War zone

linda MLS1

Peg realtor Linda van den Broek:
Nothing subtle about this market

Six hundred thousand over asking?

That was the word from an awestruck Global News reporter, as she stood in front of a Toronto home that had just sold for a mere $200,000 over list. The report, with no small irony, came moments after the latest job loss numbers – another 45,000 gone, twice economists’ forecast.

But it ain’t just Toronto, of course. In Winnipeg these days realtors say one in three sales is the result of a bidding war. Over 1,300 houses sold there last month, 30% of them over asking, the highest reported premium being $52,000.

And in Vancouver, now arguably the greatest bubble city in North America, more than 4,000 homes changed sweaty hands in July – a record. Frenzied buyers have pushed the average price up 9% this year, with the median at $528,000, and SFD units averaging north of seven.

Meanwhile the country has lost 483,000 net jobs since October. The currency has shot to a level where it will cost tens of thousands more positions. The federal government has plunged into the largest deficit in history. Our two mega-provinces have announced sweeping sales tax increases for the months to come. Oil has damn near doubled in price, sucking off family cash flow. The auto industry almost lost it. And you are not paying a single dollar less in income tax – unless you spend $10,000 on a new hot tub.

As the last post attempted to show, when you combine bidding wars with record low downpayments, equity-less homeowners and legions of people who can only buy because of manipulated mortgage rates, well, the threat of an underwater nation is real.

But you won’t hear that on Global’s nightly cast.

Or news the network’s parent just screwed bondholders out of $18.5 million by defaulting on an interest payment.

Did I ever mention this won’t end well?

112 comments ↓

#1 Barb .. a reader in Calgary on 08.07.09 at 9:39 pm

Yup, she did imply it, six hundred thousand over asking.. [..just had to check the video.. almost thought it was a typo and that I’d have to go back to proofreading]

#2 Slice on 08.07.09 at 9:41 pm

tick – tick -tick -tick –

=poof=

#3 Crash on 08.07.09 at 9:47 pm

The whole economy is going to implode imminently. We are witnessing the final swan song before financial armaggedon. Stock prices, real estate, commodities, you name it: Bubble. This should have been dealt with a decade ago. It’s the 1920’s all over again.

#4 nonplused on 08.07.09 at 10:07 pm

Garth,

My guess is only 2 things can stop the mania: intrest rates rise, or it has to run it’s natural course. Of course things will be that much worse the longer it goes on, but only the cliff can stop the stampeding buffalo.

#5 Jody on 08.07.09 at 10:24 pm

Honestly, I can’t wait until this blows up. The more they go on and on about how good things are getting the worse this H-bomb of a crash will be.

#6 statsguy on 08.07.09 at 10:27 pm

“July’s private-sector losses were the worst since the record-breaking decline in January. A 35,000 rise in self-employment partially offset the drop”… really 35,000 newly self-employed? How does Stats Can know that? Are they perhaps taking a page out of the US BLS (Bureau of Labour Statistics — or is that the Lies and Statistics?), who have used various models to create out of thin air counted jobs — that don’t actually exist!

I’d say there’s a good likelihood that the real job losses in July were the 45,000 reported + the 35,000 now “self employed” = 80,000.

#7 hal smith on 08.07.09 at 10:29 pm

Don’t you see how clever these people are? They under list the asking price, knowing full well that there will be multiple higher bids. Then the media can report that the housing market is “on fire” with multiple offers and bidding wars, further fueling the frenzy to buy now ! or be left behind and you will never be able to get in later.
Logic and fundamentals no longer apply. It’s fear and greed. There is a lot of cleverness and ingenuity keeping this bubble inflated and the government will do whatever it takes to keep it inflated. This bubble will not end soon but like Garth says, when or if it does,it will not end well.

#8 TheFirstRick on 08.07.09 at 10:31 pm

What would they call me if I went out tomorrow and bought a car? Enthralled by a specific model? Similarily salivating over the machine like the boys next to me? Coming home with the machine after winning the bidding war and paying, say, 20% over MSRP? I’d probably be called ‘nuts’ and rightly so. Why this concept doesn’t apply to real estate amazes me.

I don’t get it anymore. It doesn’t even piss me off anymore. I might even go out and hug a realturd. (OK, probably not) 6 digits safely in the bank, 3 digits added every month, a rental on the ocean with a pristine view. Why give this up? Oh, I forgot, it’s not “mine.” I could get kicked out and have to find a place with a mountain view!! I’m simply trying to convince myself that the possibility of interest income covering my rental costs being a viable form of “financial freedom.” But hey, whoda thunk it? We haven’t been conditioned to think like this, logically, a semblance of sanity.

“Screw” the cult of home ownership, I may rent forever or until the end of time, whichever comes first. I’ve been ‘house poor’ too many times to take this leap lightly again. Why do I drive by Home Depot on the weekend and laugh? I love the fact that I haven’t been in that place for a few years. I do get caught in the HD traffic sometimes on the way to the golf course or beach. Oh well, no biggie. Let the overloaded Bimmer pass, he looks like he is ready to snap!!

Oh, and by the way, this concept of freedom relates to, and reminds me of Linda van de Poke. Financial freedom seems to inherently bring on pleasures that go beyond roof repairs and yard maintenance. Road trip this weekend, beach and maybe a bit of sailing. No doubt another ‘Linda’ will remind me of what is truly important; the simple fact that I have “mowed more grass” in the last few years than when I actually owed a lawn mower brings it all home for me. (Pardon the pun)

Thanks ‘Linda’, until we meet again. We will, but likely not at Home Depot, the last time I saw ‘you’ there you seemed a bit stressed.

#9 Dawn in Calgary on 08.07.09 at 10:33 pm

JHC. This is scary. This whole economic situation, big banks lying about assets, bidding wars, artificially low interest rates, bailouts, industry pumping, unemployment craziness.

I have my bunker ready for when it blows. I don’t think it’s going to be a slow leak anymore, it’s gonna be nuclear.

#10 Bob on 08.07.09 at 10:41 pm

#3, you are right partially! we are gonna have depression but not outright deflationary! we will first have inflation, possibly hyperinflation!!! and then deflation!!

#11 D Griffiths on 08.07.09 at 10:51 pm

Unbelievable!
Heaven help us all! And this WILL affect all of us!

#12 D Griffiths on 08.07.09 at 10:53 pm

So much for avoiding Great Depression 2.0.
Hang on folks, this is going to get bumpy!

#13 Randy...Vx on 08.07.09 at 11:00 pm

Even God can’t help these greed driven sheeple. There too stupid to be called people.

#14 Dr Destiny on 08.07.09 at 11:08 pm

In the above post “here” is Vancouver. It’s this spectacular city on the water next mountains that has no economy (except for its port and tourism), but somehow has the most expensive real-estate in the country.

So basically, it’s either there’s a massive unending amount of funny money or there’s lots of rich people moving here.

I know you say it’s funny money, and I would be REALLY interested in seeing some confirmation on that.

From own personal experience: most people I know who buy property (and have discussed this with) have put over 25% down, and have modest mortgage payments and secure jobs. Either that or they’re loaded and just pay cash because they want to live in Vancouver.

#15 Dr Destiny on 08.07.09 at 11:11 pm

Hi Garth,

I like data.

You mention there has a large amount of low quality mortgages in Canada. Where is this data coming from?

I’ve had trouble confirming this (and in fact have information suggesting these mortgages are less than 5% of the market).

It seems to me that here in Canada lending standards were tighented and rates were very low in late 2008. Prices fell 10% or more.

Builders used to offer 5% mortgages here, but not anymore (they’re basically stopped building, as well).

I would really like some more data and information on this.

In the above post “here” is Vancouver. It’s this spectacular city on the water next mountains that has no economy (except for its port and tourism), but somehow has the most expensive real-estate in the country.

So basically, it’s either there’s a massive unending amount of funny money or there’s lots of rich people moving here.

I know you say it’s funny money, and I would be REALLY interested in seeing some confirmation on that.

From own personal experience: most people I know who buy property (and have discussed this with) have put over 25% down, and have modest mortgage payments and secure jobs. Either that or they’re loaded and just pay cash because they want to live in Vancouver.

#16 Dan on 08.07.09 at 11:11 pm

People are buying because Winnipeg is financially safer than elsewhere in Canada.

Why?
We have federal money coming in all the time, regardless of how little we produce.

Why?
We are a have-not province with a proportionally large Aboriginal population whose healthcare, welfare, and education are heavily subsidised by all Canadian taxpayers.

How the hell is this fair?
It isn’t. Suck it up and watch as my have-not backwater lives large on declining federal revenues.

What can I do about it?
Move to Manitoba if you can live with the winters, mousquitos, and a province where a job with the government is considered “making it”.

Are you serious? WTF?!
I’m just frustrated that I actually have to live here.

#17 squidly77 on 08.07.09 at 11:27 pm

phoenix house prices down 53%
los angeles house prices down 50%
miami house prices down 47%
a sure sign of what lies ahead..deny and financially perish

#18 Kilt on 08.07.09 at 11:28 pm

Hey Garth, shouldn’ t that read that oil has halved in price. This time last year wasn’t oil nearly $140. Gas is cheaper than it was last summer. Come to think of it almost everything is cheaper than last summer. Houses, cars (especially if you have cash), gas, food, stocks …

Interestingly the realtor thinks prices are going to come down. But if rates stay the same, I find that hard to believe. This spring/summer buying frenzy has reduced listings to the point where supply/demand suggest stable if not increasing prices.

I was hoping to pick something up this winter, but I may as well wait to after the olympics and hope for a pullback then.

Kilt.

#19 anon09 on 08.07.09 at 11:33 pm

In 2007, it was reported that, “The Bank for International Settlements, the world’s most prestigious financial body, has warned that years of loose monetary policy has fuelled a dangerous credit bubble, leaving the global economy more vulnerable to another 1930s-style slump than generally understood.” Further:

The BIS, the ultimate bank of central bankers, pointed to a confluence a worrying signs, citing mass issuance of new-fangled credit instruments, soaring levels of household debt, extreme appetite for risk shown by investors, and entrenched imbalances in the world currency system.

[…] In a thinly-veiled rebuke to the US Federal Reserve, the BIS said central banks were starting to doubt the wisdom of letting asset bubbles build up on the assumption that they could safely be “cleaned up” afterwards – which was more or less the strategy pursued by former Fed chief Alan Greenspan after the dotcom bust.[39]

In 2008, the BIS again warned of the potential of another Great Depression, as “complex credit instruments, a strong appetite for risk, rising levels of household debt and long-term imbalances in the world currency system, all form part of the loose monetarist policy that could result in another Great Depression.”[40]

In 2008, the BIS also said that, “The current market turmoil is without precedent in the postwar period. With a significant risk of recession in the US, compounded by sharply rising inflation in many countries, fears are building that the global economy might be at some kind of tipping point,” and that all central banks have done “has been to put off the day of reckoning.”[41]

In late June of 2009, the BIS reported that as a result of stimulus packages, it has only seen “limited progress” and that, “the prospects for growth are at risk,” and further “stimulus measures won’t be able to gain traction, and may only lead to a temporary pickup in growth.” Ultimately, “A fleeting recovery could well make matters worse.”[42]

The BIS has said, in softened language, that the stimulus packages are ultimately going to cause more damage than they prevented, simply delaying the inevitable and making the inevitable that much worse. Given the previous BIS warnings of a Great Depression, the stimulus packages around the world have simply delayed the coming depression, and by adding significant numbers to the massive debt bubbles of the world’s nations, will ultimately make the depression worse than had governments not injected massive amounts of money into the economy.

After the last Great Depression, Keynesian economists emerged victorious in proposing that a nation must spend its way out of crisis. This time around, they will be proven wrong. The world is a very different place now. Loose credit, easy spending and massive debt is what has led the world to the current economic crisis, spending is not the way out. The world has been functioning on a debt based global economy. This debt based monetary system, controlled and operated by the global central banking system, of which the apex is the Bank for International Settlements, is unsustainable. This is the real bubble, the debt bubble. When it bursts, and it will burst, the world will enter into the Greatest Depression in world history.”

Entering the Greatest Depression in History

#20 Lawrence on 08.07.09 at 11:39 pm

I don’t believe what’s happening in Vancouver with prices as I live in Kelowna. Every day I recieve from a realtor a new forclosure the prices of which I have not seen for 10 years. I see the writing on the wall..Maybe older and wiser.
Lawrence

#21 Future Expatriate on 08.08.09 at 12:35 am

Hey, cool. This might be the largest fastest-inflating bubble in history, next to an atomic explosion.

And with all this on the way, too.

Not going to end well? It might just all end, period.

Bubbles are NOT signs of life in a swamp.

#22 Future Expatriate on 08.08.09 at 12:59 am

Change that only IDIOTS believed in… FROM DAY ONE.

#23 Kool-aid13 on 08.08.09 at 1:04 am

That guy that put in $20000 over asking may need some more tools and sand paper to do all those renos. I hope his “Crappy Tire” bag had some switch covers in it. He looks like the kind of guy that will watch Mike Holmes and then think he can hit Rona so he can get stuck into his drywall mud. Better get some band aids too for when he cuts his fingers on the blister pack of his brand new laser level. The Granite and Stainless gods are watching their next sacrifice.

#24 Vancouver Old-timer on 08.08.09 at 1:09 am

I live on the westside of Vancouver, home of the most entitled bunch one would ever want to encounter (I was born and bred in Kitsilano) and the real estate market is truly insane – a house on my block, an ex-grow house, sold about 3 years ago for $834,000. The suckers who bought it after the grow-op people had “re-habbed” it have done nothing but throw good money after bad; wiring, drainage – you name it – and still the house has problems. They have finally thrown in the towel and put the house on the market this week for $1,150,000 and deluded fools have been flooding in. The agent has assured the owners it will sell by Monday, and sadly, it probably will. I can predict that in another 2 or 3 years some other 45 year old fool will once again be throwing in the towel to get out from under the money pit but will they make a profit – I certainly hope not. My 23 year daughter thinks that until the pain is tangible the madness will continue and she is probably right.

#25 EJ on 08.08.09 at 1:12 am

The used house salesfolk TELL sellers to list below what they think the place will sell for in order to lure people in, then pit them against each other in bidding, driving up the price higher than market value. It happens all the time.

And people fall for it!

I think if P.T. Barnum were alive today, he’d be in real estate. Even the circus has never seen suckers like this.

#26 kc on 08.08.09 at 1:21 am

600K over asking?? hmmm maybe the buyer knows something no-one else knows…. did D.B.Cooper rent the basement??? LOL

#27 Bailing in B.C. on 08.08.09 at 1:40 am

sex is my only comfort

#28 Mark on 08.08.09 at 2:47 am

@#3 – I agree big implode due to happen.

my money is on harper “letting” the liberals take over power at the end of the year, just as he allows interest rates to rise.

Then everyone can point towards the liberals for “causing” this mess.

.. and the tories will be back in power 4 years down the line.

#29 HalifaxFamily on 08.08.09 at 4:37 am

thanks for posting some Canadian content! Please do more, as we are always hearing about the Americans and their economy.

#30 DW on 08.08.09 at 5:48 am

This was quoted in the Metro newspaper:
Four bedroom house in Toronto’s Leaside was listed at $949,000 and it sold last week in multiple offers for $1,235,00 a cool $286,000 over list.

According to a report by Coldwell Banker the best deals and most abundant selection are in the West GTA neighbourhoods.

Best deals eh…. The bargains will come to those who wait, but this frenzy really does goes against all reason. I don’t confess to be anything of an expert in economics but the writing is clearly written on the wall. Everyone is under the delusion that the economy is going to quickly recover and back to business as usual.

Maybe in our urban living we have been so over fed to the point that common sense has been replaced by greed.

#31 Bruce on 08.08.09 at 5:49 am

Bernanke commits perjury…

http://www.youtube.com/watch?v=WA9Rm77rq-4

#32 Brad on 08.08.09 at 5:53 am

Gerald Celente is right. Lyndon Larouche is right. Peter Schiff is correct. Garth is right. Men like Bernanke, Paulson, Geithner, Carney, and all the other “big money boys” are going to be exposed for the lying, thieving hypocrites that they are… The countdown is on now. Only a matter of time before the bomb goes off. I say by October, early next year at the latest… Enjoy it folks.

#33 Herb on 08.08.09 at 6:12 am

“Did I ever mention this won’t end well?”

I faintly recall you using words to that effect. Better keep on saying it until it sinks in.

#34 X on 08.08.09 at 7:16 am

The best time to buy is when no one else is. Too many people can’t remember the times when no one wanted to buy RE.

Look at the stock market, how many people were lined up to buy in March ’09? Vs now, fear of loosing out on the rally, and greed of making back lost money. The stock market might just have a bailout bubble. the p/e surely do not support current prices.

How did RE sales do last fall during the stock market decline?

Exactly.

#35 jim ulmart on 08.08.09 at 7:47 am

And on top of all this we have to worry about this Canary in a coal mine

http://www.cnn.com/2009/TECH/science/08/07/global.warming/index.html

#36 Patel on 08.08.09 at 8:45 am

A good example of how the new buyers are deluded and totally in dark about things like mortgage,the re market etc.

My cousin bought a semi in Brampton last month.about
8 years old , near Trinity mall for 280K.
Her husband works as a shipper – receiver in Futureshop and she at a dollar store as cashier.

When we talked last night, I asked her about the mortgage rate and length of ammor., but they have no clue.They did not even knew that they have to renew their mortgage after the 2 or 5 years term.I hope it is 5 years.

Only thing coming out of them was ” lots of homes are selling in GTA” , ” we always wanted a home” , “the market has improved” and obviously ” the rates are very low”.

She has 2 growing kids and her mother in law lives with them.And they all are relatively new to Canada (3.5 years).

#37 Cash is King on 08.08.09 at 8:46 am

A view into Ontario’s future.

http://www.freep.com/article/20090808/NEWS05/908080403/When-benefits-expire–what-s-next-for-jobless?

43,000 people in Detroit will run out of benefits by year end. Approx 5% of the Detroit’s population.

With no money (the States Social Services programs are not nearly as “generous” as Ontario’s) look for increases in theft and…..anarchy?

#38 pbrasseur on 08.08.09 at 9:09 am

For years I have read that canadian productivity and innovation was lagging behind the US, that this fact was accumulating and mostly hidden by the boom in commodities (and possibly debt driven consummer and RE bubble). On top of that Canadians (especially in my beloved Quebec) are aging more rapidly that our US neighbours thus driving up government costs and dragging down productivity even more..

I was wondering when these fundamentals facts were going to hit us. Somehow I see the moment of truth approaching. The only way to recover from this recession is for the economy to renew itself (as it’s surely doing in the US), but since such a large part of the canadian economy has been (still is) a delusion I’m not sure the canadian economy is well equiped to adapt. The resilience of the RE bubble is an example of that: instead of going through a healty reajustment we are hanging on to the old ways and falling even more behind. At least that’s the way I see it.

#39 ca on 08.08.09 at 9:15 am

For those who doubt your warnings:

http://www.calculatedriskblog.com/2009/08/nods-increasing-foreclosures-decreasing.html

#40 Devil's Advocate on 08.08.09 at 9:22 am

I was the target of an intervention yesterday. Apparently my concerns over the countries economic situation are considered more an obsession. Friends and family are more insulated from the effects of these recent economic failings being employed in relatively safe occupations or retired. Or so they think. My own mother, long retired, believes last fall was nothing more than a typical blip, economic misfire, in the otherwise smooth running, steadily increasing economy. These interveners know not how the economy works, know nothing of the bond markets function or purpose, don’t understand the fractional reserve system, haven’t a clue how and why interest rates change. Believe it or not, some actually believe we are still on the gold standard.

I have been warning that the economy is bound to change direction since the very early turn of the decade. That my predictions, I warned, did not unfold then or yet were not a proving of me wrong but rather a further warning that a greater fall from grace would occur. As we moved from then to now my concerns and warnings have grown louder to the point that an intervention was thought needed.

You see my business is very dependent upon my positive outlook. Clients look to me to provide the best possible advice I can. The law of agency dictates that I act in the best interests of my clients and my professional association code of ethics places yet an even higher standard of conduct upon me all of which I agree with and all of which I do my best to maintain. But when I am so convinced that my industry and the general economy are doomed to fail, how possibly, ethically, morally and legally can I wantonly endorse, encourage, the jumping aboard of one who comes to me for guidance upon the train of “Greater Fools” driven by a locomotive destine for destruction. Yet if I don’t I fail my family by not bringing home the fruits of my labour, the fresh kill. If I don’t help them board that train they pay me no fare. I may save them from financial disaster but in so doing I create my own as my interveners so poignantly pointed out yesterday.

They went on to point out that neither they nor I have a crystal ball and no one can know the future. That we must live the moment enjoying all that it has to offer. And indeed our government supports us in that quest with such gifts as historically low interest rates with which to acquire all the accoutrements that enhance it.

Make no mistake; my intervention experience was very harsh. It was brought upon me by loving friends and family who pleaded that I return to the flock of the Sheeple for alone I was surely doomed. “This is a different economy with checks and balances that protect us. This is not Zimbabwe, it is not Argentina” they claimed. “Our government will not let us fall victim to financial ruin” they argued. I explained that we live better than 95% of the world’s population; we have grown fat and complacent. We are not so immune to a collective life of ruin as they might believe. Nations have come and gone and so too, in time, will this great nation become nothing more than historical record.

In the end I came to realize that I and few others like me might have insight to the most probable outcome but we can not stop it if it is to take place. There are far too many “Greater Fools” out there many of who are educated and should know better but clearly do not. At they very least the more intelligent Greater Fools should have mind to look at the situation objectively and they will probably, at the very least, come to the conclusion that they need to proceed with caution but, from my experience, they do not.

I frequent such Blogs as these to seek not confirmation of gloom and doom but to find reassurance that the Sheeple will eventually come to realize we can not continue as we have, we can not continue to fund the present with the future for that future will one day be upon us with it’s own future which looks not so bright. When that happens we will be forced to repay the debts incurred but then with few assets, a whole lot of debt and little apparent opportunity in the future. I don’t find any such comfort that the Sheeple are learning this inevitability so I find myself looking for signs it will be forced upon them. I check the stock market, gold prices, bond markets, unemployment rates, GDP statistics, BNN, http://www.greaterfool.ca, http://www.mises.org and other non MSM sources hoping to find news that, finally, our economy has snapped.

Please understand, I am not looking for such bad news for any other reason than I firmly believe that without such a day of reckoning the Sheeple will continue to move toward an even greater failing. If we don’t stop this madness NOW we will continue to exasperate the situation to the point that when it does finally blow it’s going to bring down a whole lot of hurt and dispel all the old beliefs that we can’t be reduced to living, as so many in this world do, in poverty many without food and without shelter. But we are fat and lazy unlike those who were borne into such a life of poverty. We are no in any way prepared to deal with even the slightest of their lifestyle. We need not experience an economic Armageddon to find ourselves so blindsided. Our fall from grace will not need be so great for radical change to occur. Riots in the streets, increased crime and all those other things would happen in our world with an economic failing that set us back to only a position 95% of the world would give their right arm to enjoy.

Did the intervention of me yesterday have the desired result? Maybe not so much as the interveners had intended. I have come to conclude not so much that I need return to the flocks of the Sheeple but rather that I need to help them quicken their plight. I need to go about my business earning what profit I can and thus protecting my family. I need to let those Greater Fools hasten their own demise rather than hold them back from that valuable education which will result from it.

It is survival of the fittest my friends. We are no more intelligent a species than any other on this planet. In fact, great argument could be made that we are the LEAST intelligent of species on this planet.

#41 DaleFromCalgary on 08.08.09 at 9:24 am

Latest Calgary statistics (http://www.creb.com/public/documents/statistics/2009/package/res-stats-2009-july.pdf) are:

Single family median prices: July 2009 = $390,000 down from July 2008 = $408,500
Condominium median prices: July 2009 = $263,000 down from July 2008 = $273,500

Sales are up though (and no prizes for guessing which set of statistics are publicized in the mass media):

Single family: July 2009 = 1,585 up from July 2008 = 1,313
Condominium: July 2009 = 702 up from July 2008 = 535

So it is a good time to be a realtor.

As for me, I’ll keep putting those gold Maple Leafs into my safe-dposit box for my old-age pension.

#42 David Bakody on 08.08.09 at 9:28 am

Casino Real Estate Royal …… what is to come of it? Who knows? I suspect it will be bad news and the blame will all be on those who borrowed the money. The Brick just went from 8B to 150M loss …. Air Canada is talking more layoffs …. car sales are really not that great, tourism sucks, BUT the Canadian Mint is working overtime. This reminds of those who seek justice … give me my full share before you close the door please.

#43 Justin on 08.08.09 at 9:56 am

Predictions on Oil

Oil is up for two reasons.

1. The U.S. dollar is tanking (pardon the pun)

2. Certain Investors appear to believe the Governments (and Media Cheerleaders) casuistry that the recession/depression is ending.

Nothing could be further from the truth. It’s the end of an epoch and we here in the western world are drinking from the river denial. Call it cognitive dissonance or whatever you wish.

Where will Oil go in the Short term?

Down. A vicious bear market this fall will again cause investors to flee to liquidity and of course awaken them to the fact they been had again by the powers that be.

Peak Oil? I don’t believe in peak oil as there are enormous untapped reserves (the true origin of Hydro Carbons is not taught in school) although they could force this fraud upon us as they are global warming.

#44 The 'VULTURE' on 08.08.09 at 10:21 am

Fast Times at Ridgemont High

Nice digs! What a big fat commission cheque a realtor can make on this property. The list price is $12,900,000! Here is the link:

http://www.realtor.ca/propertyDetails.aspx?propertyId=8521973

.05 x $12900000.00 / 2 = $322,500.00 commission!!

(@ 5% =$ 645000.00 then split in half with brokerage equals $322,500.00)

Bing Bong. Buy a new Ferrari or two!

I am in the wrong profession. So sad….

Maybe I can make money on this property…

http://passerelle.centris.ca/Redirect2.aspx?CodeDest=LACAPITALE&NoMls=QC8183211&Source=WWW.REALTOR.CA&Langue=E

the list price is $25,000.00

Both properties are on the opposite sides of Canada.

Truly fast times at Ridgemont High…way too fast for me…

#45 Morbid_Fascination on 08.08.09 at 10:31 am

Methinks it’s time to publicly list all those nimrods who’ve purchased/mortgaged overpriced real estate, and the prices they paid for it.

That way when they come back later whining for subsistence help, we can give them a one-way ticket to Ellesmere Island in January to make gravel with hammers.

On the other hand, we could just bypass that step, pick up the metro Toronto phonebook, and give everyone listed there a swift kick in the ass with a frozen boot.

#46 Gord In Vancouver on 08.08.09 at 10:39 am

#14 Dr Destiny

….and have modest mortgage payments
___________________________________________

Will these payments still look modest WHEN interest rates rise?

#47 JoeCalgary on 08.08.09 at 11:25 am

Don’t worry, be happy: “Job Gloom is a Passing Cloud.”

http://www.montrealgazette.com/business/fp/gloom+passing+cloud/1872941/story.html

Does anyone know the background of Philip Cross, analyst for StatsCan?

#48 dd on 08.08.09 at 11:34 am

#43 Justin

…Peak Oil? I don’t believe in peak oil as there are enormous untapped reserves…

True but how much will it cost to bring to the surface?

#49 Dan in Victoria on 08.08.09 at 11:43 am

Post#40 I hear you on that.My family thinks I fell off and banged my head years ago.I just get the “look”if I try to explain anything to them.My brothers and sisters are pretty darn smart book wise but when it comes to “street smarts”they are lacking.They have worked all their lives for the government and are counting on their nice pensions,good for them I guess.They are your perfect round pegs in the round hole types.Perfect drones.When this deal goes sideways it should be interesting watching their power point presentations,with the starbucks and designer donuts.I mean that will solve it right?On a diffrent note pops was over the other night and wanted to invest some money,I listened to him for awhile he was going to invest in some mortgages at 9.5 % What are they I said? oh…. second and thirds was the answer.I said I don’t think that is wise.Why not he said its mortgages on real estate!You can never go wrong blah blah blah(He doesn’t know that I know that he took a bath on another investment that I told him NOT to do)anyhow these are very bright people and they don’t get it.Just look out for yourself,give them the places to look and leave it at that.We now return you to your regularly scheduled doom.

#50 CalgaryRocks on 08.08.09 at 11:49 am

#116 Jody on 08.07.09 at 10:11 pm

It matters not what glorious and wonderful government program one thinks is going to cure all the ills of society, one has no right to force their neighbour to pay for it. I would never go up to my neighbour, put a gun to their head and tell them to give me a portion of THEIR wealth so I can have public healthcare,

So, I wonder how long your precious 100K in cash and metals, would last if you were to get a serious health issue, become uninsurable and have to pay everything out of pocket.

Anyways, I think there is plenty of government waste that we can cut before denying health care to those that need it. As a society we have already decided that we will not be doing that.

#51 The Great Gazoo on 08.08.09 at 11:52 am

Its wild man, in Toronto EVERYONE is buying a house.
I have my reasons to believe this is a serious bubble but check it out:

Guy at work in his early thirties bought a house in North Etobicoke, not married… whats wrong with you!?!

You’re single, rent a freakin condo downtown, have a good time downtown, party it up and save your cash. Why would you get a house in a boring suburban neighbourhood?! Do you honestly think getting a house in a real estate peak (+ mortgage interest costs) is a good invesment?

Talked to other people and they basically all justify buying something by the fact that a monthly mortgage payment is pretty much equivalent to renting, and at least this way you HAVE something.

My father mentioned, even though being an immigrant that was not able to finish school due to poverty, what will happen to all these people when interest rates and taxes go up??

But even worse will happen, Garth is right, NEGATIVE EQUITY, even TIM GEITNER can’t sell his home in the States.. have fun!

#52 dd on 08.08.09 at 11:57 am

“Not all buyers who get caught up in a bidding war come away disappointed…. Another one of Smyth’s clients paid $270,000 for a house in East St. Paul that was listed for $255,900, but said he was happy with the outcome….

A quote from one of Garths articles. Only in real estate and stocks are people “happy” by paying more for an asset than it is really worth.

#53 NKVD Black Raven on 08.08.09 at 12:04 pm

#28 Mark

The Harper personality isn’t one that ‘letts’ power.

#54 wetcoaster on 08.08.09 at 12:31 pm

Garth,

Your buddy Ozzie Jurrock is now promoting the use of no interest LOC’s in place of a mortgage so you/I can free up $1200 a month to spend on whatever your little heart desires.

On that west coast radio show this morning he used a $400,000 LOC as an example. So much for promoting fiscal responsibility while he slags people like yourself, but what can you expect from such shameless self promoting shamsters.

PS don’t forget those “Hot Properties” in butt ugly Quesnel of all places. Get’em while you can.

#55 Smart on 08.08.09 at 1:02 pm

Hunger hits Detroit

http://finance.yahoo.com/news/Hunger-hits-cnnm-2252127026.html?x=0&.v=4

The changing face of hunger – now it’s middle class folks who lost their $60,000-a-year auto job, or home owners who got caught on the wrong side of the real estate bubble.

#56 Evangeline on 08.08.09 at 1:08 pm

A question that came to me after reading the CanWest default story …

Is it possible that interest rates are so low not just to tempt hapless buyers … but because financial institutions are so strapped they can’t **afford** to make interest payments?

#57 Barb .. a reader in Calgary on 08.08.09 at 1:08 pm

Garth,

I enjoyed the Macleans book review:

How a maverick MP blogged his way out of the Conservative caucus

#58 My_view on 08.08.09 at 1:20 pm

Who would of thought the real estate froth would last this long. Makes me question if I should sell my house and bank the $$$ (greed). The thing is I like my home (content), the fire place, 2 car garage for my toys, the backyard, the neighboorhood and there is a fuzzy feeling when you drive up to your castle. I did the renting game for a decade and hated it. The noise, smells, parking, out of date building. Mind you, while I was renting I made sure to save mad money and the only way I was going to jump in the r/e market was to make sure I continued to pay myself first. I thought the market was over heated back in 2005, went looking for a home and all we seen were dumps for sale and that is still the thing presently today. Earlier on this year, the market was the opposite, the first time in a decade. The supply of reasonable homes were up there and so was the prices to a certain degree, now its insane! The correction will happen, but when is very hard to say and I think only the hurting people will be dumping, the others will hang in there. Rates are a factor and many people here have said the GOV/BOC have no control over it, sure they do. There is no more fundenmentals, economics 101 are out the window. The interest banks are making on homes today is the same $$$ prior to the boom, ex: 1996 -150K x 8%, 2009 – 300K x 4%. The banksters bottom line has not changed make $$$$ and keep people chained to debt.

#59 Kelly McMae on 08.08.09 at 1:29 pm

Bizarre times. Do these people currently purchasing beyond their means have lives that extend beyond the bottle and the boob tube?

Rather than attempt to make prophesies on where we’re going I’d rather focus on where I’m at, and working two jobs while the wife works to pay for child care so that we can pay mostly interest to some oily bankster in just dumb.

We’re realizing that the westcoast and urban premium is not worth it. Friends in the Soo and Terrace each pay less than $800 for lovely homes and breath air that doesn’t require the use of a respirator.

I think I’ll get the masters and get out.

#60 hal smith on 08.08.09 at 1:31 pm

You know what the really sad part of this whole fiasco is? The people who were financially prudent and responsible are the ones who will get hammered because the government will, directly or indirectly, soften the blow for these idiots who got their num nums caught in the wringer. And we will pay for it. I fully expect to lose half my net worth and half my purchasing power by 2012 to 2015.

#61 hal smith on 08.08.09 at 1:36 pm

RE: Ozzie Jurock. I saw him on the telly recently and he smugly said ” Life on the west coast has a certain ‘flavor’ that people are willing to pay a premium for”. I wouldn’t trust myself to be alone in a room with that guy…..

#62 Gord In Vancouver on 08.08.09 at 1:46 pm

Vancouver (Burnaby) Commercial Real Estate Market Update

Looks like this is just the beginning……..

http://www.bclocalnews.com/greater_vancouver/burnabynewsleader/business/52691012.html

#63 Basil Fawlty on 08.08.09 at 1:47 pm

The financial system is absolutely mad and is being held together by the lowest interest rates in history and government spending.
The US government bails out the nine largest banks to the tune of $125B, and said banks turn around and pay out billions in bonuses to employees. The US government purchased the derivatives of said banks at “modelled” values, when the market value of these “investments” indicates that all these financial institutions are bankrupt. The sheer unmitigated audacity of these people overwelms the senses. Lying, fraud, perjury and God knows what else happening in real time, but it’s all about perception management. Green Shoots, stock market up, real estate booming, the carnival is open. Shoot the birdie, win a cigar.

#64 Barb .. a reader in Calgary on 08.08.09 at 1:58 pm

#40 Devil’s Advocate

You do need to make the profit before you have the correct power, as you are figuring out. There’s power of money and there’s power of persuasion. Advisory: Don’t bother trying to persuade others. Your ‘power’ is to fully build your ‘bunker’ for yourself first. Your life, as with any life, is a “do-it-yourself project” (as it appears to others). If they are aware of your ‘project’ and they don’t like it, and they simply don’t understand, then you can simply stop informing them about it. Surely you are at this point where you realize good advice falls on deaf ears, or worse, fearful ears.

An individual doesn’t make the rules, the group does. If you don’t like the rules, then work ‘with’ the rules anyways, by working around them, but do work them. For instance, you need not lie to your business clients, you can stay true to your knowledge and be truthful. Be truthful, but be spirited. Show clients the ‘options’ — thereby living up to your altruistic goal, but by showing them all sides of what the future may hold. Carry on without guilt about your knowledge. They will all catch up one day, perhaps too late, but they’ll see your point eventually. Because remember one thing, the big crash may take years, or may be agonizingly slow to slide, and you do not need to live in agony warning others and waiting. The stress will kill you and then what good are you :)

And if you have to tread water in a sea of drowning people, take the advice I learned when I got my Lifeguard Certificate (many decades ago):
Don’t swim right up to a drowning person. The proper method is to throw them a life preserver if you can, but otherwise stay clear, or they will take you down.
The future scenario you speak of, building profit in your ‘survival-of-the-fittest’ mode, is the correct one. Build life preservers. Then one day when you come upon the nearly-drowned, you can put them in the proper swim-hold and help them to shore. Your choice: Help them now and be drowned, or silently work a plan to help them later.

(Oh, and get involved in the next election in some way. It’s liberating to have at least tried to be part of the democratic process.)

#65 rory on 08.08.09 at 2:23 pm

#60 hal smith you said:

“You know what the really sad part of this whole fiasco is? The people who were financially prudent and responsible are the ones who will get hammered because the government will, directly or indirectly, soften the blow for these idiots who got their num nums caught in the wringer. And we will pay for it. I fully expect to lose half my net worth and half my purchasing power by 2012 to 2015.”

You nailed this one. I am in total agreement. I wonder if anyone has seen anything about various scenarios and how they would play out …for example forgiving 1/2 of all mortgages …or permanent EI at reduced rates…it does boil down to taking from those that have and giving to those that do not…but all of us must suffer equally – including gov’t workers and defined pension plans – ‘cuz if I am the one on the hook me and my money are gone …hmmm maybe one should prepare for that before the loopholes get closed.

GT, you are one of the prudent ones …comments or maybe a future topic.

#66 jess on 08.08.09 at 2:39 pm

#19 anon09 -“the world is a different place? ”

– the human brain has not changed (evolved)to much in 100,000 + years. we all know when the change has come when the guns are extinct.

#67 David on 08.08.09 at 2:52 pm

End stage irrational exuberance in Winnipeg perhaps. Incomes grew modestly at best and the local economy was less than robust, but bubbles function independently of the real world economy or fundamentals, so prices simply had to double in 4 years because prices were doubling in Calgary and Winnipeg home prices were under valued relative to Calgary and Vancouver.
Time to declare the housing bubble dead with no possibility of resurrection on the 3rd day.

#68 rory on 08.08.09 at 2:55 pm

Hey all …

We have all heard the “too big too fail” arguement but in actuality I am thinking that the mantra was incorrect and should be readjusted to “to big to manage” …this would also include federal gov’t as well as corporations into too much of everything … remember all companies and gov’ts work from the top down and the top is very small (think pyramid) …how in the heck do you keep track …the obvious answer is you cannot or don’t …the results speak for themselves.

Smaller = more efficient, more effective, more nimble, etc. …giant anything is dead or should be made dead.

#69 TJ on 08.08.09 at 3:41 pm

From FP.com today:

Read this and then ask yourself – who are the new crop of buyers of these $400,000 Condos in Yaletown?

This woman is just a microcosm of the hundreds of thousands of young folks that start their life so far behind the debt 8-ball, they are never going to be free.

>Andrea Hoang, fresh out of university, has no idea if she is ever going to find work. And considering the July employment data released Friday from Statistics Canada, she has good reason to worry.

“I don’t think people care about young people. Young people are really undervalued,” Ms. Hoang said.

In July, the Canadian economy lost 45,000 jobs, about three times the drop expected by economists. One of the hardest-hit groups is students. The student unemployment rate is approaching a dismal 21% compared with the overall national rate of 8.6%.

Since the employment peak of October 2008, some 205,000 youths aged 15-24 have lost their jobs, almost half of the 414,000 total jobs lost in that time.

Statscan differentiates between youth and students. The overall unemployment rate for youth, ages 15-24, is at 16.2%, the highest it has been in more than a decade.

The unemployment rate for students, who are returning to full-time school in the fall, is higher at 20.9%, the highest July rate it has been since Statscan started tracking the data in 1977.

Ms. Hoang’s summer started off ominously. While she smiled and posed for pictures at her June graduation, there was only one thought running through her mind.

“What am I going to do tomorrow?” she said. The Ryerson journalism graduate completed a month-long internship at a major cable news channel, then went to Quebec to learn French. But she did not earn a cent from any of these stints.

Now back in Toronto, she’s joined the growing army of unemployed or underemployed young Canadians. The effects may show up in more than the job numbers.

“I feel I’ve done enough unpaid work. I can’t afford to intern anymore,” she said. “A lot of people have a defeated attitude. It’s hard when you’re poor and bored — you don’t feel like a valuable member of society.”

Ms. Hoang, 22, owes more than $20,000 in student loans from her four years of university, and interest has been piling up since she finished classes at the end of April. “I’m worried about the interest … I haven’t really looked into it yet. I figure when they want to reach me they will.”

http://tinyurl.com/kp7qwf

#70 Kevin in Winnipeg on 08.08.09 at 3:42 pm

Here is the house in Winnipeg from the story….

http://www.realtor.ca/propertyDetails.aspx?propertyId=8571665

#71 Ghost of Tom Joad on 08.08.09 at 3:42 pm

Devil’s Advocate: Back when GW Bush set out with his pre-emptive war in Iraq, my family all said Canada was bad for not believing the US politicians and joining them in that war. They changed their tune after reality set in. At that time I followed Michael Moore’s web site. Little did I know he was just scratching the surface of what was going on. I woke up from Alex Jones a while back. One thing I realize is that 99.5% of people will not/do not want to wake up. Bottom line, if you see someone who you can reach, go ahead and try and reach them. But most sheeple won’t be waking up anytime soon. Denial, right until they’re dead. So let ’em line up and get their H1N1 shots. Let ’em drink their fluoride water. Let ’em collect their fiat dollars. Let ’em sign away their life to a McMansion. Bottom line, you’re awake and the storm is coming so make sure you and your family are going to survive. Let the sheeple dream away in their little worlds. Obbaaaaammmmaaaaa.

#72 Herb on 08.08.09 at 3:55 pm

Basil Fawlty,

your #63, Hear, hear!

And there isn’t a blasted thing we can do about it.

#73 The 'VULTURE' on 08.08.09 at 3:57 pm

Sinister Times in the Global Economic Theatre

Yesterday knowledge was power.

Today, knowledge is power.

Tomorrow knowledge will be power.

Knowledge is power and power comes from knowledge which is power.

Economic knowledge is for your very survival…

Your guides to enlightenment and knowledge. Enjoy…I know I did….

“After the Crash: How to Guard Your Money in These Turbulent Times”

“Greater Fool: The Troubled Future of Real Estate”

“The Defence: Guarding Your Money In Uncertain Times”

“2015 After The Boom: Revised. How To Prosper Through The Coming Retirement Crisis”

“2020 New Rules For the New Age”

“The Little Book of Financial Wisdom”

“The Little Book of Real Estate Wisdom”

Have not read yet, picking up at the bookstore this weekend. “Sheeple: Caucus Confidential in Stephen Harper’s Ottawa”

Thanks Garth for sharing your knowledge with us…Keep going, let nothing deter you…Can’t wait for your next book!

#74 Future Expatriate on 08.08.09 at 4:12 pm

In keeping with the title of this post, and under the heading of “You have to see it to believe it”, the US Army National Guard is hiring…

”INTERNMENT/RESETTLEMENT SPECIALISTS”

Guess those FEMA camps and “car carrier” railroad cars have got to be manned by someone.

Oh darn, they forgot to add “Handling German shepherd attack dog experience a plus”… although I think the good ole’ USA will use pit bulls instead.

#75 Verdad on 08.08.09 at 4:16 pm

From that Winnipeg article, what they failed to state was that 59% of houses sold for less than asking price.

Maybe the title should read… Underbidding Frenzy!

I’d rather look at how much a person makes rather than what a person has in their possession. Beemer, toys, houses and everything shiny on the outside… but I’d rather have peace at night rather than the stress of what if I don’t get paid this week.

#76 JoeCalgary on 08.08.09 at 4:24 pm

Baltic Dry Index has worst week since October:

http://www.bloomberg.com/apps/news?pid=20601087&sid=aOkYkh3CsUFg

China has cut back on purchases of coal and iron ore.

#77 jess on 08.08.09 at 4:54 pm

http://www.niemanwatchdog.org/index.cfm?fuseaction=ask_this.view&askthisid=00147

amnesty and amnesia

“In October of 2000, the IRS asked the major credit card companies for their records of accounts in Caribbean tax havens that were routinely used for transactions in the United States. The intent was to uncover taxpayers who were evading taxes by hiding assets in the tax havens and using credit cards to access their accounts. The IRS was surprised by results. From the records obtained from the credit card companies the Service estimated that one to two million U.S. citizens may be using such accounts. Most were thought to have incomes that would put them in the top one percent. There is nothing illegal about having an offshore account as such; failure to report it is a felony. The IRS admitted that it was overwhelmed by the results of the credit card investigation; it simply lacked the resources to pursue all of the likely tax evasion. The Financial Times (January 14, 2003) quotes tax experts as saying that as much as $70 billion in taxes may be lost each year due such offshore schemes. To date the IRS has collected about $3.7 billion from an amnesty program…

The same investigation turned up dozens of companies involved in the promotion of offshore tax avoidance schemes. In April of this year the IRS announced that it had obtained over 100 injunctions against the promoters of such schemes.

The most significant case against a promoter of abusive tax shelters was brought against KPMG. The Justice Department alleged that the fraudulent tax shelter designed by the accounting firm cost the United States at least $2.5 billion in evaded taxes. KPMG agreed to a fine of $456 million.”

#78 dave99 on 08.08.09 at 4:59 pm

http://www.theglobeandmail.com/globe-investor/personal-finance/financial-facelift/a-growing-family-in-need-of-discipline/article1243716/

From today’s Globe and Mail…

Young couple, early 30’s, $40k owing on a line of credit (presumably for the 10% deposit?), just bought a $350k semi. They now have assets of $358k ($348k of which is their house), and debts of $372k.

When I read this article, I felt sick for them. Tragic.

#79 ryan on 08.08.09 at 5:08 pm

Correction Garth….oil has not doubled in price in the last four months, at least not in Canadian $ terms. Oil has indeed gone up, but what has happened is a very substantial depreciation in the U.S. dollar. And the US dollar looks like it is ready to correct upwards which will bring oil prices back down in USD terms.

Canadians should not look at the price of commodities in USD. It’s only really relevant to see what is happening in our own currency.

The reference was to the effect on family cash flow – in Canadian after-tax dollars. — Garth

#80 ts harpoon on 08.08.09 at 5:16 pm

Justin #43

Please consult the following and report back later regarding “untaped reserves”. The only thing they don’t teach in school is how to corroborate the evidence.

Justin: We have peaked. It happened in 2005.

Call Jeff Rubin and ask why we are heading for $200/Barrel oil. Better still, buy the book.

See: http://www.simmonsco-intl.com/files/OTC%20Topical%20Luncheon.pdf

See: http://www.simmonsco-intl.com/files/Chevron%20Fellows%20Mentoring.pdf

#81 Joanne on 08.08.09 at 5:38 pm

In the end its all been a tax grab. Having people to believe their house has more than doubled in value. Tax assessments are based on property values and is only a number on paper until you list. However when mark to market ( ie; supply and demand ) takes a nose dive, retiring boomers and underwater folks will be as angry as hell wondering why their paying thousands more in taxes when the house can’t fetch their property assessment quote. Think your property taxes would be rolled back ? No , that deal is sealed in stone . Besides those who stay in their homes will have to subsidize those who will be forced out due to forclosure. Why would you pay the taxes when you can,t even afford to pay the mortgage ?

#82 Nostradamus Le Mad Vlad on 08.08.09 at 6:38 pm

This year’s Magnificently Obvious Darwinian Award Winner, which proves that sometimes, reincarnation doesn’t work (at least for the first few thousand times) . . .

1. When his 38 caliber revolver failed to fire at his intended victim during a hold-up in Long Beach, California would-be robber James Elliot did something that can only inspire wonder. He peered down the barrel and tried the trigger again.

This time it worked.
——
By the time all the bills come due for payment — firefighters from Quebec, Oz, etc. flown in, costs of fuel and other necessities, etc. — all the “improvements” happening in Vancouver for the ‘limpix THEN the bloody games — GAMES, mind you — two weeks of fun, frivolity and laughter for the wealthy elite at the expense of taxpayers of BC — this province will be flat broke.

I understand why there may be a “bank holiday” for a week or so across this continent, an “October Surprise” (which may not happen ’til spring / summer) and other events not yet revealed (maybe planned, but it’s not their time just yet).

The fires seem to be headed toward the far back-country areas, where telecommunications towers and beacons are located. Temps. are going down here a little, ‘tho.
http://www.kelowna.com/2009/08/08/all-evacuation-orders-and-alerts-remain-in-effect/
http://www.kelowna.com/2009/08/08/brookmere-fire-increases-in-size/
——
‘Owzabout the rising US federal debt as a reason this worthless pandemic was put in place? Or, see above. — http://rense.com/general87/hhdy.htm
——
A nice contradiction / concoction of climate change, including global warming and cooling! Comment by wrh.com. —
http://www.canada.com/technology/choking+Northwest+Passage+officials/1853923/story.html

“Look, Al Gore said the polar ice is melting, so drop a @#$%ing nuclear bomb on it and melt the damn thing already!!!”

#83 john m on 08.08.09 at 7:35 pm

Is it not curious that the people who caused the problems in our economy are the ones who got the huge bailouts and are still getting them……….and what is even more curious is they are still enticing people to go further in debt.The Banks pushed out money to people for homes who could not afford it and the auto companies pushed out cars to people who could not afford them.And sadly enough our government…the people who we have to count on to look after our interests are encouraging it and backing this little game with our tax dollars. I wonder how long before the US “cash for clunkers” policy will be adopted by the Harper government?? (they have followed every step by the US so far)………i sure do wonder how many of the people most hurt by the recession are in the market for a new car?? and i really wonder what future there is for a company or financial institution that can not be counted on to market their product competitively with enough intelligence to survive without tax dollar assistance and guarantees? Sure doesn’t apply to anyone else trying to make a buck. The little guys are dropping like domino’s unnoticed and swept aside by big enterprise and government dishonesty.

#84 MenWithHats on 08.08.09 at 7:43 pm

Financial armageddon .We are standing at the brink of the abyss looking into the vortex .
The malestrpm is upon us .
God help us all .

#85 POL-CAN on 08.08.09 at 8:02 pm

Again via TAE a great read from the always interesting Bill Bonner:

Stitch in Time
By Bill Bonner

At least something good has come out of the economic crisis; it blew off the purple robes that clothed economists and exposed their naked flanks. Still, they don’t deserve the beating they’re getting in the press – with snide remarks and sarcastic comments; they deserve better. A beating with sticks!
.
.
.

http://dailyreckoning.com/stitch-in-time/

#86 Grantmi on 08.08.09 at 8:40 pm

You in good company Garth!!

http://ca.finance.yahoo.com/personal-finance/article/canadianbusiness/1183/the-rock-star-of-wall-street-economists-returns-home

David Rosenberg.. thinks the same thing.. This ain’t done yet!! But they don’t call him CRAZY or a Stopped-Clock-is-right-twice-a-day. Do they!!

#87 Third Chimp on 08.08.09 at 11:20 pm

#40 Devil’s Advocate: Previous comments to you very good. Step back and take the long view. You owe it to yourself to read John Michael Greer “The Long Descent”. Collapse is more like descending a staircase, each discontinuity (crisis) years apart. Remember, Rome wasn’t unbuilt in a day (it took two centuries to go down). If you lived then, you might say that over your lifetime, Rome’s influence weakened considerably. But you might also have waited decades after predicting very specific changes. Behind us, we have at least three generations enjoying essentially free energy. It will take a long grind to finally convince this herd that we don’t own the place. Or if you were living in ancient Mesopotamia say, you could perhaps choose another project to dedicate your life to besides the big honking pyramid that everyone else is so feverishly working on.

#88 Two-thirds on 08.08.09 at 11:53 pm

In Edmonton, alarming and deeply contradictory news:

“For the second month in a row, Edmonton-area home sales broke a record, according to MLS figures released Wednesday for July.

“Just to make the point, July sales were better than they were at the height of the boom,” said association president Charlie Ponde.”

http://www.edmontonjournal.com/business/Home+sales+break+July+record/1863937/story.html

And just a day later, the same writer produced this piece of “news”:

“Alberta’s unemployment rate highest in 13 years.

“While the national jobless rate has climbed by 2.3 percentage points since the onset of the recession in October 2008, unemployment has surged the most in Alberta (a gain of 3.5 percentage points), Newfoundland (plus 3.3), British Columbia (plus 2.6), and Ontario (plus 2.6),” said Pascal Gauthier, an economist with TD Bank Financial Group.”

http://www.edmontonjournal.com/business/Alberta+unemployment+rate+highest+years/1870348/story.html

How can this be? RE sales and unemployment set a simultaneous record?

It takes a monumental act of “doublethink” to accept this without suffering painful mental seizures.

This can’t end well. I have started to fret about the consequences all of us taxpayers will have to bear as a result of living in bizarro world.

#89 Nostradamus jr. on 08.09.09 at 12:12 am

>>”The Royal Scam”

Are we at the end? These massive insolvable problems: where can they lead? The inattentive political class, too selfish to care. The corrupt and venal insiders, what can they do? …..<<

http://www.oftwominds.com/blogaug09/KaPoom2CHS.htm

(btw…I'm moving into Garth's bunker basement suite.)

#90 Nostradamus Le Mad Vlad on 08.09.09 at 12:35 am

Not sure if anyone has seen or covered this, but here is a perfectly good reason for an October or March surprise.

http://www.econlib.org/library/Columns/y2009/Hummeltbills.html

“Buried within the October 3, 2008 bailout bill was a provision permitting the Fed to pay interest on bank reserves. Within days, the Fed implemented this new power, essentially converting bank reserves into more government debt. Now, any seigniorage that government gains from creating bank reserves will completely vanish or be greatly reduced.”

Little Timmy’s being naughty again; spot the difference in the meaning of the headings (we’re goin’ down big time baby)! —
http://www.presstv.ir/detail.aspx?id=102839&sectionid=3510213
http://emsnews.wordpress.com/2009/08/08/geithner-wants-to-raise-debt-ceiling-to-infinit/

These three may be inextricably linked. — http://informationclearinghouse.info/article23214.htm
“And they will get it sooner than many think!” (wrh.com)

A Few Good Charts. Nathan’s first. —
http://economicedge.blogspot.com/2009/08/reflective-rebound-wave-b.html
http://market-ticker.denninger.net/archives/1313-Economic-Bottom-Calls-Willful-Ignorance.html

#91 Barb .. a reader in Calgary on 08.09.09 at 2:58 am

#68 rory: “giant anything is dead or should be made dead”

rory,

So true.

Have you ever watched the award winning documentary called The Corporation? If not, I know you’d really appreciate it. It’s one of the most relevant documentaries of our age and it studies exactly what you’ve just spoken about…. when business or such entities get so large as to be monsters. The film asks the question, and then stunningly illustrates, “If Corporations are legally human, what kind of people are they?” It should be required watching for all humans.

http://video.google.com/videoplay?docid=3203253804055041031

#92 Future Expatriate on 08.09.09 at 4:31 am

Sorry for the bad link… here’s the right one for the US Army National Guard hiring…

INTERNMENT/RESETTLEMENT SPECIALISTS

Hope that works. There’s no way to preview and correct on here.

#93 TS on 08.09.09 at 7:00 am

Some early 20-something friends of my daughter just took possession of a “fixer-upper” in Toronto they purchased. $525,000 with only $25,000 down. 6 bedrooms with plans that 4 of the bedrooms need to be rented to make the thing fly.

The two big questions in my mind are:

1) What the hell are banks doing lending $500,000 to a couple of guys in their early 20’s…one has been working for about a year, the other for 3 years?

2) Where is education about financial commonsense? Both of these guys are very bright young people (according to their school marks).

As Garth has pointed out…this kind of thing will not end well.

#94 Devil's Advocate on 08.09.09 at 8:40 am

It will be a world of less consumption. There will be long-term changes in consumers’ attitudes toward discretionary spending, credit, and home ownership. And these changes will be generational. “This is at least a mild form of depression — it has to be, because it’s not a plain-vanilla, garden-variety recession,” says Rosenberg. “The last nine postwar recessions were relatively simple to forecast — they were part of the business cycle. But this wasn’t part of the business cycle. This wasn’t about expunging excessive manufacturing inventories and the Fed fighting inflation. This was about the end of the 25-year secular credit expansion that had gone parabolic between 2001 and 2007. It’s the end of a secular trend, and that makes this a different animal.”

#95 Rural Rick on 08.09.09 at 9:37 am

Cashtration (n.): The act of buying a house, which renders the subject financially impotent for an indefinite period of time.

#96 eddy on 08.09.09 at 9:38 am

a house in oakville sold in the 1971 for 24k, after 38 years it’s worth, more or less 480k. so the average TO house may be worth 400 today, in 38 years maybe 8,000,000.
this will not end well for savers

#97 Bill-Muskoka (NAM) on 08.09.09 at 9:55 am

It struck me this morning that Vancouver should really be called Jonestown, whereas, the residents all seem to be keep up with, or outdoing the Jones, and they all seem to be willing tio drink the Kool-Aide.

Yes, I have been there and found it depressign with all the rain, the horrid traffic and lack of sufficient major roads to handle it. But, also found a few marvelous spots like the aquarium, Stanley Park, Hy’s, the Kobe steakhouse, the Metropolitan Hotel, and the shipping port to be amazing. However, none of those would ever justify to my mind the housing prices people are so willing to pay. Got to go..T-storms hitting hard.

#98 Reality_Bites on 08.09.09 at 11:27 am

#91 TS –

Haven’t you heard? Domestic, family crap is the new religion, and witless overpopulation the new holy grail.

The slaughter of all kinds of culture, the fine arts, sciences, and the green environment is OK and justified in the pursuit of kids, wives, and suburbia.

All financial sanity and global financial health be damned, if it allows more ‘family’ shit to be perpetuated. Sanctimonious political correctness [hi, Garth] is allowed to grow like mold if it allows just one more brain-dead nuclear family to be stuffed into the system, either locally or through immigration offices.

That’s the core social and political justification for allowing financial institutions and real estate rodents to dump debt onto anyone with a pulse.

#99 mike as in mike on 08.09.09 at 11:38 am

TS #91 wrote:
2) Where is education about financial commonsense? Both of these guys are very bright young people (according to their school marks).
————————-

Some people are educated beyond their intelligence.

#100 Barb .. a reader in Calgary on 08.09.09 at 11:58 am

#90 Future Expatriate

An immediately striking element of your link is in the youth’s faces — transformed from the look of well-adjusted, carefree , happy smiling faces — to solemn, stern, robotic…. scary. Now THERE’S truth in advertising.

#101 Got A Watch on 08.09.09 at 1:36 pm

You just can’t save those who can’t get off the consumption train. They are the trained seal consumers, salivating like Pavlov’s dogs at the prospect of a larger house, a new car, a bigger plasma TV, new clothes, stainless steel everything…

Most have never heard of concepts like the business cycle, that the economy moves in large slow waves, that everything goes up and then down in price over time, that supply and demand swing back and forth from one extreme to another…

That there is a concept called the “blow off top” which has the greatest mania of all, when the unwise and unwary and reckless get sucked in – right before it implodes from the weight of previous excess…

For their profound and utter ignorance, I am not sure they really deserve to be saved. The only lesson that will sink in is the one that stings. Maybe they won’t be so quick next time out to max out the credit cards and re-fi their house a few times.

I agree with most comments above, and rest assured your experience is not unique. Now that everything I told my friends was going to come to pass in this economic crisis, they don’t call me ‘Dr Doom’ or make jokes about it anymore, they just ignore the economy altogether. It is a mass conspiracy of denial, most people know in their hearts something is wrong in a fundamental way with our “economy”, but they carry on as if it all weren’t happening.

I have noted this train of thought many times at summer BBQ’s and gatherings. People who should know better (university degrees, “professionials”, business owners etc) but it seems they just do not. Or they just don’t want to contemplate the awful truth.

I don’t claim any exceptional prescience, it was mostly common sense and reading a few non-MSM Blogs like Mish and Calculated Risk and Market Ticker etc. I remember listening to an old podcast by IIRC Ian Gordon a few years ago where he laid out everything that was to come, and even the bearish interviewer seemed shocked by his bearish predictions (all accurate). I’m a latecomer to this Blog by comparison.

Anyone who tells you “no one saw this coming!” is just plain lying, or they are truly ignorant. All the warnings from sensible adults were and still are ignored. Witness the clueless trolls and bubble dwellers who come here to try and dent Garth’s influence. If too many caught on to the simple truths of the actual fiscal and economic situation, the “consumer economy”, an oxymoron to start with, would implode. But what is hazardous to established orders is a necessary process of renewal, even if politically incorrect.

Hope for the best, but plan for the worst.

#102 Peter on 08.09.09 at 2:22 pm

Everyone does not care about any economics, their jobs because they all thought our mighty government is going to take care of everyone by sending them welfare cheques that would enable them to pay off those over leverage mortgages and credit lines….since they thought the govt does not want any canadian banks to fail anyways…they will push unlimited amount of money into the banks ..

#103 Peter on 08.09.09 at 2:25 pm

Indeed i have another 2 friends that just bought their nice house this week (30 yrs old dirty bungalow for $ 400K in scarborough and condo for close to 300K in scarborough town in a bidding war)and keep saying i love to be a homeowner…for those of you who are renting, kiss their b$tt…

#104 Coho on 08.09.09 at 3:46 pm

Basil Fawlty wrote,

The financial system is absolutely mad and is being held together by the lowest interest rates in history and government spending.
The US government bails out the nine largest banks to the tune of $125B, and said banks turn around and pay out billions in bonuses to employees. The US government purchased the derivatives of said banks at “modelled” values, when the market value of these “investments” indicates that all these financial institutions are bankrupt. The sheer unmitigated audacity of these people overwelms the senses. Lying, fraud, perjury and God knows what else happening in real time, but it’s all about perception management. Green Shoots, stock market up, real estate booming, the carnival is open. Shoot the birdie, win a cigar.

As evil as these guys are, they are a few steps from the top of the ladder…below the FED, which in turn is below the Bank of International Settlements. Al Capone said the closer to the top the more rotten it smells. One can only imagine how bad these characters at the top are and how they view the sheople if their lackies at Goldman Sachs have such an obscene culture of entitlement.

I read an article the other ay about the Bank of International Settlements criticizing the FED. Don’t fall for this. The FED adheres to the dictates of BIS. It’s all show to make people think there is some regulatory oversight. The wolves are in bed together their; goal being to fleece the sheople.

#105 PTDBD on 08.09.09 at 4:47 pm

Geithner wants Debt Limit jacked sky high

Why oh why? Why do I break out chortling and laughing into uncontrollable guffaws until tears stream down my eyes. I truly must be losing it. A deficit of meds? Dimished capacity of geezerhood? It’s just not rational.
Tiny Timmy Geithner’s pronouncements of profundity usually set me off…..

He says that Congress must increase the debt ceiling from its current outrageous level of, get this… $12.1 Trillion. I say, I say again $12.1 Trillion with a capital T, and that just makes me want to pee. They is going to run out of money so they better do it within the next two months, toute de feckkin sweet, or else, he adds. Or else what? Heh, heh..this is where he gets really hilarious. Or else, he says, citizens and investors here and around the world will lose confidence that the United States will always meet its obligations. Yup, the boy has no sense of irony what so ever.

“Congress has never failed to raise the debt limit when necessary,” Mr. Geithner said.

Why do I laugh so stupidly? It’s just not rational is it? The man has a clear strategy of instilling confidence and dealing with the debt, but I scoff. Everyone else thinks that he is brilliant :-) going forward :-)

#106 M. Brocciu on 08.09.09 at 6:36 pm

#98 Barb
“An immediately striking element of your link is in the youth’s faces — transformed from the look of well-adjusted, carefree , happy smiling faces — to solemn, stern, robotic…. scary. Now THERE’S truth in advertising.”

When i saw the page, i was reminded of the recruiting ads in Starship Troopers:
http://www.youtube.com/watch?v=Vz5iyEcIjbU

#107 Industrial Guy on 08.09.09 at 8:05 pm

Reality check…..
Have you noticed in the recent unemployment numbers a truly amazing increase in those claiming they are now “self employed”.

In Canada “self employment” means many things. If you’re collecting EI benefits the Government of Canada has cold hard cash for you. You’re still receiving EI benefits ….but, according to the Government, you’re no longer unemployed. Now, you’re a self employed entrepreneur.

Remember these magic words….”THE SELF – EMPLOYMENT BENEFIT”

Who can apply for this government cash? First, you must meet the following criteria:

a) Any unemployed person for whom a benefit period is established or whose benefit period has ended within the previous 36 months; or
b) for whom a benefit period has been established in the previous 60 months and who
1.was paid special benefits under section 22 (maternity) or 23 (parental) during the benefit period,
2.subsequently withdrew from active participation in the labour force to care for one or more of their new-born children or one or more children placed with them for the purpose of adoption,
3.and is seeking to re-enter the labour force

OK, whats the catch? You’re required to put some skin in the game. This “personal Investment” must equal 25% of the money they have for you. Don’t have any spare cash? No problem. Got a car worth more than $3,500.00? Use it in your “Business” and there’s your minimum contribution.

All you need is the following:
1.a bank statement showing at least the minimum investment for the proposed venture
2.evidence of a loan or line of credit
3.proof of ownership of equipment or materials that will assist you in your business

Garth’s crowd is fairly sharp, so most of you have probably figured out what’s going on here. Yeah, the government is trying to fiddle with unemployment numbers and make it look like they are actually doing something. Let’s reduce the unemployment numbers by creating instant entrepreneurs. It gets better for the government. What happens if these new “businesses” fail? Well, self employed are not covered by EI, so it’s now not their problem. Simple, but brilliant.

Just one problem with the SEB program. Not everyone is an entrepreneur or has the skills to run their own business. They tend to be risk takers who thrive on the challenge of growing their own business. Most of these new “Self Employed” the SEB program has net in are older ex-workers who are desperate to find a job and who’s EI benefits are now running out. OK, so you’re an ex member of the CAW and a guaranteed paycheck, gold plated benefits, job security and a pension are the only things which mattered to you for the last 20 years. Hardly our model entrepreneur.

If they play the game the government’s way, their benefits are extended, but this is not a hands off relationship between you and the Government. You’re required to report weekly your work hours the your activities. You’re Self Employment Benefits can be cut off at any time if the program staff thing you’re doing it all wrong. This is self employment?

Some may actually be lucky and thrive as self employed Canadians. According to the Government’s own research: “While almost three quarters of small business startups survive the first year, less than one third of micro companies (less than five employees) were in business after five years.”

So, next time you see unemployment numbers from Stats Canada ….. dig a little deeper. The truth will surprise you.

#108 X on 08.09.09 at 8:16 pm

Does anyone have a guess as to the odds that the FED will actually get audited? Where does it stand right now?

#109 Jmack on 08.09.09 at 8:45 pm

The recession is behind us…….haha

http://money.cnn.com/2009/08/06/news/companies/tarp_banks/index.htm?postversion=2009080615

#110 kabloona on 08.09.09 at 9:17 pm

#106 X, I’m guessing the Ron Paul initiative to “audit the Fed” won’t make it through Congress – likely because Paul himself admits it’s just the first step in his campaign to “abolish the Fed”…..well, that’s not likely to get anywhere with the Administration or anybody else for that matter.

Also, Bernanke will most likely be re-appointed to another term by Obama. Why? I see that lately Bernanke has been getting a lot of support from high-profile people like Krugman and Roubini, and I believe Obama is too risk averse at this point to rock the boat by appointing someone else – like say, either Geithner or Larry Summers. There’s just no political upside for Obama in such a move, he already has enough on his plate.

Besides, Bernanke really, really wants the job…. ;-)

#111 Grantmi on 08.09.09 at 9:41 pm

Yea.. But Jim Willie is reporting that the Chinese are pushing nObama to NOT renew Helicopter Ben’s next term!

http://www.kitco.com/ind/willie/aug072009.html

THE USDOLLAR CRISIS IN FIRST STAGE

The latest nationally advertised but unrecognized mythology is very convenient, since a USDollar crisis has begun. Political and intellectual cover is needed. The USEconomy would benefit from a lower USDollar, due to a quantum jump in export trade. A lower US$ exchange rate would indeed benefit the USEconomy in general, and US corporations in particular, provided the nation had not shipped a significant portion of its industrial base overseas. This is not the 1970 decade. It did so to capture the low cost of foreign labor, without thought given to the lost capital, lost wages, growing debt, and lost sovereignty from foreign creditor dominance. The US pursued financial dominance, and finally failed as Mother Nature wielded the backside of the Inflation Sword. The Chinese now dictate many key policies. A source reports that they ordered President Obama not to renew Bernanke as USFed Chairman.

“They write the check! No ticky… no ride!!!”

#112 Reg on 08.09.09 at 9:53 pm

In this post, you allude to the tax rebate for home improvements. Everyone should know this… it hasn’t been passed by parliament yet. It is on the table to be passed in the fall. It is my opinion that times being what they are, and politicians being…well, politicians… you best not taking anything for granted. What happens if it doesn’t pass? I know politicians are saying it is a given that it will pass, but when is anything a ‘given’ anymore?