Economic fundamentals


Some days ago I told you of an email thread which will become a mag article in Toronto. The weavers are some real estate ‘experts’ and the point of it is to update a cover story on the future of the housing market which appeared back when we had snow.

The poohbahs include the condo king, a flamboyant developer, a financial media guy, a big-name economist, an architect to the stars, a tony realtor of million-dollar digs, and moi. Interestingly enough, the email ordeal continues, these being the latest words from the Purveyor of Fine Homes to the Pony Set:

Feb was 100% better than jan, mar was 67% better than feb, apr was 50% better than mar, may 42% better than apr, june was 17% better than may. May and June were the best single months in our 52-year history.

Consumer confidence is up. Interest rates are at generational low levels.  People are getting back into the real estate market. This is not pent-up demand, it is a change in attitude positively directed at real estate.

And to that, the excited editor asked the others:

“Do you agree that the turnaround represents a change in attitude, with consumer confidence up? Or is it simply a matter of savvy buyers striking while the market was low?”

True enough, sales in the GTA republic – home of 20% of the country’s pop – have been on a steady trajectory higher. This is in contrast to not only some stagnant markets in, say, Alberta, but also a dejected decline in cities less than two hours from Toronto (sales in London and St. Thomas are lousy, and prices have crashed 13% y/o/y. Don’t even ask about Hamilton and Windsor).

But is this true confidence? A fundamental change in attitude, as the jewel-encrusted realtor surmises? Or a return of savvy buyers, as the urbane, designer java metrosexual editor suggests? What, truly, is driving this phenom?

Seven things. None of them having the slightest thing to do with economic fundamentals. Sadly, though, they’re affecting the economy:

  • Supply – listings are down sharply from 100 days ago. Why? Because the market is going up, silly. People are only desperate to sell their homes when prices are plunging and buyers have vanished. Now that the buyers are postal, sellers are coy, waiting for values to double.
  • Demand – of course it’s pent-up. The sexual frustration of a combat soldier on an eight-month rotation is nothing compared to young buyers who lusted for granite, stainless and polished concrete. Of course, who could have expected them to buy a house in March when prices were off 15%, lowball offers were being accepted on the spot and listings abounded, giving unbridled choice? I mean, really, c’mon. Sheesh.
  • Affordability – don’t know how many times I have to say this, but cheap rates are the one and only reason we have a bubblette. Central bankers have now shamelessly sacrificed monetary policy on the altar of politics. Guys like the Bank of Canada governor know flooding the market with 2% and 3% mortgages, LOCs and car loans will only cause more borrowing, worse household balance sheets, brought-forward demand and asset inflation. But there’s only one motto in government right now: “Not on my watch.” Let the next leader manage the consequences.
  • Misinformation – Phil Soper. Jim Flaherty. Ozzie Jurock. Mark Carney. The ShamWow Slap Chop guy.
  • Peer pressure – in rising markets, real estate’s hot, and everybody’s an expert. A house is far more than shelter, and transforms from need to want. Parents berate children for not plunging into unrepayable mortgage debt. Spouses normally obsessed with financial security needle their partners into McMansions. Girlfriends do the lysistrata until they get a signed offer. Guys mercilessly beat on their buddies until they, too, trade testosterone for pool cleaning fluids.
  • The herd – a mass delusion in certain areas (most of Toronto) has replaced rational financial thought. Suddenly real estate editors at the Toronto Star and the National Post have convinced people it’s actually 2007, when nobody had ever heard of collateralized debt obligations. Forget the unemployed and the credit bubble, the hollowing-out of the manufacturing sector and sending Nortel to Sweden. Let’s condo!
  • Economic illiteracy – at the end of the day, this is what we face. It may be the woeful inadequacy of our media. Maybe it’s fault of schools. Or big financial institutions. Or parents. Or government. Whatever. But when people don’t understand what happens when a country’s biggest client is on its knees, when their government is choking on debt, when policymakers have fired their last silver bullet, when a population is aging and unprepared, when factories and jobs have been exported, when we’re uncompetitive and when consumers have to be bribed and misled, well, we blew it.

But, whadda I know?

Buy a house if it turns you on. Just don’t call it a plan.


Actual, unretouched photo courtesy of visitor Paul Kett.

News update: Manulife shafts investors


#1 squidly77 on 08.05.09 at 11:04 pm

yeah..that shamwow sucked

#2 ugh on 08.05.09 at 11:12 pm

I agree about the cheap interest being a HUGE factor. And yeah, the bandwagon jumping.

I think stocks are going to crash again too. I don’t know how far but my hunch is that in Canada it’ll take out the March lows. I foresaw the previous crash (a year early, I admit) and I spotted the tech bubble and couldn’t believe how gullible people were buying shares in and thinking potato chip home delivery was a realistic business model. I’ve since learned that they always go on longer than one ever thinks is possible and then some.

I have a friend who is old enough to know better (old enough to remember a previous bust, a time of double-digit interest rates and of how cheap condos in TO were in the 90s when there were over a 100K fewer of them).

I know several people buying right at the top. Some talk of getting into one as an investment since money is so cheap right now.

I have warned that inflationary central bank policies mean that some point in the future interest rates will be jacked up very sharply. That prices don’t always go up – just look at California or even Manhattan.

But they say, in Toronto ‘it’s different here.’ Famous last words of any bubble.

I’m done with trying to talk friends out of what could be dumb financial mistakes. It’s their lives, their money.

I’ll be checking out real estate somewhere where people are likely to ask WTF am I thinking?
Well, except maybe Detroit…

Whatever you do, don’t blame the shamwow guy – he’s passed on to the great real estate in the sky…

#3 joel on 08.05.09 at 11:16 pm

About half of U.S. mortgages seen underwater by 2011

This article need to be adjusted for Canada…..2015?

#4 MeatLoaf on 08.05.09 at 11:26 pm


A republic hogtown ain’t . It’s a sick, inbred, self-absorbed monster, chained to the vestiges of residual colonialism.

And it’s propensity for insane delusion, housing or otherwise, is not exactly new.

“There was hundreds of ’em, buried in unmarked graves.”
“Do you know that for a fact?”
“Still got the shovel !”

#5 Joseph on 08.05.09 at 11:33 pm

Just finished reviewing a number of critiques of the film “Virtual JFK”. What struck me in particular was one comment on the film which diverged from the Vietnam thrust of the film, but instead reflected on the days when the national press did what it was supposed to do.

“Assembles an amazing array of recorded conversations and vintage newsreel, and offers up enough press conference footage to make one nostalgic for the days when an uncowed, penetrating press really did serve the public interest.”

Some of the questions directed at JFK during a number of his press conferences ( I know, as I have watched a few) would be considered downright abusive by today’s news networks, who now turn a blind eye to the fact that questions for US Presidents are even staged in advance of “free-speaking” town hall meetings.

You know Garth, in spite of your detractors, you are providing us all with an unpolished assessment of the consequences of decisions that are being made by policy makers in efforts to prop up an inflated real estate sector, and what that will mean to the future of naive buyers who will be carrying extreme debt loads for years to come. Nobody else is really doing this in the media on behalf of the Canadian populace. Stay uncowed.

#6 CS on 08.05.09 at 11:33 pm

We just sold our house, the new owners take possession in less than 2 weeks. Once all the subjects were removed and it was a done deal, I felt sick. Even though I wanted out of a mortgage I knew I’d never pay off, the conditioning of owner vs renter kicked in. Suddenly, I was going to be ‘one of them’ – a lowly renter. Credit ratings note if you are a renter or owner, people at work, next door, at the party, etc – all seem to want to know which side of the fence you are on. Kids ask other kids if their parents own their place or are ‘just’ renting. My content insurance cost WAY more per $ than my house insurance as an owner ever did and they were straight up with me that it’s because renters are considered far riskier than owners. There is an entire belief system that caters to people beleiving they are ‘less than’ if they rent…and so they want to shed that identity as soon as possible. My brain kicked back in after a day I am happy to say and the relief at having sold returned and remains. I do understand how driven people can be to buy though, and these interest rates are making an awful lot of people think the formerly unattainable just became possible – sadly they aren’t looking down the road very far to see what a nightmare may be waiting for them.

#7 hal smith on 08.05.09 at 11:35 pm

The housing bubble IS our economy. The government will not let it pop. Without the bubble what would we have? We cut down some trees and dig things out of the ground and ship them out of the country. We don’t make anything here except houses that we flip to each other for higher and higher prices. No housing bubble = no economy.

#8 eddie on 08.05.09 at 11:42 pm

what does economic literacy have to do with anything in these bubbly boom times?? fundamentals mean nothing in a boom… wasn’t the general rule of real estate location, location, location? In booming Edmonton, that means nothing…rule around here is buy now or you’ll miss the boat because RE will never go down ever again… in more normal times, people upgraded their homes for 2 reasons: size and location… these days? greed? sure…but they’ll justify that new 3/4 million dollar home in west Edmonton with more reasons than I or Garth could ever come up with in a year for not buying…

I ask why won’t these “$30,000 millionaires” or as you call them “sheeple” listen to basic economic principles???
Well… we live in a society that truly believes a tax credit or deduction means “free fences, computers, and cars” ” Just write it off! Simple. I do.” I Never realized the gov’t was giving away free money to people other than GM or Bombardier. In fact, I never realized they passed a law in Canada that every child must have his own room. Excuse me, I left my sarcasm font on.

In 1997, my friends told me directly I was an idiot for jumping into the Real Estate market; today, they are the RE experts and I’m the dummy for not wanting to upgrade my clear title home… in fact, only a few months ago they bought a $650K new home, couldn’t sell their other $400K house at the time the new one was finished construction. So, they had to borrow $80K from their parents to cover the down payment on the new home. Not only that, they proudly flaunted to all of their friends at the house-warming party they now owned a million bucks in real estate now!

So, when you have to argue against this kind of delusional mentality, what does economic literacy have to do with anything?

Thing is, they currently look like the economic geniuses here..they sold their old home & kept the cash for some luxury household items and posh vacations while their new home still went up in value over the course of this year!!

#9 timbo2 on 08.05.09 at 11:52 pm

Common Garth, the ShamWow guy is so out of date. Now its the “slap chop guy” with his buddy “cheezy”.

#10 very disappointed on 08.06.09 at 12:04 am

…when people don’t understand what happens when a country’s biggest client is on its knees, when their government is choking on debt, when policymakers have fired their last silver bullet, when a population is aging and unprepared, when factories and jobs have been exported, when we’re uncompetitive and when consumers have to be bribed and misled, well, we blew it…

Garth you are getting emotional. Yes people are gambling, but what if they don’t lose their jobs? Then what? If the rally continues, then the rally continues.

Seriously, if every Canadian that still has a job goes on obliviously, which they do, can you name one event that would shake them to their foundation?

If it’s a stock market crash.. been there, done that. By now everyone and their grandmother has charted the Dow to 1914 and doesn’t see drops like last October happening on an annual basis. So they don’t believe it, especially with the green shooting all over the place (pun intended…).

Answer this, why DID the GTA have a price correction last fall? You might think it was because they surfed over here and ingested all your myriad reasons for a price collapse, and then drew bond yield curves until the horror hidden in the spreads was revealed.

Me, I think it was the crash. And without another one, life goes on.

#11 EJ on 08.06.09 at 12:12 am

These types of interviews are always rigged in favour of the bull propaganda. Take a look at pretty much every one of Peter Schiff’s interviews from around 2005-2006. They’d stack the deck against him every time. 3 Bulls and Peter. Then they’d gang up on him and interrupt everything he had to say. They’re doing the same thing to Karl Denninger now when he gets the occasional TV appearance. Contrarians are treated as radicals or jokes.

These panel-style interviews are never about providing actual facts or information the public can use to help make their own decisions. That’s the last thing they want. They’re about presenting opinions as fact, and the general public has always treated popular opinion as Truth.

Hey, if six experts claim 1+1=3, and only one expert claims it’s 2, then the answer MUST be 3, right? I mean, thinking about it for yourself is hard work, and that’s what we hire experts for. They would never steer us wrong, even when it’s enormously profitable for them to do so, because they’re all ethical.

#12 Nostradamus Le Mad Vlad on 08.06.09 at 12:25 am

“. . . What, truly, is driving this phenom? . . . Economic illiteracy . . .”

You asked, I answered! On a bigger scale ‘tho, no one can really be faulted — we’re all doing the best we can, with the tools that are available to us.

If anything, Hard Economics should play a much greater role in public and private schools, possibly starting in Grade 3 and one thing constantly drummed into students — “Don’t buy what you can’t afford, and don’t borrow to buy unnecessary things”.

When the time comes to move into college and / or university, students should have a far better picture of what, and what not to do in life.

The end fallout from this forthcoming debacle is not going to be nice.
#96 Bill on 08.05.09 at 5:54 pm — “. . . Or should I hang on?”

Hang in there. As long as there are nice dividends being paid out (or re-invested to buy further shares), look at the long-term view.

Also, open a TFSA, max. it out and use the same or equivalent options.
Anyone recall when I mentioned a week or two ago, that the actual virus could be built right into the vaccines? Well . . .
(this is an excellent reason why Greece, among others, has said it will vaccinate its entire population whether they want it or not)
(October Surprise?)

. . . and these two should be attached to the financial side of the October Surprise . . .

“There may still be some side drafts and brief upticks, but I suspect that, finally, we are on the massive primary downslope of Depression II. Just like Depression I, which began in 1929, but seemed to peter out just before really heading down in 1931/1932, we now are on schedule for part two of what began in 2007 – this is the main event, folks.”

Another reason to rent for several years yet — what will happen down south is going to happen here.

“The economy may have pulled out of its plunge, but you’d never know by a look at many big banks.”

Webmaster’s Commentary: “Maybe the plunge is just catching its breath.”

Japan’s Green Tea Shoots. —

Wot’s happening with the Cdn. banks — anyone know? —
Excellent pix of the Lillooet fire from the Daily Mail, no less! —–The-jaw-dropping-row-spectacle-wildfire-devours-Canadian-mountains.html

#13 Crash on 08.06.09 at 12:26 am

I just keep thinking that the longer this bubble drags on, the worse it will be when it implodes. This should have been nipped in the bud with higher interest rates back at the turn of the century.

#14 dd on 08.06.09 at 12:46 am

“Misinformation – Phil Soper. Jim Flaherty. Ozzie Jurock. Mark Carney. The ShamWow guy.”

Just like reading the Globe and mail today. The entire business section is buying into this boom … of the economy. Where are they getting all this positive new from? When the government starts pulling back on spending, raise taxes, and interest rates increase then what?

#15 rant in Calgary on 08.06.09 at 1:02 am

Yes the U.S. has borrowed so much, it’s like they don’t intend on paying it back. The TSX rising because companies did not lose as much money as they first thought. The un-employment rate is slowing, that is a good thing right? It’s not just youngsters who are buying, its people who should know better too. If interest rates rise, the government will just subsidize the difference anyway. House prices may never fall again, if the government doesn’t want them to. I agree with what you’re saying, in the last year G.M and Chrysler go bankrupt, the TSX drops to half its former self, banks go belly up, un-employment rising, oil 150 down to 35 and back up, but in Canada house prices still rise. huh!

Are you winding this down?

#16 Not Part of the herd on 08.06.09 at 1:23 am

Talking to friends is a scary thing these days. There are at least 10 to 15 people complaining about losing yet another house. Of these at least 5 have made comments to me that they are going to significantly increase their bids on the next place they see in the hopes of ‘winning’. They are sure that their incomes will continue to grow to cover any interest and that 5 years is long time away and a lot changes(we are all 30 and under, most without kids).

If this isn’t a scary thought I don’t know what is. None of these people have what I would consider solid jobs and yet are willing to offer more than they would have been comfortable with at the start of their hunt. It seems as though peer pressure and the idea of looking for places as a group (they are mostly single) has given them a hobby this summer and all of them think I am missing out on the last time I will ever be able to afford a decent place (inflation is coming!!!) not to mention paying off the landlord’s mortgage rather than your own.

Where these people will be financially in five years I don’t know, but if I lowball them in cash and take their ‘newly renovated’ places for much less than they pay today, I will be a happy man.

#17 Bulls eye on 08.06.09 at 1:40 am

I remember initially predictions of a severe economic downturn that would eventually lead us to experience hardship which has for many come to fruitation. The foundation on which this Blog resides on remains constant – things will get a lot worse for those who are not prudent. The guarantee of this crisis now lies in the empty pockets of our governments of whom we have turned to. I have enjoyed the extended time to allow for personal financial recovery before I hit the EI line, I’m due soon – got to go, HR called a meeting.

#18 David on 08.06.09 at 1:41 am

was the best sales month ever and as the lawyers say, res ipsa loquitur. Selling to the Equestrian Class and Masters of the Universe obviates the need for any rigourous argument. Consumer confidence, however defined, is more important than consumer incomes and thus price support levels are unbounded and unconstrained by resources other than the capacity to assume ever increasing debt loads. Demand does not matter either, all that is necessary is a positive attitude. The good realtor has been reading too much Dale Carnegie and Napoleon Hill. Nice party and there are a few dumbass bears trying to stick a needle into the blessed real estate bubble….RUINING THINGS FOR EVERYONE!!!

#19 David on 08.06.09 at 1:43 am

Sorry missed the first part of my cut n paste.
Sounds like the realtor’s argument was a vain attempt at a Fibonacci Progression, but June 2009

#20 Two-thirds on 08.06.09 at 1:48 am

A wonderful piece of spin… err… “news” on the state of commercial real estate:

“Avison Young releases Mid-Year 2009 National Office Market Report: pause in leasing demand and rise in sublease space push up Canada’s national office vacancy rate, but fundamentals remain intact”


Sure, there is a “recovery” under way, except that commercial real estate vacancy in downtown Calgary has increased almost nine-fold with respect to 2007 while in Edmonton it has increased roughly by 50%.

Wouldn’t you expect that if the economy is roaring back to life, vacancy rates would drop? The low in the stock markets was reached in mid-March…

Check out the links for stats on other markets.

#21 Rog on 08.06.09 at 2:47 am

Garth is dead on with this….especally with the last point….ECONOMIC ILLITERACY…….what is happening right now is completely out of touch with reality. It’s almost to the point of reforming the voting system (only giving people the right to vote if they can actually understand what is going on and read between the lines).

I have an economics degree….problem is too many people think they have one as well and understand it better than me (or garth).

The main reason I come to this blog is because Gatrh understands economic fundamentals and gives an insight on all the other “pumping” that we see in all mainstream media.

If you don’t believe me check out this video…

Peter is the US version of Garth (other than the gold thing)

Don’t fret Garth we’ll be the ones laughing at the end of this thing

#22 Mike Hunt on 08.06.09 at 6:39 am


I agree with most of what you say, but I wonder if the PTB will be able to keep rates artificially low for decades like Japan? What if rates are kept near-zero for another 10 years? What then??

Crazy days, indeed…

#23 Bottoms_Up on 08.06.09 at 6:52 am

Paradise by the ironing-board light….love that picture.

What if Canada doesn’t experience the same severity in the real estate downturn as every other country? What does that say about us? I know we’re small in terms of being a global player, but we have resources out the ying-yang and a smart/healthy population. Maybe the place today to invest in is Canada?

#24 Sphinx on 08.06.09 at 7:02 am

“Misinformation – Phil Soper. Jim Flaherty. Ozzie Jurock. Mark Carney. The ShamWow guy.”

Garth, the ShamWow guy has more credibility than the rest….this is unfair.

#25 David Bakody on 08.06.09 at 7:30 am

So the 64K question is when will mortgage rates rise? ….. what is going on now is akin to the property tax game … assessments and mill rates ( lower one up the other in rotation every other year) all coupled to cost of goods and services rising especially to home owners. Jobs have not returned and never will as more disappear East …. far East. Canada was seen as a Natural Resource Country and now most have gone from fishing, mining forestry and now manufacturing ….. people skills are drying up also …. yesterday I was told that Mandarin is now the second language of Canada I mentioned that in Tim’s to some retired educators, after thinking they agreed. Times are a’changing …. BC burns, and the East is a Rain Forest …. while Toronto and Vancouver is blowing more hot air into their bubble …… The BIG BANG just may have taken on a whole new meaning! So is Garth Turner wrong> let’s hope so …. but if he is right who amongst has taken steps to weather the storm? Certainly not the MSM as they have thrown their professional oaths out the window for self preservation.

#26 miketheengineer on 08.06.09 at 7:31 am

Garth et al:

There are many different cultures in GTA. Many of them have the belief that owning property is a good thing. Something you can see, hold, feel. It is not paper. I believe the media know’s this and uses it to their advantage. Hence the mini boom right now.

When I bought my house 11 years ago, the same hype was on, buy now, get in now, etc. I bought into that hype too. Many others are jumping in, cause interest is low, which is good if you have a large down payment and can make the payments. Making the payments is key here. What is right or wrong is not the issue.

Making the payments and that ability is all that matters. If you make the payments, you get the joys of ownership. If you can’t you either sell, or go bust.

This is the risk of ownership right now. And it has never been grater since the 1980’s recession.

#27 Guan-Di on 08.06.09 at 7:34 am

Hey Garth,

Education is always the answer. People need to know that when they (banks, real estate agents, etc) say the house and mortgage it represents is “affordable”, what they really mean is “something you will barely survive provided you still have your job and the magical interest rate pixies keep rates low forever”. Unfortunately very few schools add this to their curriculum, but I hear the school of hard knocks is still enrolling daily:)

#28 miketheengineer on 08.06.09 at 7:52 am

Flu Vaccine Article–additive-means-more-flu-shots

Apparently an “adjuvant” is being added. Anyone know what this is? Is it safe for our kids.

Any MD’s in the land of Garth care to comment.


#29 Jonathan on 08.06.09 at 8:20 am

Hey Garth,

I would add an 8th point. FEAR.

Fear of missing out on the right property forever. Fear of being priced out of the market forever. Fear that property prices will never go down and so waiting is pointless. Fear.

#30 very disappointed on 08.06.09 at 8:22 am

#20 Rog

Kudos on the economics degree… wish I had one.

Kudus on the clip too… I’ve watched it so many times. It gets a good laugh everytime. Schiff was correct (on TV), and seems to have that genuine Ron Paul-esque libertarian strain coursing through viens. Though, I’m not particularly fond of libertarians.

However, it baffles me how someone with an economics degree would post such a clip while glossing over the “gold thing”.

The “gold thing” shows how predictions made by any pundit are fraught with danger. Schiff, with his illustrious family history, and astonishing resolve to make contrarian bets, is reported to have lost more money than most in 2008:

Whatever the real case about Schiff’s investment strategies and performance has been, it is undoubtedly underserved by his dogmatic and pugnacious attitude. This is what I have noticed as similar between Garth (no offence) and Peter Schiff… and it’s unnerving.

The point is, you can lose a lot of money being wrong, and you can lose a lot more money being nearly correct. You’ve got to be bang on.

The problem is timing. And that is so key.

It is often said that predicting economic events with accurate timing is a fool’s game; this is the strand of truth that I believe still runs through the efficient market hypothesis and the dollar cost averaging approach (versus Buffet’s buy and hold, which is better described as buy and hold on…).

Schiff, Turner, and the rest ought to be applauded for sticking their neck out but let’s not forget that they don’t do it for nothing. Except for when they’re wrong, and their strategies result in exactly that (re: the GTA housing market).

#31 dontcallmeshirley on 08.06.09 at 8:33 am

Look, guys, the government is increasing the money supply.

That money inevitably ends up in stocks and real estate. There’s no where else for it to go. So that means more inflation.

The only consequence on increasing money supply, or so we’re told in bed-time stories, is that our currency devalues.

So what?

Lets face it, the government can keep this up for years, maybe decades. Stop being frustrated, figure out ways to play the inflation in your favour.

#32 Art on 08.06.09 at 8:39 am


The argument that you present, although interesting, is irrelevant. The market is what it is, and you can try to explain it as much as you like, but the facts remain stubborn.

It is very hard to predict what is going to happen in real estate and the economy overall next year or the year after, because there are always going to be variables that you are not looking at right now. If you do not believe me, take a serious look at Garth’s predictions last autum…

Well then, roll over and seek a tummy rub. — Garth

#33 Mark Roseman on 08.06.09 at 8:43 am

Hi Garth, not disagreeing at all, but… what’s going to happen in a few years time? Sure we’ll have all these people stuck with mortgages that “out of nowhere!” doubled. And a huge national debt. What then?

So combine a huge number of middle-class citizens who refused to look after themselves, and a bunch of solely short-term self-interested politicos probably still locked in a two-way dogfight for power.

What are the odds the politicians will be doing the right thing for the economy, instead of jumping all over each other to pander to the masses and get ahead in next week’s polls… I mean help out the poor struggling voter?

I don’t see prudent, long-term thinking factoring into political decision making in this country anytime soon. How deep a hole can we dig?

The point of this blog is not to save the country. I tried that already. Instead, this is about saving ourselves. — Garth

#34 artisuseless on 08.06.09 at 8:44 am

@CS it’s a powerful feeling & happy you managed to escape.

Back in 1991 when I was young & impressionable I was lucky to have a prof whose class exercise really opened my eyes

He asked everyone in the class to raise their hands if they owned a house. A couple of hands went up.
He then asked the class to raise hands if their parents owned a house. Nearly every hand went up.
He then said to them to oput their hands back down if their parents had paid off their mortgage. Nearly every hand when back down.

He then said: get one thing straight then. Your parents don’t own their houses. They are owned by the bank.

#35 artisuseless on 08.06.09 at 8:45 am

I mean, nearly every hand stayed up – most had parents who had not paid off their place.

#36 PTDBD on 08.06.09 at 8:53 am

Pay attention.

up, up, up!
As the bell rang at the end of the trading day yesterday Web media reported a down session. Yes, the TSE had finished below the hard-won psychological mark of 11,000 to break a streak of winning days. Minutes later, traders were surprised to see the TSE at 11047. The streak and rally was kept alive by after-the-bell “settling” of more than 50 points. An amazing sleight of hand.

There’s an old saying of “don’t fight the tape”…especially when huge movements occur after the closing trade bell.

#37 Mel Eager on 08.06.09 at 8:57 am


I think it is pretty obvious why there is a stigma to renting.

Low Income individuals have little left to save for down payments after paying their rent, and all their other bills. They usually have poor credit, which makes it hard to get approved for mortgages (well, it used to be that way).

They need to have shelter, so they have to rent.

The majority of renters that are this demographic don’t have the discipline to save the difference between the rent they pay, and the total carrying costs of owning a home. They just spend the difference (if there is one), they don’t invest or save and thus they don’t get ahead.

They remain low net worth individuals, and stigma of renting is reinforced.

Continue to feel good about yourself, that you are the atypical renter, that you are going to invest your windfall from your sale, and keep on growing your net worth now that your costs for shelter are cheaper.


#38 VOODOO on 08.06.09 at 8:57 am

An adjuvant is something that is added to a vaccine to stimulate the immune system, and should be perfectly safe. Heat-killed mycobacteria is an example. There are also artificial adjuvants.

#39 POL-CAN on 08.06.09 at 9:05 am

Nouriel Roubini on Canada:


Despite relatively sound finances that helped it outperform the rest of the G7 in 2008 and early 2009, Canada’s exposure to the U.S. for trade and investment suggests its recovery may lag that of the U.S. (a trend that Q2 2009 data seems to support). However, a more consolidated financial sector with lower leverage, lower default rates and a revival of domestic demand should support recovery in 2010, albeit one characterized by below-potential growth. Canadian households and corporations still have more access to credit than their U.S. counterparts, a factor that helped buffer Canada from a more severe property market correction. Yet the nascent revival in consumption may be weaker than the Bank of Canada expects. The rebound in commodity prices is mixed news. Higher commodity prices and greater demand for metals, if not yet for oil and cheap natural gas, should contribute to an expansion of mining and energy output–but too strong a surge could boost the Canadian dollar, exacerbating Canada’s manufacturing weakness as it boosts labor costs.

#40 lgre on 08.06.09 at 9:06 am

I have been looking for a 1brdm apartment in the mississauga are for a week now, to rent, $1100-1200 with 2 parking spots for a 600sqfooter is the average..nothing great to look at, exterior or interior..after doing a little math, it’s actually cheaper to buy the same unit with nothing down including all, it dosent surprise me that people are jumping in to buy…

#41 Denis on 08.06.09 at 9:07 am

#2 ugh on 08.05.09 at 11:12 pm
“Whatever you do, don’t blame the shamwow guy – he’s passed on to the great real estate in the sky…”
The ShamWow guy is in Club Fed for beating a prostitute:

You’re thinking of Billy Mays (the OxyClean guy):

#42 Devil's Advocate on 08.06.09 at 9:10 am

#21 Mike Hunt on 08.06.09 at 6:39 am WROTE “I wonder if the PTB will be able to keep rates artificially low for decades like Japan? What if rates are kept near-zero for another 10 years? What then??”

Mike: Take some time and learn the difference between short and long term interest rates; monetary policy and the bond market.

Governments have little control over long term interest rates which are a function of the bond markets.

Interest rates will rise… it is inevitable and beyond the control of our government.

So the answer to your question is another question, to which I am confident you must have some idea of the answer. And that question is “What if interest rates rise to 8.0% or more?” What then?

#43 Locodogg on 08.06.09 at 9:10 am

Ugh, Shamwow is still with us, Oxi-clean is now forever in white.

#44 Makeorbreak on 08.06.09 at 9:13 am

How long ’til it happens in Ontario?

#45 Makeorbreak on 08.06.09 at 9:19 am

Intéressant! Pour ceux qui lisent le français:

#46 The 'VULTURE' on 08.06.09 at 9:21 am

“Economic Illiterates Are Good For Business – And Business is Great!”

I always wondered why I was never taught financial literacy at all in all of my years of school. Sure I did the Shakespeare thing, sex education (I was taught a stork brings the baby!!), gym, how to dissect a frog, how to mix vinegar and flour in chemistry class, useless outdated computer programming languages(guaranteeing me to be a short term contract only employee), how to do complex math that most do not use in the real world, how to make a bread box in shop class and on and on.

Then one day it dawned on me (any many of my peers for that matter!) that economic illiterates are good for business and easy prey to make loads of cash off of. Stupid people do stupid things and stupidity in the business world has serious financial consequences and can be very profitable for the financially literate.

I only wish that in all my years of over schooling (including university) I had been taught such useful things as:

How to balance a checkbook.
How negotiate and buy a car.
How to put an offer in on a house to purchase and eventually buy.
How to pick stocks and stock market investing.
What a mutual fund is, RRSP, index fund, commodities trading, currency trading, buying/selling gold and precious metals, bonds, options, ETF’s etc.
How car leasing works.
The ins and outs of financing a purchase and the true cost of renting money.
How to read a balance sheet and the difference between an asset and a liability.
How to start and run a profitable business and lease a building.
Prenuptial and postnuptial agreements.
How to budget, forecast and manage cash flow.
How to use Microsoft Excel and other financial tools to help organize and guide my financial decisions.
How insurance works and the terminology.
How to form a corporation, tax and estate planning.
How to read a legal contract and what terms to look out for.

And last but not least: How to choose a life partner to avoid the financial calamities associated with divorce.

I guess it is bad for business if people are economically literate and economic illiterates are good for business – and business is great!

#47 lgre on 08.06.09 at 9:27 am

#7 hal smith – I’m sure Bush and Obama love the housing mess they got going on, along with the leaders of dozens of other nations who have a housing crisis in their backyards, governments can only do so one point its out of their hands. Believing that the Canadian government has some special power that no other nation has is just naive, many factors play into economics not just government.

#48 My_View on 08.06.09 at 9:32 am

I think a major part of this R/E bubble is due to the stock market crash of Oct 08 & Mar 09. (Just like the 2001 tech bubble) People (the herd, sheeple, call them what you want) trust bricks and mortar not the volatility stock markets. Burned 2 many times. And how did this blog not see the silver bullets being fired (rates). It happened in 2001, and will stick around IMHO. O/40 was gone; we all thought for sure that was the end, nope. Then Toronto doubled the LTT, which will kill the golden goose, nope. Now the reason why the bubble is still kicking, low rates & the herd’s mentality. Sorry not buying it. I do believe it is a bubble, but it will not be a crash, correction maybe. If you predict something will happen year after year, eventually it will come true.

#49 POL-CAN on 08.06.09 at 9:36 am

And from KD on today’s US un-employment:

More BAD News (Unemployment Claims)

I love how the media (CNBC in particular) “spins” the weekly unemployment report.

Let’s dissect it – again.

Continuing claims is the key number. It rose 69,000 from the week previous on a seasonally-adjusted basis.

But look down the table in that report. 139,291 people rolled off the continuing claims numbers into “extended benefits.”

Those folks are still unemployed, yet they understate the continuing claims number by a whopping 140,000.

This is the distortion that creeps into the numbers, and over time it gets quite ugly. What’s worse is that we’re now starting to see people drop off the extended programs, and this will accelerate into August and beyond (although Congress is threatening to extend those benefit times once again.)

The market spiked on the release but again, the issue for the economy is consumption going forward. Government money dumps ultimately must be funded and while this has so far “worked”, it cannot continue forever.

Only the actual number of people who do not have a job matters, not those who are claimed in some headline release.

In order to support an economic recovery people need purchasing power – that is, jobs!

Beware buying the hype; euphoria feels real good while you’re on the right side of it, but the hangover can truly suck when the drugs wear off.

Let’s try to remember that we (Canada) are an export economy totaly dependant on them (USA).

They (USA) are not doing so well right now in spite of all the “hope” and “change” lies that are pumping via the GE propaganda machine. Despite all of the trillions spent it really ends up being a CONfidance thing. That is all they have left.

They need the consumer to belive that things are getting better or it all falls apart (Canada, UK, USA, etc.)

#50 Munch on 08.06.09 at 9:38 am

Nice one again, Garth!

#51 PC on 08.06.09 at 9:43 am

What is the percentage of Canadian home owners
that own their home free and clear?

Anyone know the stats?

#52 CalgaryRocks on 08.06.09 at 9:47 am

I always wondered why I was never taught financial literacy at all in all of my years of school.

Cuz most teachers are financial illiterates. You do get the odd bright one that teaches as a sideline to his real career but otherwise, you’re stuck with a bunch of people who can barely deviate from the approved lesson plans.

#53 DrC on 08.06.09 at 9:49 am

“Apparently an “adjuvant” is being added. Anyone know what this is? Is it safe for our kids.”

Mike, every vaccine is made from the antigen (the bit of the bug you are trying to educate the immune system against) and an adjuvant, something that causes some minor irritation to wake up your immune system and say, Hey! look at this! React to this bug!
So it’s as safe as any other vaccine and thousands-millions* times safer than NOT vaccinating yourself and your family (*depending on bug). We are now seeing widespread epidemics of measles, whooping cough, rubella and other nasties because of too low vaccination rates. And don’t forget that smallpox was completely eradicated because of vaccination.

#54 AM on 08.06.09 at 9:54 am

Economic Fundamentals….

An on-line article posted this morning reads “Flat open expected on North American markets ahead of earnings, U.S. data”

Meanwhile the TSX is dropping like a rock this morning…. how’s that for “fundamental stability”. When we get our next correction, hopefully economic fundamentals will kick in again and stabilize everything. I imagine the cheap credit these days is finding it’s way back into the TSX thus creating the latest surge relative to the housing market. When will this insanity end? As much as we don’t want, I think we need “normal” interest rates to bring fundamentals back.

#55 CalgaryRocks on 08.06.09 at 9:55 am

Interest rates will rise… it is inevitable and beyond the control of our government

Well we’ll just tell the guys at the BOC to get new jobs then since our economy is now controlled by bond traders.

BOC seems to be doing a fine job at keeping interest rates down, perhaps they did not get the e-mail yet?

#56 smw on 08.06.09 at 9:59 am

“We are still seeing significant job losses. We still anticipate we will see more job losses here and in other countries so it’s far too early to declare victory,” Prime Minister Stephen Harper said on Tuesday. – Tuesday August 3rd 2009

Finance Minister Jim Flaherty delivered a similar message earlier, saying: “Businesses hesitate to hire and expand until they’re convinced we have a true recovery.” – Tuesday August 3rd 2009

There is a reason that if your a premier in Canada and not already part of the magical HST, your being offered incentives to do so by the finance department.

Sevre underfunding of government. That’s the first problem we face. Higher taxation. Logical that higher shelter prices will demand higher provincial taxes and therefore higher federal taxes on good and services. Win win for the province and the country, right?

Unfortunately high home prices aren’t incentive for businesses to increase production(unless your in housing related industry), neither is a full page add in the Toronto Star or Globe and Mail stating its over.

The massaging of the interest rates is directed towards pushing up borrowing for large consumer items and home prices and therefore higher taxes. It was the same logic used to shred 2% off the GST and look where that put the country.

In theory it sounds good, everyone is happy, the homeowner has gained wealth by being “smart and savy” and governments collect the higher property taxes and consumer tax off-shoots from internal and external renos & maintanence, furniture and appliances, etc.

Hal Smith, I agree with you on the fact that our economy is bubble based, but highly disagree that we have control over the bubble popping or not. There are too many variables that we don’t control, like the reserve currency’s bank rate mainly.

Canada might be able to raise rates a little slower to help protect our dollar and possibly hold it down to make it more attractive for exports, but will all the debt, who will want to buy it when other countries have had responsible interest rate policies and are paying a higher % for their treasuries? Canada was a stable and solid economic force because of our prudence and conservatism, with the housing bubble I can see that world opinion changing.

Remember the .65 dollar?

#57 Devil's Advocate on 08.06.09 at 10:04 am

Japan’s economy is one of exports. Corporate Japan has enjoyed a world of demand for its goods, demand fueled more recently by internationally low interest rates. Should that international demand wane due to failing economies and higher interest rates Japan will not be able to remain so unique. Corporate Japan, unlike Corporate America or Canada, has been paying down its debt obligations and now is in a state of “debt rejection syndrome”. Corporate Japan, given the prospects of other countries economic failing, might be found to be most capable of weathering a global financial tsunami as they have repaired their balance sheets over the course of their “Lost Decade”; something such North American corporate entities as Chrysler and GM only now embark upon, but maybe too late…

Japan is no different than the rest of the world, they are only ahead of the rest of the world. The trends in Japan’s demographic shifts preceed that of North America. If you study the correlation between demographics and economic activities you will see that future economic trends are quite predictable as demographics are astonishingly predicatable. People earn and spend the most between the ages 35 and 47. After that they start saving and spending less. In North America and many other parts of the world we have a whole lot more savers and fewer spenders entering the demographic cycles of their lives.Unfortunately when the rest of the world embarks upon its own “Lost Decade”, largely the consequence of demographic change, they will not find a world of markets beyond their boarders to fall back upon as did Japan.

#58 PTDBD on 08.06.09 at 10:11 am

Deus Ex Papermachina

In trying to apply historic economic formula and logic to the present, one has to take into account the current 0% interest rates and the world paperprestidigitizer that countries are using to keep the wheels turning. Britain today again increased their quantitative easing (£175billion). Whenever things get wobbly, more money will be plucked from the magic paper machine to oil the gears and buy the private jets.

Did we ever have conditions like this?

There are far too many rational, reasonable thinkers on this Blog (Garth excepted). To make money on stocks, you certainly can’t use logic and fundemental analysis. You pick the most negative analysts and a poor stock performer. Once the stock turns in its dismal earnings, it will nevertheless beat the pessimistic estimate and perform “better than expected”. Voila…the stock shoots up 20%, even though profits and revenues are down over 40%.

#59 Vince on 08.06.09 at 10:18 am


The reason interest rates are being suppressed is not to spur on housing activity.

The main motivation for low interest rates, is that if they were north of 3%, Canada would “suffer” from huge inflows of capital and the Canadian Dollar would skyrocket. This would kill our manufacturing industry and anything we export to the United States. In that case you aren’t exporting jobs, you’re simply a victim of your own lack of price competitiveness.

It is a case where you are “damned if you do, and damned if you don’t.”

Perhaps if real estate agents/brokers/bankers were held accountable for their actions, much in the same manner as engineers and accountants, then maybe we wouldn’t be in the mess. Alas, the only qualification necessary is to be able to pay for ad on a park bench.

I for one have to live with my decision to purchase a small piece of sky two years ago (thankfully the damage is only $220,000). However I’ll be locking in for a 5 year fixed loan (or possibly longer) to ensure I don’t see my mortgage payments tripling when I’m forced to renew when rates invariably go north of 8-9%, probably inside of three years from now.

#60 ClaudiusEmperor on 08.06.09 at 10:21 am

Japan was able to sustain near zero interest rates for a long time because:
1. The world was not in recession at that time and Japan was heavily importing to US, Europe and the whole world with large trade surplus for many years.
2. As of the trade surplus Japan did not need loans from foreign countries and they did not depend heavily on foreign investors.
As a result of the housing bubble they went thru 17 years of stagnation with property prices now that are half of where they were 17-18 years ago.

How are the things different now?
The assets bubbles burst all around the world and resulted in drastic cut in spendings. And huge losses of capital. Almost every government is running deficit which can be financed by:
1. debt
2. money printing
We have the governments around the world competing for loans and a lack of capital to satisfy their needs. With US looking for 5 trillion dollars this and next year. What will attract investors? The near zero interest junk government bonds?
There will be significant increase in the interest rates in the near future to at least 6 percents, maybe even more resulting in at least 8 percents mortgage rates. maybe 10.
We had 18 percents interests on government bonds (Yes, it was in Canada 2 decades ago)

The alternative?
Money printing is very limited instrument. You can print only limited amount of money as after certain point the money you print will be disregarded as junk.
The governments could probably print only quarter of what they need, the rest have to be obtained from investors at a high price.
And if somebody is stupid enough to sink it’s own currency, fortunately we live in an open world so one can always transfer his/her savings into stable currency (there are still such if you look around) or gold. Or buy cheap real estate in another country as it looks like the whole world (except Canada) had the asset bubble burst and home prices plunging.

The impact of money printing is:
1. increased interest rates.
2. evaporated savings

Would somebody explain to me please how the heck will the baby boomers survive the inflation with no savings? Who will pay their bill? The government? With what? And how the money will be distributed? In bags at the corners or direct bank deposits? How will accept that paper junk? How will my income increase, my employer will double my salary every year? Right.

On the other hand I could never explain myself the following facts:
1. Why the condo fees in Canada are the highest in the world? How could a condo fee be close or in some cases combined with the property taxes higher the rent?
How is it possible for appartment buidlings in Paris or Munich to have maintenances that are fractions of the Canada’s condo fees?
Who needs swimming pools and security in every condo? We live in manifacturing and workers cities after all.
Every crappy townhouse on the market is luxury or executive. In most of these homes americans won’t live even if you pay them.

2. Why the hell people live in basements in Canada? I don’t know any other country in the world where people live in basements, there are basement ‘apartements’ for rent and even worse – new townhomes in Toronto where your first floor is actually bellow ground! amazing.
All this in Canada. Here based on the natural resources and the population we all should be living in affordavle 3000 sq. ft homes or 1500 sq ft. condos.
Sorry, forgot about the builders, real estate agents, the banks. Why give you all that when you are willing to mortgage your life for a crappy 700 sq ft. condo with 2 ‘bedrooms’ (2×2 meters) in a ‘trendy’ location.

In US in some places employers are checking credit scores when they hire.
Maybe we should do the same.

People should be taking sanity tests before being allowed to buy a home. I don’t want my kids paying somebody else’s mistakes with their taxes and future.
I frimly believe that there should be some formal body to protect people from their own government, there are basic human rights after all.
Fortunately we could always relocate somewhere else.

#61 Jim on 08.06.09 at 10:24 am

Vancouver Posts Record Home Sales in July

#62 The Great Gazoo on 08.06.09 at 10:28 am

Garth, I think you need to mention COLLUSION AND RE INDUSTRY LACK OF ETHICS.

In places like Toronto real estate firms have such a grip on the Toronto consumers, the have become VERY rich and they dump alot of money into media … see Toronto Star, and mainstream media will NEVER say anything against the re industry and is its main propoganda vehicle.

RE sleazeballs also do not allow FREE MARKET conditions, see that real estate agent that tried to open a discount brokerage firm with Bell in T.O. and then got his mls access taken away, see how they hide actual housing selling prices from consumers so they can maximize their condition. See all the b.s. they say about the economy and how to make money like that jackarse on Toronto AM640 money and power show.

#63 smw on 08.06.09 at 10:34 am

#21 Mike Hunt

A decade of almost zero interest rates did not decelerate the housing bubble in Japan.

It still popped because of lack of A F F O R D I B I L I T Y!

A zero rate indicates an ailing economy, not a strong and vibrant one. If Canada loses a decade, it will because of stagnant job growth and asset(housing) deflation caused by the destruction of wealth, such as the one caused by the first dose of Alan Greenspan type central bank rates.

There isn’t enough air left in the tank to create a bubble that will carry the economy for 7 years like in 2001-2002. Maybe enough to give the working class hope near the next election that everything is hunky-doory.

#64 Evangeline on 08.06.09 at 10:35 am

((Whatever you do, don’t blame the shamwow guy – he’s passed on to the great real estate in the sky…))

I haven’t read downthread yet, but I gotta correct this information.

Billy Mays, pitchman for Zorbeez (competitor of the ShamWow), died in June 2009.

Vince ‘Offer’ Shlomi, the ShamWow guy was arrested in April 2009 on a felony battery charge following a violent confrontation with a prostitute in his South Beach hotel room.

Not the same guy.

#65 Slice on 08.06.09 at 10:39 am

“Buy a house if it turns you on. Just don’t call it a plan.”



#66 Got A Watch on 08.06.09 at 10:43 am

I see several have posted comments along the line of “why can’t the Government just keep interest rates low for years?” The economy does not work that way, is the short answer.

Yes, Japan did this. But their economy was in a much more fundamentally sound position when they started than we have here now, and their recession was not a global depression, exports continued strong, and the Japanese Bond’s were mainly bought by Japanese, not foreigners. Among many other factors, analyzing Japan/deflation etc is a book length subject.

Yet the bottom line was: Japan remained in a recession for those 20 years, slipping into and out of outright deflation several times. The end result of gigantic Government “stimulus” and low interest rates was that the national debt had soared to immense proportions, deflation still remained, the recession was not tamed, and the entire exercise was a complete waste of time in the end.

A media report today, headlined “BoJ Sees Deflation Risk Until 2011” sums it up – all the “stimulus” was just smoke and mirrors, and did nothing in the end to really help promote actual economic growth. That’s what happens when you are export-dependent on others to buy your goods, your fate is out of your hands. Governments just piss away money down black holes, it achieves nothing in the end.

In much the same way, the West is reliant on the kindness of foreigners who buy our debt (Bonds) to finance our deficit lifestyles.The Government does not “control” the Bond market. Interest rates are set by the market, no matter what Central Banksters say in speeches. When those foreigners (China) demand it, the USA will inevitably have to raise interest rates in the medium term, and Canada will have no choice but to go along. If they attempt to hold the line on low interest rates, the value of the US $ will plummet, igniting retail CPI inflation in imported goods – then they have to raise interest rates anyway, to dampen inflationary forces unleashed by their previous actions. The Government cannot prop Bonds, stocks, currency values and every facet of the economy for long, it is simply mathematically impossible. The stress will show somewhere, right now it is the value of the US $.

But in all cases, this will not result in general hyper-inflation, as that requires wages to rise with prices. What do you think your chances of getting a big raise are next year, or the year after (not talking about Government workers, they are they just the last in the bubble before it pops). In the future, even Government workers will be taking pay and benefit cuts and being laid off – it’s inevitable when tax revenues plunge and politicians won’t raise taxes out of fear of voter wrath.

Canada is doing all the wrong things now, under the unable “leadership” we have. Cities, Provinces and the nation all operate under the delusion they will be able to sell Bonds forever, in ever greater numbers each year, to finance absurd deficits. Yet every level of Government in most nations is attempting to do the same. That will not end well, mindless propaganda announcements from talking heads aside.

People who buy at the top are called “market chasers”, and like the yapping dogs who chase passing cars, they get run over sooner or later. They aren’t called the “dumb money” for nothing, and I strongly suspect the vast majority of “consumers” fit into this category.

And those awaiting the “Chinese miracle” to save the global economy, you can exhale now: Chinese power consumption is still plunging hard I just read, and real economic growth in China is probably negative right now, and has been for a while. Ignore the fresh propaganda numbers from the Chinese Government, which have “growth” falling to “7.9%”, still under the 8% number they claim they need to just stand still. China won’t be saving anyone anytime soon, their pile of US $ will melt away as they spend it propping up what should not be propped up.

We are still locked into a global deflationary spiral, getting out of that to an inflationary environment will be very difficult and won’t happen in any hurry.

#67 A Voice of Reason on 08.06.09 at 10:52 am

Long time reader, first time poster.

I am a high school teacher in the GTA. I teach math, including a course where one of the units is basic economic concepts such as interest, amortizations and annuities are covered (grade 11, students are 17 years old).

There used to be a course that was completely focussed on financial literacy. Other segments (teachers, colleges) complained that this focus on financial math was preventing students from learning pure math concepts that are needed for other senior level math courses (a valid criticism). I think from an “insider” perspective I want to point out a few things:

1) Because curriculum decisions are made at the ministry level, if change is going to occur with what is being taught, one’s energy must be aimed at the right channels. If you are unhappy with what your child is learning, the ultimate “person” to approach is the Ministry of Education. Teachers have little say in what material is covered in a course.

2) Even when there was a full level course, it was solely aimed at student who were not going to pursue university, but rather ones who were looking to enrol in community colleges or transition directly to the workforce after high school. This begs the question of whether or not policy makers think that university level students will just figure it out for themselves. (A large percentage will not)

3) Even when I teach the unit that covers financial concepts, students seem uninterested. I do everything to try to make them realize that this is vitally important if they are to make informed financial decisions in the future. I (try) to make it interesting, involving decisions with stuff like car payments, fake monopoly money, ipods etc., all things that they relate to. They love playing with the monopoly money but still cry with tears of boredom when Im explaining the underlying financial concepts.

These tears though, are the same ones shed when I try to explain my friends who are my age (29) when they are making homebuying decision with little true understanding of what being a homeowner entails.

In short, I completely agree that the basic lack of financial literacy in this country is leading us down a very dangerous path. The same people who make irresponsible decisions and are reckless with their money are the ones who will be adding to the societal burden that must be borne when the results of their actions come to fruition.

#68 Julia on 08.06.09 at 10:56 am

Vulture – sounds like you wish you were home schooled …

#69 Don't Believe the Hype on 08.06.09 at 10:57 am

Let’s not kid ourselves. Financial illiteracy is exactly what our government and financial institutions want. Ignorance is bliss for those doing the fleecing.

#70 Evangeline on 08.06.09 at 11:06 am

((Some of the questions directed at JFK during a number of his press conferences ( I know, as I have watched a few) would be considered downright abusive by today’s news networks, who now turn a blind eye to the fact that questions for US Presidents are even staged in advance of “free-speaking” town hall meetings.))

It was no different then than it is now; if the press supports the agenda, they softball; if they don’t, they hardball. In an ideal world, the press would keep itself totally outside agenda politics, but they just can’t restrain themselves from political meddling. Both then and now it is the press’s arrogant opinion that job one is to manipulate public opinion, not to report the facts.

#71 Dean on 08.06.09 at 11:08 am

Why do commenters keep lumping in the TSX with housing arguments? Even at the lofty heights of 11,000 the TSX is 26% down from its peak. That alone would have been considered a crash if it was the bottom.

Certainly, this could be a bear market rally, but you can’t suggest a 26% drop hasn’t priced in at least some of this major recession.

Housing prices have pretty much ignored the events of the last 12 months in most markets. Considering the magnitude of collapse of the “real” economy, and the significant erosion of prices pretty much everywhere else on earth, it’s hard to consider real estate in Canada anything more than a major risk. Alternately, one could argue that a 26% drop in a commodity based stock market may have priced in much of the risk.

#72 Chris no longer in England on 08.06.09 at 11:10 am

Economist musings on Bank of England printing more money.

“I’m just struck by how backward looking a lot of it is, focusing on the economy in recession and that there is a large output gap,” said Ross Walker, an economist at RBS Financial Markets.

“We knew all that, what has changed? They seem to be giving much more weight to the backward-looking data rather than believing the better surveys.”

As someone who currently has £85,000 trapped in England waiting for a decent exchange rate, I’d be interested in any thoughts/predictions on whether there is any chance of 1.90+ to the £1 coming again any time soon? The CAN$ hit 1.93 a couple or so weeks ago (before we had the money in place, so could not move it over at that rate). Since then, it has been a downward trend, with 1.83 yesterday, 1.80 today. Ideally we would like to shift this money by the end of the month. Any comments?

#73 Hellsacomin on 08.06.09 at 11:11 am

Garth! You way way underestimate the severity of the coming depression. Just because we have a little spike in joblessness or a few housing starts don’t make it a recovery. The last depression the worst year was 37 not 29. The sheeple are going to do what the sheeple are going to do, herd mentality, greed, jones syndrome what ever, most people don’t think past their nose.
In the movie “Tombstone” Kurt Russel says in his pent up furry “Hell’s a comin” and I think a lot of readers will agree Hell’s a comin!

#74 Peter on 08.06.09 at 11:19 am

Hunger hits Detroit’s middle class

#75 Denis on 08.06.09 at 11:24 am

Here’s what scared me though: Dow Jones Industrials -40% Declines 1885 to 2008 (

“The reality is that from July 1932 to July 1933 the DJIA increased by 154% even while the Great Depression caused bank closings, DJIA stock earnings were negative and US unemployment was over 25%!”

DJIA is on a 43.2% rally since the low in March. Unemployment in the US is currently at 9.5% … But this is what kill the REAL economy:

The REAL economy … Earnings are plunging and are almost at $0.00 (and very close to negative territory). This current rally is based on companies having “better than expected earnings” and not REAL organic growth in earnings. This is surprisingly similar to 1932 … If this dips into negative, it’ll be a strong indicator.

The only big difference is the unemployment rate, which my grandfather also remarked as a big difference between now and then. “People would shovel s*** to feed their kids and put bread on the table. People are lazy and have it too easy today” to paraphrase the conversation.

I’m keeping an eye on unemployment and if earnings dip below negative, businesses will fire we might be in the same territory as back in 1932.

#76 jess on 08.06.09 at 11:26 am

volare (value) in latin used to mean “to be worthy”… interesting where the emphasis is placed today.

#77 blueskies on 08.06.09 at 11:27 am

fantastic graphic always!
and great rant…. you go garth!

#78 Just my take on it on 08.06.09 at 11:35 am

#45 The ‘VULTURE’

I’m assuming that you are being facetious about many of your points.

However, I do agree that I wish that ‘financial literacy’ or economics was taught in high school.

I taught myself how to balance a checkbook. Took a course on how to purchase a house and all the costs that it entailed. The majority of the other things you list are now easily researchable on the ‘net’.

I took Economics 101 (pre ‘net) at university, had a hard time understanding the prof (due partly to his accent &, undoubtedly, my feelings of being overwhelmed by it all). IIRC I failed the course. But, on my own (after consolidating my loans) I learned how to manage my finances and not charge anything that I couldn’t pay off at the end of the month. After I married, my husband & I also discovered how much bank interest charges can distort actual costs of housing and other big ticket items such as cars, etc. We paid off our mortgage on our current home (bought in ’81 for under $116K) (based on one person’s salary) in 7 years because we paid 25% down, doubled our mo. payments and negotiated a mtg that allowed us to put down 10% annually on the principal mtg. amount (not the remaining mtg. amount). Because we got rid of our mtg. years ago, we’ve been able to ‘deal’ and purchase our ‘used’ cars with cash.

We did, however, put money into mutual funds (after paying off the mtg) and fell into the trap of the market. We stopped investing several years ago and saw our portfolio ever decreasing. We haven’t lost our principal, but can say that we might have been done better if we had put it into GIC’s or other similar investments. We’re only starting to recoop some of our losses lately. BTW, we’ve never counted on these investments to permit us to retire. I’ve been retired for 8 years and my husband will probably retire at 61 with 40% of his salary. This may sound like we’re bragging. Its not. We don’t need 70% of pre-retirement salary on which to live. I don’t need more ‘junk’ to fill up my house. We’re boomers whose parents, and we, did without growing up. I now see so many of the younger generation who were given everything, via their parents’ charge cards, expecting they are entitled to bigger and better, but have done little to prove otherwise.

BTW, Vulture, all marriages have their ups and downs. This is a topic for another forum.


#79 conan on 08.06.09 at 11:41 am

Re: #27

I am not a Dr. but I see this as a tech advancement that allows the vaccination producers to produce more with less.

It is the same technological path that we see in electronics just now it is for vaccines.

I see this as a good thing. We are all lucky that H1N1 turned out to be mild. The system set up to protect us went into play and probably learned a lot.

#80 Devil's Advocate on 08.06.09 at 11:57 am

#61 The Great Gazoo on 08.06.09 at 10:28 am

Gazoo, I resemble that remark…

when viewing wait to get past the commercial

#81 miketheengineer on 08.06.09 at 12:02 pm

Swine Flu Article #2

I found this article after some digging on the net.

Anyone out there able to tell if this article is for real? Do we need to worry about the vaccine?

Squalene is the additive, according to the article.

Will this harm my children?


#82 PTDBD on 08.06.09 at 12:06 pm

“The Government cannot prop Bonds, stocks, currency values and every facet of the economy for long” says the very reasonable, rational Got A Watch who has never bought into the Free Lunch paradigm. Unfortunately, he didn’t get a copy of the new playbook where bonds are being bought with money from thin air by the Fed. Governments are invested in the stocks and the Public holds the bag for any losing proposition.

Hmmmm…..we are now counting how many years now of Greenbubbleblowing? How long was Greenspan in charge? The paperprestidigitizer is as unlimited as greed.
As long as the public can be exploited, politicians payed off, and rules subverted the party will continue. As for China throwing a spanner into the machinery…all individuals have a price and if you can print unlimited digits….

as it always was.

#83 Evangeline on 08.06.09 at 12:06 pm

((fantastic graphic always!))

gotta agree with that …

#84 DW on 08.06.09 at 12:15 pm

I’m seeing quite a few real estate companies in Toronto opening new locations in hard to sell or rent commercial locations. Nice glitzy interiors to attract fresh home buyers. Must be reinvesting money to save on taxes.

The cranes at the condo sites are starting up and the dump drucks are showing signs of activity. Sold signs are popping up everywhere and it looks like business as usual. Green shoots of recovery or a false dawn, but you just feel like we are on the edge of something.

Garth, you really come up with some interesting picture headings! Keep up the good work.

#85 Coho on 08.06.09 at 1:14 pm

This fear of being priced out of the market forever is irrational, but it is real and perpetuated by the ones who stand to gain by feeding this fear. Houses will never be priced out of reach for first time buyers since that is what drives the market. There will always be a way. If rates go up then 75 year mortgages will be introduced and promoted as planning ahead so your grandchildren will have the satisfaction of finally paying off a three generation mortgage.

The issue is if you bought at a better time or worse time. Realtors over the decades have aklways said the best time to buy is now. Obviously every passing day cannot be the best time to buy. The best times to buy are behind us when houses were much more affordable and perhaps in the future, for those who have some cash, after prices correct despite every last ditch effort by gov’t to prevent this from happening.

As someone posted erarlier, RE IS the Canadian economy. I tend to agree, or at least it is a huge part. Inflated home prices keep people going deeper into home equity lines of credit because when a house goes up 30k in a year, it is like “free money”. Heroin, I hear is fun to do until one becomes addicted and thus dependent on it…then it takes over your life and eventually destroys it if you can’t overcome the addiction. Government policy is analagous to pushing heroin on the people by giving them incentives to go deeper into debt to drive this consumer based economy using houses as ATM’s. Financial destruction can often destroy families…

#86 jess on 08.06.09 at 1:33 pm

literacy would not have stopped the debt/leverage boom(aquisitions)

“Argentina benefits from rich natural resources, a highly literate population”
…hum …literate people well we know the history there.

Second observation: fixed exchange collapse with currency runs

When a country has a fixed exchange rate that is too high (evidenced by unsustainable current account deficits) they become subject to runs on the currency. This happens as follows:

· Some speculator (eg George Soros) shorts-sells the currency and buys whatever it is fixed to. They do this by borrowing the target currency or by withdrawing lending in the target currency.

· They then take the borrowed currency and give it to the central bank/currency board who swap the domestic currency for foreign reserves at the fixed exchange rates. In doing so they reduce domestic money supply causing short term interest rates to rise. If they do this enough they induce a recession (ugly). This creates pressure (political and otherwise) for a deviation.

· Alternatively the central banks sterilises the money supply change. However if they continue to do this they will run out of foreign currency reserves – and the fixed exchange rate collapses anyway.

Many a fixed currency has been broken this way. George Soros did it with the pound. Nameless speculators did it across Asia. The Mexican Peso and Argentine Peso both had fixed currency pegs that didn’t hold.

#87 BigAl (Original) on 08.06.09 at 1:39 pm

#59 ClaudiusEmperor
said “In US in some places employers are checking credit scores when they hire.
Maybe we should do the same.”

Why? Does it make sense to deny someone a job based on their credit? Won’t that make their credit even worse?

The whole credit check thing is getting out of hand and is being used for things it shouldn’t be because of lazy management and leadership who use it as a simple way of assessing someone. I went through the bad credit nightmare in my twenties and learned a lesson about my finances. But I never would have been able to pull myself out if people were denying me jobs based on my credit at that time.

And two credit bureaus have gotten information wrong on my file, and I had to take it to court. Both times the judges were furious at their cavalier attitude and gave me a nice judgment.

The Credit Rating thing is out of hand, and its use should be limited to when you’re actually applying for financial credit. When you’re going for a job, how about getting off your lazy a** and performing interviews, reference checks, assessing skills.

#88 jussupow on 08.06.09 at 1:48 pm

#20 So you got a degree in economics? And are sticking it out? Talking about “ECONOMIC ILLITERACY”?.How delusional are you? I mean, look, who got this bubble(s) so wrong for so long? All this idiotic policies? How many (not even asking what percentage cause you know you can really count them down) with that worthless sheet of papyrus actually foresaw what was to come a few years back? Who are the ones that completely destroyed any traces of reputation for their own profession? Yeah the guys with classical Keynesinian degrees in economics. The ones that every year are presented with a Nobel price. What a disgrace!

Why oh why one needs to spend ones best years to acquire such a useless vocation is beyond me. Anyone with half a brain (indoctrinated not) should be able to make a lot more sense than the “economists”. Just like Denninger., just like Orlov and many others.

Schiff is a fraud. People lost their shirt by listening to the charismatic contrarian by all appearances economically literate fellow which appeared to call it like it is. Did you miss that? I am sure you can scavenge utube for clips about Schiff and his “investment” strategies and results.

#41 and this is evidence that they would not? Of course you needed to make a scene. There were prolonged periods of time (years!) on our recent memory where the interest rates behaved highly atypical. Claiming that the interest rates have just one way to go (up) like Garth does is unsubstantiated. This remains (almost) unchallenged on this board (but not on others). Whatever you (and Garth) seem to assert as impossibility – already happened. Long term interest rates in Japan after its asset bubble burst were going downhill big time (along with short term one but we know that all too well). It bottomed out below 1% in 2003, 11 years after their crash. The “sure thing” about our long term interest rates going up is not at all so sure.

Bottom line the Japan scenario is in the realm of possibility. With 200pc GDP debt, gov taking slowly over the entire economy and putting everyone on payroll. What? Shocking? Yeah.

#89 Barb .. a reader in Calgary on 08.06.09 at 1:50 pm

#6 CS “Once….it was a done deal, I felt sick….I was going to be ‘one of them’ – a lowly renter.”


Your profiling of ‘renting’ is sadly true. ‘Modern society’ has an atrocious track record of extreme shallow judgement of others, made worse when mob mentality enhances the terror of being ‘different’ or ‘less’.

As you say, there is “an entire belief system that caters to people believing they are ‘less than’”, but, it is fed by real attackers. The attackers also go after humans who are frail, ill, different or anyone who doesn’t keep up with the Jones’.

The least of one’s worries is being a ‘renter’ though, so I’m glad it was a temporary moment. If you need a reminder down the road, bolster the thought by imagining being shunned or left behind by others for being ill — that’s how sick our so-called ‘caring society’ is — I see time and time again people with unavoidable health issues are shallowly and prematurely judged and shunned by the healthy. Hard to believe but constantly true in a society that is itself dying of indifference and self-indulgence.

#90 Denis on 08.06.09 at 1:54 pm

Interesting Read – Is The Current Market A Return To “Normal”? It’s just after a “Bull Trap” and just before a massive drop followed by Fear, Capitulation and Despair.

#91 VOODOO on 08.06.09 at 2:03 pm

You’ve heard of the Snuggly. You’ve heard of the ShamWow.

Time for the SnugWow (hilarious):

#92 Makeorbreak on 08.06.09 at 2:09 pm

No wonder they aired ‘The Grapes of Wrath’ lately.

#93 Samantha on 08.06.09 at 2:17 pm

#80 miketheengineer:

Link is below. Excerpt quoted:

“A study linking squalene, as experimental vaccine adjuvant, to individuals with the clinical signs of Gulf War syndrome was published in 2002. The published findings strongly suggest that the squalene contaminated vaccines could be responsible for the Gulf War Syndrome symptoms seen in the study group, and recommended that a large scale epidemiological study be performed to verify or correct this.[4] Despite repeated assurances that the vaccine was safe and necessary, a U.S. Federal Judge ruled that there was good cause to believe it was harmful, and he ordered the Pentagon to stop administering it in October 2004.[5]”

#94 MrC on 08.06.09 at 2:19 pm

There must be a positive spin that the RE people can put on this article. Maybe its only the renters that are falling behind.

#95 Industrial Guy on 08.06.09 at 2:24 pm

CPI, Consumer price index. A year to year comparison of prices for the following:
Groceries, Gasoline,Fuel oil & Natural gas, Mortgage interest, Inter-city transportation and
Tobacco products.

According to Stats Canada consumer prices fell 0.3% in June 2009 compared with June 2008. This following a 0.1% increase in May (so Garth was right, deflation is around the corner). The decrease was due primarily to a 12-month decline of 19.0% in prices for energy products, particularly gasoline.

Excluding energy, the CPI actually increased 2.1% in June. So, do we have inflation or deflation? It’s really hard to tell. A 60 billion dollar deficit in a lot of money. The hand of Government has been so heavy in the marketplace nothing makes sense anymore. Let’s get down to basics. The two certainties of life, death and taxes have not changed. With all this out of control government spending, we may experience death from taxes in the future.

Lets look at recent changes to the market place. The price of oil is rising whether by demand or speculation. There are a lot of investors operating on the assumption that today’s oil price will be very cheap compared to six months down the road. So where is all this oil being stored if it is speculation? Try leasing a supertanker……

“(Reuters) Frontline acting CEO Martin Jensen (the largest oil tanker shipping company ) told Reuters there were currently around 40 very large crude carriers storing oil offshore. Each supertanker can store around 2 million barrels. Combined, the supertankers could be storing 80 million barrels, or nearly one day’s worth of global oil supplies.”

Car prices are set to zoom due to the frenzy of buying south of the border driven mostly by the “Cash for Clunkers” national lottery. The only lottery where everyone wins …. well, except your kids who will be paying for your new Toyota or Honda car in their taxes 20 years from now. So far, 53% of Cash for Clunkers sales has gone to purchase imports. I guess Honda and Toyota finally got their bail out (like they needed one). Less dealerships mean less competition. Expect the auto industry to take advantage of this fact.

In Canada we have our own “Cash for Clunkers” program in the RE sector. Ours is not based on direct payouts, but low interest rates. You get to trade in your nice sane rental accommodations for a shiny new overpriced house and a lifetime of slavery to a 40 year zero down mortgage. Good deal, eh?

This year, Canada has experienced two major out breaks ….. Swine Flu and Unemployment. Lets hope we find a cure soon for both of these afflictions.

#96 POL-CAN on 08.06.09 at 2:37 pm

#80 miketheengineer

Here is a link to a bunch of H1N1 articles.

Warning… Tin-Foil hat required… Or not….

#97 MenWithHats on 08.06.09 at 2:44 pm

Barb :

Canadians planning to take advantage of the Home Renovation Tax Credit should know that it has not been passed into law, though one expert says it is almost a certainty that they will be able to file for it on their taxes.

The $3 billion program was introduced in January as an incentive that the government hoped would help stimulate the Canadian economy during the early days of the current recession.

Wanna make a bet the iddiots tie this bill to a bunch of other stupid bills ?

#98 Samantha on 08.06.09 at 2:47 pm

#66 A Voice of Reason

Thank you for touching on the challenges faced by teachers.

Education plays a very important role in our economic wellness. How do we build better or more innovative industry without well educated people? How do we teach personal financial literacy to students who can’t do basic math?

My brother has taught for close to 40 years. In that time, he has battled various “powers that be” to improve the lot of his students.

When the administration gives him yet another new course to teach, he has to spend countless hours fixing and refining the course, on his own time. This is in addition to the countless hours he spends tutoring his students, free of charge. Like many other teachers, he cares and wants them to succeed.

He teaches adult education. During summers off, he has volunteered his time to teach for organizations such as X-Kalay. He has taught in a provincial jail.

This past year, he told me how he has noticed progressively “dumbed down” students arriving in his classroom. It is not their fault, he says, it is the ‘dumbing down” of our educational system over time. For example, spelling and grammar are no longer taught in many schools. And then, many of us wonder why people can’t spell?

He has had almost 40 years to witness this crisis. And yes, it is a crisis when the educational system, through no fault of the teachers who must teach this crap, is turning out students who lack a solid and basic education that will carry them forward into post-secondary learning.

Last year, he had to upgrade the students math skills – they couldn’t do fractions, before he could actually teach the math course he was supposed to teach them. And, of course, work out the “bugs” of another poorly written course.

The next school year will be his last in the system. His retirement plan is to start a not for profit foundation and tutor.

#99 PTDBD on 08.06.09 at 2:53 pm

pocket pool….
who is buying the U.S. mortgage bonds to keep interest down? – The Fed!
$721 Billion since January.


#100 Wondering on 08.06.09 at 2:56 pm

#52 DrC on 08.06.09 at 9:49 am
“Apparently an “adjuvant” is being added. Anyone know what this is? Is it safe for our kids.”

Mike, every vaccine is made from the antigen (the bit of the bug you are trying to educate the immune system against) and an adjuvant, something that causes some minor irritation to wake up your immune system and say, Hey! look at this! React to this bug!

DrC – Would this also apply to someone with an impaired immune system?

#101 jess on 08.06.09 at 3:14 pm

87 jussupow
there is no nobel prize for economics …is a prize established and funded by the Bank of Sweden,

#102 Devil's Advocate on 08.06.09 at 3:15 pm

#87 jussupow on 08.06.09 at 1:48 pm

Believe what you want to believe my friend and I will what I will. i.e. The Canadian mouse economy is linked at the hip to that of the elephant to the south, neither of which are so good at producing goods to export as Japan. We are addicted consumers who spend beyond our means largely on finished goods produced by other nations.

As goes a person, a family, a city, a province so too goes a country. International finance is not fundamentally so much more complicated than one persons.

I think the writing is on the wall. But you keep up the faith man… it’s good for our economy.

#103 The 'VULTURE' on 08.06.09 at 3:21 pm

Those Whom Marry For Money, Pay an Awful Price

Not the teachers fault for not teaching financial literacy. They are not instructed to do so. Bad for business.

Not the bankers either…why should they…5 basis point for your $100,000.00 1 yr GIC, 5.79% for their mortgage…NICE! …Cha Ch’ing! Bad for the banker’s business.

Not the governments fault for not teaching financial literacy….smart people can be really dangerous. Unemployed PhD’s running around….Nazi Germany anyone? Bad for the government’s business.

Not a business persons responsibility to teach financial literacy. Bad for business and besides, scares the suckers born every day away.

Not your stock brokers responsibility to teach financial literacy. Bad for his spread.

Not your parent’s responsibility to teach financial literacy either. You might get smart to what is going on and demand a larger inheritance and a peek – a – boo at their current will. May even sue them right now!

It is not the VULTURE’S responsibility to teach you financial literacy. The vulture’s only job is to steal that McMansion from you on a Power of Sale/Foreclosure, divorce and resale to a greater fool for additional profit. Sorry…someone has to do it. My Claws are ready to dig in suckers…..

Your spouse is not responsible for teaching financial literacy either. Bad business for divorce lawyers and bankers and those whom marry for money, pay an awful price.

#104 smw aka the real estate samurai on 08.06.09 at 3:36 pm

The crash took place in stages, like a slow-motion nightmare. Initially, there was widespread belief that Japan was merely going through a mild recession, prelude to a continued boom. Property values continued rising for months after the Nikkei started its descent, but by 1992 both were in steep decline. Interest-rate cuts failed to reverse a growing banking crisis, as dud loans piled up and banks’ stock holdings headed down.

The easily obtainable credit that had helped create and engorge the real estate bubble continued to be a problem for several years to come, and as late as 1997, banks were still making loans that had a low probability of being repaid. Correcting the credit problem became even more difficult as the government began to subsidize failing banks and businesses, creating many so-called “zombie businesses”. Eventually a carry trade developed in which money was borrowed from Japan, invested for returns elsewhere and then the Japanese were paid back, with a nice profit for the trader.

Good call on Japan, they had zero interest rates for over a decade. The stock market took 20 years to start climbing again and real estate 17…

And we fixed ours with a 15% housing improvement credit(that BTW still hasn’t passed parliament), 0.25% core bank rate and a 25% stock market drop in one year?

Anyone clinging to the hope for a decade of Japan like economic activity and low rates sustaining inflated real estate are drinking to much of their own pee.

Good luck.

#105 smw aka the real estate samurai on 08.06.09 at 3:39 pm

#96 MenWithHats

Too funny, I was thinking the same thing.

You tie your most right winged ideological bill to the housing reno tax credit and if the other parties don’t pass it, you’ve just gained votes.

#106 Greg W., Oakville on 08.06.09 at 4:08 pm

Hi Garth, I just saw the local newspaper. I hope Iggy lets you run agian for MP somewere, if you choose too.

As soon as my lobotomy is paid for. — Garth

#107 TJ on 08.06.09 at 4:26 pm

Things are dire in the housing market of our largest trading partner.

Whether we like it or not, what happens in the Excited States affects us deeply.

Half of All US Mortgage Holders Expected to Be Underwater.

If you’re not already underwater on your mortgage, there’s a decent chance you will be. According to a new report from Deutsche Bank, up to 25 million American homeowners could eventually owe more than their house is worth. That would account for 48% of all mortgage holders.

The problem is already a massive one. When the value of a house is less than its mortgage, a homeowner can’t sell and pay off his debt. If a house becomes unaffordable—because of job loss, say, or an adjusting mortgage interest rate—a homeowner is trapped. Underwater borrowers are more likely to default on their mortgage than those with positive equity.

#108 Devil's Advocate on 08.06.09 at 4:45 pm

#102 The ‘VULTURE’ on 08.06.09 at 3:21 pm

You forgot to mention us REALHOs. Not our responsibility to teach financial literacy either. But then you might lump us in with the Business People or Vultures.

#109 Greg W, Oakville on 08.06.09 at 4:57 pm

Hi #95 POL-CAN, Thanks for that link.

If you don’t know about the latest good science based evidence as to why you should NOT drink fluoridated water!

Here are two links with good up-to-date information, included;
Free info videos, read free 2006 NRC report, you can see the growing list of professional calling for the end of water fluoridation, and add your own, links to more information can be found at;

I was at the UofToronto Aug 2008, ‘World Fluoride Conference; it’s effects on the brain and soft tissues of the body’. The site above has links too much that was presented at the conference as well as a list of professional including Nobel Prize winners calling for the ending of artificial water fluoridation.

Drinking it doesn’t even help your teeth, it only help a little by topical application from sources like tooth past.
Would you drink sunscreen to protect your skin?
It says on the tooth past DO NOT SWALLOW for many good reasons! ‘It’s a myth that water fluoridation is Benin’ and drinking it is good for your teeth based on bad 1950’s information.

Protect your family’s health. Brita filters do not remove fluoride. Boiling water make it more concentrated. They don’t even control the amount you’re getting. Who much water do you drink each day?
What are your other sources of fluoride you receive from food, drinks, and drugs?
Reverse-osmoses with and ion exchange filter will remove fluoride. If you give infants fluoride you will permanently lower their IQ 5-7 points!

The body does not require fluoride. It is not a nutrient.
Tell your local governments to stop adding the industrial toxic waste from the phosphate scrubber towers to your drinking water supply. It even has arsenic, lead, and cadmium that are being added to your water. They still haven’t done the study to see how much fluoride you absorb through your skin in a bath, shower, pool, or hot tub!

Do you recall being told the smoking and second hand smoke was safe even as the good science based evidence was pilling up that it causes diseases in some humans.

I’ve seen the science based evidence and I am now convinced that water fluoridation need to stop now! I now do my best to reduce my consumption of fluoride from all sources including Haltons-Oakville/Burlington/Milton/Halton Hills water supply.
I hope they stop adding it very soon! People’s short and long-term health will improve, I’m sure!

Get yourself informed to protect your family’s health, and tell your local government to stop now! If they don’t you might need to run for office to get the job done for your fellow human beings in your area!

#110 blobby on 08.06.09 at 5:03 pm

“Not our responsibility to teach financial literacy either.”

Yeah.. but it’s the responsibility of the media to report news fair and unbiasedly… And not to send lambs out to slaughter in order to help their own pocket book.

Im ALWAYS shocked when i see the vancouver sun.

#111 Greg W, Oakville on 08.06.09 at 5:08 pm

Hi Garth, FYI everyone,

Why all the Secrecy about the SPP?
The next North American Leaders’ Summit – where Canada, the United States and Mexico meet to discuss progress on the Security and Prosperity Partnership (SPP) – is only a couple weeks away and Canadians have been told nothing about Canada’s priorities.

From August 9-10 in Guadalajara, Mexico, Prime Minister Harper will …

Some more info can be found at;

#112 MenWithHats on 08.06.09 at 5:23 pm

“I’ve just had a frontal lobotomy,” said Gareth absentmidedly.

#113 char on 08.06.09 at 5:26 pm

The adjuvant of concern being added to the H1N1 vaccine is sqalene. A harmless substance when ingested orally, injected directly into the bloodstream it causes autoimmune disorders . It is widely believed to be the factor that caused gulf war syndrome, as it was added as an adjuvant to the anthrax vaccine. See

Don’t do it !

Toronto didn’t bubble up innitially as much as California etc., so is now catching up. People will still get a house at peak, with a swine flu vaccine chaser. The social herding instinct–you gotta marvel !

#114 Samantha on 08.06.09 at 5:28 pm

Here is a link to provide some relief from economic woes:

On page 1, scroll down to the “Hello Kitty” house and behold a home reno gone horribly wrong.

Continuing down the same page, we find innovation to cope with peak oil – a “Hamster Wheel Powered Music Box”.

And below it, the “Security Cam Birdhouse” for stealthy surveillance if social chaos ensues a complete system collapse.

Lots of interesting and fun concepts. Hope you enjoy.

#115 Barb .. a reader in Calgary on 08.06.09 at 5:51 pm

#96 Men With Hats “HRTC….Wanna make a bet the idiots tie this bill to a bunch of other stupid bills?”

Men, that’s a good bet. I’d only gone as far as figuring it would be part of his election scare platform, “Vote for me or you’ll get Jack for credit!”

#116 $fromA$ia "Garths Nugget Boy" on 08.06.09 at 6:00 pm

Manulife first to announce dividend cut/trap… next Canadian Financials/banks. Now its gold stocks turn to inflate.

#117 North Van Dude on 08.06.09 at 6:03 pm

#96 that would be like the Simpsons episode where the bill includes a rider for expanding the rights of pornographers, leading Kent Brockman to say “I’ve said it before, I’ll say it again, democracy simply doesn’t work”.

#118 David Bakody on 08.06.09 at 6:09 pm

Still no movement on area’s where there once houses popping up like those yellow lawn flowers ….. still sign after sign of lots for sale …. is is now August and soon the kids will be back at school and RE in all areas slows down.

#119 TJ on 08.06.09 at 6:18 pm

This should make you cringe. China is the ‘engine’ that everyone says is going to ‘lift all boats’.
You thought Vancouver, Kelowna, Toronto and San Francisco are the only places where Real Investors are leveraged to the ears?

The cost of property in China is about the same as in the United States. But wait, the average income in China is only 1/7th what it is in the USA. How can the Chinese afford American prices?

Well, they can’t. They’re all betting on the ‘greater fool theory’ – that they can pay any price, because some greater fool will come along and pay more.

Trouble with that is that the Greatest Fool of All finally shows up…and then the whole structure collapses.

*The Daily Reckoning.

#120 Barb .. a reader in Calgary on 08.06.09 at 6:18 pm

#104 smw aka the real estate samurai: “You tie your most right winged ideological bill to the housing reno tax credit”


As Harper slowly forces his right wing extremist ideology on us, it will now remind me of this:

“Pulling a Hamas!”

….gradually imposing his Reform Party extremist ideology:
“In the future, it’s inevitable it will be implemented.”

#121 MenWithHats on 08.06.09 at 6:20 pm

Barb :
What scares me is the obvious transparency .
According to news reports thousands of Canadians have fallen for this con .
I despair .
I always considred my country to be a notch brighter than the average .
Now I am not so sure .

#122 Samantha on 08.06.09 at 6:35 pm

“Fannie Mae seeks $10.7 billion in new US aid after posting $15.2 billion second-quarter loss”

“Fannie Mae and Freddie Mac play a vital role in the mortgage market by purchasing loans from banks and selling them to investors. Together, Fannie and Freddie own or guarantee almost 31 million home loans worth about $5.4 trillion. That’s about half of all U.S home mortgages.”

#123 David on 08.06.09 at 6:40 pm

PC was asking about ownership ratios in Canada. Naturally that varies from province to province. Overall about 66% of Canadians are home owners. The free and clear titled home owners are in the 25% range. The Canadian numbers are similar to those of the USA if that is any consolation, except for the negative equity issue which has not hit home here as yet.
When the average down payment is 6% equity, those ratios are unlikely to change anytime soon.
Calling out the housing bubblemeisters is unlikely to win friends and influence people. Financial literacy provides no shield against irrational exuberance and blind faith in the housing market. The suspension of normal rational skepticism is a precondition for things like housing bubbles and the financially literate really do not drive markets which should be all too apparent by now.
House prices in the normative sense should track family incomes and the rate of inflation. During the housing bubble years there was full employment, low inflation and minimal median family income growth, the only thing that grew was the willingness to take on increasing sums of debt to actually “own” a home.
That the realtors have it all wrong should be of no surprise, it pays for them to be wrong and skeptics trying to bell the cat are a bunch of shit heeled party crashers.

#124 PC on 08.06.09 at 6:40 pm

I love the smell of a bubble in the morning…

Home ownership at record levels; Cdn mortgage debt headed to $1-trillion mark

TORONTO – Never before have so many Canadians owned homes. And never before have they owed so much for the privilege.

Interest rates at or near historical lows combined with low unemployment and recent changes that allow people to buy houses with less money down and pay off mortgages over longer periods resulted in 68.4 per cent of Canadians in the housing market in 2006.

That’s up from 65.8 per cent in 2001 and 60 per cent in 1971, according to the latest Statistics Canada data.

The increase comes despite the fact that the cost of housing in many cities across the country has gone through the roof, outstripping inflation by far, while median incomes have essentially flatlined.

“Low mortgage rates have helped offset much, but not all, of the impact of rising house prices in recent years on mortgage debt-service costs,” said Bertrand Recher, a senior economist with Canada Housing and Mortgage Corp.

The overall result has been a small increase in the percentage of Canadian homeowners who spend more than 30 per cent of their gross income on shelter costs, according to Statistics Canada census data.

But latest CMHC figures show a sharper spike in mortgage-carrying costs in terms of after-tax income.

In 2007, average household spending on monthly mortgage payments had reached 37 per cent of after-tax income, up from 32 per cent in 2006.

“That’s significant – mortgage carrying costs are increasing,” said Recher.

“This burden is heavier on the shoulders of first-time buyers because they don’t have the equity.”

Most analysts, however, see little comparison between the Canadian housing market and its American counterpart, where hundreds of thousands of homeowners suddenly found themselves in way over their heads, creating a financial meltdown.

Canadian financial institutions jealously guard the number of mortgage defaults they endure. But among the country’s big banks, only about 0.27 per cent of homeowners were three months or more in arrears on their payments.

“Anecdotally, we are not seeing any rise in arrears or defaults across the country,” said Jim Murphy, president of the Canadian Association of Accredited Mortgage Professionals, an organization that speaks for mortgage lenders.

“Canadian underwriting standards by lenders and mortgage insurers are much more thorough than they are in the United States. Canadian lenders are much more conservative.”

One key factor in the rise of home ownership is the relatively new option of mortgages amortized over 40 years.

Paying off loans for homes over a longer period means much higher total interest costs, but lower ongoing monthly payments. The effect is increased affordability. Growth in such long-term mortgages has been nothing short of dramatic, figures show.

Between the fall of 2006 and fall 2007, 37 per cent of all mortgages carried amortizations longer than 25 years, up from nine per cent in the preceding period.

“Clearly they’re very popular,” said Murphy, adding that not only first-time buyers are opting for the new choice.

One real estate analyst who disagrees with the rosy assessment of the Canadian market is Liberal MP Garth Turner, who argues too many people, especially younger buyers, are taking on too much debt to buy into the housing game.

Low interest rates coupled with 40-year amortizations and negligible downpayments might make it easier to buy higher priced homes, but it’s also leaving buyers vulnerable, Turner says.

“The inevitable conclusion is that the current Canadian real estate market is floating on a sea of unrepayable, and perhaps unserviceable, debt,” Turner maintains in his book, “Greater Fool.”

Collectively, it is a lot of debt.

In total, Canadians owe an amount fast approaching $850 billion on their homes, more than double what it was a decade ago, with percentage growth in double digits in recent years.

If trends continue as expected, the value of all outstanding mortgages will surpass the $1-trillion mark sometime toward the end of next year.

The federal government is keeping a close eye on the developments, according to Finance Minister Jim Flaherty.

“We have been monitoring the mortgage market, as we do, and we’ve seen a trend toward longer amortizations and smaller down payments, and that is a matter of some concern,” Flaherty said recently.

“We’re continuing to watch that.”

Mortgage insurers, who take care of defaults, have also tightened their criteria.

Still, any concerns over the situation appear, at least for the moment, to be outweighed by more positive views.

Overall economic conditions remain healthy in Canada, with unemployment close to historical lows, Recher noted.

In addition, the forecast is for the rapid growth in house prices to moderate substantially while interest rates are expected to remain relatively stable, at least over the next year or two.

Adrienne Warren, a senior economist and manager with Scotiabank, said easier access to mortgages certainly make the economy more vulnerable, but it would take a sharp spike in interest rates – she estimated five percentage points – coupled with a general economic downturn to see people in danger of losing their homes.

“Given that the lending criteria has been relatively benign in terms of growth and inflation and interest rates, I’m not really overly concerned with this one segment of the market.”

One group blissfully unconcerned about rising carrying costs are those aging baby boomers who have paid off their mortgages, a group that has grown in recent years.

More than 42 per cent of all homeowners hold no mortgage at all, according to Statistics Canada.

Many longtime owners have taken their equity and downsized to condos, joining the flood of first-time buyers who have gained their first toe-hold in the world of home ownership by entering the relatively affordable condo market.

About 10 per cent of households are now in condos, a tripling in 25 years.

“There’s been quite an increase . . . in the percentage of owner-households that are in condos,” said Willa Rea, senior analyst with Statistics Canada.

“There’s a good deal of young people buying in and becoming homeowners. We’ve seen quite an increase there.”

While shelter costs for homeowners have risen, they remain higher than those for renters. Roughly 40 per cent of renters spend 30 per cent or more of their income on shelter.

“That hasn’t changed,” said Rea. “It’s pretty stable there.”

The analysis released Wednesday is based on census data collected more than two years ago. The next census will be taken in 2011.

#125 Bonnie N BC on 08.06.09 at 6:56 pm

Okay this is so off topic but maybe relevant…

Harry Patch the last surviving soldier from WW1 in the UK was put to rest today. His message – no war is worth those lost souls.

64 years today, the first atomic bomb was dropped on Hiroshima. A clear and present danger still exists today.

Donald Marshall Jr. died today from complications of a lung transplant. He was wrongfully convicted of murder based on race in Canada and changed the landscape for justice for First Nations.

John Hughes a Hollywood director and writer died of a heart attack today. My favourite movie: “Uncle Buck” and second place “Planes, Trains and Automobiles”.

A Koala named Sam was euthanized today – she survived the horrible bush fire events of February in Australia to die of a virus that infects 50% of the koala population.

All these sad, sad events have a common thread. We truly lose our humanity when all we can talk about is the price of houses.

#126 Herb on 08.06.09 at 7:08 pm

“As soon as my lobotomy is paid for.”

Er, Garth, we have too many lobotomies in politics already. Don’t you dare get one just to qualify for a party ticket!

#127 char on 08.06.09 at 7:17 pm


Too much fluoride.

#128 hal smith on 08.06.09 at 7:20 pm

#81 and #98 PTDBD and # 84 COHO
I’m not alone! Somebody else gets it! Whew…..

#129 Dan in Victoria on 08.06.09 at 7:20 pm

Financial illiteracy…..Ahhh… school, yes I remember it well.The indestructable cookies from the girls home economics class,the science class stink bombs,The unfortunate unexplained gas explosions.I remember just three teachers who were able to make sense to me, the others were just day care employees.Not one bit of common sense teaching.Open the book and drone on,I remember one shop class concerning electricity we had this shop teacher who I thought was a jerk,if you’re having trouble read the book.Blah, Blah, Blah,so I took a piece of wire pulled the insulation off cut the wire in half and pushed the insulation back over the wire leaving a small gap.Put up my hand and said it doesn’t work.He looked at it and looked at it.”Maybe the book might help sir” was all I said.I finally pushed the wires together,when he looked away for a second,and when he looked back it was working.Never did tell him what I did.But I learned early to think for myself.These people who now have all this wonderful information avaliable to them re mortgages,loan calculators,etc. and still can’t get it………no amount of schooling is going to help.

#130 The 'VULTURE' on 08.06.09 at 7:37 pm

What Do You Want to Be When You Grow Up?

What is a sub-agent?

What is a buyer/seller agreement?

What is a buyer representation agreement?

What is a agreement of purchase and sale?

What is the agency relationship?

What is seller representation?

What is buyer representation?

What is dual representation?

What is “customer service”?

What is a confirmation of co-operation an representation agreement?

What is a customer?

What is a client?

What is a realtor?

What is disclosure?

What is discovery of facts?

What is disclosure of benefits to clients?

What is disclosure of benefits to customers.

What is an easement? Encroachment? Encumbrance? Squatters right? Right of way? Power of sale. Foreclosure.

What is Force Majeure? Due-on-sale provision?

What is a title, deed, writ, escrow account?

What is a great deal. A 2 storey house for $789,000.00 on 30 ft property, no backyard or front yard, a honking hydro box on the front lawn, neighbors 2 feet apart, no room for your friend to park his car in front of your place, a kitchen window that looks out onto the neighbors brick wall 2 feet away, gravel between the houses because grass cannot grow there and you can’t get a lawn mower into the back yard without going through you open concept living room knocking off Pop’s toupe in the process? Just curious George on this one?? Great deal…or what?

What is an assumable mortgage? Variable, fixed rate mortgage? Bridge loan, buy down, cap, cash-out refinance, cloud on title, convertible ARM, deed in lieu of foreclosure….

What are you to do if you are a first time home buyer and you can’t answer every one of these questions in full? You may get schooled! You will learn to hate your time with Shakespeare in high school….time better spent with financial literacy…useable life skills…sorry Shakespeare…your cool too…but money puts food on my table…nothing personal….

Don’t worry about that stuff…were friends, okay….Trust me dude….They taught you this crap in school right, or am I right? Trust me…..everything is cool pal….By the way, what do you want to be when you grow up?

#131 POL-CAN on 08.06.09 at 7:38 pm

It seems that the interest spike due to the bond market ka-boom is closer then we all think…

From KD:

BLATANT Monetization Uncovered

Remember the Dallas Fed’s Fisher saying that “The Fed will not become the handmaiden of Treasury”?

He was lying (The Fed already has), and now there is proof.

Mad props to both Zerohedge and Chris Martenson for noticing this; I missed the facts buried in the CUSIP list.

The upshot: The Fed bought nearly half of LAST WEEK’S 7 year Treasury Issuance TODAY.

#132 Industrial Guy on 08.06.09 at 8:09 pm

Greg W, Oakville, why is it always the fringe tin hat crowd who discover this stuff?

Oh, I know. It’s always a government conspiracy ….. Bud, I worked a long time for the Government both at the Provincial and Federal level and honestly ….they’re not smart enough to pull off such a fraud if it were true. We’re taking about the Government that created CSIS after all.

Don’t you think if there were a shred of evidence supporting this news about fluoride both the Canadian Dental association and Canadian Medical associations would ask for its removal from water? What would they have to gain by supporting such a “Toxic” substance if what you’re saying is true? Does every dentist get a kickback per kilo of fluoride added to the water supply?

Here’s the problem. Junk science is controversial and the mainstream press loves a controversy. Recently, we had a case where well known comedian, Jim Carrey and his wife claimed their child had developed Autism due to a reaction with mercury in a vaccine. Who knew he was a brilliant neuro scientist? He’s not. David Kirby, author of Evidence of Harm, Mercury in Vaccines and the Autism Epidemic has openly admitted he basically got it all wrong.

“I am going to declare a New Year’s truce, and announce that my critics are 100 percent correct.
This year, I hope we can ALL agree on one thing: There is no autism epidemic.”

This has not stopped a very LOUD anti-vaccine movement in the USA and Canada!

Here’s the truth the Government wants you to know about …….. Childhood diseases which were almost eradicated in the 60’s have made a comeback in some parts of the USA and Canada because the brainwashed parents of these kids eat up this pseudo science and refuse to vaccinate their kids.

Acquiring your medical information from books with titles like:
The truth the Doctors don’t want you to know about or The truth the Governments doesn’t want you to know is a scary prospect. Why is it always “A European study reported that…..”? I guess all North American universities are second rate or worse! They’re all in on the conspiracies.

“So called experts say” ….. Well bud, like it or not, they are experts. It takes a long time and a lot of effort to get a PhD. in a discipline from a top name university.

Greg W, Oakville, I’m sorry if you need attention. Please feel free to scream from a soapbox that Martians control the Government and Fluoride is a mind control drug designed to lower I Q’s and make us docile sheeple …… Topic for a new book Garth?

#133 Concessionman on 08.06.09 at 8:27 pm

What happen south happen here eventually….

“A record 1.5 million U.S. properties received a default or auction notice or were seized in the first half of this year, 15 percent more than a year earlier, as employers cut jobs and temporary programs to assist homeowners came to an end, RealtyTrac Inc. said July 16. ”

Oh the buyers up here are going to be kicking themselves in a year or two…

#134 Nostradamus Le Mad Vlad on 08.06.09 at 8:50 pm

#113 Davinci on 08.06.09 at 10:08 am — “The gold agreement in a nutshell is that central banks must sell a minimum of 500 tons of gold (total) anually for ten years. September 31 2009 that agreement is done!”

Which begs a question: What happens after Sept. 30? The date puts it nicely in conjunction with the mid-October Surprise spoken of by Lyndon Larouche and Bill Bonner, so is this a part of it?

The IMF sold 470 tons of gold recently, and with central banks doing the same then who is buying, and at what price? A recent link posted said the IMF was able to buy gold at US$42.20 / oz., but if the country(ies) don’t want to sell back then what happens?

On a slightly different note —

“The Federal Reserve is set to halt its purchases of up to $300 billion in U.S. Treasuries in [ mid- September ] as scheduled, and will probably announce the decision next week, two former central bank governors said.”

— and — / – [ Money Bomb slated for August 20th ]

Curiously stranger, said Andy Pandy to Teddy Ruxpin. In any event, someone stands to make a tidy profit of someone else’s back. We certainly do live in very interesting (and deceptive) times!
#15 rant in Calgary on 08.06.09 at 1:02 am — “. . . the government will just subsidize the difference anyway. . . .”

With taxpayers’ money? Hell, Af’stan is costing around $100 mln. / month ($1.2 bln. / yr.), Harper and Flaherty have significantly increased the deficit + debt, so look at the States.

There are roughly 48 states which are now fiscally delinquent, which is why (I guess) some are looking at printing their own currencies, and finishing with the greenback.

Anyone remember bartering? No cash involved, no records kept, no taxes to pay = govts. end up singing the blues.
#45 The ‘VULTURE’ on 08.06.09 at 9:21 am — Right on! This practical day-to-day stuff should replace the “social niceties drivel”, which is no better than junk food.
#59 ClaudiusEmperor on 08.06.09 at 10:21 am — “2. evaporated savings”

Another good reason to have dividends re-invested to buy more shares, rather than monthly cash flows.

I’ve never really understood the difference between “Book Value” and “Face / Market Value”, but our CFP has had the monthly dividends set up this way for years.
#111 char on 08.06.09 at 5:26 pm — “. . . The social herding instinct–you gotta marvel !”

Ahhhh . . . Sheeples, lemmings, morons and bimbos . . . and these are the ‘supposed’ leaders of tomorrow? I’m joining Slim Pickens in riding that bomb!

Speaking of the herd-mentality —
For the computer nerds / geeks here, this is a very interesting site. —

“Have you ever come across a web site that you could not access and wondered,”Am I the only one?” Herdict Web aggregates reports of inaccessible sites, allowing users to compare data to see if inaccessibility is a shared problem. By crowdsourcing data from around the world, we can document accessibility for any web site, anywhere.”

#135 The Great Gazoo on 08.06.09 at 8:58 pm



This economy is not sustainable and will collapse in Canada much worse than I thought. Nortel just slipped through our fingers but hey government policy priority is with interest rates and keeping the bank/re sleaze moguls happy.

Economy should be based on innovation, technology, intellectual property/services, tangible exportable products – NOT public debt bailouts and financial sorcery – THIS WILL END EVEN WORSE THAN GARTH EVER THOUGHT

#136 WillsDad on 08.06.09 at 9:03 pm

I’d say the canary in the coal mine is Wells Fargo, the Warren Buffett owned bank, is stopping all mortgage loans in Canada. Now, what does he see that the sheeple don’t?

#137 john m on 08.06.09 at 9:35 pm

In June, 1.56 per cent of Canadian credit accounts were more than 90 days overdue on payment, credit monitoring agency Equifax says. (Nick Ut/Associated Press)

Credit monitoring company Equifax revealed data on Thursday indicating more Canadians are falling behind on their credit repayment.

Nationally, 1.56 per cent of credit facilities were delinquent — more than 90 days overdue without making any payment — in June. That’s a three per cent increase over May and 24 per cent higher than where the rate was in June 2008.

Rates are increasing fastest in Alberta and B.C., by 32 and 30 per cent, respectively.<<<<<<<<…….my only thoughts are ..hmmmmmmmm wonder what it will be by next june? and the governments telling us the recession is over and it has been solved by encouraging more debt——–well no matter how they twist the facts–down will never be up!

#138 lgre on 08.06.09 at 9:59 pm

Wow, some on here feel that Big Brother is going to prop up the economy forever, now, if we ALL fell for this notion..I’m sure it would happen.

#84 Coho – theory, but not reality..if you look south, Obamanomics is trying everything in his power to get a grip on the aint working so well..RE is a huge part of an economy in mostly every nation..but obviously the tactics arent working to get it back on track, including the free 8g’s being given out..why is Canada different? it ain’t.

Hal – yes, I get it..obviously you dont. Look outside your little bubble and you actually might. But I’m sure the prop up is whats favoured, I for freedom and the government to stay out of my biz in every aspect.

#139 Jonathan on 08.06.09 at 10:03 pm

H1N1, Floridation, what do I want to be when I grow up???

crap i thought this was a housing and economy blog

since we are on the topic of everything, how is the weather tomorrow?

#140 Davinci on 08.06.09 at 10:21 pm

Hey Garth Riddle me this?

If paper money is so valuable and not a ponzi scam why is the Federal Reserve hiding the fact that it monetized most of the 5 year treasures and all of the 7 year notes?

They should be proud of the fact that they can create money at will to save the day. ;) lol

Tick-tock we are near the end of the drop the sudden stop is about here.

Got Gold?

Notice the smart person that figured it out calls it a pyramid scam and that is the same as a ponzi.

And Mark Carny said the other day he will intervene in the currency markets if the Loonie where to rise. Translation: Mark will print the loonie and buy as much USD to keep us down.

When I think about it, I am angry and sad at the same time. The devastation will be cataclysmic, thanks to Garth and others telling people that paper is money and have them take out 30k in 10s and 20s when they could have done the same with gold in the same denomination or smaller from the Canadian Mint.

Why gold? Cuz it can’t go to ZERO.

Pure foolishness, saving paper bank notes.

Lets hope they pull another rabbit out of their ass and delay the enviable a bit longer so I can save a few more people.

#141 Bottoms_Up on 08.06.09 at 10:29 pm

Vaccines, you have a choice:

Don’t get vaccinated, fairly high risk of developing a severe disease and possibly death. But no risk of vaccine side effects.

Get vaccinated, abolish the risk of developing a severe disease or early death, but introduce a slight risk of side effects (which MAY include a severe disease).

For me, the decision is an easy one. Promoting vaccine avoidance is like suggesting to not take antibiotics to fight a bacterial infection. People that promote vaccine avoidance are killing more people than terrorists.

#142 Trevor on 08.06.09 at 10:56 pm

Garth, I’m offended that you seem to put Vince and the Slap Chop into the same category as Realtors. I saw the commercial and ordered one.

I got it in the mail a few days later and popped it open.
One slap, big chunks for stew – Check.
Two slaps – home fries, in a second – Check.
The more you do it, the finer it gets – Check.
You love salad, you hate making it – Check.
Stop having a boring tuna, stop having a boring life – I can confirm this.

I could go on…and don’t get me started on the Graty.

Long story short, Vince is bringing convenience, honesty, and pleasure to people’s life. In these times, the world needs more people like Vince.

#143 D from London, ON on 08.06.09 at 11:07 pm


The tinfoil hat crowd seems to be coming out in force. It’s more than just goldbugs now – soon the alien abduction crowd will start showing up here.

Will you please post something that will keep them in line? Or would that just encourage them all the more?

#144 Mike Hunt on 08.06.09 at 11:42 pm

#41 Devil’s Advocate on 08.06.09 at 9:10 am
#21 Mike Hunt on 08.06.09 at 6:39 am WROTE “I wonder if the PTB will be able to keep rates artificially low for decades like Japan? What if rates are kept near-zero for another 10 years? What then??”

Mike: Take some time and learn the difference between short and long term interest rates; monetary policy and the bond market.

DA: what if the Fed and/or other pseudo-government agencies were to affect the bond markets by creating artificial demand for treasuries – i.e., left-pocket to the right-pocket – but doesn’t disclose/admit it? Year after year, for a long time. Does it sound like a ponzi scheme? Because it is…

#145 jussupow on 08.06.09 at 11:57 pm

#100 C’mon! Semantics? Googling the honorable Mr. Paul Krugman quickly reveals that said Mister is a (cut&paste) Nobel Prize winner. Neither Wikipedia nor common sense seem to have any issues with the term. Beside “The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel” does not sound as melodramatic as I would have hoped. Though technically you are right.

#101 Believe? You have expressed certainty on the subject of interest rates and I have just articulated another probable scenario. Ultimately we may believe in the same thing. Obviously you (as Garth and others here) are an FMS (free market stoic). I too believe in free markets. However. My physics analogy to free market forces is gravitation. A “weak” force as they say. An apple, a rocket or a Copperfield ultimately falls to the ground… however a diligent student of physics or a charlatan my defy it for long long time. long time. That is all that matters. One may be undecided Carney and Co to which group belongs. But you and I know too well.

#146 Barb .. a reader in Calgary on 08.07.09 at 12:12 am

#119 MenWithHats “I despair. I always considred my country to be a notch brighter than the average. Now I am not so sure.”

I felt the same way. I’m not sure either now.

#147 Larry on 08.07.09 at 12:19 am

Only a few wise people read this blog, the masses are feeding on an orgy of cheap money and their foolishness is blinded by their greed. I am a proud renter who couldn’t give a rats ass if some people consider me a 2nd rate citizen. The crash is coming and it will be huge.

#148 kw on 08.07.09 at 8:17 am

Bloomberg is showing Dow Futures up 65 or .7% as of 40 mins. before market open. About 1/2 hour previous futures were down about 40. Quit the swing! Bloomberg reports US job cuts slow, Unemployment Rate Unexpectedly Falls as Downturn Eases.
Here in Can. Job losses deeper than feared, according to
What to believe?

#149 Mr. D - Ottawa on 08.07.09 at 2:38 pm

Off topic, but I had to respond to the Industrial Guy’s ill informed comments.

#130 Industrial Guy, Maybe you’ve been drinking way too much fluoride. I don’t know how harmful fluoride is, but after reading the Journal of the American Dental Association, I don’t see any point in using it.

“It is now revealed that fluoride as a supplement or as a health providing ingredient of a toothpaste was never tested by the Food and Drug Administration or FDA for its supposed dental health benefits or even for its safety. According to the FDA, this was so because the fluoride substance has been in the market for as early as 1938, an era when the FDA testing laws were not yet enforced.”

You can find the rest of the above article from a dental insurance company here:

Why has 98% of Europe outlawed the fluoridation of municipal water supplies?

American Dental Association concedes: Excessive fluoride a risk to children

Remember that the dangers of trans fat have been revealed in the last few years. Those dangers were well known to some scientists for many, many years. This knowledge was nearly completely suppressed until only recently. When the status quo turns out to be very bad, it’s still usually very difficult to change it.

#150 Heather on 08.07.09 at 10:14 pm


I read the Greater Fool last Fall. Your book was an eye opener for my husband and I. We recently owned a larger home and a rental property. I can honestly say that your indirect advise assisted in our move to down size our personal home. We were able to collect our equity out of our home in the nick of time. We moved into our rental property. We shifted our lifestyle from a 3200 sq ft house to a 1000 sq ft home and payed off the rental unit we now live in. We were heckled by our friends. I can say who’s laughing now. Our town has lost a large number of manufacturing jobs and prices have drop. I think that the trend will be small is better for many reason. Just my thoughts.