Stability

strange1

India now has a nuclear sub capable of hurling Armageddon-tipped missiles, presumably into Pakistan. It’s got nukes, too. World Health Organization officials are reportedly telling world leaders to expect a billion cases of N1H1 swine flu over the next six months. And when asked why he crashed interest rates, US Fed boss Ben Bernanke said on Sunday: “I was not going to be the Federal Reserve Chairman who presided over the second Great Depression.”

Has the world always been a dangerous place? You bet. Screwed-up, too.

But the world in 2010 is unique. For example, look at this chart of corporate profits:

S&P
I included words above about Indian nukes, swine flu and the nearness of a neo-Depression to remind that we are one incident away from a changed game. Even if the Bank of Canada’s right and the recession is ending, it will not be bringing back 2006. The yellow flag is out. Speculation’s cool again. Be careful out there.

You too, Thomas:

We sold in early 2007 and closed in late 2007 and  have been renting every since.  At that time of course GIC rates were quite attractive and interest from the sale made us alot of money and safe money.  We have put many an offer in on houses that we can pay cash for, plus having quite a bit left over,  and come up empty because of crazy sellers and incompetent realtors.
Right now our lease is soon and cannot even think of renting again… just hate not being able to do things we would like and that I am good at.
We live in central Toronto and the landlord bought this place for his daughter in order to tear it down and put up a monster show home .  We essentially do not have any time left and are hedging whether to buy or reluctantly find another rental.     Your advice all along was to wait and as you know some houses did moderate in price mid to late winter here in Toronto but nothing of great consequence.   Are you still of the mindset that Toronto proper might  have a correction or do  you feel that the hype and low interest rates is just too big to see things drop AT ALL…  I am not sure if we are just cheap or know too much for our own good.  Truly sick of looking and would prefer some sort of certainty.

Well, Tom, the previous post showed what I know about Toronto real estate. We are now at the highest price point in history, just as the unemployment rate achieves its own summit. The southern Ontario auto industry’s in tatters and Nortel’s moving to Sweden. The dollar is nearing parity, finishing off the exporting and tourism sectors and we’re one year closer to the great Baby Boomer property dump.

Given all of that, what’s your problem? You’re sitting on a mountain of cash. You sold out close enough to the peak price. You’re a smart guy – you know what inevitably will come. In July of 2010 interest rates will be on an upward trajectory, while the jobless rate stays stuck about where it is now. Ottawa will be planning higher personal levies, while Ontario and BC slap the mother of all sales taxes on residential real estate.

Oil prices will be licking at a hundred bucks a barrel, squeezing family cash flow and we’ll all be buying Chinese air conditioners at Wal-Mart. Meanwhile, what if there’s an economy-wilting pandemic scare or a disintegration in the value of the US dollar as its deficit adds $1 trillion a year to an unrepayable debt?

None of those things can you control or influence. But they’ll all impact you. As a renter, at least your cash is secure and you have options. If real estate dives, you can buy in at a reasonable price. As a homeowner, with your cash buried in bricks and mortar, you’d only lose. No upside. You would have bought a home at its highest price ever, knowing full well the world is unstable and change is inevitable.

But, whadda I know? I just crave cash, independence and freedom more than I seek certainty.

Must be the cowboy in me.

Bonner: 'We're in the early stages of depression...'

101 comments ↓

#1 nonplused on 07.26.09 at 10:55 pm

Hey all you first time buyers out there, I was just reminded by HousingDoom.com that there is a difference between “non-recourse” and “recourse” mortgages. I understand the difference, in a “non-recourse” loan the lender is lending against the asset only (in this case the house), and in a “recourse” loan they are lending against EVERY THING YOU OWN.

Garth, correct me if I am wrong, but in Canada only business loans are “non-recourse” and even then there is often a “personal guarantee”.

If I am right about that, CHMC does not start “insuring” your mortgage until the bank has your house, car, RRSP, a garnishee on your wage, your boat, your underwear, and can claim a tax receipt when you donate your hair to cancer wigs.

In other words you leave with nothing they can sell. Explains why they are more apt to lend right now. For some reason they want the Dodge Compass too.

#2 Devil's Advocate on 07.26.09 at 11:34 pm

Me thinks July 2010 is gonna be a real bitch.

#3 Swag on 07.26.09 at 11:40 pm

Garth I have been entertained by your colourful and at times accurate predictions over the years (since 1999). I agree with you that the game is changing now though. Debt and leveraging are still undeniably very high, as they have been for the last few years. The US economy is crippled while “Chindia” takes the lead. The Chinese incidentally hold a lot of the money that we invisibly owe – I wonder what they will do with it?

It’s now plainly obvious that the powers that be are inflating us out of this debt. And even though a short period of very low inflation exists now, a rebound will follow. The irony is that interest rates actually might not follow this closely and we could see significant inflation spread all over before the BoC decides our dollar shouldn’t be protected from rising. Political pressure is definitely on the side of inflation going forward.

The result? A rise in everything – stocks (happening) and commodities (happening) and later on … wages (likely to affect commodity-“extracting” occupations first). This is why banks are giving away mortgage debt at such low rates despite the obvious structural flaws – don’t forget that they can’t redistribute the risk as they used to do. 10 years from now everything will be double or triple in price and those that held cash will wonder at their misplaced thrift. GICs won’t hold the answer because interest rates will continue to be held down.

The change in this game will be the disconnect between inflation and interest rates. If they continue to rise in unison as they have recently, we are in for very serious problems.

#4 tjmikey on 07.26.09 at 11:47 pm

Four things….

1) GDP
2) Employment
3) Federal and Provincial deficits
4) Inventory numbers

The rest in easy to manipulate smoke and mirrors.

#5 Joseph on 07.26.09 at 11:47 pm

Whenever I start drifting into irrational thinking, this blog brings me back down to earth. I love this blog. Two examples: Blogger’s comment from yesterday’s post.

“I paid off my house in 1997 and immediately friends started asking what kind of bigger house I would then trade up to. I couldn’t make them understand that the whole point of paying off a mortgage is to then stay out of debt forever. ”

As Sarah Palin would say, You Betcha!!!

And tonight, from Garth:

“As a homeowner, with your cash buried in bricks and mortar, you’d only lose. No upside. You would have bought a home at its highest price ever, knowing full well the world is unstable and change is inevitable.

… I just crave cash, independence and freedom more than I seek certainty.”

Crashing down to earth once again. I need this blog. It’s a much needed reality check.

#6 Onemorething (aka DaHKkid) on 07.26.09 at 11:58 pm

Hey Tom, does worthless and weak wimp come to mind!!!

Bro, you already made the right move in front of this mess!!!

Are you going to be a statistic?? It’s patience you need right now and not to be suckered by the mega manipulators! Stop reading the rags, stop listening to our Ponzi government, the useless RE people (agents and brokers who will lie steal and sell their souls and children to save their skins) along with banks and your “misery loves company” friends and family!

There are only 1% power players in this world, be one of them kid!!!!

#7 Nostradamus Le Mad Vlad on 07.27.09 at 12:22 am

“. . . Screwed-up, too. . . . the US dollar as its deficit adds $1 trillion a year to an unrepayable debt?”

Well, at least I know where I stand!

Offhand, I’d refer to the pic at the top of this post (that’s me in my younger days), and combine it with the head of the last post — End of Story.

Beyond that, y’all know what Je would do — continue renting and invest the spare change or, “Keep Your Eyes On The Road And Your Hands On The Wheel!”. Nice way to Continue My Story!
——
3:52 clip which shows the IMF buys gold at US$42.20. Also included: SDRs, US Fed, Bank of Shanghai and a few others. One question, ‘tho:

Recently, the IMF sold a stack of gold, presumably at the high rate (about US$850 / oz.), which gives a handsome profit. The UK also sold a stash as well. Now, the IMF can buy it back at US$42.20?

If so, someone is making a killing somewhere and China, which just bought a whole bunch (maybe from the UK, and possibly through the Bank of Shanghai) paid way over the top. Lotsa fun!

http://revolutionarypolitics.com/?p=1830

http://money.cnn.com/2009/07/24/news/companies/guaranty_financial.reut/index.htm

“Guaranty Financial Group Inc , the second-largest publicly traded bank in Texas, said it will probably fail after loan losses and writedowns left it “critically” short of capital.”

Webmaster’s Commentary: “If the Texans are running out of money …” [Calif., Fla. and a few others already have, and are exploring the possibility of printing their own currencies].
——
Aaahhh, but didn’t I just speak of a black hole, where the elite are able to get Comfortably Numb with each other?! —

http://rense.com/general86/medb.htm — which may go with —

http://www.astrobio.net/index.php?option=com_news&task=detail&id=1726

This is a pic, taken from a Japanese satellite, of last week’s eclipse.

http://www.wired.com/wiredscience/2009/07/eclipseshadow/
——
Never figured that commercial RE was worth close to US$3 trillion, now it’s Foreclosure Time and “Space For Rent” signs!

http://www.mybudget360.com/atlas-vacant-the-commercial-real-estate-bust-gearing-up-for-a-3-trillion-headache-increase-in-vacancy-rates-and-higher-defaults/
——
Another version of Welsh Rarebit (melted cheese). —

http://economicedge.blogspot.com/2009/07/dr-marc-faber-this-is-not-final-crisis.html
——
Update to the link I posted Sat. re: the human / pig / bird flu combo., possibly with the disease already added to it.

http://www.nzherald.co.nz/world/news/article.cfm?c_id=2&objectid=10586864&ref=emailfriend

“Flu vaccines can also contain a number of chemical toxins, including ethylene glycol (antifreeze), formaldehyde, phenol (carbolic acid) and even antibiotics like Neomycin and streptomycin.

“In addition to the viruses and other additives, many vaccines also contain immune adjuvants like aluminum and squalene.

“In addition to the viruses and other additives, many vaccines also contain immune adjuvants like aluminum and squalene.

“The adjuvant? Squalene.”

#8 Foreign Investor on 07.27.09 at 12:34 am

Good question, sit on cash or invest in a house???
Cash is paying close to nothing in interest those days and with all the printing going on is not as safe as it is supposed to be.
Buying a house is expensive, but a mans home is his castle. I say that if you want to buy a house to live in for yourself and your family and you intend to settle longterm, BUY NOW, dont look at the price, it is irrelevant. And dont listen to gold, oil and commodity investment ideas, it is the easiest and fastest way to waste your cash speculating.
I dont agree with Garth that CAD will go to pair with USD, I rather see it crashing to below 70cents where it belongs on a purchase power basis. Just wait untill the CMCH dirty story becomes reality and the whole Canadian goverment will start looking like the bankrupt AIG. The cheap CAD will bring again the big boys from the south to invest here and eventually the Canadian economy will recover, it is the same old story over and over.
USD will be king again and look for oil going to below 40 in not the too distant future.
It is a risky world out there, buy a house for your family if you have the cash, the best advise I can give you.

#9 gold bugger on 07.27.09 at 1:19 am

“Right now our lease is (up?) soon and cannot even think of renting again… just hate not being able to do things we would like and that I am good at.”

That means the house is a vanity project.

Why not help your brother-in-law build a garage if you’re bored? Or volunteer at the community centre?

My gawd, are people that lacking in creativity that they desperately need to tie themselves to $500K+ in debt so that they can TINKER?

#10 Gordie Canuk on 07.27.09 at 1:36 am

Eventually you’ll be proven right Garth, but the market operates on its own clock…as I’m sure you’re well aware. When Nortel zoomed past $100 and kept climbing, anyone suggesting selling was an idiot. All the way up to $140 bears were idiots and bulls were financial wizards. At under a buck that $100 looked pretty damn amazing…but bears have to be perfect in their prognositcations or they’re discredited.

Those who sold last summer or later…I’m sure they’ll eventually be patting themselves on the back, but guessing exactly when prices will drop is a mug’s game.

Vested interests are going to be doing all they can to keep the market propped up for as long as possible, but they can’t keep it up indefinitely. My own guess is we’ll see prices dropping this winter and then continued deflation in housing for at least the following 18 months.

Winter 2011 is when I’m aiming to look at RE again, and just hoping the financial resources will be there for me to do it.

#11 Elle on 07.27.09 at 2:56 am

Garth – loved the quote of Ben Bernanke when asked why he crashed the interest rates … “I was not going to be THE Federal Reserve Chairman who presided over the second depression” In other words he doesn’t give a darn what happens long term, just so it’s…”not on my shift!”
The sheeple have a difficult time accepting that the best laid plans of mice and men don’t always work out,
bad things do happen … suddenly … who could have imagined those planes flying straight into the twin towers … and the world hasn’t been the same since!
Is it such a stretch to think we are in for more than a “mild” recession? The pressure on this fragile economic system and the scary Nation relations….is like the tinder on the hills of Kelowna last week. Someone is gonna get burned!

#12 No Condo in the 604 on 07.27.09 at 3:15 am

THE IGNORANCE IS MADDENING. see no economic worry, feel no economic worry. recession? hey, what was that? it’s over, right? the mad rush to buy, Buy, BUY has blocked out the REAL world for many. particularly in Vancouver.

one reason why Irrational Exuberance is still the rage on the West Coast is that jobs seem to be holding steady enough that folks just don’t know that the rest of the world has turned to a pile of crap. personally, idon’t know anyone who has been laid off.

and get this:

friends of mine bought a year ago in East Vancouver, after looking for two years. no home inspection — apparently “no-one was doing those” at the time. surprise when they had to redo all the plumbing, wiring. while they were at it, put in new hardwood floors, cabinets, granite counters, stainless steel appliances, new doors. they signed on for 35-year debt (not to mention all the $$$ they spent on renos). they have NO savings, NO RRSPs, nothing in the market, no inheritance, no pension. total household income, i’m guessing, is around $100,000. it’s either they make it happen and ride out whatever happens to interest rates, job security, etc. etc. or the twin swords of bankruptcy and foreclosure will be upon them.

i noted the following in conversation:

1) they had only a passing knowledge of the mortgage fiasco in the states. barely a basic grasp of what REALLY happened.

2) everything they spouted about the local market could have come from a Coles Notes for Vancouver Real Estate. for example, they insist that the local market might soften a bit, but drop of 40% was impossible!

– can’t happen here, because of fundamentals!
– construction!
– real estate can only go up!
– everyone wants to live here!
– rich Asian industrialists are scooping up condos for their daughters at UBC!
– they’re not making any more land!

i REALLY had to bite my tongue. over the last two years, i’ve read over and again, on this blog and others, that people actually use those arguments — but i never thought my good friends would have been suckered in like that.

#13 Jack the Lad on 07.27.09 at 3:47 am

Two question:

Are the 0 down 40 year mortgages back in Canada? I thought the gov’t banned them a while back?

Oil going to a 100??? Hmmmm, I hear there is a TON of supply out there and oil could crash again.

I say long term oil at over 100, but short-term… anyone’s guess.

#14 Comfortable in a coma on 07.27.09 at 4:16 am

Oh man!
If that chart is the true state of corporate profits, look for some more heavy layoffs.
I still don’t understand why the west coast retains it’s high priced real estate. I am visiting BC and talking to small business owners. Every one says their business is awful this summer. Penticton shop owners say no US tourists this year and they are laying off staff they hired for the summer season.
This doesn’t sound like recovery.

#15 David Bakody on 07.27.09 at 5:58 am

“DITTO” It would seem foolish having made all the right moves and been well ahead in the rate race to throw it all away now sitting back and licking ones chops. Then Thomas, once upon a time there was a race between a turtle & rabbit and the speedy rabbit got too smart when he was well ahead in the race and stopped for a rest, fell asleep and the lost! Whatever changes this world is going through both financial and climate wise has just begun and that Sir you can take to bank ….. fools and their money will soon be parted!

#16 Mike (Authentic) on 07.27.09 at 6:18 am

You are right Garth, it’s just the Government stepped in, QE’s the heck out of the economy and the media, well, is being the media and not doing the job it was setup for… reporting and investigating news.

This is a great sign that people are looking to buy and can’t wait any longer, it means we are near the end as smart money leaves and fools with money enter the game.

Renting is ok overall, but when you realise your actually MAKING money renting vs owning, it doesn’t suck so bad.

There is a time for everything in life, the time to buy a home may not be just now.

Mike

#17 wayupnorth on 07.27.09 at 7:06 am

Well it seems it is a race between the east and the west who will break down first.

China is desperately trying to cover up the cultural clashes in its six regions along with social unrest as millions find themselves out of work with no e.i. plan to help them are killing company executives who threaten to privatize companies and lay off more workers. India is running out of water and the monsoons are three months late. Combine that with Monsanto seeds and western agricultural practices and mass starvation is not far. Pakistan is slowly being taken over by the Taliban and just think what those suicide bombers will do with 70 or so nukes!

The middle east is ….well… the middle east and the third world countries know nothing other than poverty and starvation so not much will change for them.

So that leaves the west. Most countries in both east ad west Europe have either collapsed or are in worse shape than the 1930’s. We all know the American borrowing machine is in full steam ahead mode. Interesting that the amount borrowed to give the banks would have paid off 50% of every mortgage and all credit card debt. But that wouldn’t have saved the banks would it? I asked a question on the old blog about a year ago. “who is at fault, the person who maxed out 7 credit cards or the 6 banks that gave them the cards after maxing the first? I believe Vlad and a few others attempted to answer it but couldn’t come to much of an agreement. Well it seems that the people down there are making that decision now and it is taking the form of stopping payments on credit cards, lines of credit and mortgages as it becomes apparent that it is hopeless to pay off something that either grows or drops in value faster than you can pay.

So that leaves Canada. Good old Jim the other day said we are different! The recession is over! good times are here again so go out and buy a house before you are priced out of the market again and start maxng out those credit cards you fought to pay off. Life is good! And good old Jim and Steve would never lie to us would they?

#18 Joe on 07.27.09 at 7:17 am

I see that British economists(including the head of Bank of England) have apologized to the Queen for getting it wrong. When do you think we will hear from Canadian economists?

#19 wjp on 07.27.09 at 7:23 am

Looking for China to lead the world out of this economic mess, you might want to consider this…
http://www.reuters.com/article/ousiv/idUSTRE56Q10920090727
Then there is the US…
http://market-ticker.denninger.net/

But Canada is immune, at least, the Governor of the Bank of Canada seems to think…I am not as sure as he is…but then again, he’s the Governor, I am just an ordinary retiree trying to make ends meet!

#20 anon09 on 07.27.09 at 7:25 am

(Note the following article was written on Nov. 20, 2008, and the content contains some profanity and vulgarity.)

Let’s Put the Economic Blame Where it Belongs: On Ourselves

#21 lili on 07.27.09 at 8:04 am

As I have recently evoked the ire of some devoted Garthites, I will try to avoid adding any caustic goodies. However, I’ll lob one to “Got A Watch” and “nonplused”: assumptions about my market intelligence are misplaced… entirely.

Garth rarely adjusts his tone, but here is what I wish he would say:

1) Crazy chart chasms aside, stagflation is being reinvented. Fret about money all you want, there is almost no way to make it easily now. The best solution is to stay employed, and avoid sudden shocks like panic selling your home.

***A recent study shows pain felt incrementally is actually less pain overall: People shouldn’t be tearing off the band-aid right now.

2) Accurate accounts of Toronto’s past real estate bust have no beneficiaries (so you wont get one). The times are looking similar (jobless recovery, corporate restructuring, and hangovers from hawk-ery) , but the information machine (media) is more concentrated, more pugnacious and more apt to lie to us outright. This may be THE stabilizer that Garth has missed.

3) Economically, we are now good at making bubbles, and not much else. If you have cash, park it or gamble. Those are your choices with vivid recent evidence to back it up.

OK, OK… I have one slightly caustic goodie, all in good fun though:

1) At four years and counting, Garth is dangerously close to mooring the ship on a craggy perma-bear coast. This is non-productive and self-destructive.

I’m reminded of the Roubini-type prognsticators that are popping up everywhere: privately long and publicly short everything… market up, portfolio up… market down, speaking engagements up. Garth is not there yet, but this is really cutting it close.

Love,

lili.

‘At four years and counting, Garth is dangerously close to mooring the ship on a craggy perma-bear coast.’ This blog is 16 months old, not four years. I only seem to be eternal and omnipresent. — Garth

#22 Sampson on 07.27.09 at 8:14 am

I will be moving into a new home in September. I am sitting on $290,000 cash and the valueof the property is $390000. Do i :
A) plow $240,000 into the property and keep $50K on the side as an emergency fund,
B) Plow all $290K into the house and open a LOC to act as an emergency fund,
C) Do I put the minimum require down payment to eliminate CMHC fees and invest the balance?

#23 Herb on 07.27.09 at 8:24 am

What’s the problem? Our fundamentals are as solid as a Canadian swamp.

Where did all that bailout money go? Down the same rabbit hole as the proceeds of the sale of those tarnished assets before they were classified as “tarnished”?

Unearthed in eclectic reading last night:

Governments last as long as the undertaxed can defend them against the overtaxed.

(Bernard Berenson,Rumour and Reflection, N.Y. 1952, p.248)

#24 Devil's Advocate on 07.27.09 at 8:40 am

Bill Bonner: Son Of Stimulus…

http://www.youtube.com/watch?v=fzTTky1U1Mc&eurl=http%3A%2F%2Fwww%2Ehowestreet%2Ecom%2Ffbn%2Findex%2Ephp%2Fmediaplayer%2F319&feature=player_embedded

#25 dd on 07.27.09 at 8:41 am

#4 tjmikey

1) GDP
2) Employment
3) Fed Deficit
4) Inventory numbers

The rest in easy to manipulate smoke and mirrors.”

What? So what is the real rate of Unemployment? It is not the government stated rate. Deficits? Come on … that is also another easy one to fool with …

#26 Devil's Advocate on 07.27.09 at 8:49 am

Frugal McDougall, A Rhyme For Our Times…

http://www.howestreet.com/articles/index.php?article_id=10239

“They said “greedy savers are hording their cash
And collectively made the economy crash.”
His penchant for saving was very well known.
Poor McDougall’s cover was thoroughly blown.

“Tax him,” folks cried as they all shook their fists
“And tax him some more if he tries to resist!
He has more money than he’ll ever need,”
They cried in a horrid expression of greed.

Poor Frugal McDougall was truly confused,
Saddened, frustrated and now feeling used.
He’d tried to warn people of what lay ahead,
But they didn’t listen and blamed him instead.”

… and so it will be…

#27 Munch on 07.27.09 at 9:06 am

Old Munch family saying (from me Pappy, bless his soul).

There are time when you worry about the return ON your investments, and at other time you worry about the return OF your investments!

Now is the latter!

Don’t chase yield; don’t chase anything for that matter; wait for opportunities to reveal themselves, and in the interim worry about the trun OF your investments!

Munch

#28 Samantha on 07.27.09 at 9:07 am

Hi Tom:

“We sold in early 2007 and closed in late 2007 and  have been renting every since.”

You have been renting for less than 2 years from the dates above.

“…GIC rates were quite attractive and interest from the sale made us alot of money and safe money.”

Good. Don’t blow it now. A fool and easily acquired money are just as easily parted. If you had to earn that money, would you be more discriminating in your house search?

“We have put many an offer in on houses that we can pay cash for, plus having quite a bit left over…”

You have the double luxury of cash plus time. You are in the driver’s seat. Don’t jump out of the car and become roadkill.

“…and come up empty because of crazy sellers and incompetent realtors.”

There is a time to every season, Tom. Why buy at the wrong time?

“Right now our lease is soon and cannot even think of renting again”

See above, if your dates are correct, then you have only been renting for less than 2 years, not 20.

“… just hate not being able to do things we would like and that I am good at.”

Understandable, but buying a house immediately isn’t the only way to deal with this issue. Simply put: find something else to do with your time. Take a carpentry course and acquire new skills that you can use once you do buy a house. Or, if you already have those types of skills, volunteer to teach inner city youth or help repair low income senior’s homes. There’s always Habitat for Humanity.

“We essentially do not have any time left and are hedging whether to buy or reluctantly find another rental.”

First, you do have time. Actually you have the luxury of time and resources (cash), so change that tape in your head that says “no time, no time” to one that says “lots of time and cash”.
If you buy now, you are paying more for the most important purchase of your life – a house. Don’t be a hedge hog and curl up into a little ball with your paw extended ready to sign on a deal that is not to your advantage.

As for “reluctantly” finding another rental, well Tom, it’s all how you look at this situation, isn’t it? In your case, the glass isn’t half empty, it’s overflowing, so please think about that and slow down.

“Truly sick of looking and would prefer some sort of certainty.”

Good. So stop looking and do something else with your time. As for certainty, what is that really? Things can change in a heartbeat. Many things are variable right now, with real estate prices in Toronto just one of them. It is a time for caution and prudence because the opportunity to misstep abound.

You have the luxury of time and resources, Tom. Remember that. In the meantime, get busy living and find other things to do until the time to buy does come.

#29 Greg W., Oakville on 07.27.09 at 9:47 am

Hi Garth,

Doctor strange loves cowboy/sheeple being told/believing going down, to go out in a big bag is what he must do, reminds me of the ‘profound’ comment in the movie regarding the drinking of water’s purity’. (What’s that saying again about art and reality?)

How sure are you that what you have been told about drinking fluoridated water (by people in white lab coats) is actually a safe/smart think you should be forcing everyone/anyone to be doing at all?

In Aug 2008, I attended U of Toronto ‘World Fluoride Conference, its effect on the brain and soft tissues of the body’. There were Scientist, Medical Doctors and Dental Researchers, and other professionals from around the world presenting what is now known. What the newest good science is clearly telling us about consumption of increasing amount of fluoride from drinking fluoridated water and other sources.
(The amount you drink isn’t even controlled! How much water do you drink each day?)

I now try very hard to only drink water that has gone through the reveres osmoses with ion exchange filter, which can remove the fluoride from the water I’m drinking.
Brita water filters do not remove fluoride and unfortunately I’m still being forced to bath in it.

It was eloquently explained by the Dental Researcher from the USA at the conference, that any small reduction in cavities that fluoride might help prevent is from topical application only, not from drinking it! The equivalent reduction in carries/cavities that has been seen in all countries fluoridated or not is due to better oral hygiene and dental care, and fluoridated tooth past, not from drinking artificially fluoridated water.
On your tooth past tube it says ‘Do Not Swallow’. Why are we still forcing all human beings to drink it by adding it to their drinking water supply???

Would you drink sunscreen to protect your skin?
Why do you think drinking fluoride helps your teeth?
Why do you think diluting the industrial toxic waste from the phosphate scrubber towers, that includes lead, arsenic, and cadmium is benign to your body as a whole?
It is not benign, as I have found out from the newest science based evidence I saw at the conference.

Get yourself informed about the latest good science based information about the toxic effect on the human body, and especially the people in the population that are most susceptible to it toxic effects, like infants, people with poor kidney function, people with poor diets, just to name three groups.
And also see the growing list of Professionals calling for an end to artificial water fluoridation that includes Nobel Prize winners,
Go to;

http://www.fluoridealert.org/

And another good information site about fluoride is,
http://www.fluoride-journal.com/

Find out the latest good science that is now available, and write your local Government to tell them to stop this truly insane practice based on poor science from the 50’s. When it was believed that ‘the solution to pollution was dilution’. The same people that started telling us drinking fluoride was good for our teeth also told us DDT was safe.

Do you recall being told that cigarettes smoking and second hand smoke didn’t cause disease in humans, even as the science-based evidence was mounting? From the evidence I’ve seen there seems to be a similar denial process happening regarding artificial water fluoridation.

Simply avoiding looking at all the information that is now available, and listening to the professional that have looked, then taking the steps to protect people’s overall health by erring on the side of caution and stop forcing human beings to drink fluoridated water would be just be dumb, or worse.

#30 Houman on 07.27.09 at 10:03 am

You all keeo saying that the RE will crash, when?
The US RE might be on its way up, when do we expect RE in Canada to crash? It looks like the RE is on its way up not down. As much as I love to see this sick market turn around I wonder if it will ever happen..
There are multi offers every where and inventories are low this surley is a sellers market now!!!!!!

#31 DonDiego on 07.27.09 at 10:09 am

Take a look at us now Europe!

Toronto and Van is now more costly(on a value basis)
than The Cote d’Azur.

Canucks with BUBBLE BRAINS!

We are worse than Bubbles American style.

So, I can now live where Picasso, Mattise and Gauguin lived or where garbage is piling up and you’re taxed to the moon and the cost of living is sky rocketing.

It’s time to dump our Canadian offerings(droppings) and move somewhere with more value and a better lifestyle.

Like the South of France.

#32 Got A Watch on 07.27.09 at 10:14 am

lili – Thanks for reading. You are free to believe whatever you want, this is still a nominally free country. But when you post on a public Blog, you should have some facts, or strong theories at least (and I don’t mean some “economist” on TV talking bull) to back it up.

Simply because many consumers have not realized the landscape has fundamentally changed, as they still try to live like it’s 2005 – does not mean change has not occurred. It is not reported in the MSM much, if at all, since the plain truth would be heavily damaging to corporate advertisers dependent on consumers continuing to spend with abandon. Don’t bite the hand that feeds.

“assumptions about my market intelligence are misplaced… entirely.” So you claim, but you provide nothing to back it up but what looks to me like wishful thinking. Hope is not a plan.

“stagflation is being reinvented” – ummm, that was a term from the ’70s, and the times are not very comparable. Definition of Stagflation: “Stagflation is an economic situation in which inflation and economic stagnation occur simultaneously and remain unchecked for a period of time…the global stagflation of the 1970s: it began with a huge rise in oil prices, but then continued as central banks used excessively stimulative monetary policy to counteract the resulting recession, causing a runaway wage-price spiral.” I see almost a 0 chance of a “runaway wage-price spiral” happening this time. Sorry. Let me know when you get a big raise at work, and everyone else get’s one too. Hint: don’t hold your breath.

I confess I don’t really get your other points, they seem incoherent. Maybe you need to express them more clearly.

Real estate is a “market” similar to all others: it goes up for a while, then it goes down. It is more illiquid than almost all others, so it just takes longer to make the turn at inflection points. What part of this is not “beneficial” to you? Are you denying that past history is most likely to repeat here? Is it really “different this time!”? Please, I think not.

You may think the media can determine the future direction of the economy – if that were true, we would have never had this crisis, since the MSM never saw it coming, and have denied it all the way until recently. They can lie all they want, it makes little difference. Except the less informed actually believe them, and act on it – like the first-time buyers chasing the real estate market right now. That is a product of financial illiteracy and the power of self-reinforcing delusion, not to be confused with an actual strong economy.

I am reality based. If the economy was booming and it was time to buy real estate, I would say so. But it is not. One day, it will be. Garth just tells the truth, which is toxic to those committed to continuing the pump job as long as possible. We can review the outcomes down the road, and see who was right and who was wrong.

btw, my macro views have little to do with my short-term trading. I just trade the tape I am given, based on technical analysis. Works for me. Why ask why the market does this or that over short terms.

#33 Onemorething (aka DaHKkid) on 07.27.09 at 10:28 am

#22 Sampson, I would list the property for fun and see what can be had.

If not put the least down but have option to pay off anytime during the term when rates go up as if they do the value of your home will go down.

REMEMBER : DEBT IS CONSTANT, VALUATIONS ARE VARIABLE!!!!

There is going to be 20%+ of Canadians under water when the RE market tanks finally!

Canada is the only western country in the world unchanged, WAKE UP PEOPLE!!!

#34 David Rockefeller on 07.27.09 at 10:34 am

Listen to the Austrians like Bill Bonner, they got it right. Bonner has been warning about the real estate and other bubbles for at least six years. BTW, the Austrians are really big on precious metals and for good reason.

#35 Nostradamus jr. on 07.27.09 at 10:36 am

Garth suggests a “world changing event” is a strong likelyhood.

…Unfortunately, Nostradamus jr. predicted a 100% certainty that world changing events are a certainty.

The U.S. is bankrupting the world in order to keep its currency the currency of the world.

…Expat Iranians and also Zorastrians have been relocating to North & West Vancouver for over 20 years because they still consider the North Shore as the safest location in the world.

Asian Immigrants & Refugees also consider Canada the safest country in the world.

…To all above, A home in Canada is the safest investment there is.

Europeans are stuck in their own quagmire.

…Have I ever mentioned that Vancouver will become North America’s financial, trade, cuture and leisure capital?

#36 buy gold on 07.27.09 at 10:44 am

Garth, I really confused as to where the canadian economy is going from reading your last post End of story then reading today that the USA economy is at the early stages of a depression???

#37 bubbleboombust on 07.27.09 at 10:59 am

I love reading this blog! I’ve sat here in Van in my rented apartment for the last few years, watching everyone else buy property while I pay off my student loans and max out my RRSPs to lower my tax burden, and scratching my head as to what I’m doing that I can’t afford to buy. Now all my smart friends that bought two or three years ago are saying to buy now because prices are so low, but they’re still not low enough to afford them with a $100,000 household income. Guess I’m just crazy or something. Everyone else must make double the pittance wage we make, because they seem to be getting along great — they have new cars and a nice house with nice furniture and they take nice vacations and wear new clothes. I should maybe stop wasting my money on mutual funds and invest it in something smart, like Lululemon pants.

#38 Mel Eager on 07.27.09 at 11:00 am

Hi Garth/B-Dogs,

Regarding the impending….” great Baby Boomer property dump”…..

What are the likely assets the mass wave of boomers are going to buy with their freed up cash from the sales of their McMansions, starting around 2015?

Thanks,

Mel.

#39 613 Happy where I am on 07.27.09 at 11:08 am

It appears to me that all those people who are involved in real estate (developers, agents, inspectors, lawyers, flippers, speculators, etc.) have a pretty smug attitude these days as it appears that Canada has dodged swallowing the bitter pill that other countries have had to do.

I say, with all due respect, that we are pretty close to the top of the cycle and, as Garth points out, it will only take a modest increase in interest rates and this extremely fragile house of cards (and alot of hot air!) will topple.

My mother tells me, from a purely financial point of view, that I should sell my townhouse… But,, I say back, I still need to live somewhere… and there is nowhere right now I would rather live than right where I am…

I hope I don’t regret not taking my mother’s advice….

#40 Devil's Advocate on 07.27.09 at 11:10 am

Economic busts are proportionate to the economic booms which preceded them. The overall economic boom of the last 50 plus years has been immense and most notably that of the last 25 years. We have not seen any degree of contraction proportionate to the growth over this period. Those who believe the economy can and must continue to grow are fooling themselves blinded with greed. It just does not happen without some equal and opposite reaction – be it economic or social. If we are lucky it will be nothing more than a significant hit to our wallets. If we are not so lucky, as has been the case so often throughout most history, it will be a significant hit to our person. As Garth suggests a “world changing event” is a strong likelihood.

#41 Future Expatriate on 07.27.09 at 11:14 am

“I only seem to be eternal and omnipresent. — Garth”

We notice you left out omniscient.

Agreed.

#42 smw on 07.27.09 at 11:38 am

#37 Mel Eager

Taxes, food and utilities…

#43 D from London, ON on 07.27.09 at 11:41 am

#37 – Mel Eager

Q – “What are the likely assets the mass wave of boomers are going to buy with their freed up cash from the sales of their McMansions, starting around 2015?”

A – “New knees, hips, and a boatload of generic brand Viagra”.

Next question…

#44 Dan in Victoria on 07.27.09 at 12:00 pm

Post#35 Nostradamus jr. Should be an asterisk at the bottom on the last statement. Have I ever mentioned…….. “Some conditions do apply”

#45 JeffinPickering on 07.27.09 at 12:10 pm

#37 – Mel Eager

Q – “What are the likely assets the mass wave of boomers are going to buy with their freed up cash from the sales of their McMansions, starting around 2015?”
————

Uh, who says they are going to be able to sell them, or at least for a tidy sum?
That’s why so many are totally screwed. Great, you have a $500,000+ house you paid off…but, there’s no one that wants to buy it now that you’re selling (or they might offer you a cool $250K tops).

They aren’t going to have freed up cash.
They’re going to have reverse mortgages or equivalent, new debt, and a pointy stick to try to work their way to the front of the health care lineups…oh, and jobs if they can find them.

#46 maridion on 07.27.09 at 12:25 pm

to Don on the basement:

I think rental prices are like other prices, more or less controlled by big players. Have you ever heard of mothballed apartments? I saw dozens of them in a condo in the late ’90’s; never lived in but rather dated.

Living in Ottawa, I also need a more comfortable and healthier rental, at a sustainable price. My recent search has been disheartening. I have lost time and spirit chasing advertisers who, I would say, had other motives but renting.

When one thinks of it, it is to be expected that powerful industries did everything to control their prices. After all, the “free market” has been dead for a long time, hence inflation.

For those who might like some explanations:

“Almost everyone’s guide to economics” written by the Canadian born economist, John Kenneth Galbraith in 1976!, available in public libraries.

Wished I had read it earlier.

For now, I am taking it easy again. My rental indisposes me but won’t kill me.

#47 Kelly McMae on 07.27.09 at 12:32 pm

#38 613 Happy where I am on 07.27.09 at 11:08 am

“I hope I don’t regret not taking my mother’s advice….”

Ouch. Good luck with that one. Mum’s the word?

This lili character is fun. I’m curious what viewpoint/position you’re speaking from. Myself I’m young and have negligible assets, so I read this blog for education and entertainment. Most often provided with the latter.

Be careful with quoting studies. One study says doesn’t refute hundreds of studies speaking otherwise, unless it was authored by Einstein.

#48 Munch on 07.27.09 at 12:57 pm

The Canadian real estate crash will happen JUST when everyone on THIS blog gives up!

EXACTLY at that time, will the last Greater Fool buy the last over-priced condo box for too much money!

This came to me now, in a dream, so it is true!

Thanks for listenin.

munch

#49 tjmikey on 07.27.09 at 1:19 pm

#25 – dd

What I meant was these are really the only four factors that I would look at to determine the health of pretty much any economy.

#1 – GDP is fairly obvious, we gotta sell the stuff and then make the stuff and then hopefully get paid for the stuff.

#2 – Employment numbers are a bit of a grey area, once a person is off the system nobody really knows where they are statistically. I go off the hard numbers supplied by the feds, the rest is speculation.

#3 – Federal and Provincial deficit numbers could be fudged for sure, but the important fact is that there are in deficit.

#4 – Inventory numbers are a direct reflection of #1 and #2, if inventory numbers are strong (overbuilt) and we are experiencing lay-offs you can expect inventory dumping ala GM and Chrysler.

If the GDP starts a positive move up, employment starts to show stabilty and inventory numbers are down, meaning stuff needs to get built then I will start to listen about a recovery.

Unemployment and Welfare will be a problem for the next decade, all taxes are going to have to increase, the REAL cost of living is going to increase, household income is going to plummet.

This one’s a bitch.

#50 MenWithHats on 07.27.09 at 1:24 pm

Man ,I just love guys like ol’ Tom who figure that somehow,some way their situation is different from everyone else . Magic will happen and his dreams of avarice will all come true .
Ain’t gonna happen Tommy boy .This ain’t a fanyasu blog .
The info here is for people smart enough not to question the master .
But go ajead . Chances are you’ll be a winner in a losers market .
Tie up all your cash . That is a smart thing to do .

#51 Nostradamus jr. on 07.27.09 at 1:25 pm

Scenario #1

…The U.S. “Defaults” its foreign debt, “Nationalizes” other forms of foreign investment, returns all Mexican illegals & initiates “protectionism” foreign policy…(keeps Free Trade w/ Canada.)

Scenario #2…New World Order…

…China, Japan, India trade their U.S. Treasury Debt for Residential and Commercial Real Estate in the U.S.

U.S. elite quietly relocate to Vancouver.

#52 Devil's Advocate on 07.27.09 at 1:31 pm

#47 Munch on 07.27.09 at 12:57 pm The Canadian real estate crash will happen JUST when everyone on THIS blog gives up!

We must almost be there for after more than 5 years of pessimistic opinion on our economy (documented) I have just about given up and am ready to join the ranks of the Greater Fools throwing all caution to the wind. What the hey anyway… bankruptcy is not life threatening and to have NOTHING is truly liberating as surely our patronizing government will look after us… right?

#53 Devil's Advocate on 07.27.09 at 1:32 pm

What a party I would have and enjoy on the way down!

#54 jess on 07.27.09 at 1:44 pm

Economist Allan Meltzer of Carnegie Mellon University in Pittsburgh isthe author of two volumes chronicling the Fed from 1913 to 1986.

Great Depression
“In the Great Depression, consumer prices fell for more than three years, at an annual pace as high as 10 percent. ..
So far, inflation has shown no signs of heating up — nor has deflation reared its head. The U.S. core inflation rate, which excludes food and energy costs, fell to 1.7 percent as of June from 2.4 percent at the beginning of the recession.”

In Meltzer opinion, “Central bankers tilt toward stimulating growth.”
==============
but, I believe Mr. Bernanke is aware of the inflations problem especially since one of the (gearing tools) for the exit plan is that the fed. can increase interest to the banks on the reserves giving them the incentive to keep the reserves there rather than play the wild short term.

#55 jess on 07.27.09 at 1:47 pm

#37 – Mel Eager
REVERSE MORTGAGES

#56 MenWithHats on 07.27.09 at 1:52 pm

fanyasu . Ooops fantasy .

#57 jess on 07.27.09 at 2:23 pm

.#7 Nostradamus Le Mad Vlad

. The desire for such attention is understandable in an environment where science and scientific funding are increasingly competitive. The National Science Foundation now emphasizes “transformative” research, and few events are as transformative as an impact. In an era when evolution, geologic deep time, and global warming are under assault, this type of “science by press release” and spectacular stories to explain unspectacular evidence consume the finite commodity of scientific credibility.

#58 jess on 07.27.09 at 2:24 pm

gorgot the web site vlad

http://www.gsajournals.org/perlserv/?request=get-document&doi=10.1130/GSAT01801GW.1&ct=1

#59 Vancouver_bear on 07.27.09 at 2:34 pm

News from Nostri’s world capital Gangcouver:

Woman shot by BB gun in downtown Vancouver for refusing to give money or cigarettes to a man.

http://news1130.com/news/local/more.jsp?content=20090727_123808_1128

Air Quality advisory for Metro Vancouver and Fraser Valley
An air quality advisory has been issued for Metro Vancouver and the Fraser Valley Regional District for today. Air quality is forecast to deteriorate due to high smog levels brought on by very hot and sunny weather.

http://news1130.com/more.jsp?content=20090727_140644_4464

Still think it the best and safest place on earth?
WRONG!

#60 Peter on 07.27.09 at 2:38 pm

On Swag on 07.26.09 at 11:40 pm:

Vary interesting.

“…The Chinese incidentally hold a lot of the money that we invisibly owe – I wonder what they will do with it?”
– they will want to take it back. War? How probable is it?

Further, if I am not mistaken, you are predicting “changing rules in the game” – inflation with low rates. Does it mean, as wages rise, people (who have work) might be able to pay their mortgages paying few monthy salaries?… Rosy picture!

#61 Devil's Advocate on 07.27.09 at 3:18 pm

In the sunny Central Okanagan there have been 186 single family residential transactions thus far at a median sale price of $425,000 on the median original asking price of $462,000 after a median 71 days exposure on the market (not accounting for previous unsuccessful attempts).

Comparatively for the same period in 2008 there were 135 such sales yielding a median sale price of $473,000 on the original median asking price of $499,000 after 55 days on the market.

Back in 2007 the same period yielded 238 sales of SFD with a median sale price of $453,000 on the original median asking price of $462,000 after 33 days on the market.

These are the facts in this neck of the woods. REALTORS® are reporting a strong market without looking forward to the weak foundational economic indicators. But then they are not economic forecasters they are merchandisers here, now and today.

Just thought I’d let ya all know so’s you can compare notes with your neck of the woods.

Now Gordo has announced a Harmonized Sales Tax of 12% which will kick in on July 1, 2010, after the Olympic party bills start to really roll in and the absence of any significant economic benefit of having held such a party. This HST will add significant tax costs to any newly constructed housing over $400,000.00. Today our 5%PST is applicable to the product, but not the labour, that goes into the construction of such houses which is roughly 50% of the cost. This new HST is apparently “to make us more competitive” according to Gordo.

Hmmm… ya right…

#62 Mark on 07.27.09 at 3:31 pm

I thought I’d do a quick copy/paste on this article from CNNMoney.com…

“Real estate has packed quite a punch of late, appreciating 12.4% annually between 2001 and 2006, according to the S&P/Case-Shiller U.S. Home Price index. That clobbered stock prices, which gained only 4.3% a year as measured by the S&P 500.
But over the long run stocks win easily. A new study by Jack Clark Francis, a finance and economics professor at Baruch College in New York City, and Yale’s Roger G. Ibbotson compared the annual returns of real estate from 1978 to 2004 compared with those of 15 different “paper” investments, including stocks, bonds, commodities futures, mortgage securities and real estate investment trusts (REITs).

The results? Housing delivered a solid but unimpressive annualized return of 8.6%. Commercial property did better at 9.5%. The S&P, however, delivered a crushing 13.4%.

Other studies argue that real estate’s returns are much worse. Yale finance and economics professor Robert Shiller, author of Irrational Exuberance, who looked back to 1890, contends that only twice has real estate produced truly outstanding returns: after World War II, when returning troops were starting their families, and from 1998 to 2005, a period he thinks is a bubble.

Housing’s rate of return, he argues, has to trend back to the mean of about 3% a year – barely above the inflation rate. If that’s starting to happen now, he says, we could be facing many years of losses.”

Avg house price in Vancouver in 1960 was $13,000. Using 8.5% per year return over 50 years (compounded) equates to approx $768,000 today. Which is about where we are. Just pointing this out for anyone who says real estate beats investing in stocks, etc., statistically …

#63 moneywoman on 07.27.09 at 3:39 pm

To Bubbleboombust, post no. 36

I have figured out why you have less money than your peers. Simply said, you don’t own a house.

Historically, silver, gold & even tobacco have been money. Today, a house is money (at least, still in Canada); and what compounding!

The way to your hands on the pot of gold is well known; the Americans did it first. Get a HELOC (home equity loan) first, then go shopping.

Everybody wants houses; and more is better. Houses are money.

Think about it. You buy a house for $300,000.; comes Christmas, you get a HELOC for $5,000. at prime minus, interest only and Merry Christmas to you. A diamond ring for yourself, a fur coat for your wife and what not for the kids.

Comes the summer, the bank tells you there’s room in the house for another $10,000. , so a HELOC increase to pay for the interest on the lst HELOC, with plenty left over to go to Greece for the whole family.

And so, it goes.

Now that you get it, go buy a house.

#64 moneywoman on 07.27.09 at 3:43 pm

To Don Diego:

Thank you for alerting me to possibilities of retirement living (is that it?) in the South of France.

Would you elaborate on the subject. It has a certain appeal.

#65 MenWithHats on 07.27.09 at 3:49 pm

Stpckboy Day proposes paying off our debt to China with seal skins .

#66 MenWithHats on 07.27.09 at 4:08 pm

Wonder why the banks don’t jack up jumbo loans,those $400,000 amd higher , by a couple of percentage points ?
Seems reasonable to me .

#67 The Great Gazoo on 07.27.09 at 4:22 pm

It is a perfect political power-play.
Conservative backed Carney says “recession is over” (similar to “mission accomplished” by Bush Jr.) everyone is supporting them, they inflate the markets and consumer confidence allowing greater fools to keep buying debt for the great real estate market … financial spinsters, mortgage lenders, sleazy re agents and re moguls are laughing all the way to the bank …
Oh wait, Conservatives announce an asterisk note… “its gonna all depend on the dollar”, which is out of our control, as a result dollar keeps climbing even further, negatively impacting manufacturing and employment.. imagine the impact to manufacturing dependant Ontario. ..
Of course the Conservatives won’t take the blame as they SAID the recession is over, its just the dam dollar that keeps rising. On the premise of that, Conservative get re-elected by greater fools maintaining their power. In reality as a result second even deeper hit to the economy causes the house of cards for real estate to crumble, in the case that they further keep artificially inducing low interest rates and high housing prices amidst high unemployment, stagnant wages and consumer debt, ultimately the standard of living in Canada falls for middle class as all finances will have to be put into repaying absurd housing purchase and mortgages.

But why would the Conservatives care, they will still be in Power.

#68 jwk (nee jwkimba) on 07.27.09 at 4:31 pm

#26 DA, great poem. That was exactly my scenario living in Los Angeles from 2000-2005. And now I have that same sense of doom living in Toronto, I can’t explain it, I just see things that don’t add up and wonder how this can possibly go on.

I sold everything and left LA in summer of 2005. Just in time. I drove to Toronto in my Toyota, not the Porsche convertible I wanted – and almost bought(!). Just in time indeed….phew!

#69 Bill-Muskoka (NAM) on 07.27.09 at 5:10 pm

For some reason they want the Dodge Compass too.
#1 nonplused

If you meant the vehicle it is a Jeep Compass, same chassis as the Dodge Caliber.

BTW, Garth, T.O. Has graduated from granite counter tops to granite sidewalks. LOL

Granite war being waged on Bloor St.

I suppose all those new condo buyers will be insisting the Condo King provide granite sidewalks, in matching colour of course, to go with their counter tops? Definitely a ‘Value Added’ feature the RE Board will promote in a heart beat. LMAO!

#70 Vancouver_bear on 07.27.09 at 5:41 pm

#35 Nostradamus jr. on 07.27.09 at 10:36 am

Just admit it, you either stupid or in deep denial.

1. Vancouver is not safe anymore, gang violence, street violence is through the roof as fundamentals of real economy deteriorate.
A woman was shot for denying to spare some change or cigarettes to a bum (see my post earlier). Soon bums will start killing for stealing a cell phone or piece of bread!
A shooting is reported on a daily basis since the beginning of 2009, so now it’s not a huge issue. We got used to it.
There was a shooting in your wonderland recently, someone was killed.

2. You were talking about plenty of water, but what we read on the CBC…..they talk about water shortages, sprinkler patrols….etc.

http://www.cbc.ca/canada/british-columbia/story/2009/07/27/bc-heat-wave-fire-air-pollution-water-shortage.html

So how it is the safest and the best place with water being a scarce resource?

#71 Mike (Authentic) on 07.27.09 at 5:45 pm

Bonner: ‘We’re in the early stages of depression…’

Bonner is a smart guy, I can see why a million people read what he writes.

I’ll forward that video on to others. Maybe it will help wake them up.

Mike

#72 blobby on 07.27.09 at 6:10 pm

why arent the numbers in that graph equally spaced out? it seems almost as if it’s dilibertly trying to be mis-leading?

#73 DonDiego on 07.27.09 at 6:10 pm

ATTN: moneywoman

some leads

http://www.internationalliving.com/Countries/France/Retire

http://www.frenchentree.com/fe-lavie/DisplayArticle.asp?ID=127

You may want to check out Panama as well.
You can really leverage your CAD there and live like a king/queen.

#74 pbrasseur on 07.27.09 at 6:31 pm

Let the bull speak:

Herrmann Says U.S. Economy Coiling for `Big Expansion.

http://www.bloomberg.com/avp/avp.htm?N=av&T=Herrmann%20Says%20U.S.%20Economy%20Coiling%20for%20`Big%20Expansion’&clipSRC=mms://media2.bloomberg.com/cache/vdP3KROSE8wU.asf

#75 Toronto C9 Renter on 07.27.09 at 6:38 pm

Reality check from the San Diego condo market which is in shambles, notwithstanding the fact that San Diego is a beautiful ocean city with perfect weather…

http://www.latimes.com/business/la-fi-condobust27-2009jul27,0,881890.story

I thought one particular quote from the article hilariously ironic… “Canadian developers with little experience in Southern California, starting with Nat Bosa, a prominent Vancouver, Canada, condo builder, led the condo charge downtown, overestimating its potential, experts said.”

#76 TUT on 07.27.09 at 6:43 pm

#71 blobby

The vertical scale is logarithmic, expands the smaller values and compresses the big ones. Generally is used to accommodate a big range of values by keeping constant the ratio between them.

#77 Jeannie on 07.27.09 at 6:44 pm

As a big fan of Bill Bonner, and subscriber to his financial
newsletters for many years, I’m pleased to see that Garth has introduced him here on the Blog.

I’ve just sent away for his set of C.D’s, DVD’s from the recent 7 day Vancouver Financial symposium.
‘The Daily Reckoning’ is also a free daily report.

#78 dd on 07.27.09 at 6:45 pm

Stability … isn’t that Slim Pickins?

#79 dd on 07.27.09 at 6:49 pm

#69 Vancouver_bear

“#35 Nostradamus jr. Just admit it, you either stupid or in deep denial”

He is pumping so he can dump the house that we bought at the heigth of the market.

1. Vancouver is not safe anymore, gang violence, street violence is through the roof as fundamentals of real economy deteriorate.
A woman was shot for denying to spare some change or cigarettes to a bum (see my post earlier). Soon bums will start killing for stealing a cell phone or piece of bread!
A shooting is reported on a daily basis since the beginning of 2009, so now it’s not a huge issue. We got used to it.
There was a shooting in your wonderland recently, someone was killed.

2. You were talking about plenty of water, but what we read on the CBC…..they talk about water shortages, sprinkler patrols….etc.

http://www.cbc.ca/canada/british-columbia/story/2009/07/27/bc-heat-wave-fire-air-pollution-water-shortage.html

So how it is the safest and the best place with water being a scarce resource?

#80 Herb on 07.27.09 at 7:08 pm

“… we are one incident away from a changed game.”

Garth, are you expecting disaster capitalism?

#81 JO on 07.27.09 at 7:54 pm

Agree with most of it Garth, but oil will hit less than $ 25/brl before the end of 2010…then explode after that.

Watch the bond market folks…late 2009 through end of 2010 will be a year of hell on earth.

JO

#82 Nostradamus jr. on 07.27.09 at 7:55 pm

Vancouver _ Bear

…Ask Garth to sell you the Vice President Editor,”Greater Fool”, West Coast franchise…I’m sure he’ll let you have it for $220K…or $200K cash.

#83 eddy on 07.27.09 at 7:57 pm

Thomas, August is usually a good time to buy. The Toronto price correction has already happened. People talk technical deflation but I see inflation. keep putting in offers on houses, change agents.

#84 jess on 07.27.09 at 8:14 pm

Say what?
“Chinese government assistance so generous, that Chinese firms can afford to buy granite from halfway around the world, ship it home, cut it into finished pieces, ship it back around the globe and still sell the resulting product for at least 40 per cent less than comparable granite manufactured here.”

…so Bill does the Canadian Navy protect it against pirates? ;^>

#85 jess on 07.27.09 at 8:16 pm

hum…genworth went public? makes ya wonder why at this time.

#86 dondiego on 07.27.09 at 8:54 pm

get ready for the rates RE lemmings.

http://www.financialpost.com/news-sectors/story.html?id=1834370

#87 Peter Wiener on 07.27.09 at 8:55 pm

to Tom in the letter

some sage advice:

” Gamblers bet on the weather; investors bank on the climate”.

Think about it.
Sure seems pretty ‘sunny and bright’ right now in the Toronto residential real estate market, no?

#88 Devil's Advocate on 07.27.09 at 8:56 pm

#79 Herb on 07.27.09 at 7:08 pm
“ “… we are one incident away from a changed game.” Garth, are you expecting disaster capitalism?”
I am growing very impatient with all this economic nonsense. I figure, given the true state of the economy, we should all have been dining on squirrel meat long ago. It’s hard to believe we have hung on so long. Makes a guy wonder why he didn’t join the party six months ago. I look around and either a lot of people are living WAY beyond their means or I am a dolt for folding and choosing to watch the game since mid last year.
Can we hurry up and get there already… the suspense is KILLING me!!!
Until that “one incident” occurs we will continue on blindly as we are, as we have and as we will… all greater fools… them, you and me. It’s as if our economy has received a frontal lobotomy.

#89 dondiego on 07.27.09 at 8:58 pm

U watch. They’ll raise them right after the xmas shopping season.

They’ll want strong retail sales numbers and then up the rates go.

#90 Shawn Allen on 07.27.09 at 9:30 pm

Nonplussed, No. 1 has the key point.

CMHC is I understand very lax in lending but yes it is recourse you have to go bankrupt to default.

But a conventiaonal mortage at 79% loan 21 % equity may be non-recource, if prices fall they get your house and nothing more if you default??

A banker told me this is a voluntary foreclose, it may hurt your credit rating but they can’t legally come after you assets?

If so and you have an expensive house why not mortage it up 79% and then you gain the option to “put” it to the bank at 79% of current value if the value drops say 40%.

Thoughts?

#91 john m. on 07.27.09 at 9:34 pm

My bet is that within 8 months the crap is really going to hit the fan for the following reasons….#1-its summer time now after a brutal winter people (that are working) are holidaying,kids out of school,barbecues with friends etc..life is easy,people are enjoying being outdoors..what could possibly change our way of life?(in fact our political leaders are telling us nothing will)…#2..by the end of August real estate will go flat –it always does (even in a good economy),people are no longer thinking of moving,kids schooling is arranged etc. ….# 3 fall approaches then winter-businesses of all kinds slow down,people stay home more,more layoffs,heat bills start happening etc…# 4 real estate stays flat (it usually does till spring)this also happens with car sales etc……#5 spring arrives real estate prices are dropping,more unemployment,UI benefits have run out,new business ventures are rarely started in the winter months and the economy shows little potential to take a gamble as the economy collapses further…..#6 No more government bailouts available–by now they are beginning to feel the wrath of the people for the billions they squandered as the economy collapses …. …….it doesn’t get better-IMO we are in for a hell of a ride come spring?

#92 Peter Wiener on 07.27.09 at 9:48 pm

# 87 Devils Advocate

“It’s as if our economy has received a frontal lobotomy.”

PRECISELY!!!!!!!!!!!!!!

I don’t always share your views, but that was the most succinct description of the current Canadian economy that I have ever heard!

Patience my man, go read Jesse Livermore’s take on it.
‘The money is in the sitting and waiting, yet not a man in a thousand can seem to do it.’

And thank the lord they can’t – that’s where you’ll be coming in if you want to – when the market gives you an opportunity and not before.

#93 Industrial Guy on 07.27.09 at 10:06 pm

The Depression is coming. It was nice to hear someone else say that. Excellent video.

Manufacturing in this country was shielded from a lot of real competition by the previous Federal government’s low dollar policy. The 60 to 70 cent dollar was an unofficial subsidy and boy did our manufacturing sector get fat and lazy. Modernization? Sure, but only as far as the overly generous Collective Agreements would permit. The CAW worked diligently to kill any attempts at automation. They were willing to protect “Our Jobs” even if it meant a loss business to competitive firms. Now they sit at home collecting EI waiting for the next $30.00 per hour job with benefits to become available.
It’s going to be a very long wait.

I’m one of the few still working in our Industrial sector and I have visited our competition in the USA and Mexico. WE ARE SCREWED. They have robots and automation everywhere. They have even outsourced the outsourcing. Things maybe really tough in the USA and yes, unemployment is still rising, but they’re not shipping their entire manufacturing sector outside the country in shipping containers. The guy in the video is right. These jobs are gone and never coming back.

Renters do indeed have the choice of moving or diving into the RE market should the correction be as sudden and as deep as the one experienced in the USA. Renting is a good strategy for uncertain times. Who knows, even rents may drop as more and more people exhaust their EI benefits and begin collecting welfare.

Who needs bricks and mortar or a permanent address? If you have the money, buy an RV! Prices are really depressed and there are great deals to be had in the used RV market. Anyway, it will make traveling around Canada to find work much easier. No RE Taxes …I’m sold!!!!!

Dr. Strangelove or: How I Learned to Stop Worrying and Love the Bomb was a great film. Didn’t they destroy the world in the end?

#94 dd on 07.27.09 at 10:13 pm

#90 john m.

Who knows when … this POP of the bubble might take 10 years to deflate. Most on this site know the direction it is going.

#95 dd on 07.27.09 at 10:17 pm

#81 Nostradamus jr.

“…Ask Garth to sell you the Vice President Editor,”Greater Fool”…”

U tried something like that with your run at the Finance Minister role in this new cabinet. Tell the viewers how that worked out.

#96 conan on 07.27.09 at 10:52 pm

It is hard to predict what will happen. There is a lot of stimulus money still crashing around like a loose cannon.

One thing for sure…. if stimulus does not work the next solution is slated to be more stimulus.

I read somewhere that the “great economists” of England had to do a group apology to the Queen.

Not a good time to be an economist.

#97 Mike (Authentic) on 07.28.09 at 4:37 am

#61 Mark “Just pointing this out for anyone who says real estate beats investing in stocks, etc., statistically …”

Warren Buffett (I’m sure you know who that is) just was on CNBC last week and said that bonds actually beat the stock market long term. And surprised himself by admitting that because he said just a year ago he wouldn’t agree. But aparently, for the world’s biggest stock trader to say “bonds beat stocks” is something!

Bonds. Safe, guaranteed return investments.

Mike

#98 pbrasseur on 07.28.09 at 7:17 am

@Mike (Authentic)

“Warren Buffett (I’m sure you know who that is) just was on CNBC last week and said that bonds actually beat the stock market long term. ”

That’s a load of crap, WB may have said that bonds may beat stocks over long periods, but certainly not that bonds beat stocks over the long term.

That is mathematically impossible because bonds returns DEPEND on wealth created by businesses. If that wealth (hence company value wich is soon or later reflected in stock value) grows more slowly than loans the economy would become a black hole!!!!

#99 pbrasseur on 07.28.09 at 7:27 am

Here’s what Buffet really said about stock and bonds:

http://www.cnbc.com/id/32123530/

“I would much rather own equities at 9000 on the Dow than have a long investment in government bonds or a continuously rolling investment in short-term money. Now, again, I don’t know where it’s going to go next week or next month.”

#100 Bill-Muskoka (NAM) on 07.28.09 at 7:35 am

…so Bill does the Canadian Navy protect it against pirates?
#83 jess

I think not, and neither does Oddawahaha protect Canadians against the Pirates of the Condominiums.

#101 Andrew toronto on 07.28.09 at 9:34 pm

here’s a good interveiw between nourei/ Niall and mort zackerman (comercial realesate nobody had anything good to say..

http://www.cnn.com/video/#/video/bestoftv/2009/07/26/gps.recession.near.end.cnn