hippies’ were a m$m thing. The real organizers (and hardest workers) were not boomers.

Perhaps it’s time for YOU to step up to the plate. The world has been waiting for you “Whores of ’69” to live up to the media hype for 40 years…

P.S. – Unleash your diatribe on your ungrateful Millenial children. You owe them SOME degree of parenting, after all – (hey, there’s another area you failed to measure up). Just ask them about all the ways you evaded your responsibilities – it’s a great topic to discuss the next time they ask you come to one of their therapy appointments.

#111 Jonathan on 05.23.09 at 10:50 pm

#95 PeakOil

I’ll pull up the report when i’m back in the office Monday. CMHC does actually own mortgages. 250 billion worth. Largest owner of mortgages in the country (now). The federal government’s $125 billion purchase of high risk mortgages was managed by CMHC.

This helps to stop a meltdown because it keeps anything toxic off the banks books. This encouraged the banks to fill their books back up with new mortgages.

#112 NZ on 05.24.09 at 11:50 am

Get Gold and SIlver while you still CAN!!!!…..
OR,… Suffer the consequences of the coming Financial Holocaust.
The world is heading the way of Zimbabwe and Haiti…good luck to all!!

Evidence? Proof? Sources? Be aware this is a fatuous-free zone. — Garth